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State differences in the federal balance of payments.

INTRODUCTION

In 1999, the federal government spent $1.7 trillion dollars in the domestic economy. In the same year, $1.8 trillion in federal revenues were raised by taxes levied on state taxpayers. Not surprisingly, the federal spending and taxes were not equally distributed throughout the states. Some states realized a positive balance of payments where the federal spending exceeded federal taxes paid, while other states had a negative balance of payments. In fact, as we will see in this report, the federal system largely redistributes resources from high-income states to low-income states. That is not to say that all federal programs have as their primary goal the redistribution of state income. For instance, such programs as defense spending, Social Security spending and disability payments are more a function of strategic necessity, the distribution of political power, and demographic realities. We will find, however, that the federal tax system, especially the individual income tax, is a major force leading to the re distribution of resources among the states.

The purpose of this paper is to examine the actual patterns of the state balance of payments between the federal government. Both the expenditure and revenue side of the federal budget will be examined in terms of its impact on the states. Reasons for the wide differences in state balance of payments will be discussed and the ultimate impact of state differences in the balance of payment will be presented.

THE DATA

Most of the data used in this paper was compiled in a report entitled The Federal Budget and the States, Fiscal Year 1999 (1) prepared each year by the Taubman Center for State and Local Government, John F. Kennedy School of Government at Harvard University. The state balance of payments is defined as the difference between federal spending received and federal taxes paid by state. A positive balance indicates that the state receives more federal spending than taxes paid and a negative balance indicates that the state paid more in Federal taxes than federal spending received. A positive balance of payments would add to the economic activity of the state and a negative balance would reduce it. To better take into account the real impact of these fiscal flows the data on spending and taxes have been adjusted by a state cost of living index developed by Leonard and Friar. (2)

Federal Expenditures

Federal expenditures by state are divided into the five categories. (3) They are:

1. Defense (including veterans benefits),

2. Nondefense (discretionary),

3. Social Security,

4. Medicare,

5. Assistance programs.

Defense spending includes all spending by the Department of Defense and Department of Energy on defense-related activities and military retirement, disability payments, and other veterans' benefits. It accounted for about 17 percent of total federal spending in 1999. Non-defense discretionary spending includes thousands of federal programs, such as agriculture, education, housing, national parks, and transportation. (4) It accounts for the 31 percent of total spending and includes all other categories of federal spending other than defense, mandatory spending (Social Security and Medicare, etc.). Social Security spending accounts for 27 percent of total federal spending while, Medicare spending accounts for 14 percent. Assistance programs, which account for 11 percent of federal spending, include a broad range of means-tested assistance programs such as Medicaid, AFDC, agricultural stabilization programs, food stamps, housing assistance, and unemployment insurance. (5) Because of our interest in the balance o f payments from the South Dakota point of view, federal spending on agricultural programs will also be examined as a separate item. Agricultural programs are divided into commodity loans, price supports and other agricultural programs.

Federal Taxes

Federal taxes by state include individual and corporate income taxes, social insurance taxes (Social Security and Medicare), excise taxes (fuel, cigarettes, and alcohol), estate and gift taxes, and custom duties. (6)

BALANCE OF PAYMENTS

In 1999, the per capita balance of payments ranged from a high of $3,944 in New Mexico (1St) to a low of $2,840 in Connecticut (50th). This data is presented as Column (1) in Table 1 on the following page. South Dakota's per capita balance of payments was $2,327 which ranked 8th in the nation. There was a wide geographic dispersion of states with high positive balances. New Mexico ranked 1st Montana ranked 2nd, and Virginia ranked 3rd. States with high negative balance of payments tended to be northeastern states but not exclusively. Connecticut ranked 50th, New Jersey ranked 49th, and New Hampshire ranked 48th, Of the northeastern states, only Maine (16th) and Rhode Island (23rd) ranked less than 40th. However, some surprises were the low rankings of Illinois (47th), Nevada (46th), Minnesota (45th), Michigan (44th), and Wisconsin (40th). With the exception of Nevada these state are located in the Great Lakes region. The low rankings for these state reflect relatively low spending and above-average taxes.

Using the 1997-99 (3-year average) data did not substantially change the rankings. New Mexico still ranked 1st and Connecticut ranked 50th. South Dakota's rank changed from 8th to 10th Once again, most northeastern states had low rankings. This data is shown in Column (2) of Table 1. Viewing the data for the 1983-99 time period the basic trends remain the same. New Mexico ranked 1st with Connecticut 49th and New Jersey South Dakota ranked 7th for this longer time period. This data is shown as Column (3) in Table 1.

