Small Cities Struggling to Pay for Infrastructure Projects

Towns with shrinking or stagnant tax bases can't keep up with the costs of aging infrastructure without state and federal support.

2 minute read

July 6, 2021, 7:00 AM PDT

By Diana Ionescu @aworkoffiction


Orlando Street

Nataliya Hora / Shutterstock

Small cities around the country are struggling to pay for infrastructure projects, and as Jake Blumgart writes in Governing, many of them have "staggering" needs that they can't tackle without state and federal support, which lags far behind other countries–"only 2.4 percent American gross domestic product is applied to infrastructure, in comparison with 5 percent in the European Union and 9 percent in China."

"Advocates of increased infrastructure spending also note that before the 1980s there were greater federal commitments to at least some local projects. In the 1970s, the federal government paid to update many drinking and wastewater systems to bring them up to newly instituted environmental standards. But federal investments in water infrastructure fell during the 1980s." Today, cities with stagnant tax bases "can't [keep up with infrastructure needs] without vastly increasing their property tax revenues. If older cities just keep jacking the property tax rate up, that creates a vicious downward cycle where more population leaves," says Bill Fulton, director of the Kinder Institute for Urban Research at Rice University. 

It isn't just Rust Belt cities feeling the pinch. "In many cases, more recently developed regions have leveraged population growth to get developers to build a lot of their necessary infrastructure. As a side effect, the consequences of the strict caps that states like California and Washington place on property tax increases were not felt. Today, however, population growth is slowing and developers are not on the hook to patch up the infrastructure they built decades ago. Property taxes revenues are not keeping up with regular expenditures, let alone expensive infrastructure investments." For mayors like Ferndale, Michigan's Melanie Piana, any new federal commitments to local infrastructure funding could inject much-needed capital into city coffers.

Saturday, July 24, 2021 in Governing

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Get top-rated, practical training

Concrete Brutalism building with slanted walls and light visible through an atrium.

What ‘The Brutalist’ Teaches Us About Modern Cities

How architecture and urban landscapes reflect the trauma and dysfunction of the post-war experience.

February 28, 2025 - Justin Hollander

Complete Street

‘Complete Streets’ Webpage Deleted in Federal Purge

Basic resources and information on building bike lanes and sidewalks, formerly housed on the government’s Complete Streets website, are now gone.

February 27, 2025 - Streetsblog USA

Green electric Volkswagen van against a beach backdrop.

The VW Bus is Back — Now as an Electric Minivan

Volkswagen’s ID. Buzz reimagines its iconic Bus as a fully electric minivan, blending retro design with modern technology, a 231-mile range, and practical versatility to offer a stylish yet functional EV for the future.

March 3, 2025 - ABC 7 Eyewitness News

View of mountains with large shrubs in foreground in Altadena, California.

Healing Through Parks: Altadena’s Path to Recovery After the Eaton Fire

In the wake of the Eaton Fire, Altadena is uniting to restore Loma Alta Park, creating a renewed space for recreation, community gathering, and resilience.

March 9 - Pasadena NOw

Aerial view of single-family homes with swimming pools in San Diego, California.

San Diego to Rescind Multi-Unit ADU Rule

The city wants to close a loophole that allowed developers to build apartment buildings on single-family lots as ADUs.

March 9 - Axios

Close-up of row of electric cars plugged into chargers at outdoor station.

Electric Vehicles for All? Study Finds Disparities in Access and Incentives

A new UCLA study finds that while California has made progress in electric vehicle adoption, disadvantaged communities remain underserved in EV incentives, ownership, and charging access, requiring targeted policy changes to advance equity.

March 9 - UCLA Luskin Center for Innovation