Final answer:
Education constitutes the largest category of state spending, accounting for about one-third of total expenditures. Local government spending also prioritizes education, with healthcare being another major area for combined state and local spending. The correct option is 2.
Step-by-step explanation:
The largest category of state spending is education. This can be verified by multiple sources, including reports that at both state and local levels, spending on education accounts for about one-third of the total expenditures.
The remaining budget covers a variety of programs such as highways, healthcare, parks, and police and fire protection. It is important to note that, unlike the federal government, all states except Vermont have balanced budget laws.
Evidence suggests that at the local level, public education, particularly at the elementary and secondary levels, is also the largest spending category. Nonetheless, when considering combined state and local spending, healthcare also constitutes a significant portion of the expenditures, alongside education.