Fiscal footprint: the relationship between city greenhouse gas emissions and local government budgets

Purpose This study investigates how municipal budget allocations influence greenhouse gas (GHG) emissions, examining whether fiscal choices made by local governments shape cities’ environmental outcomes. By focusing on Minnesota cities from 2012 to 2020, the research argues that budgeting is a crucial yet underexplored tool for climate governance. Design/methodology/approach We integrate city-level greenhouse gas (GHG) emissions data from the Regional Indicator Initiative with local government expenditure records from the Office of the State Auditor. Through regression analysis, we evaluate how spending in key budget categories, such as culture and recreation, economic development and housing and conservation, correlates with total emissions as well as emissions from energy, transportation and waste. Findings The results indicate that the relationship between budget allocations and emissions is variable and can be contradictory. Spending on conservation and natural resources is consistently linked to reduced emissions, primarily through carbon sequestration and improved infrastructure efficiency. In contrast, expenditure on culture and recreation has mixed effects: for instance, investments in active mobility infrastructure can decrease transport-related emissions, while energy-intensive facilities tend to increase them. Similarly, economic development and housing expenditures may lower emissions if they promote compact, mixed-use development, but they can lead to higher emissions when associated with industrial or commercial expansion. Originality/value This research provides empirical evidence on local climate governance by connecting city-level fiscal choices to environmental outcomes. This paper integrates expenditure and emissions data, enhancing the understanding of budgets as climate policy tools. The findings offer policymakers practical insights, highlighting budget categories that can achieve lasting emissions reductions and the need to disaggregate expenditure types to identify climate-relevant trade-offs.