Association for Public Policy Analysis & Management

Real local government spending in the United States increased by more than 330 percent  between 1972 and 2007, faster than can be explained by population growth (a 43 percent increase), growth in median household income (a 72 percent increase). Local government spending grew even in counties that experienced population decline; spending more than doubled in such places. In this paper, I examine the asymmetry in local government spending responses to economic and demographic change using detailed data on local government finances aggregated to the county level over the 1972-2007 period. Regression analysis reveals significant asymmetry in local government responses to economic and demographic change. Specifically, local governments tend to have larger upside responses to economic and demographic change than they do to downside changes. A significant portion of this asymmetric response appears to be the result of increased intergovernmental assistance to local units to address poverty alleviation.  Declining areas also experience relatively stronger spending pressures from other potential drivers of local government growth such as growing income disparity, an increasing number of single female-headed households, increasing number of household living in mobile homes, and especially increased obesity and behavioral problems such as hyperactivity, anxiety, depression, and violence associated with increased sugar consumption. Since the 1970s, the obesity rate in the United States increased from 12 percent to 35 percent. The analysis indicates that sugar consumption and associated mental/emotional/physical health problems accounts for a significant portion of increased local government spending growth, and this effect appears to be magnified in counties experiencing declines in population. These findings increase our understanding of why local governments in declining places tend not to shrink proportionately with economic and demographic forces.