State and Local Revenues
State and local governments collected a combined $3.1 trillion of general revenues in fiscal year 2017.
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 “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?
- What are the sources of revenue for local governments?
- How have the sources of revenue for state and local governments changed over time?
- Further reading
State governments collected $2.0 trillion of general revenues in 2017.
Taxes provided 48 percent of state general revenues in 2017, including:
- 18 percent from individual income taxes
- 2 percent from corporate income taxes
- 15 percent from general sales taxes and gross receipts taxes
- 8 percent from selective sales taxes on purchases such as alcohol, motor fuel, and tobacco products
- 5 percent from other taxes such as estate taxes and severance taxes
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 revenues in 2017. Miscellaneous sources, such as special assessments, provided another 7 percent of state general revenue.
Taxes, fees, and user charges are considered "own-source" revenue.
The final 33 percent of state general revenue came from intergovernmental transfers; 32 percent from federal government and 1 percent from local governments. (Sources of state general revenue do not sum to 100 percent because of rounding.)
Local governments collected $1.7 trillion in general revenues in 2017.
Taxes provided 42 percent of local general revenues, including:
- 30 percent from property taxes
- 5 percent from general sales taxes and gross receipts taxes
- 2 percent from selective sales taxes on purchases such as alcohol, motor fuel, and tobacco products
- 2 percent from individual income taxes
- 3 percent from other taxes such as a city’s hotel tax
Charges, such as city revenue from sewerage and parking fees, when combined, provided 18 percent of local general revenues in 2017. Another 5 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 36 percent of local government general revenue came from intergovernmental transfers; 32 percent from state governments (this total includes indirect federal funds) and 4 percent directly from the federal government. (Sources of local government general revenue do not sum to 100 percent because of rounding.)
In inflation adjusted-dollars, combined state and local general revenue increased from $1.2 trillion in 1977 to $3.1 trillion in 2017, or a 170 percent increase. All major sources of revenue have grown in real dollars since 1977, with charges seeing the largest increase ($126 billion in 1977 to $526 billion in 2017, or a 303 percent increase).
In 2017, transfers from the federal government provided 23 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 general sales taxes (12 percent), individual income taxes (12 percent), and selective sales taxes (6 percent).
Since 1977, property taxes as a share of combined state and local revenues have declined while charges have increased. The share coming from property taxes fell from 22 percent of total revenues in 1977 to 17 percent in 1985, but have been relatively stable since then. In contrast, revenues from charges have steadily increased from 11 percent in 1977 to 17 percent in 2017. Meanwhile, individual income taxes have also increased as a percentage of state and local revenue, providing 10 percent in 1977 and 12 percent in 2017. Revenue from individual income taxes peaked at 14 percent in 2001.
Transfers from the federal government fluctuated considerably over the past three decades. They provided 22 percent of state and local 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. However, the percentage of revenue from federal transfers then fell to 23 percent as economic stimulus spending receded.
State Tax and Economic Review
Lucy Dadayan (reports are updated quarterly)
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)