
Our description of the trends inresponsibilities of the various levels of government begins with the shares offederal, state, and local governments in public expenditures. We then examinethe trends in the shares of federal, state, and local governments in governmentrevenues. Following this, we examine the importance of transfers in totalrevenues of state and local governments. Lastly, we describe the importance ofvertical and horizontal imbalances.
Federal, State, and LocalGovernment Shares of Total Public Spending
Table B1 provides data from 1960 through 1995on the shares of federal, state, and local government in total public spending.We have divided the data into two categories: one including intergovernmentaltransfers and one excluding them. We do this to avoid duplication so that, forexample, transfers that are reported as expenditures of the federal governmentare not also included implicitly in the expenditures of state and localgovernments that they help finance. Thus, data including transfers treattransfers as expenditures of the disbursing governments, whereas data excludingtransfers treat them as receipts of the recipient governments.
Table B1: Federal, State, and LocalGovernment Shares of Total Public Spending (Percentages)
Including Transfers | Excluding Transfers | |||||
Year | Federal | State | Local | Federal | State | Local |
1960 | 64.3 | 16.5 | 19.1 | 59.7 | 14.5 | 25.8 |
1961 | 63.6 | 17.1 | 19.3 | 59.3 | 14.9 | 25.8 |
1962 | 64.4 | 16.6 | 19.1 | 60 | 14.4 | 25.6 |
1963 | 64.2 | 17.2 | 18.6 | 59.6 | 15.0 | 25.4 |
1964 | 64.1 | 17.0 | 18.9 | 59 | 15.2 | 25.9 |
1965 | 63.2 | 17.4 | 19.4 | 57.9 | 15.3 | 26.9 |
1966 | 63.6 | 17.4 | 19.0 | 57.8 | 15.1 | 27.1 |
1967 | 64.7 | 17.5 | 17.8 | 58.9 | 15.4 | 25.7 |
1968 | 65.3 | 17.7 | 17.0 | 58.9 | 15.3 | 25.8 |
1969 | 63.6 | 18.4 | 18.0 | 57.3 | 15.8 | 26.9 |
1970 | 62.5 | 19.4 | 18.1 | 55.5 | 16.5 | 27.9 |
1971 | 61.2 | 20.5 | 18.2 | 53.8 | 17.9 | 28.4 |
1972 | 60.7 | 20.3 | 19.0 | 52.3 | 17.9 | 29.9 |
1973 | 62.4 | 20.1 | 17.5 | 53 | 17.9 | 29.1 |
1974 | 61.7 | 21 | 17.3 | 52.7 | 18.0 | 29.2 |
1975 | 60.8 | 21.8 | 17.4 | 51.9 | 19.0 | 29.1 |
1976 | 62.4 | 20.4 | 17.2 | 51.3 | 17.9 | 30.8 |
1977 | 63.3 | 20.2 | 16.5 | 52.4 | 18.0 | 29.6 |
1978 | 64.1 | 20.1 | 15.8 | 53.5 | 18.0 | 28.6 |
1979 | 64.4 | 20.3 | 15.4 | 54.1 | 17.9 | 28.0 |
1980 | 64.2 | 20.0 | 15.8 | 54.7 | 17.8 | 27.4 |
1981 | 64.6 | 19.9 | 15.5 | 56.1 | 17.8 | 26.1 |
1982 | 64.4 | 19.6 | 16.0 | 57.5 | 17.1 | 24.0 |
1983 | 64.6 | 19.5 | 15.9 | 57.7 | 17.2 | 25.0 |
1984 | 64.9 | 19.2 | 16.0 | 57.9 | 17.0 | 25.0 |
1985 | 65.2 | 19.3 | 15.5 | 58.4 | 17.1 | 24.5 |
1986 | 64.5 | 19.2 | 16.3 | 57.7 | 17.0 | 25.3 |
1987 | 63.4 | 19.9 | 16.7 | 57.2 | 17.5 | 25.3 |
1988 | 63.3 | 19.7 | 17.0 | 57.1 | 17.2 | 25.7 |
1989 | 62.5 | 20.3 | 17.2 | 56.3 | 17.6 | 26.1 |
1990 | 62.8 | 19.6 | 17.6 | 56.2 | 17.2 | 26.6 |
1991 | 62.2 | 20.1 | 17.7 | 55.5 | 18.1 | 26.4 |
1992 | 61.4 | 21.0 | 17.6 | 54.0 | 19.3 | 26.8 |
1993 | 61.0 | 21.2 | 17.8 | 53.1 | 19.9 | 27.0 |
1994 | 60.6 | 21.6 | 17.7 | 52.5 | 20.6 | 26.8 |
1995 | 60.1 | 22.2 | 17.6 | 51.9 | 21.1 | 26.9 |
Source: U.S. Census Bureau, Statistical Abstract of the United States, selected years and The Tax Foundation, Facts and Figures onGovernment Finance, 1999.
Examination of the data in Table B1 showsthat there has been a small tendency for spending to become more decentralizedover time from the federal to the state governments. This is true bothincluding and excluding transfers. The federal share of total spendingincluding (excluding) transfers was 64.3% (59.7%) in 1960 and had fallen to60.1% (51.9%) in 1995. During the same period, the states’ share of spending has increasedfrom 16.5% (14.5%) to 22.2% (21.1%). Despite the tendency for state spendingresponsibilities to grow over time, the federal government still commands adominant role in public spending in the United States. While many state andlocal expenditure responsibilities are in areas of high growth (e.g. educationand health care), the federal government is actively involved in many highgrowth areas either concurrently with the states (e.g. health care) orpredominantly independently (e.g. national defense and social security).Somewhat surprisingly, the same trend of increasing expenditure shares has notoccurred with respect to local governments.
Federal, State, and LocalGovernment Shares
ofTotal Government Revenues
