Does Urban Sprawl Pay Off for the Suburban Municipal Budget in Poland?

The literature stresses the negative environmental, economic, and social consequences of urban sprawl. The dynamics of this process is high, as beneficiaries of it are against any attempts to reduce or control this phenomenon. In Poland, suburban municipalities usually base their development strategies on increasing the number of inhabitants, that is they consider urban sprawl as a blessing. We would like to look closer at municipal finances to verify if this might be true. We do not attempt to assess the full costs and benefits of urban sprawl – we will focus only on financial aspects of this phenomenon from the perspective of municipal revenues and expenditures. We use quasi-experimental design comparing a treatment group (suburban municipalities) and a control group (other municipalities similar to suburban units) in the period 2004–18 using data from the Polish Ministry of Finance. On the revenue side of the suburban municipalities, we can observe a greater increase of both, total and per capita revenues, compared to the control group. Suburbanization also affects expenditures, but due to the economies of scale, the relative increase in current expenditures is lower than the increase in the number of inhabitants. Generally, the current operational surplus grows faster in suburban municipalities, but also varies in time. From the perspective of financial standing of the suburban municipality urban sprawl can be regarded as a positive phenomenon at least in the short and medium run.