According to the Chart the Citizens Are Being Taxed

According to the Chart the Citizens Are Being Taxed

State and local governments spent $3.3 trillion on straight general regime expenditures in fiscal year 2019.i
States spent $one.half-dozen trillion direct and local governments—cities, townships, counties, school districts, and special districts—spent $1.8 trillion directly (the numbers do not sum to the combined full because of rounding).two

While state governments raised more than revenues than local governments in 2019, local governments’ direct expenditures were larger than states’ because localities often administer programs with funds transferred from country governments. In 2019, states transferred over $568 billion to local governments. This full includes indirect funds from the federal authorities, oftentimes referred to every bit pass-through grants. For instance, the federal regime sends elementary and secondary education funds to state governments, then state governments transfer the money to local governments which spend the dollars on local teaching programs.

Nearly state and local authorities spending falls into one of seven categories: simple and secondary education, public welfare (which includes well-nigh Medicaid spending), college education, health and hospitals, highways and roads, criminal justice (which includes spending on constabulary, corrections, and courts), and housing and community development.

  • What do state and local governments spend money on?
  • How does state spending differ from local spending?
  • How have land and local expenditures changed over time?
  • How and why does spending differ beyond states?

What practice state and local governments spend coin on?

State and local governments spend most of their resources on education, health, and social service programs. In 2019, about one-third of state and local spending went toward combined elementary and secondary education (22 percent) and college education (ix percent).3 (Demography’s data on higher educational activity expenditures include both spending funded by taxation revenues and student tuition and fees. See our higher education backgrounder for more information.)

Another 22 percent of expenditures went toward public welfare in 2019. Public welfare includes spending on ways-tested programs, such as Medicaid, Temporary Assistance for Needy Families, and Supplemental Security Income.4 Spending on wellness and hospitals was another 10 percent of land and local direct expenditures.

Medicaid constitutes a large and growing portion of state spending. However, Census does not separate Medicaid spending into its own category. Instead, most Medicaid spending is accounted for under the public welfare category with some spending counted as hospital expenditures.5

The National Association of State Budget Officers (NASBO) estimates that in fiscal year 2021 Medicaid alone accounted for virtually 27 percent of total state spending—up from 20 percent in 2008. (Both of these totals include the federal share of Medicaid spending.)6

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Highway and road spending was half dozen percent of state and local directly general expenditures in 2019. Looking at criminal justice expenditures individually, police spending was iv percent of state and local straight general expenditures, corrections spending was iii per centum, and court spending was 2 percentage. Housing and community development expenditures accounted for another 2 percent of state and local direct general expenditures.

Most of the remaining 22 percent of state and local straight expenditures in 2019 went toward these programs:

  • financial administration and central staff services (5 percent)
  • interest on debt (3 percent)
  • sewerage (2 percent)
  • local fire protection (2 percent)
  • parks and recreation (one per centum)
  • natural resources services (i percentage)
  • air transportation (1 percent)
  • solid waste management (i per centum)
  • public buildings, libraries, and water transportation (each expenditure accounted for less than 1 percent)

The rest was by and large miscellaneous expenses not elsewhere classified by Census.

How does land spending differ from local spending?

States and local governments provide different mixes of services, which are reflected in their direct general expenditures.

State verse Local Expenditure

Elementary and secondary instruction is a far larger share of directly local government spending than than state spending. In 2019, xl percent of directly local authorities spending went to uncomplicated and secondary education versus less than 1 percent of directly state spending. Nonetheless, while local governments overwhelmingly spent these dollars straight, much of that coin came from state and federal funds.7
In full, during the 2017-2018 school twelvemonth, states provided 47 percent of overall unproblematic and secondary education funding, local governments provided 45 per centum, and the federal government provided viii percentage.8

Meanwhile, college education was a far larger share of land direct spending (17 pct) than local government direct spending (three percent) in 2019.

Similarly, states also directly spent a far higher percentage of their budgets on public welfare expenditures than local governments. In 2019, 43 pct of states’ directly general expenditures went toward public welfare, the largest directly expenditure as a share of land spending. Local governments spent only 4 percent on public welfare. Much of public welfare spending is Medicaid spending, which is jointly funded by states and the federal authorities but administered by state governments (and local governments in a few states).