FEDERAL GOVERNMENT SPENDING BY STATE

Since the state balance of payments reflects the difference between federal spending and taxes by state, to fully understand its determinants we must examine separately spending and tax data by state. This data is presented in Table 2 on page 6. The high-ranking states in terms of federal spending, not surprisingly were the states of Virginia (1St) and Maryland (2nd). Both of these states are adjacent to Washington, D.C. and home to many federal offices and agencies. New Mexico ranked 3rd which is due to its high ranking in defense spending (2nd). North Dakota ranked 4th primarily due its 1st place ranking in agricultural assistance spending. South Dakota ranked 7th due to its 3rd place ranking in agricultural assistance programs and 15th place ranking in Social Security payments per capita. Table 4 (page 9) provides further breakdown of agricultural assistance programs into price support and other agricultural programs indicates that South Dakota ranked 1st in agricultural price support program spending per capita. States with low federal spending per capita included New Hampshire (50th), Utah (49th), and Nevada (48th). Both Utah and Nevada are states with a relatively young population which accounts for the low Social Security spending (49th and 42nd respectively) and Medicare spending (49th and 42nd respectively). New Hampshire has very low defense spending.(38th) , non-defense discretionary spending (47th), Social Security spending (41st), and Medicare spending (44th), and assistance program spending (46th).

Examination of federal spending by category provides some interesting results. As shown in Table 3 on the following page, Virginia had the highest defense spending per capita at $3,685 per capita. Other states with high defense spending per capita were New Mexico ($2,655), Hawaii ($2,391), and Alaska ($2,194). South Dakota was below average with $638 per capita compared to the all state average of $993 per capita. In terms of non-defense discretionary spending Montana ($3,939) ranked first followed by Alaska ($3,786), Maryland ($3,768), North Dakota ($3,745), and South Dakota ($3,720). Combining Social Security and Medicare we find, surprisingly, that West Virginia ($3,300) ranks first followed by Florida ($3,225), Pennsylvania ($2,834) and Arkansas ($2,802). South Dakota ranked slightly above average with $2,360 per capita. Alaska ranked fast with $891 per capita. New York ranked first in assistance programs at $985 per capita followed by West Virginia with $967 per capita. South Dakota ranked below average with $558 per capita.

Support for Agriculture

Because of the importance of agriculture to South Dakota, a special analysis of federal agricultural spending by state is presented. Per capita agricultural loans and assistance by state are reported in Table 4. Since the data is so aggregated little information is provided about specific agricultural assistance programs. (7) However, this data does provide information about the relative importance of agricultural assistance on a state-by-state basis. For instance, agricultural assistance programs account for approximately 25 percent of total Federal spending in Iowa and North Dakota. In South Dakota and Nebraska, agricultural programs accounted for 19 percent of total federal spending. Montana and Minnesota also had high percentages of agricultural assistance.

South Dakota had the highest per capita price support level at $457 per capita. Other high price support states were Iowa ($456), Nebraska ($419), and North Dakota ($409). Overall, North Dakota had the highest per capita agricultural support at $1,881 per capita. Iowa was second at $1,499. South Dakota was third at $1,397 per capita, Montana was fourth at $1,191 per capita and Nebraska was fifth at $1,092 per capita.

FEDERAL TAXES BY STATE

High-ranking states in terms of federal taxes per capita were Connecticut (1st), New Jersey (2nd), and Maryland (3rd) (See Table 2.). The high tax burdens for these states primarily reflect their high-income levels. As shown in Table 5, Connecticut ranks 1st in real per capita income and Maryland ranks 2nd, while New Jersey ranks 4th. Minnesota ranks 3rd in real per capita income and ranked 7th in taxes. States that ranked lowest in federal taxes per capita were Mississippi (50th), West Virginia (49th), and Hawaii (48th) (See Table 2.). The low ranking in terms of federal taxes per capita reflects the low incomes of each of these states (49th, 47th, and 48th respectively). New Mexico ranks 50th in real per capita income and 47th in federal taxes per capita. South Dakota ranks 32nd in federal taxes per capita which is pretty much in line with its real per capita income ranking of 29th.

DETERMINANTS OF FEDERAL SPENDING AND TAXES BY STATE

To the extent that redistribution is an important element of federal fiscal policy one would expect that income is one of the most important explanations of differences in federal spending per capita and taxes per capita by state. Since the individual income tax is strongly related to income, it would be expected that high-income states would have higher per capita federal tax payments. Federal government spending programs would also be expected to be related to income but not as strongly as tax payments. That is, such programs as defense expenditures, Social Security and Medicare payment reflect a host of variables such as geographical location and proportion of residents who are in the senior age category, rather than income. Nevertheless, since the balance of payments is the difference between federal spending and taxes we would further expect to find that the balance of payments is negatively related to income. These expectations are confirmed in Figure 1 below.

