State Spending and Revenues
State and local governments face competing challenges: keeping revenues and expenditures in line to satisfy balanced-budget rules while providing valued services such as K–12 education, public safety, and infrastructure. In light of rising costs, population aging, and growing uncertainty about the federal government’s role, it is more important than ever for state and local officials and their constituents to have the most timely, relevant, and accessible budget information.
The election of Donald Trump as president and Republican majorities in Congress have Washington primed for major legislative reforms. But it's important to keep in mind that what the new government in the nation’s capital does will reverberate in all 50 statehouses. Most changes could hand states more control over programs but also demand more fiscal responsibility, forcing states to address big questions about how much they want to tax and spend in the future.
To understand variation in how much states collect in revenue and spend on goods and services, we examined what states could raise and would spend if they followed national averages, taking into account their own demographics and economic conditions. We found wide variation in both measures and the differences between them. Federal funds did not close these gaps in all states, raising questions about how to design effective federal grant programs as well as state and local tax and spending policies.
Changing demographics, technology, and inflation are creating an increasingly difficult environment for state budgets. To keep a functioning government, legislators need to make difficult trade-offs between revenue increases and spending cuts. This brief examines the history and outlook of state revenues and expenditures with particular attention to the effects of the last recession on state fiscal policy.
With an improving economy, most state coffers have recovered. But governors and legislators are engaged in intense battles over spending and tax priorities that may have long-term consequences for government and growth. This forum addressed how budget pressures affect how state and local governments make finance decisions.
Every year, the Urban Institute produces hundreds of reports, briefs, webcasts, and blog posts. In this publication, we bring together the latest evidence-based research, data, and solutions relevant to analysts charged with crafting and deliberating over state budgets. Topics include Medicaid and the Affordable Care Act, criminal justice and corrections, social safety net programs, state finance and tax policy, pay for success and performance measurement, and demographic and housing trends.