Federal Spending and State Budgets

Anne Stauffer: Fiscal Federalism Initiative, director

Matt McKillop: Fiscal 50, officer

Paul Miller Washington Reporting Fellowship

September 11, 2017
Washington, DC
Importance of Federal-State Fiscal Connections

Federal spending spread across the country

Federal government and the states deeply involved in

nearly every area of policy

Federal and state tax codes connected

PewTrusts.org/Fiscal-Federalism
Federal Spending in the States

Source: Council of State Governments, Federal Spending in the States; 2015

PewTrusts.org/Fiscal-Federalism
Nationally, Federal Spending is Equivalent
to 19% of State Economic Activity
Federal spending relative to gross domestic product by state, federal fiscal 2015

Source: Council of State Governments, Federal Spending in the States; 2015

PewTrusts.org/Fiscal-Federalism
The Mix of Federal Spending Varies Among States
Types of federal spending relative to GDP, by state, fiscal 2015

Source: Council of State Governments, Federal Spending in the States; 2015

PewTrusts.org/Fiscal-Federalism
 Federal Defense Spending by State
Per capita, federal fiscal 2014

Sources: Pews calculations using data from the U.S. Department of Commerces Bureau of Economic Analysis, Annual State Personal Income and Employment, SA35 Personal Current Transfer
Receipts (SA35), (accessed January 2016); USASpending.gov, (accessed October 2015); U.S. Department of Defense Office of the Actuary, Statistical Report on the Military Retirement System,
Fiscal Year 2014 (2015); Department of Defense Office of Economic Adjustment, Defense Spending by State, Fiscal Year FY 2014 (2015); and U.S. Census Bureau, Annual Estimates of the
Resident Population for the United States (December 2015).

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Surface Transportation Funding Flows Among
Levels of Government
Spending on highways and transit, 2012

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Federal Share of Total Funding for Highways and
Transit, 2008-2012

Source: Pews analysis of U.S. Census Bureaus Annual Survey of State and Local Government Finances, 2008-2012

PewTrusts.org/Fiscal-Federalism
How States Piggyback on the Tax Code
Personal income tax calculations

Source: Pew analysis

PewTrusts.org/Fiscal-Federalism
Fiscal 50: State Trends and Analysis

Key Indicators of Fiscal Health

Tax
TaxRevenue
Revenue Change in State Employment to Debt and Unfunded Reserves and
Spending Population Ratio Retirement Costs Balances
Tax Revenue Volatility
State Medicaid State Personal Fiscal Balance
Federal Share Spending Income
of State Revenue

PewTrusts.org/Fiscal50
 Revenue

TAX REVENUE

TAX REVENUE
VOLATILITY

FEDERAL SHARE This indicator shows how much of a states

OF STATE REVENUE total revenue comes from the federal
government and how that share has
Spending changed over the past two recessions.

Economy and People

Long-term Costs

Fiscal Policy

PewTrusts.org/Fiscal50
 50 States: Sources of State Government Revenue
FY 2015

0.77%
7.37%

10.84%
Taxes
Federal revenue
49.17% Service charges
Miscellaneous
Local revenue

31.86%

Source: U.S. Census Bureau Survey of State Government Finances

PewTrusts.org/Fiscal50
 Share of State Revenue From Federal Funds
50-state share, FY 2000-15
FY 2010:
Percent 35.5%

36%

34% FY 2015:
31.9%

32%

30%

28%

26%

RECESSION
RECESSION
24%
000 0 01 0 02 003 004 005 006 007 008 009 010 0 11 012 013 014 0 15
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
FY U.S.
Source: FYCensus FY BureauFY Survey
FY of State
FY Government
FY FY
FYFinances FY FY FY FY FY FY FY

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Greatest and Smallest Shares of
State Revenue from Federal Funds
FY 2000-15
Percent
50%
LA
42.2%

