Who Benefits from Public Funds?

Austin Neill via Unsplash

Who Benefits from Public Funds?

Urban residents might like to think that city funds marked for equity go towards its most vulnerable members. A closer look at Chicagoan neighborhoods reveals that public spending often goes towards business interests instead.

Talen, Emily and L. Anselin. “City cents: Tracking the spatial imprint of urban public expenditures.” Cities 108 (2021): 102962.

City governments make great promises, but don’t always deliver. We know that access to parkscleaner waterbetter storm defenses, and other environmental attributes improve the health and safety of urban residents. However, some neighborhoods are still missing such benefits. This situation begs us to question where our taxpayer money actually goes. A recent study shows that even when governments set aside money towards areas needing more support, such public spending often goes towards businesses and wealthy neighborhoods instead. 

Typical inspections of city budgets by researchers and auditors start broadly, examining spending at the city or ward levels. Chicago – a Midwestern regional center, the third most populated American city, and a city with a history of racial segregation – is well suited for examinations of public spending. At first glance, the City of Chicago’s public spending seems to meet residents’ needs. From 2012-2017, it divided over $4 billion on various development, improvement, and maintenance programs throughout its 50 wards. Considering Chicago’s racial segregation and resulting inequity, various city and State plans have aimed to strengthen all communities and uplift those in greatest need. The city even created novel tax funds to support previously neglected areas. However, an article from January 2021 in Cities: International Journal of Urban Policy and Planning took a deeper dive into the city’s spending patterns to reveal a more complex picture. 

In that paper, Dr. Emily Talen and Dr. Luc Anselin from the University of Chicago took the unusual step of breaking the city into almost 800 neighborhood-sized “tracts”. To enable comparisons in spending across tracts, they also defined three patterns of city government spending: “efficiency,” “development,” and “equity.” Cities pursue “efficiency” when they spend money in an impartial way so that all neighborhoods are affected equally. “Development” spending concentrates money to help businesses grow in certain areas. The hope is that profits might trickle down to city residents, but other research has shown that benefits don’t always materialize for surrounding residents through this model. The third spending pattern, “equity”, focuses money towards neighborhoods in need. This can look like maintenance of neglected places or improvements for densely crowded, lower income neighborhoods.  

In contrast to the optimistic aims of Chicago’s investment plans, Dr Talen and Dr Anselin found that funds didn’t reach each part of Chicago equally, nor were they concentrated towards more crowded, lower income neighborhoods. Instead, clusters of less crowded neighborhoods close to the downtown business centers received most of the funding, indicating a “development” style of public spending.  

It seems that nominal support for equity is not enough; spending must change to reflect neighborhood equity too. Following the paths of city funds to the tract level will reveal the true patterns of public spending and allow us to hold decision makers accountable. Chicago is not alone in nominally committing spending towards “equity” while pursuing new funding methods. If decision makers can directly tie public spending to specific neighborhoods instead of larger wards, they can start to provide healthy parks, cleaner water, safer storm defenses, and other health and safety benefits for urban residents that need them most. 

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