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Why did state and local government spending increase after World War II?
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A Federal Emergency Management Agency (FEMA) official addressing the Watonga City Council to discuss aid for flood victims, Watonga, Oklahoma, 2007.
After World War II, state and local government spending in the United States increased rapidly due to several key factors:
- Expanded Public Services: There was a significant rise in expenditures for education, health, and welfare services. Education, in particular, grew to account for more than one-third of state and local budgets.1
- Administrative Growth: The administrative role of government expanded to meet the needs of a growing and increasingly urbanized population, leading to higher demand for a wide variety of public services.2
- Urban Development: Local governments invested heavily in public infrastructure, including schools, police stations, recreation centers, and water and sewerage systems to support suburban growth and urban renewal projects.3
- Federal Support: While much of the funding was locally determined, federal grants-in-aid increased dramatically, particularly during the 1960s, to support specific programs in areas like income security, housing assistance, and health, such as Medicaid.1
This growth in spending necessitated an expansion of tax bases, shifting away from a primary reliance on property taxes toward the adoption of retail sales taxes as a major source of finance.1