CHAPTER 8. EXPENDITURE

Contents and Abstract:

8.1 Expenditure Definition

8.11 Refunds and Correction Transactions

Chapter 4 provides a detailed description of the various functional categories the Bureau uses for reporting expenditure statistics. This chapter focuses on the definition of expenditure, its various types, and descriptions of the character and object categories.

8.1 Expenditure Definition

Expenditure includes all amounts of money paid out by a government during its fiscal year--net of recoveries and other correcting transactions--other than for retirement of debt, purchase of investment securities, extension of loans, and agency or private trust transactions. Under this definition, expenditure relates to external payments of a government and excludes amounts transferred to funds or agencies of the same government (other than payments to intragovernmental service funds; see Section 6.62).

Expenditure includes payments from all sources of funds, including not only current revenues but also proceeds from borrowing and prior year fund balances. Note, however, that the Bureau's finance statistics do not relate expenditure to their source of funding.

Expenditure includes amounts spent by all agencies, boards, commissions, or other organizations categorized as dependent on the government concerned (see Chapter 3). Stated in terms of the accounting procedures from which these data originate, expenditure covers outlays of all accounting funds of a government other than intragovernmental service (revolving), agency, and private trust funds.

Expenditure of business-type activities of governments (utilities and other commercial or auxiliary enterprises) is reported on a gross basis. That is, related revenues are not deducted from their expenditures to derive net expenditure amount.

The following types of outlays are excluded from expenditure:

• Loans or other extensions of credit, except contingent loans and advances to other governments which are reported as intergovernmental expenditure (see Section 6.41).
• Refunds of revenues collected during the same fiscal year, which are deducted from gross receipts of revenue item involved (see Section 6.54).
• Erroneous payments and other outlays that are recovered during the same fiscal year, which are deducted from the expenditures that originally included them (see Section 6.54).
• Purchase of securities for investment purposes. Recorded loss on the sale of investments, however, is treated as an expenditure.
• Payments for the retirement of debt principal (long- or short-term), which are reported with debt statistics (see Chapter 9). Interest on debt, however, is reported as an expenditure.
• Transfers to other agencies or funds of the same government, except for intragovernmental service funds and utilities operated by the same government (see Sections 6.6 and 8.4 ).
• Agency or private trust transactions, i.e., where the government is acting on behalf of others (see Section 6.5).
• Noncash transactions, such as provision of perquisites, technical services, commodities, property, noncash gifts or bequests, and other "payments in kind." The cost of items distributed in-kind are treated as purchase of goods and services (i.e., as a current operations expenditure).

Government expenditures are categorized according to their functional purpose and by character and object. The census codes resulting from this cross-classification are listed in Table 8-1. All expenditure falls into one of the four sectors of government described in Chapter 3. Note that how an expenditure is financed does not determine necessarily its expenditure classification--e.g., administration of an insurance trust system from insurance trust revenue is treated as a general government expenditure.

8.11 Refunds and Correcting Transactions

Expenditure data are adjusted for refunds and other correcting transactions, including those originally made in prior fiscal years. See Section 6.54 for details.

8.2 General Expenditure

8.3 Liquor Store Expenditure

8.4 Utility Expenditure

• Depreciation of assets (instead, capital outlays are reported at the time of their payment).
• Contributions or other intragovernmental transfers by a utility to its parent government. As a practical matter, interest on utility debt held for investment purposes by other funds of the parent government are included in utility interest expenditure.
• Expenditures relating to utility facilities owned but leased to others for operation (reported as general expenditure), except where the government maintains day-to-day financial oversight of the utility operation.
• Intergovernmental payments (which are always general expenditure) for support of or for contributions toward construction of utilities operated by other governments (see Section 8.41). Note that purchase of utility services or commodities as a regular customer from another government is treated as a current operation expenditure of the paying function.
• Any expenditure not directly related to the utility's acquisition, operation, capital improvements, or interest on its debt (to the extent this is possible). This includes, for instance, administration of investments and other nonoperating expenses, and payments to other governments as "in-lieu-of-taxes" or as actual taxes on utility property. Generally, these would be classed in the general government sector.
• Contributions to an insurance trust fund administered by the same government (an intragovernmental transfer) or benefit payments to former utility employees who are members of a government public employee retirement system (reported as an insurance trust expenditure). Contributions to a social insurance trust system administered by another government, however, would be classified as utility current operation expenditure.
• Cost of producing electricity or natural gas as a by-product of waste resource recovery facilities (reported under Solid Waste Management, code 81).

Utility expenditure is categorized according to the type of utility involved and by character and object.

8.41 Intergovernmental Expenditure Codes for Utilities

8.42 Joint Utility Projects (Public and Private)

• In joint public/private utility projects, capital outlay expenditure from bond funds for new plants are classified as utility construction expenditure ("F" code) rather than purchase of existing structures ("G") code. That is, it is assumed that the government is paying the private firm for the construction work unless there is strong evidence indicating that the government utility is taking over an existing private utility.
• In joint public/public utility projects, payments to another government either for construction or debt service generally is treated as intergovernmental expenditure (using the new codes for utilities described in Section 8.41). However, if the receiving government utility treats the contribution as part of its basic rate structure (i.e., classified as utility revenue, code A9-), then the government's contribution is treated as a current operation expenditure.

8.5 Insurance Trust Expenditure

8.6 Character and Object Categories

* The use of the "G" code for purchase of land and existing structures applies only during the original compilation of data for state and largest city and county governments. When these data are inserted into the Bureau's computerized records, they are combined with purchase of equipment data ("K" codes) to produce a category called "Capital Outlay Other Than Construction." The equipment only category ("K" codes), therefore, becomes a subcategory under this one in all subsequent computer files, printouts, and publications. For all other governments, the "G" code represents the purchase of land, equipment and existing structures--i.e., all capital outlays other than construction.

As indicated by the above chart, two prefix codes have double meanings. The "E" prefix is used both for assistance and subsidies and for current operations . There are, however, just four assistance and subsides codes that use the "E" prefix:

Similarly, the "I" prefix is also used both for assistance and subsidies and for interest on debt. There are, however, just five codes for interest on debt:

Note that all the remaining "I" codes relate to assistance and subsidies expenditure of the Federal Government. See Chart 8-A for a detailed description of each character and object category.

8.61 Construction Data Improvement