The National Association of State Budget Officer’s 2024 State Expenditure Report, released today, December 10, shows that total state spending continues to rise, buoyed by strong revenues in the years that followed the onset of Covid-19.

In fiscal 2024, total state spending increased by 6.2%, according to the NASBO report. That increase brought the collective annual spending total to over $3 trillion for the first time in the 37-year history of the expenditure report.

While the impact of pandemic era federal aid continues to permeate the fiscal 2024 report, the last two fiscal years have been a “period of adjustment” as the bulk of those federal funds continue to dwindle.

A handful of highlights from the new report, with the caveat that fiscal 2024 figures, while reliable, are still estimates:

• Total spending on Medicaid, which includes both state and federal funds, is the largest state expenditure category, representing 29.8% of the total in fiscal 2024. The next largest categories for the most recent year are K-12 education (18.9%), higher education (8.7%), transportation (8%), corrections (2.7%), public assistance (1%).

• Transportation spending represented the fastest area of growth In fiscal 2024, with a 21.1% increase, buoyed by a number of state revenue raising measures, including increases in gas tax, greater use of tolls and fees, the exploration of road use charges, and increased registration fees for electric and hybrid vehicles. (While gas taxes increased, they are shrinking as a percentage of the total transportation revenue picture.)

• Capital spending was also strong with a growth rate of 14.6% -- the highest annual increase since 1994. The increase, fed by both state and federal funds, is attributed to an emphasis on “growing infrastructure demands and the use of one-time funds from revenue surpluses.

• Medicaid spending grew 5.3% in fiscal 2024. Looking at the breakdown of state and federal funding in this area, state’s own spending grew 16% while federal funds grew 0.2%, given the expiration of enhanced federal funding. The report notes that states faced significant Medicaid budget pressures during this period, which included provider rate hikes and greater health care utilization, although enrollment dropped.

• Total K-12 education spending increased 7.8% in fiscal 2024, with states own spending jumping by 10.9% while federal funding declined by 3.9%. In higher education, total state spending increased 3.6%. There, too, higher increases came from state funds, which rose by 5.4% while federal funding dropped by 7.8%.

As the executive summary points out, this report includes data from estimated fiscal 2024 and actual spending information from fiscal 2023 and 2022. In addition to the 50 states, information is also included on three territories: Guam, Puerto Rico and the U.S Virgin Islands. (Note that data is not adjusted for inflation.)

While the executive summary provides general spending information, readers interested in individual state spending trends will enjoy the 51 tables that spell out both summary and regional data, and the details of individual state spending.

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