State Government Expenditures

9 Key excerpts on "State Government Expenditures"

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  eBook - PDF

  China's Public Finance

  Reforms, Challenges, and Options

  • Shuanglin Lin(Author)
  • 2022(Publication Date)
  • Cambridge University Press

    (Publisher)

  6 The Size and Structure of Government Expenditure 6.1 Introduction Government expenditure is a key instrument through which government seeks to achieve its economic and social goals. Adam Smith (1776) argued that the government has duties to erect and maintain a public education system, a transportation system, public infrastructure needed to support commerce, public safety, and national defense, and a justice system that protects as far as possible, every member of society from the injustice or oppression of every other member of it. He mentioned that the govern- ment should provide services that “support the whole of society.” In modern public finance, government is entrusted with more responsibil- ities, such as stabilizing the economy and promoting economic growth. The size and structure of government expenditure are important issues in public finance. The size of government expenditure is usually measured by the ratio of government expenditure in gross domestic product (GDP), and it matters for economic development. By introducing government expenditure into the production function, Barro (1990) showed that the- oretically, if government expenditure is small, an increase in government expenditure will increase the growth rate of the economy; if government expenditure is large, an increase in government expenditure will decrease the growth rate. However, Landau (1983, 1986) found that government spending negatively affects economic growth based on data from more than 100 countries. The structure of government expenditures is repre- sented by the shares of various government expenditures in total govern- ment expenditure, and it also matters. Barro (1991) showed that government consumption expenditures negatively affect economic growth and government investment expenditures are insignificantly related to 163 economic growth. De Long and Summers (1991) demonstrated a positive causal relationship between government equipment investment and GDP growth.

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  Handbook of Governmental Accounting

  • Frederic Bogui(Author)
  • 2008(Publication Date)
  • Routledge

    (Publisher)

  Census Bureau, Government Division. http://www.census.gov/ govs/www/ 136  Handbook of Governmental Accounting 3.2.5 Expenditures of State and Local Governments Expenditures for state and local governments in fiscal year 2003 are reported in Table 3.4 (U.S. Bureau of the Census, Government Division, 2006). Note that in recent years states transfer considerable sums of money through intergovernmental grants to their local governments. The table tallies such spending at the recipient level to make the expenditures “direct.” In addition, the table follows the budget conven-tion and separates direct general expenditures with other direct expenditures, which include government-operated utilities, liquor stores, and insurance trust systems. As shown in Table 3.4, the largest category of state government spending is for social services and income maintenance, which includes public welfare, hos-pitals, health, social insurance, and veteran services. Total budget of this category accounts for about 43% of direct general expenditure. Budgets for these programs have grown rapidly since 1996 when changes of the federal welfare program have placed even greater responsibility on states and provide them a great incentive to administer carefully and move people off assistance roles. Another major expense for state governments is education, including everything from kindergartens to major universities and specialized vocational schools. The bulk of the education category, higher education, amounts to 18% of the total direct general expenditure. Bear in mind that, however, for elementary and secondary education, a great deal of state spending is distributed through grants to local school districts. These amounts are instead shown as direct expenditures at the local level. Other shares of state expen-ditures go to transportation (10%), public safety (7%), government administration (5%), and others (U.S. Bureau of the Census, Government Division, 2006).

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  Public Sector Economics

  Made Simple

  • D. I. Trotman-Dickenson(Author)
  • 2014(Publication Date)
  • Made Simple

    (Publisher)

  The size of the public expenditure will depend on the definition adopted and will differ accordingly. This can give rise to confusion when com-parisons are made over a period of time or internationally. Thus if public expenditure is defined in terms of what the central government and local authorities spend, it will appear smaller, than when expenditure by public corporations is included. The basis on which public expenditure once defined is analysed, does not, however, affect the total figure which represents the absorption of resources by the public sector. The analysis can be undertaken on the following basis: (i) spending authority: central government, local authorities, public corporations. (ii) economic category: current expenditure account (expenditure on goods, services, transfer payments); capital account (investment). (iii) programme: defence, agriculture, housing. The total figure for public expenditure, which ever basis is used, should be the same and represents the absorption of resources by the public sector. Theories of Public Expenditure The doctrine of laissez-faire. Some of the philosophers and classical econ-omists of the eighteenth century subscribed to the doctrine of laissez-faire which was based on the principle of minimum state intervention in the 46 Public Sector Economics workings of the economy. 'Governments are always and without exception the greatest spendthrifts of society' because, Adam Smith argued, 'they spend other people's money'. The supporters of laissez-faire therefore maintaned that people should be left unhindered to pursue their best inter-ests and in the process they would benefit the society. The implication of this was a low level of public expenditure and taxation but the need for some increase in public expenditure was conceded. Social injustice which became apparent during the industrial revolution undermined the belief in the doctrine of state non-intervention.

