Tuesday, March 31, 2009

All About Intergovernmental Transfers

Federal spending numbers at usgovernmentspending.com come from the OMB budget. They include direct spending on programs and also grants to states and local governments. State and local spending numbers come from the US Census Bureau. They are "direct spending" net of monies transferred to other governments.

Monies transferred to other governments are called intergovernmental transfers. To avoid double-counting at usgovernmentspending.com we show a “Gov. Xfer” column. It represents intergovernmental transfers from the federal government to the states and local governments. For instance, Medicaid (included under Health Care) is a joint federal-state program in which the federal government reimburses state governments for 50 percent or more of their expenses. The federal government's outlay for Medicaid includes monies directly spent by the federal government and monies sent to the states as grants and then spent by the states on Medicaid.

You can see that Health Care has the biggest “Gov. Xfer” number.

The intergovernmental transfer numbers used in the Numbers table are all Census Bureau “B” codes, as described in Census Bureau's Government Finance & Employment Classification Manual. For example, Census Bureau code “B01” is an intergovernmental transfer for “Air Transportation (Airports)”. The numbers are rolled up to provide the totals you can see at the top level. However, we have not used the Census Bureau numbers to report the intergovernmental transfers. Instead we have used OMB's Historical Table 12.3—Total Outlays for Grants to State and Local Governments, by Function, Agency, and Program.

If you drill down two levels (using the [+] controls) you will uncover the specific Census Bureau “B” spending codes used to compute the “rolled-up” intergovernmental transfer numbers. Each code is a link to the Census Bureau page that lists codes.

In summary, usgovernmentspending.com shows federal spending amounts as published by OMB that include monies transferred to other governments, but shows state and local spending as "direct spending" net of transfers to other governments as published by the US Census Bureau. Total spending is calculated as the sum of OMB federal spending plus Census Bureau state and local spending less "intergovernmental transfers" as published by the US Census Bureau.

Of course, intergovernmental transfers affect the revenue side as well as the spending side. You can see intergovernmental transfers on the revenue details page here. Intergovernmental Transfers equal (Total Revenue less Total Direct Revenue) at the state and local level.

UPDATED 10/19/16


  1. Cato Institute's Chris Edwards says that state+local spending is 11.2% of GDP, as shown in chart #2 (an animated series of 6 graphs) on Cato webpage

    I sent him an email pointing out the problem. Surely there are some significant transfer payments from states to locals, but not enough to overlap virtually all of the 9.9% state spending (of GDP), and 12.4% of local spending (of GDP).

    Cato needs to resolve this problem.

    Do you account of state-local intergovernmental transfers?

  2. The Census Bureau numbers that I use for state and local spending are supposed to be "direct" spending, net of intergovernmental transfers.
    If you look here and drill down at "Total Direct Revenue" you can see the total of intergovernmental revenue at the state and local levels.


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