Where Does Local Government Revenue Come From Now?

Online Appendix to the Rethinking Revenue Phase 1 Report

All data in this section is drawn from the Urban Institute’s “State and Local Finance Data: Exploring the Census of Governments” tool. This tool is based on the Census of Governments State and Local Finance series, which comes from the U.S. Census Bureau.

First, it is important to understand that the answer to this question varies from state to state and between types of governments (cities, counties, schools, etc.). Let’s examine local government “general” revenues. General revenue pays for general services like public safety and some public works. It excludes other services like utilities that have their own funding sources. It might also exclude revenues that are restricted for specific purposes. An example might be a gas tax that can only be used for roadwork. We are focusing on general revenue because that revenue is the most flexible for meeting the changing service demands that local governments face, and that revenue makes up a large portion, if not the majority, of almost all local government budgets. Exhibit 1 summarizes the results across all 50 states for cities, counties, and schools. We see that cities and counties are not radically different, though counties have a notably higher reliance on intergovernmental revenue and somewhat higher reliance on property taxes and lower reliance on sales taxes. Schools are much different, with a greater reliance on property taxes and intergovernmental revenue than either cities or counties.