Rising Cost of State and Local Government

September 16, 1930

Report Outline
Causes of Increased Governmental Expenditures
Causes of Increased Governmental Expenditures
Growth of All Governmental Expenditures
The Growth of State Expenditures
The Growth of Municipal Expenditures
Special Focus

Causes of Increased Governmental Expenditures

Growth and Movement of Population

As 1930 draws toward a close, states and cities whose fiscal year coincides with the calendar year are estimating their budget needs for 1931. And the prospect almost everywhere is for a continued increase of expenditures, with corresponding increases in the burden of taxation. It is reported that New York City's 1931 budget will exceed $600,000,000, which is 30 million dollars more than the 1930 figure. In Illinois the legislature in special session has passed a series of bills to relieve the financial distress of Chicago and Cook County, including one authorizing a referendum at the November election on the adoption of a state income tax. In Philadelphia the question is “not so much whether there will be an increase in next year's tax rate, as how much the increase will be.”

In many states the cost of government shows a striking increase. So perplexing, in fact, is the financial situation in the states that new sources of state revenue were seriously discussed by the governors at their recent conference at Salt Lake City, Figures recently published by the Department of Agriculture show that taxes on farm property have increased by 163 per cent since 1914, and by 70 per cent since 1920. While taxes have been rising land values have been falling. Between 1920 and 1930 the value of farm lands per acre felt by 32 per cent for the country as a whole. In the cities there is growing opposition to the increase of taxes on real estate. At the same time, real estate values have declined, as an accompaniment of the 1930 depression, so that heavier assessments, it is feared, will be inadequate to meet the growing cost of government.

Increasing Costs in the Face of Depression

Meanwhile, the forces making for increased state and local taxation have gathered such momentum that industrial depressions have little effect upon them. This was the experience during the depression of 1920–21. From 1919 to 1922 the ordinary expenses (including interest) of cities having a population of over 30,000 increased from $28.19 per capita to $41.42, capital outlays increased from $7,38 to $15.95, and property taxes rose from $23.13 to $34.54 per capita. Today it is doubted whether the forces making for greater state and local expenditures can be checked even by the severest economic depression.

ISSUE TRACKER for Related Reports
State and Local Taxes
May 04, 1966  Local Income Taxes and Revenue Needs
Feb. 13, 1963  State and Local Taxation
Dec. 10, 1958  Local Income Taxes
Aug. 16, 1941  State-Local Finance in the War Emergency
Sep. 28, 1937  State Control of Local Finance
Jul. 09, 1932  New Sources of State and Local Revenues
Sep. 16, 1930  Rising Cost of State and Local Government
Nov. 24, 1926  Increasing State and Local Taxation
Jul. 20, 1925  Problems of State and Local Taxation
State, Local, and Intergovernmental Relations