Local Government Infrastructure Construction Spending Expected to Reach $300 Billion in 2025

The United States Conference of Mayors P3 Task Force recently examined capital construction spending on a variety of community infrastructure assets that local government owns, operates and maintains. Local and state government spent a total of $4.5 Trillion from 2012 to 2024 according to annual Census reports on the value of capital construction put in place for a dozen community asset classes. Local government accounts for roughly two-thirds of annual public construction spending, is estimated to be $284.5 billion in 2024, and is increasing at an annual 5% growth rate. Robust local construction spending in the last three years and overall capital outlay has increased and will likely exceed $300 Billion in 2025.

This report provides information on public (local and state government) capital construction spending on community assets from 2012 to 2024. The purpose of the review is to better understand the patterns of construction spending over time and among physical asset classes to anticipate the level and trajectory of spending on these assets for planning purposes. In addition to capital construction spending data the Census also reports estimated overall capital outlay for states and local governments separately in the annual local and state finance reports.

The 2025 public infrastructure investment outlook for community assets is positive and should continue to grow.

The Conference of Mayors P3 Task Force provides a forum for local elected officials to discussalternative models of public project delivery.

Visit our website for more information on over a dozen classes of community assets and capital investments.

Findings

Public Infrastructure Capital Construction Spending in 2024

Community Assets and Long-Term Construction Investments

Local and state government spent $4 Trillion on capital construction from 2012 to 2024. The community assets leading in cumulative spending include highways ($1.29 trillion), education ($1 trillion), transportation ($433 billion), sewer ($350 billion), and water supply ($226 billion), (Table 1). The top three asset categories account for two-thirds of long-term spending and are expected to continue to increase.

Table 1: Long-Term Public Construction Spending, 2012-2024

Trends in Public Construction Spending, 2012-2024

Public spending on capital construction for community assets grew 76% from $279 billion in 2012 to $492 billion in 2024. The local and state government portion of total public spending grew 80% over the same period. The level of construction spending varies annually but has steadily and steeply increased since 2022. While the average annual growth in spending from 2012 to 2024 is 5%, the levels fluctuate widely. For example, some of the most variable annual growth rates are -3.1% in 2021; 7.2% in 2022; 17.5% in 2023; and, 9.5% in 2024), (Figure 1).

Figure 1: Trend in Public Construction Spending, 2012-2024

Annual construction spending has increased in all 12 asset categories, ranging from a 48% increase for health care assets to a 154% increase for commercial construction, (Table 2).

Table 2: Change in Spending on Community Asset Construction, 2012-2024

Local Public Construction Spending

Construction spending reported by the Census does not disaggregate state from local spending. The Census, however, also reports on capital outlay estimates for several infrastructure asset categories in the Local and State Finances reports. While construction data is reported up to and including 2024, capital outlay data was last reported by the Census in 2022. Census estimates for capital outlay in 2022 were used to partition the local and state shares of capital construction spending among the dozen community asset classes, (Table 3).

Local and state capital outlay, including construction, for 2022 was a total of $428.8 billion. Overall, the local government share was $284.5 billion, or 66%; and, the state government share was $144.2 billion, or 33%. The breakdown in local and state spending delineates the level of construction spending devoted by each level of government for each general asset category. Spending in each asset class varies. Sewage construction spending, for example, is almost exclusively local, as are airports, education (elementary and secondary), parking, utilities and solid waste.

Table 3: Public Capital Outlays 2022

A crosstabulation of asset spending level and percentage change from 2012 to 2024 indicates the fastest growing and high spending asset categories are water supply, amusement and recreation and sewage,
(Figure 2).

Figure 2: Comparing Spending Level and Rate of Change over Time