According to the US Department of Justice

Local governments spend more on criminal justice than state governments or the federal government.

 

Department of Justice Direct Expenditure by Level of Government

 

Local spending represented just over half (51%) of total government expenditures on criminal justice.  State spending accounted for a third (33%) and federal spending represented a sixth (16%) of criminal justice expenditures.

After adjusting for inflation, federal expenditures increased 71%, state expenditures increased 62%, and local expenditures increased 39% between 1990 and 2000. 

From 2001 to 2007, state spending on criminal justice declined slightly, while federal spending increased 19% and local spending increased 7%.

Adjusting for inflation
Government expenditures for fiscal years preceding 2007 were inflation-adjusted using Gross Domestic Product deflators prepared by the Bureau of Economic Analyses. Chain-type price indices as appropriate for state and local government spending and nondefense federal spending were applied to expenditures reported in years prior to 2007 to produce inflation-adjusted expenditures in 2007 constant dollars.