During the 1960s, many rural local governments were believed to provide inadequate government services, which hindered rural development. Rapid growth in government spending has reduced the incidence of government poverty from 78 percent of nonmetropolitan counties in 1962 to only 7 percent in 1987. Those counties still government-poor in 1987 spent only 61 percent of the average for all nonmetro counties. Relatively few nonmetro counties are substantially short on public services such as health, education, road maintenance, and police protection. However, government poverty continues to be a significant problem in totally rural areas, in the South Central part of the country, and in retirement and low-income counties. When expressed in real dollars per capita, the spending gap between government-poor and average nonmetro counties grew substantially more for education than for sewage and sanitation, and highways and transportation. However, when expressed in percentage terms, government-poor counties' spending on education still appears closer to the nonmetro average than spending on the other functions examined. The relatively better performance in education may be due to court-imposed legislation to equalize school financing that increased state aid to education, and due also to federal aid to poor school districts. The document contains several tables and figures. An appendix on regression analysis includes a discussion of conceptual problems in relating results to the current national policy debate. (KS)