As shown in Figure 1, the state balance of payments is negatively correlated (-0.71) with per capita personal income (adjusted for cost-of-living). Spending is only loosely related to income with a correlation of -0.26. Taxes were closely related to income with a correlation of 0.96. As expected, Social Security and Medicare payments were positively correlated (0.76) with the percent of the population 65 and older. Closer examination of the relationship between income and balance of payments and federal spending and taxes is presented in Table 6 on the following page. AS shown in Table 6, while income is fairly highly correlated with balance of payment and federal taxes it is only weakly correlated with the major categories of spending. That is not to say that spending at more disaggregated levels is not highly correlated with income but at the highly aggregated levels it is not. This analysis indicates that the Federal tax system is the main source of redistribution through the federal fiscal system.

IMPACT OF FEDERAL FISCAL SYSTEM ON STATE PER CAPITA INCOMES

So how do differences in the state of balance payments with the federal government affect state levels of economic activity? One way of roughly estimating this impact is to adjust state per capita disposable income by the balance of payments measure to see how the state would rank without the balance of payments variable. States with a positive balance of payments such as South Dakota would be worse off without the net federal inflows and states with a negative balance of payments such as Connecticut would be better off. Table 6 presents the data. Column (1) presents the per capita personal income adjusted for cost-of-living. In this case, South Dakota per capita personal income ranks 29th. Connecticut ranks 1st while New Mexico ranks 50th. Column (2) presents the data in Column (1) adjusted for taxes. In this case South Dakota ranks 22nd reflecting its low state tax burden. Connecticut stiff ranks 1st and New Mexico still ranks 50th. Column (3) adjusts column (2) for the balance of payments by subtracting th e balance of payments for each state from the disposable income variable. In this case, states that have a negative balance of payment should move higher in the income ranking (improvement), while those states with a positive balance of payments should move lower in the income ranking.

It should be mentioned that the impact of federal spending and tax programs on state per capita income levels using this method is only an approximation. Not all dollar expenditures or taxes by the federal government cause state income to change by the same dollar amount. While changes in individual taxes or Social Security payments may change personal income the same magnitude, the same cannot be said for many other types of expenditures or loans. Therefore, interpretation of the results of this type of analysis should be made with great care.

If the net federal inflows were not present, South Dakota would now rank 31st rather than 22nd in per capita disposable income. The largest change in rank was Virginia, which moves from 4th to 29th. North Dakota would move from 32nd to 42nd and Alaska would move from 33rd to 41st. Other states with large changes in rank were Maryland (20th to 9th), Nebraska (11th to 18th, and Missouri (20th to 26th). The states that would show a large improvement in ranking are Nevada (13th to 5th), New Hampshire (14th to 6th), Oregon (31st to 24th), and Vermont (40th to 33rd).

SUMMARY AND CONCLUSIONS

This paper has examined the flow of federal spending and taxes between the states. The state balance of payments is the difference between Federal spending received and federal taxes paid by state. States with a positive balance of payments received more federal spending than taxes paid while states with a negative balance paid more federal taxes then they received in spending. In 1999, New Mexico led the nation in a positive balance of payments at $3,944 per capita. Connecticut (50th) had the largest negative balance of payment with -$2,840 per capita. South Dakota ranked 8th with a positive balance of payments of $2,327 per capita. States with the largest positive balance of payments were a disparate group including New Mexico, Montana, and Virginia. States with the largest negative balance of payments tended to be the northeastern states.

The state balance of payments tends to redistribute income from high-income states to low-income states. However, the major force leading to this redistribution was not due to differences in federal spending, which are, only weakly related to income, but rather due to differences in federal taxes, which are strongly related to income. South Dakota ranked first in agricultural price supports and third in overall agricultural, assistance programs per capita.

ENDNOTES

(1.) Herman B. Leonard and Jay H. Walder, The Federal Budget and the States, Fiscal Year 1999, Taubman Center for State and Local Government, Harvard University, December 2000.

(2.) Herman B. Leonard and Monica Friar, Variations in Cost of Living Across States, Taubman Center Working Paper Series, Taubman Center for State and Local Government, Harvard University, 1998.

(3.) Federal government expenditures not included in this state balance of payments analysis include net interest on the debt, international payments and foreign aid, and expenditures for such agencies and the Central Intelligence Agency and National Security Council.

(4.) Leonard and Walder, p. 28.

