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Current Issues in Local Government Finance

1 min readBy: Chris R. Edwards

Download Special Report No. 31

Special Report No. 31

Executive Summary
Local governments across the United States will raise and spend an estimated $656 billion in 1994 and employ 11 million people—over half of all government workers in the country. Local governments form a complex web of 87,000 different jurisdictions including city and county governments, school districts, and many “special districts” which typical perform single functions such as water supply. To finance their activities, local governments will collect $408 billion in taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. es and other revenue and receive $248 billion in grants from the federal and state governments.

The primary local tax is the property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. which will raise an estimated $190 billion in 1994. The largest general spending function of local government is education, totaling an estimated $278 billion in 1994. In addition to the kind of rigorous downsizing that many private corporations have undertaken in the past several years.” Nonetheless, they conclude that, “competitive pressures and taxpayer resistance will constrain [future] tax increases, forcing governments to focus interest on `reinventing’ government.”