Federal Finance Issues that
Affect the States
Sam Rosen-Amy
August 2014
Federal Spending in the States
Main Types of Federal Spending in the States
• Grants
• Contracts
• Salaries and wages
• Direct payments
• Retirement
• Non-Retirement
Federal Spending in the States
FY 2010 outlays relative to state GDP
40%
36%
35%
30%
25%
22%
20%
15%
12%
10%
5%
0%
New Mexico
South
Dakota
Michigan
Kansas
Ohio
Retirement and Disability Payments
Grants
Salaries and Wages
National
National
AAverage
Average
Nebraska
New York
Delaware
Medicare and other Direct Payments
Procurement
Source: Pew analysis of the U.S. Census Bureau’s Consolidated Federal Funds Report data.
Federal Grants as Share of States’ Revenues
FY 2012
50%
45%
45%
40%
35%
32%
30%
25%
20%
20%
15%
10%
5%
0%
Mississippi
Missouri
Ohio
Iowa
National
Average
Pennsylvania
Source: Pew analysis of the U.S. Census Bureau’s Annual Survey of State Government Finances data.
Illinois
Alaska
Federal Grants as a Percentage of State Revenues
1961-2012
40%
35.4%
35%
30%
25%
20%
15%
10%
5%
0%
Recessions
United States
Source: Pew analysis of the U.S. Census Bureau’s Annual Survey of State Government Finances data.
Federal Grants to States Over Time
Total Budget Authority, Adjusted for Inflation
Base FY 2008
60%
Percent Change from FY 2008
50%
40%
30%
18%
20%
10%
0%
FY 2006
-10%
FY 2007
FY 2008
FY 2009
Recession
Source: Pew analysis of Federal Funds Information for States data.
FY 2010
FY 2011
FY 2012
FY 2013
FY 2014
Trends in Federal Grants to States
Change in FY 2008 to FY 2014
Total Budget Authority, Adjusted for Inflation
Source: Pew analysis of Federal Funds Information for States data.
Federal – State Tax
Connections
Mark Robyn
August 2014
Federal-State Tax Connections
Statutory links between state and federal tax codes
Assistance through the federal tax code
Economic impact
Federal-State Tax Connections
Statutory links between state and federal tax codes
Assistance through the federal tax code
Economic impact
Conformity
Pros
Cons
• Simplicity
• Revenue
• Compliance
• Uncertainty
• Ease of administration
Conformity: Starting Points
Conformity: Types of Provisions
Deductions
e.g.:
Itemized Deductions
Credits
e.g.:
Earned Income Tax Credit
e.g.:
Child Care Credit
Federal-State Tax Connections
Statutory links between state and federal tax codes
Assistance through the federal tax code
Economic impact
Federal Support to States Through the
Tax Code
Federal deduction for state and local taxes paid
• Reduced taxes by $45 billion
Federal exclusion of interest on state and local bonds
• Reduced taxes by $26 billion
Federal-State Tax Connections
Statutory links between state and federal tax codes
Assistance through the federal tax code
Economic impact
Geographic Distribution: Mortgage
Interest Deduction
Average deduction per tax filer, by state, 2011
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