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Spending outpaces population in shrinking counties

Municipal spending in the US is outpacing population and income growth—not only in growing counties, but also in shrinking ones.
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Growing United States counties are increasing their total spending, but so are shrinking counties, research finds.

For the new study, researchers used US Census of Governments data to examine municipal spending aggregated to the county level nationwide from 1972 to 2012.

Because of the American Society of Civil Engineers’ failing grades for the nation’s built infrastructure, the study used three types of variables:

  • economic (median household income),
  • demographic (total population change),
  • and institutional (state and local tax expenditure limits).

The researchers studied the relationship between these variables with total municipal spending, with an emphasis on capital spending.

Super spending

“One of the things we were curious to see was how counties across the nation grew or shrunk over the last 40 years, and how total municipal expenditures and capital spending were related to that growth or decline,” says Biswa Das, assistant professor of community and regional planning at Iowa State University.

“What we found is the asymmetry is clear, but shrinking cities are spending at a high rate, both on the aggregate as well as on capital projects, which is surprising.”

The findings show that aggregate municipal spending is more responsive to population growth than decline, and the effect is most pronounced for capital spending. The findings also show that places that have implemented school finance reform tend to reduce municipal spending, though more so in growing counties than in shrinking ones.

Growing counties saw population increase by 69 percent over the study’s timeframe; municipal spending increased by more than 300 percent. Shrinking counties saw population decrease by 28 percent during this timeframe; but municipal spending still increased by 200 percent. Further, municipal spending increased at a faster rate than did median household income in both growing and shrinking counties.

Downward cycle

While increased spending on new infrastructure in growing places could be attributed to meeting the needs of a burgeoning population, increased spending in shrinking counties may be an effort to maintain infrastructure, either because of general degradation or federal mandates, the researchers say. Maintenance can be more expensive than building new infrastructure.

This puts shrinking counties in an “exacerbated” downward cycle, according to the study. Population loss means a municipality has less tax revenue, which makes it more difficult to maintain infrastructure that meets quality of life standards, which in turn triggers further population loss. And tax increases—particularly to develop new or maintain excess infrastructure—are often unpopular with residents.

“These places are forced to take a hard look at existing infrastructure and make strategic decisions about what requires reinvestment and what infrastructure does not yield positive net returns to the community; this infrastructure should be allowed to depreciate,” according to the study.

To maintain infrastructure investments in the long run, growing counties should plan carefully, the researchers say.

“Sometimes places that are growing invest way more in infrastructure than is necessary,” Das says. “Cities make long-term projections, but sometimes those aren’t realized and they’re left with extra infrastructure.”

Researchers from Michigan State University also contributed to the paper, which appears in the Journal of Regional Analysis and Policy.

Source: Iowa State University

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