(5.) Ibid.

(6.) State data on taxes is based on data prepared by the Tax Foundation.

(7.) For more detailed information on agricultural assistance by state see the Environmental Working Group's Website: www.ewg.org.

About the author:

Ralph J. Brown, Ph.D., is Professor of Economics at the School of Business, University of South Dakota.

[Figure 1 omitted]
TABLE 1: BALANCE OF PAYMENTS BY STATE DATA

 (1) (2) (3)
 BOP 99 BOP 97-99 BOP 83-99 Cum
STATE Per Capita Rank Per Capita Rank Per Capita Rank

AL $2,091 9 $1,839 11 $25,481 9
AK $2,777 6 $2,301 7 $19,276 12
AZ $904 20 $586 22 $10,316 22
AR $1,633 13 $1,462 15 $19,259 14
CA -$685 39 -$546 39 -$3,830 36
CO -$620 38 -$499 38 $1,144 30
CT -$2,840 50 -$2,497 50 -$27,753 49
DE -$1,025 43 -$1,027 43 -$21,371 47
FL $47 31 $170 26 $2,820 27
GA -$29 32 -$66 32 $889 31
HI $1,982 10 $1,903 8 $21,812 11
ID $829 21 $755 20 $13,077 19
IL -$1,669 47 -$1,620 48 -$26,361 48
IN -$399 35 -$425 36 -$8,655 40
IA $750 22 $472 23 $2,887 26
KS $373 25 $127 28 $3,454 25
KY $1,595 14 $1,722 12 $17,336 15
LA $1,576 15 $1,460 16 $13,967 17
ME $1,324 16 $1,470 14 $19,270 13
MD $1,770 12 $1,879 9 $24,498 10
MA -$895 42 -$730 40 -$1,557 34
MI -$1,042 44 -$1,210 44 -$19,486 45
MN -$1,294 45 -$1,384 45 -$15,206 44
MS $2,684 7 $2,406 6 $38,493 3
MO $1,187 18 $1,179 17 $25,859 8
MT $3,109 2 $2,478 5 $27,423 6
NE $320 27 $102 31 $4,001 24
NV -$1,583 46 -$1,586 47 -$11,752 41
NH -$1,787 48 -$1,579 46 -$19,657 46
NJ -$2,342 49 -$2,099 49 -$34,850 50
NM $3,944 1 $3,702 1 $57,403 1
NY -$890 41 -$837 41 -$13,865 43
NC $146 30 $115 29 -$1,725 35
ND $3,043 4 $2,781 3 $36,915 4
OH -$344 34 -$378 35 -$6,972 39
OK $1,866 11 $1,707 13 $13,432 18
OR -$483 36 -$434 37 -$5,106 37
PA $256 28 $171 25 -$1,192 32
RI $528 23 $633 21 $4,654 23
SC $1,265 17 $1,127 18 $17,310 16
SD $2,327 8 $1,878 10 $26,028 7
TN $961 19 $893 19 $12,145 21
TX -$189 33 $159 33 -$5,543 38
UT $230 29 $111 30 $12,227 20
VT $343 26 $140 27 -$1,379 33
VA $3,069 3 $2,874 2 $40,098 2
WA -$533 37 -$327 34 $1,597 29
WV $2,808 5 $2,565 4 $27,696 5
WI -$887 40 -$906 42 -$13,735 42
WY $386 24 $415 24 $2,517 28

SOURCE: The Federal Budget and the States, Fiscal Year 1999, Taubman
Center for State and Local Government, John F. Kennedy School of
Government at Harvard University.
TABLE 2: DATA ON BALANCE OF PAYMENTS, SPENDING AND TAXES

 (1) (2) (3)
 BOP 99 Fed. Spending Fed. Taxes
STATE Per Capita Rank Per Capita Rank Per Capita Rank

