Unformatted text preview: 3.6
4.0 Further evidence of the magnitude of intergovernmental assistance in the U.S. is that federal and state governments are
each responsible for a larger share of total revenues than of total expenditures (compare Tables 3 and 7). Only local
governments are responsible for more expenditures than revenues. Expenditures (Table 7) are categorized according to
the level of government where the service is delivered and not where the revenues are raised. Thus, intergovernmental
finance is a revenue of the granting government and an expenditure of the receiving government.
Almost all transfers from the national to state and local governments are given in the form of specific grants, many of
which are for income maintenance purposes. Federal transfers amounted to 26.0 percent of state general revenues in 22 Commission on Fiscal Imbalance 1998 and 3.9 percent of local government general revenues. No form of revenue sharing exists, having been eliminated
a decade ago. Major programs, such as Medicaid, food stamps, and TANF, are all part of the income maintenance
program that is now provided by the states. Medicaid, the largest of these programs, is financed with matching grants,
with each state’s share determined by the per capita personal income. The federal share varies from 50.0 to 76.8
percent of the cost. The federal government fully finances food stamps. Following many years of shared finance, the
federal share of TANF is financed by a block grant to states. Highway aid, particularly for interstate highways, is another
major federal program that is often financed with matching grants.
INTERGOVERNMENTAL REVENUE FROM STATE GOVERNMENT AS A
SHARE OF TOTAL LOCAL GOVERNMENT DIRECT GENERAL EXPENDITURE
United States Total
District of Columbia
39.2 Generalizations about state to local intergovernmental aid programs are difficult to make, given the independence that
states have in financing services (Table 10). States provide both specific grants and shared tax revenues, with local
governments having received 36.0 percent of their direct general expenditures from state transfers in 1998, but with
wide variation by state. Hawaii is at the low end, with transfers equal to10.9 percent and New Mexico is at the high end
with 51.6 percent transfers.
The largest specific state grant is for e...
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