Fiscal Disparities Across States
States and their local governments vary both in their needs to provide basic public services, and in their abilities to raise revenues to pay for those services. This study uses the Representative Revenue System (RRS) and the Representative Expenditure System (RES) frameworks to quantify these disparities across states by comparing each state's revenue capacity, revenue effort, and necessary expenditures to the average capacity, effort, and need in states across the country.
- Revenue capacity is the total revenue that a state (and its localities) would have raised if it were to apply a uniform set of taxes and charges 'representative' of policies prevailing across the 50 states.
- Revenue effort is the ratio of actual revenues to revenue capacity.
- Expenditure need is a measure of the cost of providing public services at an average level given the state’s characteristics.
- Expenditure effort is the ratio of actual expenditures to expenditure need.
- Fiscal capacity is the ratio of revenue capacity to expenditure need.
More information and findings from the study:
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