Asymmetry in Municipal Government Responses in Growing vs. Shrinking Counties with Focus on Capital Spending

Spending by municipal governments in the United States increased by more than 250 percent between 1972 and 2012, faster than population growth (48 percent increase) and growth in median household income (32 percent increase). Further, other socioeconomic 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 significant growth in spending. Yet, reinvestment in core infrastructure in many places is insufficient and slowly crumbling. The purpose of this paper is to examine asymmetry in municipal revenue and expenditure responses to changing economic, demographic, and institutional variables using detailed municipal finance data aggregated to the county level for the United States over the 1972-2012 period. Regression analysis reveals asymmetry in shrinking and growing places in responses to economic, demographic, and institutional change.