Federalism and Intergovernmental RelationsIntroduction to Public Administration

Introduction

• The United States is somewhat unique in that its citizens have dual citizenship:• Citizens of the United States.• Citizens of the state in which they reside

• The framers of the Constitution wanted to preserve sovereignty of the states:• Federalism—system in which authority is divided between

two sovereign levels of government: national and regional.• Sovereignty—ultimate authority to govern within a certain

geographical area without outside interference.

Other Systems of Government

• Confederacy – a system of government in which two or more independent states unite to achieve certain specified common aims.• Examples:

• Pre-Constitution U.S. (Articles of Confederation)• The United Nations• European Union

• Potential problems:• Individual members can act out on their own, even to the detriment of the larger group.

• Unitary – a system of government in which the constituent states are strictly subordinated to the goals of the central government as a whole.• This is not to say that individual subunits to not have representation in the national bodies, but

ultimate sovereignty lies in the national government.• Examples:

• Great Britain• France• China• Kazakhstan

• Potential Problems:• Hypercentralism disallows local officials to respond to the needs of their particular geographic area.

Federalism

• Federalism – a constitutional division of governmental power between a central or national government and regional government units, each with independent authority over its citizens.• Accountability (separation of power)• Potential problems:• How to ensure a balance of power such that one level does not usurp the power of the

other.• Identifying the proper uses of centralization and decentralization

• Three Views of Federalism:• Constitutional• Political arrangement• Fiscal/administrative

• Why do we study federalism with regard to public administration?• More governments equals more bureaucracy (see next slide)• Fiscal federalism affects the implementation of programs• Relations between different governments/bureaucracies an important aspect of

bureaucratic politics, also called…

Intergovernmental Relations (IGR)

• Intergovernmental Relations (IGR) – all the activities and interactions occurring between or among governmental units of all types and levels within the federal system.• Includes: national-state relations, interstate, national-

local, state-local, interlocal, and national-state-local

Intergovernmental Relations (IGR)

• Attitudes of elected and appointed officials affect the relationships between units of government

• IGR is an ongoing effort at solving multi-governmental problems• Involves public and private, often non-profit, officials at all levels• Characterized by:• Fragmentation of decisions government agencies work independently of

one another, motivated by local pressure (no centralization).• Ongoing relationships, not single instances or formal arrangements.• The allegation that IGR makes it difficult to hold government accountable.• Functional alliances

Fiscal Federalism

• Fiscal Federalism (Intergovernmental Fiscal Relations) – the complex of financial transactions, transfers of money, and accompanying rules and regulations that characterize national-state, state-local, and national-local relations.

• The Nature of the Relationship• Fiscal mismatch – differences in the capacities of various governments to raise

revenues, in relation to those governments’ respective abilities to pay for public services that they are responsible for delivering.• States provide more direct public services (education, welfare, housing, and police protection)

than national government.• Two reasons for fiscal mismatch:

• Local/state have more limited geographic areas• Smaller tax base

• Different types of taxes yield different amounts of revenue• Elastic tax – a tax that shows the greatest increase in revenue for a given rise in taxable income.• National – income tax (graduated tax)

• Tax increases as income increases• State/Local – sales tax (flat rate), excise tax, property tax.

• Tax does not increase as income increases

• Result:• The national government must provide financial assistance to the states.

Grants-in-aid

• Grants-in-aid – money payments furnished by a higher to a lower level of government to be used for specific purposes and subject to conditions spelled out in law or administrative regulation

• Original Purposes• Establish national minimum standards for

programs• Equalizing resources among states through

redistribution• Improving state/local program delivery• Improve research/coordination on problems that

cross borders• Increase public services without increasing

national power• Encourage experimentation

• Advantages of Grants-in-aid• Bring about concentrated action on a policy

problem• Provides opportunities for minority groups to seek

support for policy preferences• Help deal with nationwide problems• Externalities create a ripple effect

Types of Grants-in-aid

• Categorized in two ways:• Degree of discretion national government officials have in distributing funds• The degree of restriction imposed on the recipient for use of funds

• Categorical Grants – form of grant-in-aid with purposes narrowly defined by the grantor, leaving the recipient little chose as to how the funding is to be used.• Can be spent on designated “categories”

• Example: Medicaid• Subtypes:

• Formula grants – type of categorical grant in which money is allocated based on a set formula and treats applicants uniformly (blind/aid to elderly).• Low administrative discretion (grantor)• Low recipient discretion

• Project grants – GIA for individual projects, more numerous than formula, but less money per grant.• Constitutes ¾ of all categorical grants• High administrative discretion• Low recipient discretion

Results of Categorical Grants

• Administrative complexity• Single state agency

requirement creates vertical functional autocracies or picket fence federalism – parallel relationships of administrators who manage intergovernmental programs

• Problems:• Different priorities• Application complexity• Tension between politicians

and administrators• Overlapping grants and lack of

coordination (where to apply)

Types of Grants-in-aid

• General Revenue Sharing (GRS)• A portion of tax revenues would be returned to states and local governments

according to a prescribed formula defined by Congress with no strings attached and for any purpose.• This only ended up as a small portion of IG spending• Administrative discretion low• Recipient discretion high

• Block grants – purposes for the grant more broadly defined (by policy area) by grantor allows for more discretion• Most based on formula • Administrator discretion low• Recipient discretion medium

• Actual purpose: cut government spending• “creeping categorization” block grants become more like categorical grants• This is a result of R/D struggle

The Future of Fiscal Federalism

• Regulatory federalism – agencies use regulations as opposed to grants to influence state and local governments• Unfunded mandates – laws or regulations that impose requirements

on other governments that often result in the use of funds without the national government providing financial assistance.• Americans with Disabilities Act (ADA)• UM used with public health, transportation, environmental pollution,

and safety• Unfunded Mandates Reform Act

• Devolution – process of transferring power or functions from a higher to a lower level of government in the federal system

Case Study: Hurricane Katrina and Federalism

• How do the events leading up to Katrina demonstrate or fail to demonstrate the problems with federalism?

• How do the events leading up to Katrina demonstrate or fail to demonstrate the three views of federalism?

• How does Katrina demonstrate or fail to demonstrate aspects of intergovernmental relations?

• Would a unitary system or confederacy have helped or hindered efforts to prevent this disaster?