Government Expenditures and Public Services in the American States

Abstract

Much recent policy analysis is based on the assumption that the amount of money spent in a jurisdiction indicates the nature of services provided. This study seeks to test this assumption as it applies to the American states. Among the studies that have attempted to explain the “outputs” of state and local governments by reference to political and economic characteristics, several have identified expenditures with services implicitly by mixing indicators of spending with indicators of services as the “outputs” to be explained. Other studies have claimed explicitly that government expenditures reflect the “scope and character” or “calibre” or the “alpha and the omega” of public services. A contrary argument is that “money is not everything.” Such nonmonetary factors as the quality of personnel or the nature of the political environment may exert the greatest influences upon the quality or quantity of public services within a jurisdiction. In assessing the relationship between spending and services, this study first defines static relationships between measures of spending and measures of public services. Secondly, it examines relationships over time in an attempt to discern if increases in government expenditures are likely to bring about increases in the quality or quantity of public services.