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This article reviews the theory of individual preferences between tax and bond finance of municipal expenditures and tests the hypotheres that cities' borrowing will vary in relation to the cities' capital expenditures, median income, bond rating, and the population level, growth, mobility, and age composition. Differences in bond ratings, population, and population growth did not prove significant, but median income, capital expenditures, and population mobility were found to have statistically significant effects on the percentage of city expenditures financed by borrowing.

Observations that goods and services cannot legitimately be divided into just two categories - private and public - have led to a proposal, published in this journal, that the traditional concept of public goods be abandoned. In this paper it is suggested that the problems of the private versus public dichotomy be solved by expanding the taxonomy, not by abandoning it. Non-rivalry and non-excludability are independent characteristics (i.e. one can exist without the other), and they can be present in varying degrees (i.e. they are not all-or-nothing characteristics). Recognizing this, an expanded taxonomy is constructed which is not subject to the valid criticisms which have been made of the too simple private versus public dichotomy.