Based on our text, state governments: a.) spend the most on education, and the largest source of revenue is federal grants. b.) spend the most on highways, and the largest source of revenue is the sales tax. c.) spend the most on health, and the largest source of revenue is insurance trusts. d.) pend the most on public welfare, and the largest source of revenue is the individual income tax. e.) have been steadily reducing spending since 2004.