Abstract
Analyses of the relationships of earmarked finances on their respective programs and total expenditures have produced conflicting views of how governments spend earmarked revenue. Some show that earmarks are used in addition to existing finances to increase the total level of funding for recipient programs while others show that earmarks are fungible and program spending is unchanged. An analysis on local option sales taxes earmarked for transportation (LOST‐Ts) suggests that transportation spending is increased by more than LOST‐T revenue. For every dollar generated by LOST‐Ts, transportation spending increases by an estimated $1.76 and nontransportation spending decreases by an estimated $0.73.
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