US state and local budgets -- anemic growth in spending; spending funded by debt

23 Jun 2013 by Jim Fickett.

Growth in total, inflation-adjusted spending by US state and local governments, from Q1 2012 to Q1 2013, was a negligible 0.1%. And the spending that did occur was possible only because state and local governments added about $150 billion to their total debt over the course of the year.

More generally, looking at longer-term data for state and local government income and spending, the two main things that stand out are that (1) income and spending are approximately where they were a decade ago, and (2) starting in Q4 of 2007, spending has been greater than income every single quarter.

While state and local governments are doing better than they were immediately following the crisis, one could certainly not describe budgets as healthy.

(For more detailed commentary, a year old but still relevant, see US state and local finances -- getting by for now; big challenges in healthcare and pensions long-term. For background, sources, and links to other commentary, see the Reference pages NIPA state and local budgets and Fiscal Survey of States.)