There's Nothing Natural About the State of Government Spending in Arkansas
38 Pages Posted: 3 Oct 2017
Date Written: August 8, 2017
Arkansas is one of the poorest states in the United States, but it has a relatively high level of state government spending compared to similar states. This study examines the drivers of state spending and of spending increases in Arkansas. We investigate both the largest spending categories in absolute terms and categories that have grown significantly in recent decades. We also investigate formal and informal institutional changes that affect state and local government spending. Arkansas has seen significant growth in spending in recent decades. Between 1991 and 2013, state spending has almost doubled, increasing by almost 97 percent even after adjusting for inflation and population. The growth since 1951 has been ever more dramatic, increasing ninefold in real, per capita terms. We investigate what state- and local-level changes have brought about this growth and what institutional changes may have driven the growth, and we suggest institutional reforms.
Keywords: public expenditure, state budget, state revenue, state tax, Arkansas, budget constraint, Revenue Stabilization Law, public finance, education expenditure, public pensions
JEL Classification: H72, H20, H71, H75, H765
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