Early in the 19th century local governments spent less than either the federal or state governments. By the end of the 19th century local governments spent more than the federal and state governments combined. This growth is obviously related to the growth of cities, but cities continued to grow in the 20th century, while the local government share of total government expenditures fell, so the growth of cities cannot be the complete answer. An examination of expenditures and revenues in two cities - Boston and Baltimore - suggests that no one component of expenditures was responsible for increases in total spending. Rather, it appears that the primary causal factor was revenue growth. Cities rely heavily on property taxes, and the increasing value of taxable property allowed cities to raise increasing amounts of revenue, leading to increased government spending.
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|Published - Sep 2004