This paper examines the relationship between ethnic divisions and the provision of public goods in US cities, metropolitan areas, and urban counties. The authors develop a model that links the heterogeneity of preferences across ethnic groups to the amount and type of public goods supplied. They test the model using three datasets: US cities, US metropolitan areas, and US urban counties. The results show that productive public goods, such as education, roads, libraries, sewers, and trash pickup, are inversely related to ethnic fragmentation in these areas, even after controlling for other socioeconomic and demographic factors. Ethnic fragmentation is also negatively associated with the share of local spending on welfare. The findings suggest that ethnic conflict is a significant determinant of local public finances, particularly in majority-white cities reacting to varying minority group sizes. The paper concludes by discussing the implications of these findings for policy and further research.This paper examines the relationship between ethnic divisions and the provision of public goods in US cities, metropolitan areas, and urban counties. The authors develop a model that links the heterogeneity of preferences across ethnic groups to the amount and type of public goods supplied. They test the model using three datasets: US cities, US metropolitan areas, and US urban counties. The results show that productive public goods, such as education, roads, libraries, sewers, and trash pickup, are inversely related to ethnic fragmentation in these areas, even after controlling for other socioeconomic and demographic factors. Ethnic fragmentation is also negatively associated with the share of local spending on welfare. The findings suggest that ethnic conflict is a significant determinant of local public finances, particularly in majority-white cities reacting to varying minority group sizes. The paper concludes by discussing the implications of these findings for policy and further research.