The Effect of Local Earmarking on Capital Spending in Georgia Counties

IN RECENT YEARS, the public has begun to perceive the importance of improved public capital facilities for local economic development, business retention, and quality of life in communities. This public interest has prompted concerns among local government officials regarding adequate public capital investment and maintenance efforts. Major capital outlay sources for local governments have been intergovernmental grants (federal and state) and own-source revenues (current revenues and long-term borrowing). The sources of capital outlay in local and state governments have fluctuated in importance over the years. Throughout the 1970s and much of the 1980s, federal aid was the major source, peaking at over 40 cents out of every dollar spent on local and state infrastructure (Petersen, Holstein, and Weiss 1993). However, the termination of federal revenue sharing, reduced federal grants, and various spending and tax limitations imposed by the state government and voters in the wake of taxpayer revolts since the late 1970s have made it more difficult for local officials to find adequate revenue sources for capital projects. Faced with declining federal and state aid and resistance to property taxes, local governments have increasingly relied on user charges and fees, as well as a host of innovative financing The Effect of Local Earmarking on Capital Spending in Georgia Counties