1. FUNDAMENTALS OF FEDERALISM
CH. 3

2. 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

3. NATIONAL MINIMUM DRINKING AGE ACT

4. “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”

5. 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

6. 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

7. 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

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

9. (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

10. 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

11. CROSS-OVER SANCTIONS

12. 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

13. 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