Political Economy of Grant Allocations: The Case of Federal Highway Demonstration Grants

This article examines the political economy of U.S. federalhighway demonstration grant allocations. Demonstration grantsare a rapidly growing segment of federal highway grants directlyearmarked for a congressional district by Congress, unlike themajority of highway grants where Congress determines a formulaand allocates funds accordingly to states. Our empirical analysis,considering the period 1983–2003, suggests that a state'sability to attract demonstration project grants is positivelyinfluenced by its contributions to the highway trust fund andpolitical variables, and it is not affected by the formula highwayaid and vehicle miles traveled in a state.     

Block grants and state discretion: A study of the implementation of the partnership for health act in three states

This article examines the use of federal funds provided to state health departments under a grant consolidation of eight previously categorical health programs in Michigan, Pennsylvania, and Alabama in a comparative context. The primary question addressed is why the three states chose to describe their allocations of funds within the total health department budget differently, and what political, administrative, and bureaucratic factors explained the differences. Although certain factors were found to be at work in all states (e.g. each had an incentive to concentrate the reported use of federal funds to simplify federal audits) these factors combined with circumstances unique to each state to produce different expenditure patterns. After examining the experience of three states, general hypotheses are developed. For example, it is hypothesized that more volatile changes in allocations will result from grant consolidations in policy areas which do not address basic service needs. Finally the decision-making process with respect to block grant funds is characterized as one in which a small group of professionals determined allocations autonomously with relatively little input from interest groups or other actors within state government; nevertheless, the external political and administrative environment severely limited the possibilities of realistic choice in each of the three states studied.I wish to thank the National Center for Health Services Research which supported this study under grant HS 01495. I am indebted to the state health department officials in Alabama, Michigan, and Pennsylvania who made this research possible. I would also like to thank Leonard Robins, Janet Shikles, William Schmalzreid, Bruce Vladeck, John Kingdon and Robert Baitty for comments on an earlier draft. Of course the views expressed are my own and in no way reflect the positions of the Department of Health and Human Services.     

Geographic Politics in the U.S. House of Representatives: Coalition Building and Distribution of Benefits

This article argues that scholars need to consider the structure of House representation to better understand distributive politics. Because House districts (unlike states) are not administrative units in the federal system, House members cannot effectively claim credit for most grant-in-aid funds. Instead, their best credit-claiming opportunities lie in earmarked projects, a small fraction of federal grant dollars. As a consequence, I expect to find: (1) political factors have a much greater effect on the distribution of earmarked projects than on federal funds generally; and (2) project grants are a better support-building tool for coalition leaders than allocations to states. I test this argument with a study of the 1998 reauthorization of surface transportation programs and find strong support for both hypotheses .     

WATER RESOURCE DEVELOPMENT

Both the federal and state governments have strong constitutional daims and political resources with which to influence the allocation of water resources. Until the 1970s. federal agencies were able to dominate kr setting goals and objectives. However, when the federal government attempted to implement a national water policy in the 1970s, effective opposition was mounted by the states. Both the states and the federal government now exert decisive influence in water policy.     

Some evidence of congressional political markets in DOD personnel allocations across states

An empirical analysis of the distribution of Department of Defense (DOD) personnel (both military and civilian) across states is developed with a commonly used Public Choice model of resource allocation in a legislative setting. The model specification employs Congressional seniority, Congressional committee representation, Presidential electoral votes, and the per capita dollar value of prime defense contract awards to explain the variation of DOD personnel across states over time. The empirical analysis is performed over the last three decades, and the results indicate that this particular Public Choice legislative model performs well in explaining the variation in DOD personnel allocations across states. The results also provide some limited evidence of a possible political market between the states for DOD personnel allocations. This analysis has implications for future testing of whether the Base Realignment and Closure Commission (established in 1988 under President Reagan), and the Defense Base Closure and Realignment Commission of 1990 (under President Bush) were effective in significantly decreasing the legislative politics involved in the selection and approval process for base closure and realignment.     

Managing Fiscal Federalism: Revenue Allocation Issues

Like most federal systems, Nigeria has a revenue distributionsystem in which the national government shares revenues withstate and local governments. Since the early 1970s, the bulkof revenue has been collected by the national government. Muchof this revenue has been derived from petroleum taxes and miningrents and royalties. Various proportions of this revenue havethen been distributed to state and local governments under arevenue allocation system (RAS) using different formulas. Akey problem, however, is that revenue allocations since 1970have been driven largely by political considerations and byformula factors, such as jurisdictional population and stateequality, rather than by factors associated with economic developmentimperatives.     

Carbon Taxation and Policy Labeling: Experience from American States and Canadian Provinces

A vast economics literature embraces taxation of the carbon content of fossil fuels as the superior policy approach for reducing greenhouse gas emissions. However, experience around the world suggests that carbon taxes face exceedingly difficult political hurdles. Federal experience in the United States and in Canada confirms this pattern. This article reviews sub‐federal policy development among American states and Canadian provinces, a great many of which have pursued climate policy development. With one major exception, explicit carbon taxation appears to remain a political nonstarter. At the same time, states and provinces have been placing indirect carbon prices on fossil fuel use through a wide range of policies. These tend to strategically alter labeling, avoiding the terms of “tax” and “carbon” in imposing costs. The article offers a framework for considering such strategies and examines common design features, including direct linkage between cost imposition and fund usage to build political support.     

