Legacy City States More Prone to Overspend

ChrisProfileBy Chris Eshleman

In late January, the US Census Bureau compiled and released data showing that in 2012 state governments spent well beyond their means — for the third time in four years. Revenues lagged behind expenditures in 34 states.

The implications of state deficits for city-level fiscal health are myriad. They cover everything from the future of revenue-sharing programs and borrowing rates to state legislatures’ ability to compile healthy annual capital budgets.

But when you break the numbers down, the implications were worse for some states than for others. The 20 states with at least one legacy city overspent in 2012 by $391 per state resident — that’s the amount that state expenditures eclipsed revenues divided by the number of state residents (as counted in the 2010 census).

The states with the largest deficit (New Jersey, Massachusetts and Louisiana) are home to legacy cities; the three states with the largest surplus have none.

The equivalent figure for the 30 states without a legacy city was only $64 of overspending per state resident.

Analysts at the Census Bureau noted that the shrinking size of federal grants was a big factor in states’ inability to craft balanced budgets. Click here for the bureau’s full analysis and the data set.

Chris Eshleman is a Master of Public Administration candidate at Columbia University’s School of International and Public Affairs, focusing on urban policy and quantitative analysis. He also holds an MS in Economics from the University of Alaska. Follow Chris on twitter here.

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