FUNDAMENTALS OF FEDERALISM CH. 3

FISCAL FEDERALISM Fiscal Federalism: pattern of spending, taxing, and providing grants in the federal system Federal government uses this power to enforce national rules and standards Congress has two resources to work with when it comes to influencing states to do what it wants: authority and money $$$ Categorical grants Block grants Unfunded mandates

NATIONAL MINIMUM DRINKING AGE ACT

“He who pays the paper calls the tune” Fiscal Federalism Defined: the pattern of spending, taxing, and providing grants in the federal system. The major way the federal government has grown in power is through using money as a manipulator. Federal aid makes up 25% of state and local governments and 16% of the federal budget. “He who pays the paper calls the tune”

GRANTS-IN-AID Money paid from one level of government to another, 2 major types: Categorical Grants - target specific purposes and “strings attached.” Very detailed 80% of all aid to state and local gov Preferred by nat’l level Formula and Project Ensures state compliance and policy uniformity Matching funds Members of Congress receive credit when program target effective Block Grants – given for broad, general purposes and allow more discretion on how the money is spent (ex. Welfare reform) Preferred by governors Most famous example is TANF – Temporary Assistance to Needy Families aka Welfare Reform Act

WELFARE ACT Temporary Assistance for Needy Families (TANF) 1996 DC set terms for cash aid to poor families with children but states administer the program according to federal specifications States have greater leeway in defining many of the rules, qualifications, work requirements while still recognizing federal provisions, limits on how long people can collect Welfare is not an entitlement is states run out Transferred the money to states as block grants Strings attached: head of family must work or lose benefit; lifetime benefits limited to 5 years; unmarried mother < 18 only receive $ if stay in school and live with adult; immigrants ineligible for 5 years

MANDATES A requirement that a state undertake an activity or provide a service They have no choice! Different from grants! Why would this cause a power struggle? Often times the states or local gov’ts have to pay the bill of the mandate set by Congress OR it overturns existing state policy States no longer have the RIGHT to monitor or legislate Americans with Disabilities Act (1990) Civil Rights Act of 1964

CIVIL RIGHTS ACT OF 1964 Outlawed discrimination based on race, sex, religion, national origin in schools, workplace and public facilities

(Unfunded) Mandates Direct orders to state governments to do something. Specific policy requirements but does not provide a way to pay for activities CONSEQUENCES: criminal or civil penalties or promises to cut off other, often unrelated, federal funds Little to no funding by the federal government; all or most funding by the state governments. Examples: Clean Air Act ADA

ADA Prohibits discrimination based on disability Requires that buildings be made readily accessible to the handicapped Compliance costs the states considerable sums of money states must comply upon pain of financial penalties

CROSS-OVER SANCTIONS

NEW FEDERALISM DEVOLUTION REVOLUTION Nixon-Reagan: give states more control “Our Federalism” - power of the federal government is limited in favor of the broad Idea that American federalism is strengthened by a partial shift in authority from the fed. Gov. to state and local gov. powers reserved to the states. Goal: lessen federal domestic spending and give the states more control over spending

NEW FEDERALISM Began w/ budgetary pressures in 80’s Fed. assistance slowed More block than categorical grants States take on more financial burden for joint programs States have more authority, BUT also bigger share of responsibility – programs under funded