Record Budgets, Self-made Problems
America’s largest cities are spending money at levels rarely seen in modern history. According to a RealClearInvestigations analysis of 38 cities with populations of at least 500,000, inflation-adjusted per-person spending increased 18 percent over the past decade. The only comparable periods of rapid spending growth were during Franklin Roosevelt’s New Deal and the Great Society programs of the 1960s.
Yet unlike those earlier eras, many of today’s cities are struggling to show measurable improvements in the issues that matter most to residents. Homelessness continues to rise, crime remains a major concern in many communities, schools consume ever larger budgets while academic performance disappoints, infrastructure continues to age, and growing pension obligations threaten future budgets.
One common thread is political leadership. Nearly all of America’s largest cities are governed by Democratic administrations that generally support higher taxes and larger public budgets. While many factors influence the success or failure of city government, critics increasingly argue that years of expanding budgets have not produced the level of improvement taxpayers were promised.
Budgets Continue to Climb
The numbers are striking. In 2016, the cities examined collected an inflation-adjusted average of $6,727 per resident while spending $7,685. By 2025, revenues had increased only modestly to $7,063 per resident, but spending had surged to $8,827. The gap between revenue and spending reached 25 percent, the largest on record since at least 1940.
The growth has not simply been driven by higher costs. Administrative spending increased 55 percent between 2016 and 2023 after adjusting for inflation. Many cities added government employees even as their populations declined. Memphis, for example, added more than 1,000 municipal employees while losing more than 40,000 residents.
Christopher Thornberg, founder of Beacon Economics, questioned the approach.
“It seems sufficient to brag about the money they spent without referring to whether that spending accomplished anything.”
Homelessness Reaches New Highs
Perhaps nowhere is the disconnect between spending and results more visible than homelessness.
The RealClearInvestigations analysis found that homelessness increased an average of 34 percent in America’s largest cities between 2017 and 2024. Cities that spent the most on homelessness generally did not achieve better outcomes than cities that spent less.
Los Angeles has become one of the country’s most visible examples after spending billions of dollars over several years while continuing to battle one of the nation’s largest homeless populations.
Seattle also illustrates the challenge. The city and King County poured hundreds of millions of dollars into the Regional Homelessness Authority. Washington state increased spending on housing construction sixfold. Yet homelessness continued to increase, while a state audit found the agency overspent its budget and failed to properly account for millions of dollars in spending.
Portland experienced similar problems. The city expanded homelessness programs and funding, yet homelessness continued to climb while one nonprofit funded through the program collapsed amid allegations of financial mismanagement.
Not every city struggled. Detroit reduced homelessness by improving coordination among nonprofit organizations and using better data rather than simply increasing spending. Milwaukee also reported significant success through targeted policies designed to prevent evictions before families became homeless.
As Thornberg observed, “Cities that have had success in battling homelessness, it turns out, it’s not just that they’re spending money, but how they’re spending money.”
Crime Remains a Challenge
Public safety presents another difficult picture.
While violent crime declined modestly across the cities studied, researchers found no meaningful relationship between larger police budgets and greater reductions in crime. Some cities that dramatically increased police spending saw crime worsen.
San Jose nearly doubled its police spending after adjusting for inflation, yet violent crime increased by roughly 50 percent between 2017 and 2024. Police staffing shortages forced officers to work extraordinary amounts of overtime, increasing payroll costs while failing to produce the desired improvements.
Phoenix also increased spending while continuing to struggle with staffing shortages, pension obligations, and crime concerns.
Experts argue that effective policing depends on management, training, deployment, and technology as much as budget size.
Education Consumes More While Outcomes Lag
Public education tells a similar story.
New York City now spends approximately $43 billion annually on public schools, or roughly $44,000 per student. Yet enrollment has fallen dramatically over the past decade, while standardized test scores remain disappointing.
Despite educating nearly 158,000 fewer students than ten years ago, the city operates more schools than before. Critics argue the system has struggled to adapt to changing enrollment while continuing to increase spending.
Andrew Rein of the Citizens Budget Commission summarized the concern.
“Despite the City spending $44,000 per student, too many of its schools are delivering middling results.”
California school districts face another version of the problem. Even as per-pupil funding approaches record levels, many districts warn of growing financial crises driven by declining enrollment, pension costs, health care expenses, transportation costs, and special education spending.
Infrastructure Is the Next Financial Threat
Another challenge has received less public attention but may prove even more expensive.
A Wall Street Journal report highlighted research estimating that American cities face more than $1 trillion in deferred infrastructure wear and tear. Roads, bridges, public buildings, water systems, and other assets continue to age while repairs are delayed to close annual budget gaps.
Older cities such as Philadelphia, Baltimore, and Milwaukee face especially large future liabilities.
The problem is simple. Infrastructure can be postponed for years, but eventually roads must be rebuilt, bridges repaired, and water systems replaced. Those costs do not disappear. They simply become larger.
Meanwhile, many cities devote increasing portions of their budgets to pension obligations, debt payments, retiree benefits, and other legacy costs that leave fewer dollars available for visible improvements.
Chicago illustrates the danger. Years of underfunding pension obligations have left the city with enormous long-term liabilities. More than 15 percent of its budget now goes toward addressing pension costs rather than improving services.
The Question Taxpayers Are Asking
The evidence does not suggest that every city has failed or that every program has been ineffective. Several cities demonstrated measurable progress through better management, improved coordination, or smarter deployment of resources rather than simply increasing spending.
What the evidence does show is that dramatically larger budgets have not consistently produced dramatically better outcomes.
After years of expanding budgets, America’s largest cities have become a real-world test of a governing philosophy that favors higher taxes and greater public spending. Most of these cities have been led by Democratic administrations for years, giving those leaders ample opportunity to demonstrate that bigger government produces better results. Instead, many continue to struggle with persistent homelessness, aging infrastructure, disappointing educational outcomes, public safety concerns, and growing fiscal pressures. While every city’s challenges are unique and no single factor explains every problem, the overall pattern is difficult to ignore. As taxpayers are asked to contribute ever larger sums, they are increasingly asking a simple question: if government keeps getting bigger, why aren’t our cities getting better?
