About State Government Finances

How have aggregate state government expenditures changed over time?

Aggregate state government expenditures rose steadily from $436 billion in 1977 to $1.5 trillion in 2009 (in constant 2010 dollars), representing a 234 percent increase over the 30-year period. Although state government and local government expenditures were approximately the same in 1977, since then state expenditures rose at a faster rate and exceeded local government expenditures by approximately $214 billion (or about 17 percent) in 2009. When considered as a proportion of the nation’s gross domestic product (GDP), state government expenditures grew from approximately 7 percent in 1977 to a high of just under 10 percent in 2009, indicating a faster growth rate than the overall economy.

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Source: GAO Analysis of U.S. Census Bureau Government Finance Statistics. Although the original sources for finance statistics are accounting records of governments, the data derived from them are purely statistical in nature. Consequently, the Census Bureau statistics on government finance cannot be used as financial statements or to measure a government's fiscal condition.

Note: The components of general current expenditure include current operations, interest on debt, assistance and subsidies, and intergovernmental expenditures.

State Government General Current Expenditures (1977-2009): TXT PDF

Source: GAO Analysis of U.S. Census Bureau Government Finance Statistics. Although the original sources for finance statistics are accounting records of governments, the data derived from them are purely statistical in nature. Consequently, the Census Bureau statistics on government finance cannot be used as financial statements or to measure a government's fiscal condition.

Note: The components of general current expenditure include current operations, interest on debt, assistance and subsidies, and intergovernmental expenditures.

State Government General Current Expenditures as a Percentage of GDP (1977-2009): TXT PDF

What are the key categories of state government expenditures and how have they changed over time?

Spending on educationEducation (State Expenditures):
includes elementary and secondary education, higher education auxiliary enterprises, other higher education (degree-granting institutions operated by state or local government), state government scholarships and other subsidies, and federal and state other education (special programs and institutions primarily for training and education of the blind, deaf, or other people with disabilities).
and public welfarePublic Welfare (State Expenditures):
includes federal categorical assistance programs, other cash assistance programs, payments to Medicare trust fund, vendor payments for medical care, vendor payments for other purposes, institutions, other (expenditures not classified elsewhere), veteran’s bonuses, and federal and state veteran’s services.
were by far the largest categories of state expenditures from 1977 to 2009, consistently ranking first and second respectively. Together they accounted for more than two-thirds of all state expenditures in 2009. Education expenditures (which include K-12 and higher education) rose from $179 billion in 1977 to $545 billion in 2009 (in constant 2010 dollars) an increase of 204 percent. Spending on public welfare (which includes categorical and cash assistance programs as well as Medicaid) rose from $96 billion in 1977 to $443 billion in 2009—an increase of 361 percent. As a proportion of total state expenditures, education decreased slightly, dropping from 41 to 38 percent, while the share devoted to public welfare increased from 22 to 31percent during this period. Other categories making up the state expenditures are health careHealth Care (State Expenditures):
includes health (provision of services for the conservation and improvement of public health, other than hospital care, and financial support of government’s health programs) and hospitals (expenditures related to the government’s own hospitals as well as expenditures for the provision of care in other public or private hospitals).
(which excludes Medicaid and Medicare), public safetyPublic Safety (State Expenditures):
includes correctional institutions, other corrections, local fire protection, judicial and legal, police protection, and protective inspection and regulation.
, transportationTransportation (State Expenditures):
includes air transportation, regular highways, toll highways, parking facilities, sea and inland port facilities, and private transit subsidies.
, and interest on debtInterest on Debt (State Expenditures):
amounts paid for use of borrowed monies, except those on utility debt, paid by all funds of the government.
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Source: GAO Analysis of U.S. Census Bureau Government Finance Statistics. Although the original sources for finance statistics are accounting records of governments, the data derived from them are purely statistical in nature. Consequently, the Census Bureau statistics on government finance cannot be used as financial statements or to measure a government's fiscal condition.

Note: The components of general current expenditure include current operations, interest on debt, assistance and subsidies, and intergovernmental expenditures.