AL $2,091 9 $6,610 9 $4,519 38
AK $2,777 6 $7,649 5 $4,872 33
AZ $904 20 $5,617 24 $4,713 35
AR $1,633 13 $5,871 19 $4,238 44
CA -$685 39 $4,909 38 $5,593 17
CO -$620 38 $5,303 32 $5,923 10
CT -$2,840 50 $5,224 34 $8,064 1
DE -$1,025 43 $4,851 39 $5,876 11
FL $47 31 $6,121 14 $6,074 6
GA -$29 32 $5,493 28 $5,523 19
HI $1,982 10 $5,937 18 $3,955 48
ID $829 21 $5,178 35 $4,349 41
IL -$1,669 47 $4,592 45 $6,260 4
IN -$399 35 $4,686 43 $5,085 29
IA $750 22 $5,820 21 $5,071 30
KS $373 25 $5,832 20 $5,459 20
KY -$1,595 14 $6,111 15 $4,516 39
LA $1,576 15 $6,008 17 $4,432 40
ME $1,324 16 $5,539 25 $4,215 45
MD $1,770 12 $8,334 2 $6,564 3
MA -$895 42 $5,361 30 $6,256 5
MI -$1,042 44 $4,682 44 $5,724 16
MN -$1,294 45 $4,775 41 $6,069 7
MS $2,684 7 $6,589 10 $3,905 50
MO $1,187 18 $6,544 11 $5,358 22
MT $3,109 2 $7,389 6 $4,279 43
NE $320 27 $5,624 23 $5,304 23
NV -$1,583 46 $4,355 48 $5,938 9
NH -$1,787 48 $4,067 50 $5,854 13
NJ -$2,342 49 $4,362 47 $6,705 2
NM $3,944 1 $7,992 3 $4,048 47
NY -$890 41 $4,944 37 $5,834 14
NC $146 30 $5,287 33 $5,141 27
ND $3,043 4 $7,690 4 $4,647 36
OH -$344 34 $4,827 40 $5,171 26
OK $1,866 11 $6,198 13 $4,332 42
OR -$483 36 $4,752 42 $5,235 25
PA $256 28 $5,531 26 $5,275 24
RI $528 23 $5,504 27 $4,976 31
SC $1,265 17 $5,810 22 $4,546 37
SD $2,327 8 $7,276 7 $4,949 32
TN $961 19 $6,071 16 $5,110 28
TX -$189 33 $5,377 29 $5,566 18
UT $230 29 $4,324 49 $4,094 46
VT $343 26 $5,061 36 $4,719 34
VA $3,069 3 $8,825 1 $5,756 15
WA -$533 37 $5,339 31 $5,872 12
WV $2,808 5 $6,724 8 $3,916 49
WI -$887 40 $4,521 46 $5,409 21
WY $386 24 $6,338 12 $5,951 8

SOURCE: The Federal Budget and the States, Fiscal Year 1999, Taubman
Center for State and Local Government, John F. Kennedy School of
Government and Harvard University.
TABLE 3: PER CAPITA FEDERAL SPENDING BY CATEGORY

 (1) (2) (3) (4) (5)
 FEDERAL DEFENSE NON-DEFENSE SOCIAL
STATE SPENDING INC. VET BEN DISCRETIONARY SECURITY MEDICARE

AL $6,610 $1,320 $1,964 $1,802 $917
AK $7,649 $2,194 $3,786 $657 $234
AZ $5,617 $1,361 $1,689 $1,474 $657
AR $5,871 $595 $1,772 $1,932 $870
CA $4,909 $943 $1,439 $1,195 $708
CO $5,303 $1,408 $1,884 $1,143 $513
CT $5,224 $1,046 $1,156 $1,543 $817
DE $4,851 $615 $1,458 $1,578 $685
FL $6,121 $1,058 $1,392 $2,025 $1,200
GA $5,493 $1,322 $1,626 $1,360 $666
HI $5,937 $2,391 $1,441 $1,107 $456
ID $5,178 $1,166 $1,616 $1,412 $505
IL $4,592 $354 $1,442 $1,501 $755
IN $4,686 $493 $1,318 $1,663 $719
IA $5,820 $325 $2,409 $1,837 $720
KS $5,832 $898 $2,083 $1,646 $758
KY $6,111 $970 $1,702 $1,858 $800
LA $6,008 $788 $1,815 $1,597 $1,001
ME $5,539 $1,110 $1,399 $1,589 $648
MD $8,334 $1,895 $3,768 $1,322 $762
MA $5,361 $836 $1,528 $1,415 $891
MI $4,682 $265 $1,197 $1,742 $824
MN $4,775 $432 $1,713 $1,455 $595
MS $6,589 $1,285 $1,877 $1,776 $863
MO $6,544 $1,293 $1,966 $1,776 $881
MT $7,389 $596 $3,939 $1,624 $630
NE $5,624 $657 $2,177 $1,614 $629
NV $4,355 $944 $1,172 $1,349 $561
NH $4,067 $576 $1,189 $1,358 $528
NJ $4,362 $504 $1,097 $1,452 $765
NM $7,992 $2,655 $2,678 $1,387 $530
NY $4,944 $305 $1,370 $1,473 $812
NC $5,287 $898 $1,415 $1,666 $677
ND $7,690 $1,005 $3,745 $1,624 $720
OH $4,827 $514 $1,275 $1,660 $786
OK $6,198 $1,255 $1,864 $1,685 $839
OR $4,752 $354 $1,564 $1,571 $601
PA $5,531 $563 $1,450 $1,812 $1,022
RI $5,504 $824 $1,409 $1,624 $828
SC $5,810 $1,438 $1,346 $1,682 $665
SD $7,276 $638 $3,720 $1,678 $682
TN $6,071 $686 $2,029 $1,722 $862
TX $5,377 $1,037 $1,801 $1,278 $686
UT $4,324 $725 $1,854 $989 $373
VT $5,061 $587 $1,690 $1,491 $574
VA $8,825 $3,685 $2,851 $1,382 $588
WA $5,339 $1,377 $1,490 $1,325 $527
WV $6,724 $419 $2,036 $2,332 $968
WI $4,521 $284 $1,333 $1,688 $645
WY 46,338 $769 $3,062 $1,472 $574

