PROJECTState and Local Backgrounders


Project Navigation
  • Project Home
  • State and Local Expenditures
  • State and Local Revenues
  • Alcohol Taxes
  • Charges
  • Cigarette and Vaping Taxes
  • Corporate Income Taxes
  • Criminal Justice Expenditures: Police, Corrections, and Courts
  • Elementary and Secondary Education Expenditures
  • Estate and Inheritance Taxes
  • Fines and Forfeitures
  • General Sales Taxes and Gross Receipts Taxes
  • Health and Hospital Expenditures
  • Higher Education Expenditures
  • Highway and Road Expenditures
  • Housing and Community Development Expenditures
  • Individual Income Taxes
  • Lotteries, Casinos, Sports Betting, and Other Types of State-Sanctioned Gambling
  • Marijuana Taxes
  • Motor Fuel Taxes
  • Property Taxes
  • Public Welfare Expenditures
  • Severance Taxes
  • Soda Taxes
  • State Earned Income Tax Credits
  • State and Local Government Pensions

  • State and Local Revenues

    State and local governments collected a combined $3.5 trillion of general revenues in fiscal year 2019.

    That amount includes intergovernmental transfers from the federal government but not transfers between state and local governments (which is why the combined total is less than the sum of the separate state and local totals listed below).

    It also excludes revenues from government's "business-like" activities such as water, gas, electricity, and transit utilities; government-run liquor stores; and government-administered insurance trusts such as employee retirement, unemployment compensation, and workers’ compensation systems.

    What are the sources of revenue for state governments?

    State governments collected $2.2 trillion of general revenues in 2019.

    Source of State General Revenue

    Taxes provided 49 percent of state general revenues in 2019, including:

    Charges, such as tuition paid to a state university, payments to a public hospital, and tolls on highways, when combined, provided another 11 percent of state general revenues in 2019. Miscellaneous sources, such as special assessments, provided 7 percent of state general revenue.

    Taxes, fees, and user charges are considered "own-source" revenue.

    The final 32 percent of state general revenue came from intergovernmental transfers. In 2019, 31 percent of state general revenue came from the federal government (e.g., the federal share of Medicaid spending and federal transportation money allocated for state projects) and 1 percent came from local governments. (Sources of state general revenue do not sum to 100 percent because of rounding.)

    In 2020 and 2021, Congress transferred a large amount of funds to state governments as part of the CARES Act, the Coronavirus Response and Relief Supplemental Appropriations Act (part of the December 2020 omnibus bill), and the American Rescue Plan. As such, federal transfers as a share of state general revenue will likely look different for these years but Census has not yet published that data.

    What are the sources of revenue for local governments?

    Local governments collected $1.9 trillion in general revenues in 2019.

    Sources of Local General Revenue

    Taxes provided 42 percent of local general revenues, including:

    Charges, such as city revenue from sewerage and parking fees, when combined, provided 18 percent of local general revenues in 2019. Another 6 percent of local general revenue came from miscellaneous sources such as amounts received from the sale of property and interest from some investment securities.

    The final 34 percent of local government general revenue came from intergovernmental transfers. In 2019, 4 percent of local government general revenue came directly from the federal government (e.g., federal funds for local transportation projects) and 31 percent came from state governments (the numbers do not sum to the total share from intergovernmental transfers because of rounding). However, the state government transfer total includes indirect federal funds that are initially allocated to states. For example, the federal government sends K-12 education funds to state governments that then distribute the money to local governments. (All sources of local government general revenue do not sum to 100 percent because of rounding.)

    In 2020 and 2021, Congress transferred a large amount of funds to local governments as part of the CARES Act, the Coronavirus Response and Relief Supplemental Appropriations Act (part of the December 2020 omnibus bill), and the American Rescue Plan. As such, federal transfers as a share of local general revenue will likely look different for these years but Census has not yet published that data.

    How have the sources of revenue for state and local governments changed over time?

    In 2019 inflation adjusted-dollars, combined state and local general revenue increased from $1.2 trillion in 1977 to $3.5 trillion in 2019, or a 188 percent increase.

    All major sources of revenue have grown in real dollars since 1977, with charges seeing the largest increase in percentage terms ($132 billion in 1977 to $575 billion in 2019, or a 337 percent increase) and transfers seeing the largest increase in total dollars ($263 billion in 1977 to $762 billion in 2019, or a 189 percent increase).

    Sources of State and Local General Revenue

    In 2019, transfers from the federal government provided 22 percent of combined state and local general revenues. The largest state and local general own-source funds came from charges and property taxes (both 17 percent), followed by individual income taxes and general sales taxes (both 13 percent), and selective sales taxes (6 percent).

    Since 1977, property taxes as a share of combined state and local general revenues have declined while charges have increased. The share coming from property taxes fell from 22 percent of general revenue in 1977 to 17 percent in 1985, but since then property taxes as a share of general revenue have been relatively stable. In contrast, revenues from charges steadily increased from 11 percent of general revenue in 1977 to 17 percent in 2019. Meanwhile, individual income taxes have also increased as a percentage of state and local general revenue, providing 10 percent in 1977 and 13 percent in 2019.

    Sources of State and Local General Revenue

    Transfers from the federal government have fluctuated considerably over the past three decades. They provided 22 percent of state and local general revenues in 1977, dropped to a low of 16 percent in 1989, and returned to 22 percent in 2003. The American Recovery and Reinvestment Act of 2009 created a sharp uptick in transfers from the federal government between 2009 and 2011, peaking at 25 percent of state and local revenues in 2010 and 2011, before falling back to 22 percent in 2012.

    Given state and local tax revenue volatility resulting from the COVID-19 pandemic, and the large amount of federal transfers approved by Congress, particularly as part of the American Rescue Plan, these numbers will probably look different for fiscal years 2020 and 2021, but Census has not yet published that data.

    Interactive data tools

    State and Local Finance Data: Exploring the Census of Governments

    State Fiscal Briefs

    How the COVID-19 Pandemic is Transforming State Budgets

    Further reading

    State Tax and Economic Review
    Lucy Dadayan (reports are updated quarterly)

    Surveying State Leaders on the State of State Taxes
    Lucy Dadayan and Kim Rueben (2021)

    More Than Fines and Fees: Incorporating Equity into City Revenue Strategies
    Aravind Boddupalli, Tracy Gordon, and Lourdes German (2021)

    State and Local Government Revenues and Racial Disparities
    Aravind Boddupalli and Kim Rueben (2021)

    Assessing Fiscal Capacities of States: A Representative Revenue System–Representative Expenditure System Approach, Fiscal Year 2012
    Tracy Gordon, Richard C. Auxier, and John Iselin (2016)

    Governing with Tight Budgets; Long Term Trends in State Finances
    Norton Francis and Frank Sammartino (2015)

    Note

    All revenue data are from the US Census Bureau’s Annual Survey of State Government Tax Collections.  All dates in sections about revenue reference the fiscal year unless stated otherwise.

    Research Areas State and local finance
    Policy Centers Urban-Brookings Tax Policy Center