Why Are We Lagging Behind? An Empirical Analysis of Municipal Capital Spending in the United States

This research examines the determinants of municipal capital investment in the United States. Using a data set of 100 large cities in five select years over 1992–2012, the regression analysis finds that local tax and expenditure limitations and legal debt limitations restrict municipal capital spending. The receipt of intergovernmental revenue, governmental fund balance, and some demographic factors have significant effects on the capital outlays. The empirical findings shed light on how to address the lag of critical investment in infrastructure at the municipal level in the United States.