What Accounts for the Growth of State Government Budgets in the 1990s?

Brief

What Accounts for the Growth of State Government Budgets in the 1990s?

July 1, 2000

Abstract

While real per capita state expenditures increased an average of 29 percent from 1988 to 1997, the brief finds that states' expenditures for public welfare increased by 71 percent. Payments to vendors for medical services - most under the Medicaid program - increased by 111 percent and accounted for 80 percent of the growth in public welfare spending. Significant increases in state spending also occurred in health and hospitals (28 percent), elementary and secondary education (24 percent), and corrections (54 percent). Substantial growth in three sources of revenue accounted for most of the additional revenue states needed to pay for these increased expenditures: federal payments (57 percent), individual income tax (28 percent), and sales tax (20 percent).

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