Changing Patterns of Federal Aid to State and Local Governments, 1969-75

PAD-78-15: Published: Dec 20, 1977. Publicly Released: Dec 20, 1977.

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An analysis of the distribution by State and region of Federal aid to State and local governments showed that Federal aid per capita is distributed more uniformly than 7 years ago and that the Northeast has begun to receive a larger proportion of Federal aid than it pays in Federal personal income taxes. Federal aid to State and local governments totaled about $60 billion in fiscal year 1976 or about 15% of the Federal budget.

In 1975 the five largest categories of Federal aid used in the study were: public assistance, concentrated in the Northeast; revenue sharing, distributed rather evenly by population; the highway trust fund, which went in large portions to the Mountain States; comprehensive manpower programs, the greatest share of which went to Westerners; and aid to elementary and secondary education, the biggest portion of which went to residents of East South Central States. Major trends during 1969 through 1975 included: (1) Federal aid per capita increased by more than twice the percentage of gains in per capita income; (2) the aid became more evenly distributed by population, partly because of the addition of revenue sharing in fiscal year 1973; (3) the East North Central region continued to contribute a greater share of Federal personal income taxes than it received of aid; (4) the Northeast, while its population grew most gradually and its unemployment rate rose to the highest in the Nation, began to receive a greater percentage of Federal aid than it paid in Federal taxes; and (5) the South's and the West's shares of Federal aid declined but were still somewhat larger than their shares of Federal income taxes.

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