How have the major categories of state spending grown over time?

The chart below combines data from the state’s financial reports on budgeted state spending with data from the Division of Local Services which reports on local spending. 

Major Spending Categories — Change 1989-2007 CAGR % of Total Chg. % Chg. $ Chg.
Medicaid 8.2% 35.3% 312% 5716
Public Assistance 1.7% 2.1% 36% 334
State Higher Education Subsidy 2.3% 2.3% 50% 373
MBTA and Regional Transit Subsidy (plus sales tax allocation) 5.3% 2.9% 154% 477
Pension 4.0% 4.2% 102% 675
Group Health Insurance 6.3% 4.2% 200% 681
Debt Service 6.7% 8.9% 221% 1435
Other State Program Expenses 3.6% 24.0% 90% 3896
Direct Local Aid (plus sales tax allocation) 3.6% 16.1% 88% 2615
Total State Budgeted Spending (plus sales tax allocation) 4.7% 100.0% 127% 16202
Municipal Expenses (ex. Benefits, Debt Service) 4.1% 42.5% 106% 6880
Local Assessment for MBTA and Regional Transit 1.6% 0.2% 33% 40
Total State-Local Contribution to MBTA/Transit 4.5% 3.2% 120% 517

 Medicaid is the program that accounts for the largest share of state spending growth over the past 18 years (consolidated financial history does not extend back before 1989).  Medicaid is both the largest single spending category and the fastest growing, crowding out growth in other spending categories.

 The direct state programs that employ people, like Highway, Public Safety, DCR and Human Services have grown much more slowly, at 3.6% on average (excluding benefit and pension costs).  This growth rate is slightly below the growth rate in comparable municipal spending, 4.1%.  During the same 18 year period, the consumer price index in the greater Boston area grew by 3.1% on average and the Gross State Product grew by 4.6% on average.

 Local aid has kept pace with direct state programs, but has not quite kept pace with local spending.

 Spending on higher education and public assistance have been squeezed hardest, with growth rates running well below inflation.

 The MBTA and Regional Transit subsidy (mostly MBTA) has grown relatively rapidly.  This rapid growth in the state subsidy has allowed local assessments to grow relatively slowly.  For additional detail and intermediate years, click here.

 The data above exclude off-budget transfers out of the budgeted funds — recently transfers have been used to fund Universal Health Care. 

 Additional categories of spending include capital spending (excluded from both the state and local data above) and some special purpose federal grants (excluded from state spending data above, but possibly included in local spending data).

Published by Will Brownsberger

Will Brownsberger is State Senator from the Second Suffolk and Middlesex District.