I believe that having local government engage in big construction projects ($10 million plus) is not Pareto Efficient.
Local government should leave big projects, such as building bridges and the like to the central government because it takes away monies that could be deployed more efficiently, and subject to rigorous oversight by bipartisan commissions. Besides, the central government enjoys better economies of scale for starters. For these reasons, local governments should be funded (70%) for the likes of safety and beautification of public spaces, including parks and buildings. Moreover, it is time citizens get a very robust and reliable garbage collection service. It should be noted the 70% funding should be determined by population size, for starters.
The remaining 30% of funding will have to come exclusively from the local government itself, i.e. local leadership in partnership with businesses and citizens will have to engage in business activities to generate tax revenues, including creating incentives to encourage new businesses to relocate to the Region . For this reason, the development of local talent and innovations would be crucial to the success of the respective Region. For some Regions, tourism would be a natural focus, for others Agro processing, and so on.
If the Pareto Inefficiencies continues, it is because politicians endorse slush funds in the guise of funding for so called large scale local government projects with the understanding of buying votes.
Let local governments and the citizens participate in improving their own lives with pride and freedom from party gerrymandering.