Financing State and Local Governments

Financing State and Local Governments

Financing State and Local Governments

Financing State and Local Governments

Excerpt

Which level of government, the federal or the state and local, bears major responsibility for providing civilian (nondefense) services in the United States? The answer is state and local, and by a considerable margin. In fact, when it comes to civilian services, state and local governments together spend more than two and one-half times as much as the federal government. Education, roads, welfare, public health, hospitals, police, sanitation are primarily state and local responsibilities, and their cost falls mainly on state and local sources of revenue.

A great surge of state and local activity began after World War II. Spending on their functions had been reduced or postponed during the war and the Great Depression that preceded it. With the end of war, both the need and the desire grew to expand and improve the nation's capital and social infrastructure. For many years the increase in state and local spending was unambiguous. Whether spending was measured in nominal terms or on an inflation-adjusted basis, in per capita terms or in relation to gross national product, the rising trend was clear. But between 1978 and 1982 per capita state-local spending in constant-dollar terms actually declined and, in 1984, real per capita expenditure had almost reached the level of 1978. Will state and local expenditures resume their upward trend or have new public priorities been established? This is one of the main concerns of this book.

What governmental functions are mainly state and local? Education is the single most important responsibility of state and local governments, but in recent years spending growth has slowed and education expenditure now claims a smaller share of the gross national product than in the 1970s. On the other hand, government spending on public welfare and health has exploded, growing more rapidly than either total state and local expenditures or the GNP Also, the aged have become a larger proportion of the population and continuing advances in medicine have lengthened lives and enlarged the range of treatments. This has resulted in relatively large increases in expenditures on health and hospitals.

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