How Cities Can Consider Equity in Budgeting And Why It Matters

The parks, playgrounds, health clinics, and other public facilities that local governments manage are built and maintained with money allocated through a process known as capital budgeting. Virtually all local governments struggle to find funding that meets all their capital needs, prompting difficult decisions about which projects they should prioritize.

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These types of investments can have cascading impacts. Properly maintained or refreshed facilities—particularly in lower-income areas whose residents have access to fewer personal resources—can help people access Wi-Fi to search for jobs or child care, learn new skills, enhance their education, and join sports leagues that foster a greater sense of community and provide additional opportunities for students outside of school.

So how can a city’s capital budgeting process become more equitable, to ensure that communities and facilities with a historically lower level of investment get a fair share of the pie?

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For starters, examining past investments can help inform future spending. And Baltimore and Philadelphia have taken the lead by doing just that.

At the city of Philadelphia’s request, The Pew Charitable Trusts recently released a report analyzing how capital fund commitments were distributed across various demographic groups and geographic areas in the city from fiscal years 2011 through 2022. The study—“Capital Budgeting in Philadelphia,” adapted from a methodology created by the Baltimore City Department of Planning—found that considering equity when selecting projects led to more favorable outcomes for many racial and ethnic groups and various income brackets, as well as neighborhoods that had experienced lower levels of investment.

The report found that census tracts that received greater shares of capital investment tended to have higher median household incomes and a larger share of non-Hispanic White residents relative to the city overall. And tracts with the lowest share of investment tended to have a higher percentage of non-Hispanic Black or African American residents and lower median income levels.

A key reason for this: Many of Philadelphia’s largest and most expensive assets, such as museums designed to serve the entire city, are located in and around the central business district, Center City, which also has the highest median household income.

Differences in investment among smaller, more widely distributed facilities, such as recreation centers and libraries, were more modest, though disparities persisted.

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Among only recreational assets, census tracts with the smallest share of Black or African American residents had a per capita investment of $324, or 25% greater than the citywide average. But tracts with the largest share of Black or African American residents had a per capita investment of $196, or 25% lower than the citywide average. (See Figure 1.)

For comparison, Pew conducted the same analysis on Philadelphia’s Rebuild program, which aims to make equitable capital investments. For many demographic groups, the results were reversed from the general findings, with lower-income areas receiving greater investment than the citywide average.

As more local governments consider including equity as a factor in their capital budgeting, it’s vital for them to take stock of where investments have been made and where funding has fallen short. Pew’s methodology, adapted from a framework used by Baltimore, can be replicated using a city’s capital investment data and publicly available demographic information.

Such analyses highlight potential room for improvement. By monitoring this data, city governments can track their progress as they work to help ensure reliable access to public spaces and resources for all residents—which, in turn, can help their cities thrive.

Katie Martin is a project director and Alix Sullivan is an officer with The Pew Charitable Trusts’ Philadelphia research and policy initiative.