Big Ticket Spending: Transfers and Labor Costs

Abstract

This paper profiles state transfer (grant and claim) programs and labor costs (including both payroll and benefits), which together account for three of every four dollars the state spends on general operating expenses. This analysis is a complement to previous Fiscal Policy Papers in which we have examined different aspects of state government spending and revenue generation. This paper examines how the two biggest categories of spending affect the state operating budget. We conclude by looking at the implications of our analysis for declining revenues.