Most of the remaining 22 percent of state and local direct expenditures in 2019 went toward these programs: Housing and community development expenditures accounted for another 2 percent of state and local direct general expenditures. Looking at criminal justice expenditures individually, police spending was 4 percent of state and local direct general expenditures, corrections spending was 3 percent, and court spending was 2 percent.
Highway and road spending was 6 percent of state and local direct general expenditures in 2019. (Both of these totals include the federal share of Medicaid spending.) 6 The National Association of State Budget Officers (NASBO) estimates that in fiscal year 2021 Medicaid alone accounted for nearly 27 percent of total state spending-up from 20 percent in 2008. Instead, most Medicaid spending is accounted for under the public welfare category with some spending counted as hospital expenditures. However, Census does not separate Medicaid spending into its own category. Medicaid constitutes a large and growing portion of state spending. 4 Spending on health and hospitals was another 10 percent of state and local direct expenditures. See our higher education backgrounder for more information.)Īnother 22 percent of expenditures went toward public welfare in 2019. Public welfare includes spending on means-tested programs, such as Medicaid, Temporary Assistance for Needy Families, and Supplemental Security Income. 3 (Census's data on higher education expenditures include both spending funded by tax revenues and student tuition and fees. In 2019, about one-third of state and local spending went toward combined elementary and secondary education (22 percent) and higher education (9 percent). State and local governments spend most of their resources on education, health, and social service programs. What do state and local governments spend money on?
In 2019, states transferred over $568 billion to local governments. This total includes indirect funds from the federal government, often referred to as pass-through grants. While state governments raised more revenues than local governments in 2019, local governments' direct expenditures were larger than states' because localities often administer programs with funds transferred from state governments. 1 States spent $1.6 trillion directly and local governments-cities, townships, counties, school districts, and special districts-spent $1.8 trillion directly (the numbers do not sum to the combined total because of rounding). State and local governments spent $3.3 trillion on direct general government expenditures in fiscal year 2019.