 (6)
 ASSISTANCE
STATE PROGRAMS

AL $607
AK $779
AZ $435
AR $703
CA $624
CO $355
CT $661
DE $514
FL $445
GA $520
HI $541
ID $479
IL $540
IN $492
IA $529
KS $447
KY $781
LA $807
ME $794
MD $587
MA $691
MI $655
MN $581
MS $788
MO $629
MT $599
NE $547
NV $330
NH $415
NJ $543
NM $742
NY $985
NC $631
ND $596
OH $592
OK $554
OR $662
PA $684
RI $819
SC $679
SD $558
TN $771
TX $574
UT $385
VT $719
VA $320
WA $619
WV $967
WI $571
WY $461

SOURCE: The Federal Budget and the States, Fiscal Year 1999, Taubman
Center for State and Local Government, John F. Kennedy School of
Government at Harvard University.
TABLE 4: PER CAPITA AGRICULTURAL LOANS AND ASSISTANCE

 (1) (2) (3) (4)
 AG COMMODITY
 LOANS AGRICULTURE AGRICULTURAL AGRICULTURE
STATE PRICE SUPPORTS OTHER LOANS ASSISTANCE TOTAL

AL $12 $12 $45 $69
AK $0 $13 $11 $24
AZ $0 $7 $23 $30
AR $139 $56 $260 $455
CA $11 $5 $21 $37
CO $11 $7 $89 $107
CT $0 $3 $17 $20
DE $3 $12 $31 $45
FL $3 $5 $7 $16
GA $35 $14 $49 $98
HI $0 $14 $4 $18
ID $19 $35 $208 $262
IL $52 $6 $118 $175
IN $55 $13 $108 $176
IA $456 $29 $1,014 $1,499
KS $51 $23 $622 $695
KY $43 $29 $62 $134
LA $24 $38 $97 $159
ME $0 $29 $23 $52
MD $2 $5 $14 $21
MA $0 $4 $2 $6
MI $16 $9 $37 $63
MN $202 $16 $382 $600
MS $196 $43 $144 $383
MO $35 $16 $120 $172
MT $67 $51 $1,073 $1,191
NE $419 $41 $631 $1,092
NV $0 $5 $5 $10
NH $0 $8 $8 $16
NJ $0 $2 $2 $4
NM $2 $16 $57 $74
NY $2 $4 $6 $12
NC $24 $20 $43 $87
ND $409 $100 $1,373 $1,881
OH $17 $7 $47 $70
OK $9 $32 $161 $202
0R $2 $16 $38 $56
PA $1 $8 $9 $18
RI $0 $5 $1 $6
SC $2 $18 $37 $57
SD $457 $65 $875 $1,397
TN $22 $17 $41 $81
TX $26 $14 $99 $140
UT $80 $10 $17 $108
VT $0 $22 $22 $44
VA $10 $10 $17 $37
WA $4 $10 $59 $73
WV $1 $24 $11 $36
WI $30 $15 $93 $137
WY $5 $24 $91 $119

 (5)

 PERCENT OF
STATE TOTAL SPENDING

AL 1.0%
AK 0.3%
AZ 0.5%
AR 7.8%
CA 0.7%
CO 2.0%
CT 0.4%
DE 0.9%
FL 0.3%
GA 1.8%
HI 0.3%
ID 5.1%
IL 3.8%
IN 3.8%
IA 25.8
KS 11.9%
KY 2.2%
LA 2.6%
ME 0.9%
MD 0.3%
MA 0.1%
MI 1.3%
MN 12.6%
MS 5.8%
MO 2.6%
MT 16.1%
NE 19.4%
NV 0.2%
NH 0.4%
NJ 0.1%
NM 0.9%
NY 0.2%
NC 1.6%
ND 24.5%
OH 1.5%
OK 3.3%
0R 1.2%
PA 0.3%
RI 0.1%
SC 1.0%
SD 19.2%
TN 1.3%
TX 2.6%
UT 2.5%
VT 0.9%
VA 0.4%
WA 1.4%
WV 0.5%
WI 3.0%
WY 1.9%

