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Local Government Expenditures

Local Government Expenditures

On an ordinary day, probably without even noticing, you will use a lot of services provided by the local government. Think about the water you use to brush your teeth, the water you flush into the local sewer, and the electricity you use to prepare your morning coffee. Maybe you are going to a public school and use the streets or public transportation along the way provided by the local government.

In this article, we will learn all about the different types of local government expenditure and its control. Ready to learn? Let’s start reading!

Local Government Capital Expenditure

Local government capital expenditure generally focuses on education, utilities, and public safety. The local government capital spending is generally tailored to the needs of local residents. Compared to state spending, local government expenditure is focused less on public welfare and higher education but more on elementary and secondary education, housing, public safety, and utilities.

The income sources for local government capital expenditures may include property taxes, city income taxes, and other local sources but differ across regions. There are some limitations for local government capital expenditures due to the fact that these sources are generally small compared to state budgets and are not stable across seasons.

One of the reasons for the instability of the budget would be the tourist season. During the tourist season, the local government can collect more taxes from visitors, which contributes to the local budget, whereas the budget might be more limited during the off-seasons.

Definition of Capital Expenditure Local Government

What do we mean by local government? Municipalities, counties, parishes, townships, school districts, and other special districts can be counted as part of local government.

The capital expenditure of the local government is the expenditure on public goods and services at the local level. They include education, utilities, and public safety expenditures.

Control of Local Government Expenditure

The control of local government expenditure depends on the local government we talked about. Therefore, the mayor, the city council, the county judge, or other elected bodies can be in charge of the control of the local budget. The budget and spending amounts should be approved by the local bodies but the system that determines spending may differ across local governments and from year to year.

Types of Expenditure in Local Government

Elementary and Secondary Education

Expenditures for elementary and secondary education are one of the main responsibilities of local governments and generally account for the largest part of local government expenditures. The salaries of teachers, principals, and other staff working at the school are the main expenditures.

Furthermore, school supplies such as textbooks and costs to maintain the school buildings are other regular costs that the local government should take care of. Sometimes, schools need a one-time budget for some events or construction. Thus the local governments should plan the budget in such a way that they should be able to cover these one-time or urgent cases.

Local Government Expenditures A high school canteen in the U.S. StudySmarter A high school canteen in the U.S., Wikipedia Commons

Utilities

Generally, utilities are the second largest cost for local governments. Utility costs include the costs for services such as electricity, sewerage, gas, and water. Since these services are used on a daily basis by almost all local residents, it is pretty important not to just provide them but also to manage their periodic maintenance.

The cost to provide utility services is not only for common use but also for some specific institutions such as schools, public libraries, or administrative centers.

Public Safety and Health

The expenditures on public safety and health differ significantly across regions and depend on their budget and size. Generally, large local governments hire full-time paid police officers and firefighters and maintain their own local hospitals with a full staff. On the other hand, some very small local governments might not have hospitals or try to find some volunteers for firefighters and similar positions.

Other Expenditures

Apart from these categories, a local government would have other areas to spend money on which would not seem obvious at first look.

Think about the roads, street lamps, signs, and traffic lights. Have you ever thought about who paid for these services, or who would remove the snow in winter or repair the storm drain if something happens? Yes, all these costs and other local-related expenditures that are not covered by the state government should be covered by the local governments.

Local Government Expenditures Street signs and lamps as part of the Local Government Expenditures Wikipedia Commons StudySmarterStreet signs and lamps as part of the local government expenditures, Wikipedia Commons

Annual Local Government Expenditures

The sum of U.S. local and state direct general government expenditures in the year 2019 was $3.3 trillion. Of that, $1.57 trillion was spent by the state whereas the remaining amount ($1.76 trillion) was spent by the local governments.1

Thus, we can see that local government expenditures were higher compared to state government expenditures in 2019. One of the reasons for that is the administration programs of local governments, which are funded by transfers from state governments.


Local Government Expenditures - Key takeaways

  • Local government capital expenditure generally focuses on education, utilities, and public safety. Local government capital spending is generally tailored to the needs of local residents.
  • Municipalities, counties, parishes, townships, school districts, and other special districts can be counted as part of the local governments.
  • Expenditures for elementary and secondary education are one of the main responsibilities of local governments and generally account for the largest part of the local government expenditures.
  • Utility costs including services such as electricity, sewerage, gas, and water are the second largest cost for local governments.
  • Expenditures on public safety, health, roads, street lamps, signs, and traffic lights are also a part of local government expenditures.

References

  1. US Bureau of the Census, Survey of State and Local Government Finance, 1977-2019, accessed via the Urban-Brookings Tax Policy Center Data Query System, January 5, 2022, https://state-local-finance-data.taxpolicycenter.org.

Frequently Asked Questions about Local Government Expenditures

No. GDP includes federal, state, and local government spending, It does not include transfers such as Social Security.

State governments can fund some administration programs that are managed by the local governments or transfer money to local governments to spend on other things such as education, utilities, public safety, and health. 

Local government capital expenditure generally focuses on education, utilities, and public safety. The local government capital spending is generally tailored to the needs of local residents.

Expenditures for elementary and secondary education generally account for the largest part of local government expenditures.

Elementary and secondary education, utilities, public safety, health, roads, street lamps, signs, and traffic lights are the main areas of expenditure of the local governments.

Final Local Government Expenditures Quiz

Question

Does GDP exclude local government expenditure?


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Answer

No. GDP includes federal, state, and local government spending, It does not include transfers such as Social Security.


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Question

How can state governments use revenue to influence local expenditures?


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Answer

State governments can fund some administration programs that are managed by the local governments or transfer money to local governments to spend on other things such as education, utilities, public safety, and health. 


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Question

What are local government expenditures?


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Answer

Local government capital expenditure generally focuses on education, utilities, and public safety. The local government capital spending is generally tailored to the needs of local residents.


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Question

Which of the following is a local government expenditure category?


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Answer

Elementary and Secondary Education


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Question

What is the largest local government expenditure?


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Answer

Expenditures for elementary and secondary education generally account for the largest part of local government expenditures.


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Question

Which of the following is the largest local government expenditure category?

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Answer

Education

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Question

What are the main areas of expenditure for local government?


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Answer

Elementary and secondary education, utilities, public safety, health, roads, street lamps, signs, and traffic lights are the main areas of expenditure of the local governments.

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Question

Local government would be resposnbile to remove the snow in winter.

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Answer

True

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Question

The sum of US local and state direct general government expenditures in the year 2019 was ...

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Answer

$3.3 trillion

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Question

Generally, utilities are the second main cost for local governments. 

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Answer

True

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What do the utiliy costs include?

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Answer

Utility costs include the costs for services such as electricity, sewerage, gas, and water.

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What is the second main cost for local governments?

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Answer

utiliy costs

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What are some examples of public safety and health costs as part of the local government expenditures?


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Answer

Costs to hire full-time paid police officers and firefighters and maintenance costs to manage the local hospitals and staff,

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What are the capital expenditure of local governments?

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Answer

The capital expenditure of local governments is the cost to provide public goods and services at the local level. They include education, utilities, and public safety expenditures. 


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Question

What are examples of local governments?

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Answer

Municipalities, counties, parishes, townships, school districts, and other special districts can be counted as part of local governments. 


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