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  Growth and Variability in State Tax Revenue

  An Anatomy of State Fiscal Crises

  • Randall G. Holcombe, Russell S. Sobel(Authors)
  • 1997(Publication Date)
  • Praeger

    (Publisher)

  State Government Spending 27 Figure 2.2 State Education Expenditures An examination of the evolution of state educational expenditures shows that although education has been becoming increasingly more state funded and less locally funded, education as a share of state budgets has been slowly declining. In percentage terms, educational expenditures have been crowded out by other budgetary areas, although overall growth in state expenditures has meant increasing funding overall. Surely demands for education have put pressure on state governments, but in a manner similar to other government programs where recipients of the expenditure pay less than the total cost of the service. Thus, there is no good argument that the demands for educational expenditures have caused fiscal crises in state governments. WELFARE The latter half of the twentieth century has seen an increasing involvement by government in welfare services, and this involvement has included state governments along with the federal government. Table 2.2 shows that welfare as a percentage of State Government Expenditures has increased substantially since the mid-1960s, after declining through the 1950s. In the 1950s, when State Government Expenditures were lower in total, welfare composed more than 15 percent of state expenditures, but that dropped to between 13 and 14 percent from the mid-1950s through 1966 as State Government Expenditures grew more rapidly in other areas. 28 Growth and Variability in State Tax Revenue From that point, a rapid increase pushed welfare expenditures up to more than 20 percent of state expenditures in 1973, and in 1993 welfare expenditures were more than 26 percent of State Government Expenditures. Because State Government Expenditures had been growing as a percentage of GDP, looking at welfare as a percentage of state expenditures conceals some growth relative to GDP.

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  Defensible Spending for Public Schools

  • Arvid J. Burke(Author)
  • 2019(Publication Date)
  • Columbia University Press

    (Publisher)

  CHAPTER II GOVERNMENTAL SPENDING AND PUBLIC SCHOOL EXPENDITURES ANALYZING GOVERNMENTAL EXPENDITURES Difficulties of analysis. The analysis of total governmental expenditures into allotments for various purposes is necessary for understanding, appraisal, and policy formulation. The amount which can be spent for public schools depends in part upon expenditures for other governmental purposes and vice versa. For this reason local, state, and Federal analyses of governmental spending have been prepared. On the basis of such comparisons public school expenditures and other governmental expenditures have been defended and attacked. In-creases or decreases have been urged, using such evidence. Yet, there are certain limitations of the data which often make such generaliza-tions invalid. The analysis and comparison of expenditures for various govern-mental purposes involves three very serious limitations. In the first place, most governmental activities serve several purposes and all classifications are arbitrary. Secondly, most services are provided by overlapping units of government, or more than one unit participates in their financing. And finally, the compilation of statistics is made difficult and inexact owing to differences in definitions, accounting, records, and reports. There are few governmental activities which promote only one pur-pose. Most of them have multiple objectives, many of which are the same as those of some other governmental service. Public education, hospitals, public health, sanitation, water supply, recreation, and public assistance to the disabled and unemployed are all classified as separate activities, but they all promote health. Education, police protection, fire protection, traffic control, highways, correction, health, sanitation, water supply, and public assistance, all help pro-tect life.

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  The Distributional Effects of Government Spending and Taxation

  • D. Papadimitriou(Author)
  • 2006(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  This is inconsistent with our goal of measuring the household's access or command over products. Further, unlike the social accounting approach, the alternative method would not, by definition, yield the actual total government expenditure when aggregated across recipients. Such a feature is incompatible with our goal of estimating net government expenditures using a consistent methodology. The third type of government expenditure that we consider as part of our measure of well-being are public expenditures ('public consumption'). In deciding to allocate these expenditures to the household sector we attempt to follow, as far as possible, the general criterion that a particular expenditure must be considered as incurred directly on behalf of the households and as expanding their consumption possibilities. The implementation of the approach is carried out in two stages. We begin with a detailed functional classification of government expendit- ures (excluding transfer payments) and exclude certain functions entirely because they fail to satisfy the general criterion. Most such functions form part of general social overhead and their major effect is to keep the ship of state afloat (for example, national defense, general public service, law courts and prisons, and so on). Expenditures under other functional categories also may not meet the general criterion fully because part of such expendit- ures can be considered as being incurred on behalf of the business sector (for example, transportation, energy, natural resources and so on). We estimate the household sector's share in such expenditures using data on the util- ization or consumption of services or goods provided via the expendit- ures. 4 Finally, expenditures under certain functional categories are considered as incurred completely on behalf of the household sector, such as health. In the second stage, the relevant totals for each functional category are distributed among the households.

