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Receipts and expenditures of state governments and of local governments: revised and updated estimates, 1985-88.

Receipts and Expenditures of State Governments and of Local Governments: Revised and Updated Estimates, 1985-88

REVISED and updated estimates of receipts and expenditures of State governments and of local governments within the framework of the national income and product accounts (NIPA's) are presented for 1986-88 in tables 1 and 2. For these estimates, the State and local government account (NIPA table 3.3) is deconsolidated to provide separate accounts for the two levels of government. Tables 3 and 4 supplement these estimates by providing revised and updated functional breakdowns of expenditures (NIPA table 3.16) for the two levels of government for 1986-87.(1)

The revisions to 1986-87 reflect the annual NIPA revisions released in July 1989. Most of the revisions were small. Large revisions included a downward revision to State corporate profits tax accruals in 1987 and upward revisions to contributions for State social insurance and to State purchases of structures in 1987. The net effects of the revisions on the State and local NIPA surpluses were relatively small, except in 1987, when the State NIPA surplus was revised down by $3 billion.

Fiscal position

Tables 1 and 2 show the NIPA surplus or deficit and its two components: The surplus or deficit for social insurance funds and for other funds. The "other funds" surplus or deficit is a better measure of the fiscal condition of these governments than the NIPA surplus or deficit and is used in the discussion that follows.(2) (See "The State and Local Government Fiscal Position: An Alternative Measure" in the March 1984 SURVEY OF CURRENT BUSINESS for a discussion of the characteristics of the fiscal position measures.)

State governments.--The fiscal position of State governments deteriorated in both 1987 and 1988; the other funds deficit increased $8 1/2 billion in 1987 and $7 billion in 1988, to $16 1/2 billion. Given an upward trend in both receipts and expenditures, the increase in expenditures was larger than the increase in receipts in both years. Receipts were affected by sharp changes in Federal grants-in-aid and in indirect business taxes other than sales and property taxes. Expenditures reflected a large increase in purchases in 1988 that was concentrated in structures.

In 1987, both receipts and expenditures increased less than in 1986. Federal grants-in-aid changed little, following a $7 1/2 billion increase in 1986; the deceleration was widespread among grant programs. Other indirect business tax and nontax accruals declined in 1987, following an increase in 1986. The decline was due to a drop in severance taxes and to large, one-time payments in 1986 resulting from the settlement of court cases involving violations of Federal oil pricing regulations. In contrast, personal income tax receipts accelerated, partly because of taxpayer responses to the Federal Tax Reform Act of 1986. Among expenditures, transfer payments and grants-in-aid to local governments increased less than in 1986.

In 1988, both receipts and expenditures increased more than in 1987. Federal grants-in-aid increased sharply. Corporate profits tax accruals and indirect business tax and non-tax accruals also accelerated, partly offsetting a deceleration in personal tax and nontax receipts. All the major components of expenditures accelerated. The acceleration in purchases was led by structures, especially highway, education, and prison construction.

Local governments.--The fiscal position of local governments also deteriorated in both 1987 and 1988; the other funds measure showed deficits of $3 billion in 1987 and $5 billion in 1988--the first deficits since 1980. As was the case for State receipts, local receipts were affected by sharp changes in Federal grants-in-aid; Federal grants-in-aid declined sharply in 1987.

In 1987, receipts and expenditures increased less than in 1986. Federal grants-in-aid declined $4 1/2 billion, following a slight decline in 1986; the large 1987 decline resulted from the end of general revenue sharing. Property taxes and State grants-in-aid, important revenue sources for local governments, decelerated in 1987. Among expenditures, purchases of structures accounted for most of the deceleration.

In 1988, receipts accelerated while expenditures increased at the same rate as in 1987. Property taxes, State grants-in-aid, and sales taxes accelerated; Federal grants-in-aid increased slightly, following the large decline in 1987. Among expenditures, purchases decelerated slightly; another deceleration in structures and a smaller one in other purchases more than offset an acceleration in employee compensation. Interest received also decelerated, resulting in a smaller offset to expenditures. [Tabular Data 1 to 4 Omitted]

(1)Estimates for earlier years appeared in "Receipts and Expenditures of State Governments and of Local Governments: Revised and Updated Estimates, 1959-84," SURVEY OF CURRENTBUSINESS 66 (May 1986): 22-33; in "Receipts and Expenditures of State Governments and of Local Governments: Revised and Updated Estimates, 1983-86," SURVEY 67 (November 1987): 29-35; and in "Receipts and Expenditures of State Governments and of Local Governments: Revised and Updated Estimates, 1984-87," SURVEY 68 (September 1988): 23-25.

The functional breakdown is presented only through 1987 because the source data for 1988 are not yet available. (2)Receipts and expenditures excluding social insurance funds are shown as the addenda to tables 1 and 2. Social insurance funds are chiefly retirement systems administered by States and localities. Other funds receipts exclude contributions for social insurance funds. Other funds expenditures exclude social insurance funds' administrative expenditures, transfer payments, and interest and dividends received.
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Author:Peters, Donald L.
Publication:Survey of Current Business
Date:Oct 1, 1989
Words:872
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