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How does the location of a state’s capital structure the state’s politics? And does the bifurcation of political and economic power across different cities in a state affect distributive choices by the state government? Existing research suggests that elite decision-making regarding state capital location in the United States has historically been driven by representational concerns, as framers of state governments have demonstrated a willingness to locate state capitals in proximity to the state population centroid. Here, I examine the effects of where institutional designers locate the machinery of state government. I develop and test a model of the distributive consequences originating in the significant representational decision regarding the placement of a state’s capital. Namely, I argue that locating the state government in a city of less economic import leads state legislators to deprioritize urban interests as the capital becomes a competing center of political authority. I examine state funding for transportation and urban development across all fifty states since 2000. Preliminary evidence suggests that major urban centers in states with capitals located in small towns are comparatively underserved by state-level public programs compared with those in states whose capital is a primary economic center, as well. In suggesting that divorcing a state’s political and economic authority contributes to the underfunding of public institutions in major urban centers, this research has important consequences for our understanding of the relationship between spatial and distributive politics.