The Budgetary Repercussions Of Capital Convictions

Understanding how transient fiscal distress affects the stability and distribution of local budgets is increasingly important as control of public spending and revenues becomes more decentralized. This paper exploits the large and unexpected shock to county budgets imposed by capital crime trials, first to understand the incidence of the cost of capital convictions, and second to uncover the effects of local fiscal distress on the level and distribution of public spending and revenues. I show that these trials are quite costly relative to county budgets (with each trial causing an increase in county spending of more than $2 million), and that the costs are borne primarily by increasing taxes (although perhaps partially by decreases in police and capital spending). Using these trials as a source of exogenous variation, I also find significant inter-jurisdictional spillovers of both spending and revenues.