Federal Aid and Rural County Highway Spending: A Review of the 1980 |
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| Authors: | Norman Walzer Steven C. Deller |
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| Affiliation: | Norman Waker is professor of economics and director of the Illinois Institute for Rural Affairs at Western Illinois University. He has written extensively on state. and locaI government issues and has had articles published in Review of Economics and Stotistics, Land Economics, National Taxas Journal, Financess Publicaques and Industrial and Labor Relations Review. He has written or edited several bookson economic developmentand local publoc finance, the most recentbeing Rural Community Ecommic Development (Praeger Publishers, 1992).;Steven Deller is assistant professor of agricultural economics at the University of Wiionsin—Madison. His work focuses on community and regional economic development and local public finance issues with attention to the efficient allocation of public resources. Deller's work has appeared in The Review of Economics and Statistics, Regional Science and Urban Economics. and the American Journal of Agricultural Economics. |
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| Abstract: | The Reagan/Bush Administrations cut back federal support for state and local governments during the 1980s, causing total real resources available to finance local roads and bridges to increase very slowly between 1977 and 1989. The effect of federal aid on spending for infrastructure has been subject to debate for many years. Some studies have indicated that federal aid is stimulative, while others report that federal aid substitutes for local resources. This article examines the effect of state and federal aid on county highway spending. The analysis demonstrates that, in 1987, federal aid was stimulative but state aid was not. In light of changes brought about by the Surface Transportation Efficiency Act of 1991 (ISTEA), we can expect federal aid to have a stronger relationship with local highway spending. |
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