SOURCE: U.S. Census Bureau, consolidated Federal Funds Report for Fiscal
Year 1999, U.S. Government Printing Office, Washington, D.C.
TABLE 5: CORRELATIONS BETWEEN INCOME AND KEY VARIABLES

VARIABLE INCOME

BOP -0.71
FEDERAL SPENDING -0.26
 DEFENSE SPENDING -0.10
 NONDEF. DISCRETIONARY -0.20
 SOCIAL SEC + MEDICARE -0.07
 ASSISTANCE PROGRAMS -0.31
FEDERAL TAXES 0.96
TABLE 6: PER CAPITA PERSONAL INCOME (COLA) ADJUSTED FOR BOP

 (1) (2)
 Personal Income Disp. Personal Income
 Per Capita Per Capita
State COLA Adjusted RANK COLA Adjusted RANK

AL $24,754 39 $21,536 36
AK $25,606 33 $21,972 33
AZ $25,194 37 $20,380 43
AR $24,300 43 $20,489 41
CA $29,217 16 $24,299 18
CO $31,322 5 $25,208 8
CT $34,902 1 $27,746 1
DE $29,783 11 $24,322 17
FL $29,718 12 $24,364 15
GA $29,673 13 $24,755 10
HI $22,870 48 $19,070 49
ID $24,650 41 $20,423 42
IL $31,195 7 $25,574 5
IN $27,083 31 $22,966 29
IA $27,540 26 $23,232 28
KS $28,534 20 $24,330 16
KY $25,254 36 $21,376 38
LA $24,553 42 $21,293 39
ME $23,793 44 $19,902 46
MD $33,018 2 $27,417 2
MA $31,292 6 $24,703 12
MI $29,313 14 $24,987 9
MN $32,232 3 $26,905 3
MS $22,689 49 $19,955 45
MO $28,201 23 $24,032 20
MT $23,381 45 $19,769 47
NE $29,237 15 $24,706 11
NV $30,110 9 $24,671 13
NH $28,476 22 $24,411 14
NJ $31,750 4 $25,352 7
NM $22,591 50 $18,831 50
NY $29,997 10 $23,745 23
NC $28,490 21 $23,623 25
ND $25,269 35 $22,090 32
OH $27,627 24 $23,309 26
OK $24,730 40 $21,410 37
OR $27,423 27 $22,437 31
PA $27,393 28 $22,890 30
RI $26,853 32 $21,676 34
SC $25,463 34 $21,598 35
SD $27,282 29 $23,824 22
TN $27,591 25 $23,701 24
TX $29,176 17 $25,411 6
UT $23,284 46 $19,191 48
VT $24,984 38 $21,263 40
VA $30,917 8 $25,662 4
WA $29,100 18 $24,211 19
WV $23,011 47 $20,172 44
WI $28,790 1 $23,890 21
WY $27,102 30 $23,239 27
All-state avg $27,534 $23,046

 (3)
 Disp. Personal Income
 Per Capita - BOP Change
State COLA Adjusted RANK In Rank

AL $19,445 40 4
AK $19,195 41 8
AZ $19,476 39 -4
AR $18,856 44 3
CA $24,984 13 -5
CO $25,828 8 0
CT $30,586 1 0
DE $25,347 12 -5
FL $24,317 19 4
GA $24,784 14 4
HI $17,088 48 -1
ID $19,594 37 -5
IL $27,243 4 -1
IN $23,365 23 -6
IA $22,482 30 2
KS $23,957 20 4
KY $19,781 35 -3
LA $19,717 36 -3
ME $18,578 45 -1
MD $25,647 9 7
MA $25,598 11 -1
MI $26,029 7 -2
MN $28,199 2 -1
MS $17,271 47 2
MO $22,845 26 6
MT $16,660 49 2
NE $24,386 18 7
NV $26,254 5 -8
NH $26,198 6 -8
NJ $27,694 3 -4
NM $14,887 50 0
NY $24,635 17 -6
NC $23,477 22 -3
ND $19,047 42 10
OH $23,653 21 -5
OK $19,544 38 1
OR $22,920 24 -7
PA $22,634 28 -2
RI $21,148 32 -2
SC $20,333 34 -1
SD $21,497 31 9
TN $22,740 27 3
TX $25,600 10 4
UT $18,961 43 -5
VT $20,920 33 -7
VA $22,593 29 25
WA $24,744 16 -3
WV $17,364 46 2
WI $24,777 15 -6
WY $22,853 25 -2
All-state avg $22,515

SOURCE: The Federal Budget and the States, Fiscal Year 1999, Taubman
Center for State and Local Government, John F. 'Kennedy School of
Government at Harvard University.


