Money plays a key role in the federal government’s relationship with the
states. Congress gives money to the states, for example, but stipulates how this
money should be used in order to force the states to cooperate with federal
policies.
Federal Aid to the States
Since World War II, states have come to rely heavily on federal money.
Likewise, the national government has also relied on the states to administer
some federal policies, a practice called fiscal federalism. The
term grants-in-aid refers to the federal government giving money to
the states for a particular purpose. There are two general types of
grants-in-aid:
-
Block grants: Money given for a fairly broad purpose with
few strings attached.
-
Categorical grants: Money given for a specific purpose
that comes with restrictions concerning how the money should be spent. There
are two types of categorical grants:
-
Project grants: Money states apply for by submitting
specific project proposals
-
Formula grants: Money given to states according to a
mathematical formula
Example: When the Republicans retook
Congress in 1994, they changed many federal grants into block grants.
Instead of giving money to states to buy textbooks or repair schools, for
example, Congress gave states blocks of money to spend on education in any
way the states saw fit.
Federal Pressure on the States
The federal government uses a number of tactics to compel states to follow
its policies and guidelines. Congress can order states to comply but usually
applies pressure more subtly by threatening to withhold funds from disobedient
states.
Example: When the federal government
decided to raise the drinking age to twenty-one, it denied certain highway
funds to states that opted not to comply.
Mandates
Sometimes the federal government orders states to do certain things,
such as obeying housing laws or environmental regulations. These demands are
called mandates. An unfunded mandate is one for
which the federal government provides no money. For example, the federal
government has required state and local governments to live up to the
Americans with Disabilities Act without providing money to make buildings
accessible to handicapped people. State governments resent unfunded mandates
because they drain state coffers.
One way for Congress to pass mandates is to impose regulations and
standards on state and local governments. In the past, Congress has forced
state governments to meet certain environmental standards, for example.
Scholars call this practice regulated federalism.
Preemption
Because of the supremacy clause, all laws passed by the national
government take priority over state and local laws. The national government,
then, can override state laws if it can demonstrate a compelling national
interest; this practice is called preemption.
Horizontal Federalism
Horizontal federalism refers to the ways state governments
relate to one another. States often compete or cooperate on many different
issues, from environmental policy to economic development. One state, for
example, may lower its tax rate in order to attract businesses away from other
states. States have a great deal of leeway in how they behave toward one
another.