40%
50 State
31.9%

30%

ND
18.4%
20%

RECESSION RECESSION

10%
FY FY FY FY FY FY FY FY
2001 2003 2005 2007 2009 2011 2013 2015

North Dakota 50-state share Louisiana

PewTrusts.org/Fiscal50
 Revenue

TAX REVENUE This indicator tracks how much state tax

revenue has recovered since the Great
TAX REVENUE Recession. Revenue is adjusted for
VOLATILITY
inflation and updated quarterly.
FEDERAL SHARE
OF STATE REVENUE

Spending

Economy and People

Long-term Costs

Fiscal Policy

PewTrusts.org/Fiscal50
 50 States: Sources of State Government Revenue
FY 2015

0.77%
7.37%

10.84%
Taxes
Federal revenue
49.17% Service charges
Miscellaneous
Local revenue
31.86%

Source: U.S. Census Bureau Survey of State Government Finances

PewTrusts.org/Fiscal50
 Change in Tax Revenue from Each States
Peak Quarter, Adjusted for Inflation
50-state total, Q4 2016
Percent
10

5.9%

-5

-10
-13.0%
RECESSION

-15
6 6 7 7 8 8 9 9 0 0 1 1 2 2 3 3 4 4 5 5 6 6
200 200 200 200 200 200 200 200 201 201 /201 /201 201 201 201 201 201 201 201 201 201 201
1/ 1/ 1/ 1/ 1/ 1/ 1/ 1/ 1/ 1/ 4/1 050-state
/1 4/1/ total
/ / / / / / / /
/1 4/1 0/1 4/1 0/1 4/1 0/1 4/1 0/1
/
4/ 10/ 4/ 10/ 4/ 10/ 4/ 10/ 4/ 10/ 1 1 0 1 1 1 1
PewTrusts.org/Fiscal50
 Change in Tax Revenue from Each States
Peak Quarter, Adjusted for Inflation
Highest and Lowest States, Q4 2016
Percent
150

100

50
22.7%

-50
-91.0%
RECESSION
-100
Axis Title
50-state total Alaska North Dakota

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Real Tax Revenue in 32 States Has Recovered
from Recession
Tax collections in Q4 2016 compared with each states peak, adjusted for inflation

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 Revenue

Spending

CHANGE IN STATE
SPENDING

This indicator shows the share that states

STATE MEDICAID
SPENDING
spend of their own money on Medicaid
health care coverage.

Economy and People

Long-term Costs

Fiscal Policy

PewTrusts.org/Fiscal50
Medicaid Runs on Mix of Federal
and State Dollars
FY 2015

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 State Medicaid Spending as a Share of
Own-Source Revenue, 2000-15
50-state share
Federal Action Reduces State Rx Spending

18%
Stimulus Increased
Federal Share of Funds
17%

16%

15%

14%

13%

12%

11%

RECESSION RECESSION
10%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: CMS, U.S. Census Bureau 50-state share

PewTrusts.org/Fiscal50
 State Medicaid Spending as a Share of
Own-Source Revenue, 2000-15
New York, Utah, and 50-state Total
Federal Action Reduces State Rx Spending

35%
Stimulus Increased
Federal Share of Funds
30%

25%

20%

15%

10%

5%

RECESSION RECESSION
0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

New York 50-state share Utah

PewTrusts.org/Fiscal50
 Change in State Medicaid Spending as a Share of
Own-Source Revenue, 2000-15

Louisiana 12.8

Alaska 10.1

California 8.6

50-state total 4.5

Michigan 1.0

New York -0.1

North Dakota -0.9

-2 0 2 4 6 8 10 12 14
Percentage Points

PewTrusts.org/Fiscal50
 Anne Stauffer
PewTrusts.org/Fiscal-Federalism
@AStaufferDC

Matt McKillop
PewTrusts.org/Fiscal50
@mattmckillop

For additional questions or information, please contact:

Jeremy Ratner (media contact)
jratner@pewtrusts.org
202-540-6507