RELATED ARTICLE: STATE DATA CENTER NEWS

AN AGING POPULATION

Global Population Aging

According to a U.S. Census Bureau report, "the world's population age 65 and older is growing by an unprecedented 800,000 people a month." The report on An Aging World: 2001, prepared by Kevin Kinsella and Victoria A. Velkoff, predicts that global aging will continue into the 21st century and will affect both developed and developing nations.

In 2000, nearly 13 percent of the population in the United States was 65 years and over. Among the countries included in the report, Italy, Greece, Japan and Sweden reported the highest rates of those 65 years and over. As shown in the following table, Europe is considered the "oldest" world region, and Africa, the youngest."

The focus of the study "is to look at the numbers, proportions, and growth rates (past, current, and projected) of the elderly population and to summarize socioeconomic statistics for both developed and developing nations." Some of the reasons for the increase of an older population are lowered fertility, worldwide improvements in health services (and consequently reduced death rates), educational status and economic development. After 2010, those 65 and older are expected to peak, "primarily the result of high fertility after World War II." The "baby boom" generation includes those born from 1946 to 1964.

South Dakota Population Aging

Since 1900, South Dakota's median age has risen from 20.8 years of age in 1900 to 35.6 years of age in 2000 as shown in the accompanying table. In 2000, the median age in South Dakota was only slightly above the United States median age of 35.3 years.

The U.S. Census Bureau has also produced population projections for states for selected age groups. These projections incorporate corrections, adjustments and modifications to the 1990 Census. Further information on the projections by states are available at www.census.gov/population/www/projections/popproj.html.

In 2000, 14.3 percent of the population were age 65 and over. Projections of the percent of South Dakotans who will be 65 years and over through 2025 are as follows:

As these numbers grow throughout South Dakota and the world, numerous groups will be striving to meet the needs of the elderly.
Percent Elderly by Age: 2000-2030

Region Year 65+ 75+ 80+

Europe 2000 15.5 6.6 3.3
 2015 18.7 8.8 5.2
 2030 24.3 11.8 7.1

North America 2000 12.6 6.0 3.3
 2015 14.9 6.4 3.9
 2030 20.3 9.4 5.4

Oceania 2000 10.2 4.4 2.3
 2015 12.4 5.2 3.1
 2030 16.3 7.5 4.4

Asia 2000 6.0 1.9 0.8
 2015 7.8 2.8 1.4
 2030 12.0 4.6 2.2

Latin America/ 2000 5.5 1.9 0.9
Carribbean 2015 7.5 2.8 1.5
 2030 11.6 4.6 2.4

Near East/ 2000 4.3 1.4 0.6
North Africa 2015 5.3 1.9 0.9
 2030 8.1 2.8 1.3

Sub-Saharan Africa 2000 2.9 0.8 0.3
 2015 3.2 1.0 0.4
 2030 3.7 1.3 0.6

United States 2000 12.6 N/A 3.3
 2015 14.7 N/A 3.8
 2030 20.0 N/A 5.3

Source: U.S. Census Bureau, 2000a, (An Aging World: 2001)
South Dakota Median Age 1900-2000

Year Median Age

1900 20.8
1910 22.6
1920 23.3
1930 24.4
1940 27.4
1950 28.6
1960 27.7
1970 27.4
1980 28.8
1990 32.5
2000 35.6

Source: Compiled by State Data Center from U.S. Census Bureau
Year Percent 65+ Yrs

2005 14.1%
2015 16.3%
2025 21.7%


The State Data Center, located at the Business Research Bureau at the School of Business, University of South Dakota, is the designated lead census center for South Dakota and serves as a repository of U.S. Census Bureau and U.S. Bureau of Economic Analysis publications and data bases.
COPYRIGHT 2001 The Business Research Bureau
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2001 Gale, Cengage Learning. All rights reserved.

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Author:Brown, Ralph J.
Publication:South Dakota Business Review
Article Type:Illustration
Geographic Code:1USA
Date:Dec 1, 2001
Words:6305
Previous Article:Published by Business Research Bureau - University of South Dakota.
Next Article:South Dakota economy. (Business Highlights).
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