Overview of State and Local Government Expenditures: 2017 Census of Governments Data

In FY 2017, according to data from the Census of Governments, U.S. states directly spent, on average, $85.41 per $1,000 of the personal income of all U.S. residents, or $87.76 if unemployment insurance and worker compensation payments are included.   Spending by local governments equaled $110.85 per $1,000 of personal income.  This spending was funded by state and local taxes, charges for services, aid from the federal government, as described in the prior two posts, and money borrowed.  Taken together, state and local government spending equaled $198.71 per $1,000 of personal income, or 19.9% of the income (including fringe benefit income) of everyone living in the United States. That is about one dollar in five to/from the government, not including money the federal government directly spends rather than passes on to the states.

The State of New York directly spent $86.36 per $1,000 of the personal income of New York State residents’ personal income, or $89.28 including unemployment insurance and worker compensation payments.   Local governments in New York City spent $181.24 per $1,000 of city residents’ personal income, and local governments in the rest of New York State spent $129.20 per $1,000 or the income of people living there.   Assuming the burden of State of New York expenditures was distributed between the two areas in proportion to personal income, that is $270.52 per $1,000 of personal income spent for New York City, and $218.48 per $1,000 of personal income for the rest of the state.  Or 27.1% and 21.8% of personal income, respectively.

The rest of this post will summarize the government functions this money was spent on.   Posts on individual government functions, with comparisons over time and across the country, will follow.

Overview of State and Local Government Expenditures: FY 2014 vs. FY 2004, Census Bureau Data

State and local government public services and benefits are getting squeezed. There is less money available for them because of rising costs from the past, notably under-funded and retroactively enhanced pensions for public employees who are already retired or soon to retire. In some places, as noted in the prior post on taxes, this squeeze has been exacerbated by falling taxes as a percent of personal income. The total wages and salaries of those public employees who are still working are falling as a percent of taxpayer personal income just about everywhere, as is spending on services for the needy (other than those associated with health care). And the anecdotal evidence suggests that since FY 2014, the latest year for which data is available, the squeeze has gotten worse. Despite the third biggest stock bubble in history by one measure,

https://www.bloomberg.com/view/articles/2017-03-03/what-to-make-of-these-twice-in-history-s-p-500-valuations

which makes public employee pensions seem better funded than the really are, years of zero percent interest rates, which reduce state and local government interest costs, and a long-running economic upcycle, which has boosted tax revenues.

http://www.eastbaytimes.com/2017/03/03/borenstein-despite-booming-economy-oakland-finances-deteriorate/

Whatever this data shows, things have gotten worse since in most of the U.S.