State budgets are dedicated primarily to public infrastructure.

State and local governments are the stewards of most of the country’s public capital.

They own over 90 percent of non-defense public infrastructure assets, and although the federal government assists in the building and maintenance of these assets, state and local governments pay 75 percent of the cost of maintaining and improving them. (See Figure 2.)

States and localities spend the vast majority of their capital dollars — 85 percent — on key building blocks of a state’s economy: schools, transportation, and drinking water treatment and distribution. (See Table 1.)

Not surprisingly, current investment varies significantly by state, based on factors like the size and population density of a state or the age of existing infrastructure. But some differences result from the willingness of the state to identify and fund needed investments. Overall, investments have been declining as needs have risen. Figure 3 shows the portion of total state spending devoted to capital spending in 2014. Several large states with small populations — Alaska, North Dakota, South Dakota, and Wyoming — spent over 15 percent of their budget on capital expenses. At the other end of the spectrum, three states — Michigan, Rhode Island, and New Hampshire — spent less than 7 percent.