Select State Government Expenditures (1977-2009): TXT PDF

How has aggregate state government general revenue changed over time?

Aggregate state government revenue grew from $496 billion in 1977 to $1.5 trillion in 2009 (in constant 2010 dollars), an increase of 205 percent. In 1977, state governments collected slightly less than local governments. However, in 2009 state revenue exceeded local government revenue by $104 billion. When considered as a proportion of the nation’s GDP, state government revenue grew from 8 percent in 1977 to 11 percent in 2009.

Source: GAO Analysis of U.S. Census Bureau Government Finance Statistics. Although the original sources for finance statistics are accounting records of governments, the data derived from them are purely statistical in nature. Consequently, the Census Bureau statistics on government finance cannot be used as financial statements or to measure a government's fiscal condition.

Note: The components of general revenue are own-source revenues (taxes, charges, miscellaneous revenue, etc.) and intergovernmental revenues (revenues received from federal and local governments).

State Government General Revenue(1977-2009): TXT PDF

Source: GAO Analysis of U.S. Census Bureau Government Finance Statistics. Although the original sources for finance statistics are accounting records of governments, the data derived from them are purely statistical in nature. Consequently, the Census Bureau statistics on government finance cannot be used as financial statements or to measure a government's fiscal condition.

Note: The components of general revenue are own-source revenue (taxes, charges, miscellaneous revenue, etc.) and intergovernmental revenues (revenues received from federal and local governments).

State Government General Revenue as a Percent of GDP (1977-2009): TXT PDF

What are the key sources of aggregate state government revenue and how have they changed over time?

From 1977 to 2009, the largest source of state government revenue consisted of federal assistanceFederal Assistance (State Revenues):
grants made from the federal government to the state government. These grants represent the total sum of grants funding given to states including some funds that might be passed on to local governments.
, accounting for $134 billion in 1977 and rising to $481 billion in 2009 (in constant 2010 dollars), a 257 percent increase. Income taxIncome Tax (State Revenues):
taxes on individuals measured by net income and taxes on special types of income (e.g., interest, dividends, income from intangible property, etc.).
and sales taxSales Tax (State Revenues):
taxes applicable with only specified exceptions (e.g., food and prescribed medicines) to sales of all types of goods and services or to all gross receipts, whether at a single rate or at classified rates; and sales use taxes.
follow as the sector’s second and third largest revenue streams in 2009, representing 16 percent and 15 percent respectively. Other categories of state government revenue are licensing fees and chargesLicensing Fees and Charges (State Revenues):
alcoholic beverage license, amusement license, corporation in general license, hunting and fishing license, motor vehicle license, motor vehicle operators license, public utilities, occupant and business license, other license taxes, and all other general current charges.
, other taxes and miscellaneous revenueOther Taxes and Miscellaneous Revenue (State Revenues):
includes death and gift taxes, documentary and stock transfer taxes, severance taxes,, special assessments, sale of property, interest earnings, state government—other dividends, fines and forfeits, rents, royalties, donation from private sources, net lottery revenue, and miscellaneous general revenue.
, and corporate taxesCorporate Taxes (State Revenues):
taxes on corporations and unincorporated businesses (when taxed separately from individual income), measured by net income, whether on corporations in general or on specific kinds of corporations, such as financial institutions.
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Source: GAO Analysis of U.S. Census Bureau Government Finance Statistics. Although the original sources for finance statistics are accounting records of governments, the data derived from them are purely statistical in nature. Consequently, the Census Bureau statistics on government finance cannot be used as financial statements or to measure a government's fiscal condition.

Note: The components of general revenue are own-source revenue (taxes, charges, miscellaneous revenue, etc.) and intergovernmental revenues (revenues received from federal and local governments). These data represent aggregates for the sector. State revenue sources vary considerably by state. For example, seven states have no state income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Two others, New Hampshire and Tennessee, tax only dividend and interest income.

Select State Government Revenue (1977-2009): TXT PDF