FEDERAL-STATE RELATIONSConstitutionally the federal government may be supreme, but politically it must take into account the fact that the laws it passes have to be approved by members of Congress selected from, and responsive to their constituencies.

GRANTS-IN-AID• The first of these programs began even before the

Constitution was adopted.1. Land Grants land given to the states by the federal government

to fund education, build roads, canals, RR, and flood control projects. The states sell the land how the grant money was used was left almost entirely to the states

2. Cash Grants-in-aid (1808) Congress gave the states 200,000 to the states to pay for the militias. The states were in charge of the size, command, and deployment of the troops.

The grant in aid programs remained small until the 20th century. By 2001 these programs provided state and local governments with about a fifth of their annual budgets. They fund hundreds of programs such as medicaid.

Why did the grant-in-aid programs grow

• They helped state and local governments solve a dilemma• They wanted access to superior taxing power of the federal

government • The federal government could not spend money for purposes not

authorized by the Constitution. (until the late 1930’s)• The solution was to have federal money put in the hands of the states;

federal government would pay the bill and states run the programs.

4 REASONS WHY FEDERAL MONEY IS SO ATTRACTIVE TO STATE OFFICIALS• 1. The money was there

• The federal government was taking in more money than it could spend in the 19th and early 20th century. As the budget surpluses had gone away in the mid 20th century

• 2. Federal income tax• Which came in the 1920’s which proved to be a flexible tool to for public

finance because it grow as economic activity grew

• 3. Federal government managed the currency and thus print more money whenever it needed it

The states can not borrow money without having to pay it back

• The 4th reason is the most important reason for states wanting federal grants.

• 4. Politics• Federal money seemed to a state official to be free money • States could get money from citizens from all over the country not

just those in their state.• States do not have to propose, collect, or take responsibility for

federal taxes but can call out the federal government for wasteful spending but at the same time take the money.

• Federalism as practiced in the US means if the national government want to give money to one state they would have to give it to many states. Why

MEETING NATIONAL NEEDS• Until the 1960’s most federal grants-in-aid were conceived by or in

cooperation with the states and were designed to serve essentially state purposes.• Building highways• Vocational education• Help farmers

• In the 1960’s changes took place the federal government started devising grant programs based less on what the states were demanding and more on what federal officials believed to be important national needs. Some of these programs attempted to bypass the states giving money directly to cities or citizen groups• Urban poor• Combat crime• Reduce pollution• Drug abuse

• This increase in federal activism happened at a time when federal aid to states had become very large that many jurisdictions were completely depended on it for the support of vital services

INTERGOVERNMENTAL LOBBY• State and local officials began to form a lobby( made up of

mayors, governors, superintendents of schools, state directors of public health, county highway commissioners, local police chiefs) who had come to count on federal funds.

• The purpose of these lobbies was to gain more federal money with fewer strings attached. For a while states and cities did get more money but in the 1980’s federal grants stopped growing.

Federal Grants• 1 Categorical grants

• Appropriated by Congress for specific purposes (highway) These grants usually require the state to match the federal grant. There are many, but a few, including Medicaid and Aid to Families with Dependent Children, account for almost 85 percent of total spending for categorical grants.• State and local officials complain that these grants are often to narrow and cannot be

adapted easily to local needs

• 2 Block grant• Consolidate several categorical grants into a single block for prescribed broad

activities, such as social services. They give Congress less control over how the money is used. State officials have supported block grants because they give states wide control of how and where the money is spent.

• 3 Revenue sharing (no longer exists)• State and localities were given funds with no requirements for matching funds

and the freedom to spend the money on almost anything they wanted. • They were terminated in the late 1980s because of federal deficit

• Today block grants still exist, Congress is always tempted to add strings that set requirements for how federal grants are to be spent.

FEDERAL AID AND FEDERAL CONTROL• Federal aid became so important for state and local

governments that fear started to set in that the federal government was on its way to controlling state and local governments why?• The constitutional protection of state governments in the 10th

amendment were in jeopardy why?• Strings attached to the grants-in-aid• Block grants and revenue sharing was to reverse this which did not

happen

• There are two kinds of federal controls on state governmental activities.• 1. conditions of aid • 2. Mandates

MandatesMandates tells what states must do, sometimes they must be observed only if the state takes any federal grant, but sometimes they have nothing to do with federal aid they apply to all state governments whether or not they accept grants. (unfunded)•Most mandates deal with:

• Civil rights• Environmental protection

•States may not discriminate in the operation of their programs, no matter who pays for them. These antidiscrimination rules applied to

• Race • Sex• Age• Ethnicity

•Later they were extended to physical and mental disabilities as well as pollution controls that the states must follow

MANDATES CONT.• Some of them are easy to understand, simple to

administer, and relatively inexpensive.• 1988 ocean dumping ban act

• Some of them create administrative and financial problems especially when they are written in vague language; giving federal administrative agencies the power to decide for themselves what state and local governments are supposed to do• Difficult to administer, high or uncertain costs

• Americans with Disabilities Act• Unclear definition of equal access• No blue print in how it would be administered• No good estimates how much it would cost to implement

MANDATES CONT.• Mandates are not the only way in which the federal

government imposes costs on state and local governments which make it hard or expensive for them raise revenues, borrow funds or privatize public functions• Federal taxes• Regulatory policies• Federal laws• Court decisions

CONDITIONS OF AID• Tell the state governments what they must do if they want

to get any grant money.• In theory accepting these conditions is voluntary; if you do

not want the strings don’t take the money.• States depend on these grants for about 25% of their budgets and

their citizens depend on the programs that they pay for.• Some conditions are specific to a particular program but most are not• The state and federal government disagree about the costa and benefits

of rules attached to the grants.• States believe that the federal government fails to take in account diverse

local conditions• Members of Congress feel they have an obligation to develop uniform national

policies and prevent the states and cities from misspending federal money.

What Is DEVOLUTION• It aimed to pass on to the states many federal functions• Shift important functions back to the states.

• 1994 republicans in congress• Key issue was welfare Aid to Families with Dependent Children (AFDC)

• Ended any federal guarantee of support and subject to certain rules, turned the management of the program over to the states, aided by federal block grants• Rules every aided women should begin working within two years and no women could

receive benefits for more than five years.

• Traditionally members of Congress liked voting for federal programs and categorical grants Why?• They could take credit for what they did for their constituencies

• With devolution they were looking for ways to scale back the size and activities of the federal government.

Block Grants For Entitlements• Three types of block grants

• 1. operational purposes such as running state child-care programs• 2. Capital purposes such as building water treatment plants• 3. Entitlement grants transferring income to families and individual

• Federal governments two biggest grant-aid programs • AFDC welfare• Medicaid

• They were not created as block grant programs but they accounted for half of all federal grant-in-aid spending.

• They were operated as entitlement programs which entitled each state to federal dollars based on the amount of money it paid to poor families and individuals each state determined the level and range of benefits eligible individuals received within the framework defined by federal law

What’s Driving Devolution• Three forces

• 1. Devolution proponents• Distrust of the federal government belief in local government

• 2. Realities of deficit politics• Cuts in spending

• 3. views of most citizens• We favor local government in theory