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Land governments likewise spent more directly on highways and roads (8 per centum) than local governments (4 percent), while local governments spent a larger share of their budgets on police (half-dozen per centum) than land governments (1 pct). Straight spending on health and hospitals (9 percent of country budgets and x percent of local budgets) was roughly equal at the two levels of authorities.


How have land and local expenditures changed over time?

From 1977 to 2019, in 2019 inflation-adjusted dollars, land and local government spending increased from $i.2 trillion to $3.iii trillion, a 190 percent increase. Real per capita expenditures increased from $5,238 to $10,161, a 94 percent increase, over the aforementioned period.

Although spending in all major categories increased over the menses, the per centum modify in state and local directly general expenditures varied. For example, state and local government spending on public welfare, in 2019 inflation-adjusted dollars, increased past 411 percentage between 1977 and 2019, by far the near of any major expenditure. Medicaid is responsible for nearly of the increase in total state and local public welfare spending, but the federal share of Medicaid spending likewise increased over this period, from 55 percent of Medicaid spending to 65 percent.9
Related, health and hospital spending grew 231 percent from 1977 to 2019. Meanwhile, elementary and secondary teaching spending grew 138 percent betwixt 1977 and 2019.

State and Local Expenditures

Higher education spending grew 184 pct, but changes in college education spending are complicated by the increasing share of tuition payments every bit a funding source. Law spending grew 179 percentage between 1977 and 2019. Among these major expenditures, highway and route spending grew at the slowest pace, 108 per centum, from 1977 to 2019.

How and why does spending differ beyond states?

State and local governments spent $10,161 per capita in 2019, simply per capita direct spending varies widely beyond states.

Among the states, Alaska had the highest per capita state and local spending in 2019 at $17,596, followed by New York ($15,667) and Wyoming ($15,107). As is typical, the District of Columbia’s per capita spending exceeded all states at $21,066.10
Arizona ($7,251) and Georgia ($seven,280) had the everyman per capita spending in 2019.

State and Local Expenditures

Information: View and download each state’southward per capita direct general expenditures

Differences in spending arise from variations in geography, demographics, history, and other external factors. They can besides ascend from country policy choices, such as generosity of service levels, eligibility rules for social services, or revenue enhancement policy. For case, New York has relatively high elementary and secondary education spending fifty-fifty though information technology has relatively few school-age children for its overall population and a bigger share of kids in private school than most states.11
Only New York’s per capita spending is relatively high considering it has more teachers per educatee enrollment and higher teacher salaries than well-nigh states.12
In contrast, Idaho has a relatively high number of schoolhouse-historic period children to brainwash for its overall population and a high rate of attendance in public schools, but it has relatively low per capita education spending because it employs fewer teachers per student and has lower payroll costs than nigh states.13

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Interactive Data Tools

Country and Local Finance Data: Exploring the Demography of Governments

State Financial Briefs

What everyone should know about their state’s upkeep

Further Reading

Fiscal Democracy in the States: How Much Spending is on Autopilot?
Tracy Gordon, Megan Randall, C. Eugene Steuerle, and Aravind Boddupalli (2019)

Follow the Money: How to Rail Federal Funding to Local Governments
Megan Randall, Tracy Gordon, Solomon Greene, and Erin Huffer (2018)

Assessing Financial Capacities of States: A Representative Revenue Arrangement–Representative Expenditure System Approach, Financial Year 2012

Tracy Gordon, Richard Auxier, and John Iselin (2016)

Governing with Tight Budgets: Long-Term Trends in State Finances

Norton Francis and Frank Sammartino (2015)

Notes


three
The Census counts state expenditures on scholarships and other educational subsidies under a separate category that includes subsidies for college and K–12 instruction combined. The code (J19) includes, for example, individual scholarships for higher education and institutional assistance to private Chiliad–12 charter schools.


seven
See William A. Fischel, School Finance Litigation and Property Tax Revolts: How Undermining Local Control Turns Voters Abroad from Public Teaching, Working Paper WP98WF1 (Washington, DC: Lincoln Institute of Land Policy, 1998); also Sheila Murray and Kim Rueben, School Finance Over Time: How Irresolute Structures Affect Support for K–12 Education, Policy working paper WP07SM1 (Cambridge, MA: Lincoln Institute of Land Policy, 2007).

According to the Chart the Citizens Are Being Taxed

Source: https://www.urban.org/policy-centers/cross-center-initiatives/state-and-local-finance-initiative/state-and-local-backgrounders/state-and-local-expenditures