Federalism and intergovernmental relations

1. Federalism and
Intergovernmental Relations
Introduction to Public Administration

2. 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.

3. 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.

4. 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…

5. 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

8. 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

9. 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.

10. 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

11. 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

12. 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)

13. 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

14. 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

15. 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?