Thursday, July 25, 2013

Revision to Intergovernmental Transfers

On July 25, 2013, changed the method of computing "intergovernmental transfers" from 1992 to the present.  These are federal outlays that are transmitted to state and local governments and included as part of direct spending on programs by state and local governments.  They are subtracted from overall spending to avoid "double counting." See here.

Up to now we have used the numbers supplied by the Census Bureau in its annual report on State and Local Finances.  This is inconvenient for because the Census Bureau reports Welfare intergovernmental transfers in a single code B79 that includes payments to the states for Medicaid.  But reports Medicaid spending under Health care, separately from Welfare, and needs to report intergovernmental transfers for Medicaid separately from general Welfare.

We now use a table in the Budget of the United States Government, Historical Table 12.3 -- Total Outlays for Grants to States and Local Governments by Function to report intergovernmental transfers to states and local governments.  It provides a separate line item for Medicaid and it provides data up to the current budget year, i.e., FY2014 for the FY 2014 Budget.  The latest Census Bureau data as of May 2013 is FY2010 for local government finances and FY2011 for state government finances.

The main top-line difference between before and after is that intergovernmental transfer for Welfare will now be higher than before and intergovernmental transfer for Health Care will now be lower than before.

We are continuing to use the Census Bureau "B" series function codes for intergovernmental transfers, but have created several new codes to supplement the Census Bureau codes as follows.

B62Federal Intergovernmental -- Police and Safety
B66Federal Intergovernmental -- Protective and Inspection
B74Federal Intergovernmental -- Vendor Payments for Medicaid

Note: The total intergovernmental transfers computed by the federal budget does not agree with the total reported by the Census Bureau.  See below for examples.

Year  Census Bureau 
$ billion
 Table 12.3 
$ billion

Note: These changes to intergovernmental transfers only apply to the years from 1992 to the present.  Intergovernmental transfers for years prior to 1992 will remain unchanged.

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