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Page 5 of 6 V. The Slowdown in “Free” Money 1. Categorical grants gave the federal gov’t, not the states, control over the money, and this was good for Washington, since federal officials tended to distrust state governments. 2. Revenue sharing spread money out so much that to individual receivers, the cash wasn’t “a matter of life and death,” whereas in categorical grants, it often was “a matter of life and death” because of the concentration of cash. i. Revenue sharing money went to all divisions, regardless of need, and thus was wasteful. 3. The more important federal money becomes to the states, the more likely they are to fight over it, and the question of whether the federal gov’t helps certain areas of the country by distributing more cash to those areas arises. i. It is very hard for Washington to figure out how to distribute money, since money given to a defense contractor headquartered in California might go to New York if that contractor pays subcontractors from that area. ii. Recently, “distribution formulas” have arisen to decide this, thus giving huge importance to the results of the census, which is taken every 10 years. iii. Distribution formulas are okay, since there are computers take can predict all effects, but even occasionally, such formulas may end up strangely doling out money where it’s not needed. VI. Federal Aid and Federal Control 1. Some people fear that the federal gov’t is controlling the states by controlling the money that goes to them, thus, in effect, nullifying the 10th Amendment. 2. The fed gov’t can control state activities by using traditional controls (telling a state gov’t what it must do to get grant money) and attaching conditions of aid or by using mandates—telling the states what they must do period. 3. Mandates can concern civil rights (no discrimination on sex, race, or disability) and environmental protection (anti-pollution laws). i. Some mandates are clearly advantageous and easily to enforce (like no dumping sewage into the ocean) while others are not so clear and hard to administer (like the Americans with Disabilities Act of 1990, where the disabilities have to be specified). ii. Mandates, along with certain taxes, can be used by the fed gov’t to impose costs on states. iii. Citizens can also control the behavior of local governments, thanks to the Supreme Court, by suing them over just about anything that they are “entitled to” under federal law. 4. Conditions of aid are purely optional (don’t want restrictions, don’t take money), but since much of the state budgets depend on federal grants, these conditions are often taken anyway, w/ or w/o gusto. i. These conditions can be specific (i.e. only applying to highways and beautification) or general. ii. Example Problem: The 1973 Rehabilitation Act forbid discrimination of disabled people in any program receiving federal financial aid; loosely read, this could mean that otherwise capable disabled persons had to be hired for jobs, but broadly read, it could mean that buses and subways had to give access for disabled people onto their vehicles. iii. Basically, this “free money” was no longer free. 5. Bargains struck to get benefits while passing costs onto the other side used to benefit local officials, since the Congressmen were elected by the local people, but ever since the 1960s, American politics has shifted to favor Washington’s needs over local needs. i. President Richard Nixon tried to reverse this by creating block grants and revenue sharing. ii. President Ronald Reagan tried to stop this by combining 33 categorical grants into six large block grants, but Congress attached restrictions to many of the new grants. iii. Thus, the cutbacks in money during the 1980s led to many states experimenting with new ways of delivering services.
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