In the United States, the government isn’t just one, all-encompassing entity. Federal, state and local governments make laws and budgets— completely independently—and fulfill completely different responsibilities. Yet, they all exist and function simultaneously under federal law.
To successfully sell in the public sector, you’ll need to know exactly what each branch does and how they do business.
The federal government encompasses the country as a whole. As such, it gets the money it spends almost entirely through taxation. Roughly 80 percent of revenue comes from the individual income tax and the payroll taxes that fund social insurance programs. Another 9 percent comes from the corporate income tax and the rest is from a mix of sources.
The state and local governments, on the other hand, only encompass their own state, districts, counties, and cities, etc. For state and local governments, property taxes make up the largest category of revenue at 35 percent. Sales and gross receipts are a close second at 34 percent. The corporate income tax is the smallest, at a mere 3 percent of the money taken in.
The biggest difference between Federal, State and Local governments comes into play with their annual budgets. Every year in city halls, state capitols and the U.S. Capitol, agencies gather to debate and adopt their budgets. This dictates the government’s priorities for the upcoming year… and whether or not your product/service is one of them.
State and local governments are required by law to balance their budgets to that they are never spending more then they’re bringing in. The National Conference of State Legislature reported that 49 out of 50 states have balanced budget requirements, with Vermont the sole exception.
The federal government is allowed to run a deficit and to borrow money to meet its obligations. This means that the government can spend more than it brings in revenue. Congress has made efforts to pass a balanced budget amendment to the U.S. Constitution with no success.
Knowing these differences and nuances can help you strategize and target your ideal government agency and win their business.