The process of drafting a state budget starts with planning the anticipated expenditures and revenues. Whenever there is a budget deficit, the state government can deal with the shortfall in four ways. One, it may be forced to cut services. Secondly, it may borrow money to cover the expenses. Alternatively, the state may raise taxes so that extra revenue is collected to cover the costs. However, sometimes a state may opt to use all the three measures to resolve the budget deficit challenges. Budgets per capita are affected by the national level decisions such as the Affordable Care Act.
US States With the Largest Budgets Per Capita
During the fiscal year 2015-2016, North Dakota’s spending increased by $131 million from a previous budget of $7.9 billion. The main categories of taxes used for revenue collection were sales tax and gross receipts revenue (41.8%) and income tax (12.2%). The state spent 30.3% of its revenue on education and 14% on Medicaid among other expenses. Presently, the budget per capita for North Dakota is 18,760.
Wyoming has a budget per capita of 15,867 which is a derivative of its revenues and spending patterns. The main economy driver of Wyoming State is the mineral extraction of natural gas, coal, oil, and trona. Tourism also generates a lot of revenue for the state. The Commission for Electricity and Gas Regulation (CREG) projected a revenue shortfall of about 23% in Wyoming for the 2017-2018 budgets. The decrease comes from the progressive decline of oil, coal, and gas prices in the recent past. The government also experienced a budget deficit of $159 million in 2016. Overall, the instability of Wyoming State’s economy is due to the slowdown in the mineral industry.
Minnesota’s Gross Domestic Product is $333.267 billion. According to statistics taken in 2013, its revenue was worth $20,181.8 million. Most of the revenue harnessed in Minnesota is from agriculture which is the primary economic activity. However, other sources of revenue include property taxes, use tax, and sales tax. Also, there are very many public and private companies which operate in Minnesota such as 3M, US Bancorp, Ryan Companies, Best Buy, and Cargill. The government also benefits from taxes from these firms. In 2013, the state’s expenditure was $18,739.5. Minnesota used most of the revenue collected during the year to cater for Medicaid, provision of education, payment of state employees, and transport among others. Currently, the budget per capita of Minnesota State is 12,988 per capita.
Major Factors Driving Growth
Most of the US states spend their revenue on education, health and welfare, housing, interest on debt, public safety, government administration, and transportation. Amongst all of the states, North Dakota has the highest budget per capita, followed by Oregon, then Wyoming, then Kentucky, then Washington, and then Minnesota. In spending this money, the most important requirement is that most, if not all locals in a state should have access to the basic social needs such as water, food, clothing, and housing. Failure to have these requirements met by the government increases the cost of living for most people.