Asymmetry in Muncipal Government Responses in Growing versus Shrinking Counties with Focus on Capital Spending

Aggregate spending by municipal governments in the United States increased by more than 250 per- cent between 1972 and 2012, faster than population growth and growth in median household income. Further, other socio-economic and institutional variables that are typically used to explain changes in local government spending do not fully account for the growth. Even places where population is in decline experienced signicant growth in spending. Capital spending during the same period increased by 150 percent. It is documented that reinvestment in core infrastructure which is slowly crumbling is insucient. This study examines the asymmetry in municipal revenue and expenditure responses with a focus on capital spending to changing economic, demographic, and institutional variables using detailed municipal nance data aggregated to the county level for the United States during 1972-2012. Regression analysis ndings reveal asymmetry in capital spending between shrinking and growing places in response to economic, demographic, and institutional changes.