NCPA - National Center for Policy Analysis

States Increase Spending Despite Budget Gap

January 16, 2003

State and local governments are spending more money and hiring more people than last year, even though they face the "most dire fiscal situation since World War II," according to the National Governors Association.

A USA Today analysis reveals that state declines in spending from last year are actually smaller spending increases.

  • State and local government spending rose at an annual rate of 4.2 percent in the first nine months of 2002 -- or an inflation-adjusted 3.3 percent.
  • The National Conference of State Legislatures says 31 states must close a $17.5 billion budget gap by June 30.
  • States employed about 31,000 more workers in December than they did a year earlier, and local governments employed 189,000 more workers -- while the private sector was shedding 467,000 jobs.
  • Spending by state and local governments has increased faster than the rate of inflation every year since 1982.

That spending has not fallen since 1944.

Source: Dennis Cauchon, "State, Local Spending Up Despite Downturn," USA Today, January 15, 2003.

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