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  Financial Planning and Management in Public Organizations

  • Alan W. Steiss, Emeka O. Nwagwu, Alan W. Steiss, Emeka O. Nwagwu(Authors)
  • 2001(Publication Date)
  • Routledge

    (Publisher)

  2 Revenues and Expenditures in the Public Sector Historically, the United States has relied on a mixed private-public economic sys­ tem. The national economy is built primarily on the private sector—on the “invis­ ible hand” of supply and demand in the marketplace—with the public economy invoked when the market system fails to satisfy significant social goals. 1 RATIONALE FOR PUBLIC SECTOR ECONOMICS Economic activities in the public sector include (1) the provision of public goods and services (e.g., parks and recreational facilities, primary and secondary edu­ cation, public health facilities and programs), (2) the allocation and distribution of resources (public welfare, differential incidence in the costs and benefits of public programs), (3) correction of market imperfections, including natural mo­ nopolies and externalities, and (4) the provision of collective risk (including public safety, national security and defense). Each of these factors plays a role in defining the fiscal responsibilities of local government. 1.1 Provision of Public Goods and Services Public goods and services are generally those that cannot be effectively supplied by the marketplace because private entities cannot exact a price for each unit of benefit sufficient to cover the costs. The costs of public goods must be subsidized 35 36 Chapter 2 through other sources of revenues. Direct payments are largely voluntary (as with “contributions” in support of some public service), and some consumers are “free riders.” Government assumes production of public goods or services when they are undersupplied or unsupplied, and exacts a price from consumers in the form of taxation. Once supplied, no one can be excluded from accessing the ben­ efits of a public good. 1.2 Allocation of Resources Public sector policies address the allocation of resources—the distribution of wealth, stabilization, and growth.

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  Tax Expenditure Management

  A Critical Assessment

  • Mark Burton, Kerrie Sadiq(Authors)
  • 2013(Publication Date)
  • Cambridge University Press

    (Publisher)

  11 Each is an integral part of the language used by governments around the world. Each is grounded in theoretical or normative underpinnings. Each is attached to a jurisdiction’s moral and political philosophy. Yet no other term has attracted the international debate that has attached to tax expenditures and tax expenditure analysis. We propose that the reason for this is the very reason why tax expenditure management cannot be abandoned. Tax expenditures are simply too significant in terms of their impacts on the international economy, the fiscal position of the states, the constitutional framework of countries, public administration in general and tax administration in particular, and the legitimacy of governments. We justify this claim later. For now, we use the more pragmatic justifica- tion that tax expenditures are part of the tax systems of every developed country around the world. 12 2.2.2 The original intent of the ‘tax expenditure’ concept The ‘tax expenditure’ concept, as it was first identified, was designed to demonstrate the similarity between direct government spending, on the one hand, and spending through the tax system on the other. In essence, the identification of benefits provided through the tax system as ‘tax expenditures’ allows analysts to consider the fiscal significance of those parts of the tax system which do not contribute to the primary purpose of revenue raising. Where a taxpayer is entitled to a tax expenditure that taxpayer has paid the tax due under the normal tax structure and then received a reduction in tax liability due to the tax expenditure entitle- ment. It is essentially a short cut to a direct payment by a government. The reason for this is that government programmes can generally be imple- mented in one of two ways. This can be demonstrated by considering two alternate scenarios: 11 Shaviro, ‘Rethinking Tax Expenditures and Fiscal Language’ (2004), 190. 12 OECD, Tax Expenditures in OECD Countries (2010), 14.

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  Is Fiscal Policy the Answer? A Developing Country Perspective

  • Blanca Moreno-Dodson(Author)
  • 2013(Publication Date)
  • World Bank

    (Publisher)

  In the latter case, the composition of total expenditure also changes, but note that other elements of the government budget constraint also change—that is, the level of total expenditure and grants in the exam- ple just given. Finally, the studies we consider disaggregate total expenditure in dif- ferent ways. Typically, they either decompose public spending by function (education, health, transport and communications, and so forth) or by economic type (such as capital versus current spending), or they classify public spending according to its presumed growth impact whereby depending on the paper productive expenditure mostly includes some combination of education, health, transport, communication, energy, and water supply spending as well as spending on public order and safety and is assumed to affect private sector productivity. In contrast, unproductive expenditure that includes spending outside these areas is assumed to not have any effects on private sector productivity. Summary of the Estimates Tables 2.2, 2.3, and 2.4 summarize the estimates of the growth effects that arise from various public spending reforms that we extracted from the papers summarized in table 2.1. We include only those specifications that include GDP per capita growth as the left-hand- side variable (one exception is Yan and Gong 2009, who use absolute GDP growth), but we exclude those estimates that, for example, refer to changes in per capita growth. We further exclude specifications that are based on cross-section data without a panel dimension.

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