Jobless benefits lead spending increases

Of the total $2.8 trillion spent by state and local governments in 2008, the most money, $826.1 billion, went to education, the bureau said.

Welfare was the No. 2 expenditure, at $404.6 billion, the bureau said in a report on the 2008 Annual Surveys of State and Local Government Finances.

Insurance trusts, utilities and highways -- at $234.6 billion, $193.4 billion and $153.5 billion, respectively -- were the three next biggest areas of government spending, the bureau said.

Unemployment compensation, at $35.6 billion, rose 22.9 percent, or $6.6 billion, from 2007's $29 billion, the bureau said.

The first full year of the global financial crisis was 2008.

State and local governments took in $2.7 trillion in revenues in the 2008 fiscal year, a 13.4 percent drop from 2007.

Tax revenue rose 3.7 percent to $1.3 trillion. Sales taxes made up the largest share of tax revenue, at $448.7 billion, followed by property taxes, at $409.7 billion, and individual income taxes, at $304.6 billion.

State and local debt rose 5.8 percent to $2.6 trillion, while assets fell 1.7 percent to $5.4 trillion, the bureau said.

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