System Failure: The Hidden Rot in America’s State and Local Governments
New York’s Second Avenue Subway costs 12 times more per mile than similar projects in Paris and Madrid. That astronomical price tag reflects a deeper problem plaguing governments across America, where housing costs spiral out of control and basic infrastructure becomes impossibly expensive.
While the media focuses on federal policy, state and local governments—the ones that control your daily life through building permits, school budgets, and road repairs—are quietly failing at their most basic jobs.New research from Nicholas Bagley (Yale) and David Schleicher (University of Michigan) reveals the root cause. These governments are trapped in a destructive cycle where voters can’t hold officials accountable, bureaucratic red tape strangles even simple projects, and rigid budget rules force cuts precisely when communities need help most.
Key Takeaways:
- Voters are ill-equipped to hold state and local officials accountable for poor performance because they base their votes entirely on national party preference, with research showing a very high correlation between state legislative and Congressional voting patterns.
- State administrative procedures often exceed federal requirements in complexity, with all 50 states having their own Administrative Procedure Acts and 16 states imposing additional environmental review laws. This especially burdens smaller state and local agencies, which have limited resources to study impacts and solicit feedback in a timely fashion.
- State and local governments face constitutional balanced budget requirements that force harmful service cuts during recessions, creating a cycle of deferred maintenance and underinvestment.
The researchers analyzed Census Bureau data, electoral studies, infrastructure cost comparisons, and state administrative codes. They examined voting patterns and constitutional provisions limiting state fiscal powers. The evidence shows:
Broken Accountability: Voters do a poor job of holding their state and local elected officials accountable because they are not informed on state and local issues and do not understand who is responsible for governance, so they vote largely based on national party affiliation. This nationalization of state politics means officials face no consequences for poor performance. One study cited shows that 95% of voters cannot identify their state legislators. The collapse of local news has also eliminated information sources that citizens once relied on. The authors cite a study that shows when local newspapers close, government borrowing costs rise because lenders are less confident they’ll be repaid. This is compounded by numerous independently elected officials (comptrollers, attorneys general, railroad commissioners), creating a governance structure that further diffuses responsibility.
Procedural Barriers: All 50 states have their own Administrative Procedure Acts, which require agencies to provide notice of proposed rules, hold public hearings, and wait through comment periods before taking action. These processes can delay projects for months or years. Additionally, 16 states have enacted environmental review laws modeled after NEPA that require agencies to study and mitigate environmental impacts before approving projects. While intended to ensure thoughtful decision-making, these layered requirements often enable small groups to block beneficial projects.
Fiscal Constraints: State governments face significant budgetary limitations that restrict their financial flexibility. During economic downturns, balanced budget requirements force states to cut services precisely when public needs increase most. This inflexibility is compounded by mandatory spending obligations. For example, state pension systems are currently underfunded by $1-1.4 trillion, creating long-term financial pressure. Additionally, Medicaid spending has grown dramatically from 6.9% of state budgets in 1990 to 27% today, driven partly by the pursuit of federal matching dollars. These combined obligations severely limit states’ ability to allocate resources to other priorities, even during times of economic stress.
Breaking the cycle of state and local government failure requires addressing all three structural problems. For accountability, governments and philanthropists can subsidize local news, and state election reforms could explore linking local voting to local performance. For procedural barriers: challenging “byzantine, legalistic proceduralism” would stop small groups from exploiting review processes to block needed projects. For fiscal constraints: balanced budget requirements and pension debt force harmful cuts during downturns—potential reforms could restore fiscal flexibility. Without such changes, deteriorating services breed public distrust, which generates more constraints—a downward spiral that makes effective governance impossible.
Photo of Second Avenue Subway construction by PrecipiceofDuck via Wikimedia Commons