From Public Support for the Arts to Cultural Policy

Although public funding for the arts had been an element of budget and appropriations business at both the federal and state levels for over a quarter century, the idea that policy justifies and directs these resource allocations has been slow to emerge. This article provides a historiographical discussion of how the issue was framed and of the resistance to the term “cultural policy” through reference to contextual, political, and epistemic factors. It then uses four presidential reports ranging from 1953 to 1997 to track the evolution of political language concerning the policy definition of the arts and culture, the roles and responsibilities of the federal government regarding these, and the emergence of a range of policy issues beyond public funding.     

The states' scramble for federal funds: Who wins,who loses?

Interstate differences between federal expenditures and receipts are very large, generally favoring the southern and western states. The more slowly growing states of the northeast and midwest point to these imbalances as one source of their economic difficulties. The major source of disparity lies in revenue patterns, not in expenditure allocations. Reallocating federal expenditures on an equal per capita basis would reduce regional disparities in flows of federal funds by only about 25 percent. The principal regional beneficiary of equalized expenditures would be the midwest states of the Great Lakes region. However, contrary to the expectations of proponents of such redistribution, the southeastern states would also be major beneficiaries while the larger states of the mideast and New England would be hurt. Selective expenditure changes might be targeted more effectively to individual regions or states; but finding consistent, generally acceptable principles upon which to base such changes is a formidable problem.     

Federalization with a Constitutional Guarantee to Secession: Controversies,Paradoxes and Imponderables in Ethiopia

Ethiopia's federal design has a number of anomalies interesting for comparative federalism. The explicit right to secede provided to member states has become, however, real political dynamite in the country. This article deals with this right, its constitutionalization, its constitutional and ideological underpinnings, and its practical impacts on federal construction in the country for the last two decades. It challenges the political expediency views on its constitutionalization and argues that the inclusion of the right in the federal constitution is motivated by ideological reasons. By having a look at the powers member states are provided by this ‘generous' constitution, it reveals its staggering paradoxes. As far as the practical impacts of the right are concerned, the hefty controversy the constitutionalization of the right has continued creating in the country, the article argues, is a significant federal nuisance.     

Budget Deficits in the States: Massachusetts

Massachusetts entered the current recession carrying a structural deficit counterbalanced by a healthy, $2.1 billion stabilization fund, equal to 10 percent of total tax revenue. Like most states, Massachusetts only dimly realized the depth of the current recession in October 2008 when revenue collections began to slip and welfare caseloads began to increase. By May of 2009, a total FY2009 budget gap of $4 billion had been identified, the combined effect of plummeting revenues and increased costs for welfare and medical assistance. The Commonwealth closed the FY2009 budget gap through a combination of budget cuts, stabilization fund transfers, and federal stimulus funds. The Commonwealth faced an even larger $4.8 billion budget gap in FY2010. With the stabilization fund severely depleted, the FY2010 budget gap was closed primarily by budget cuts, federal stimulus money, and a sales and use tax increase. Because of the Commonwealth's reliance on one-time money to close current budget gaps, a significant budget gap of at least $2.8 billion for FY2011 was identified soon after passage of the budget. In this paper we discuss the political and historic context in which the budget gaps occurred, outline the causes of the budget gaps, and evaluate the strategies employed to close them.     

Terrorism and pork-barrel spending

The horrifying, tragic events of 9/11 made Americans aware of their vulnerability to terrorist attacks and triggered the creation of the Department of Homeland Security along with a substantial increase in federal spending to both thwart terrorist attacks and to increase our ability to respond to such emergencies. Much of this large increase in spending was in the form of direct transfers to states and cities through several grant programs. Homeland Security grants may be used for protection against terrorist activities, thereby enhancing public interests, or as wealth transfers to state and local governments, enhancing the reelection efforts of incumbents, and thus, private interests. Using 2004 per capita Homeland Security grant funding to states and their cities, we find that the funding formula used for some of the grant programs, which allocates almost 40% of the funds in some grant programs through a minimum percent to each state with the rest allocated based on population, means that per capita funding is related to electoral votes per capita, i.e., to the politics of Presidential re-election. However, the funding in other grant programs is also related to some of the dangers and vulnerabilities faced by states and their cities. Some of the variation in per capita grant allocations is also explained by the amount of airport traffic in the state and the state's population density, which are variables closely linked to the state's vulnerability to attack. Per capita Homeland Security grant allocations, however, do not seem to be related to the closeness of the 2000 presidential race.     

Intergovernmental Politics in the Allocation of Block Grant Funds for Substance Abuse in Michigan

This article examines the intersection between federal programmaticgoals and state politics in the allocation of substance-abuseblock-grant money by the State of Michigan. The Alcohol andDrug Abuse and Mental Health Services (ADMS) block grant allowsstates more flexibility in allocating "Drug War" funds. TheADMS formula determines the amount of money going to Michiganbut does not determine the distribution of funds within thestate. An examination of the distribution of ADMS funding amongthe eighteen coordinating agencies in Michigan finds that neitherthe state nor the national formulas distribute funds in a mannerthat reflects substance-abuse deaths. Michigan's formula producesa result consistent with the federal formula, despite the separatestate and national formula negotiations. The process is notone of bargaining or even coercion; it may be described as mutuallyindependent decisionmaking—or parallel policies. Modelsof intergovernmental relations must be revised to include thepossibility of joint synergistic action without coordination.     

A political theory of intergovernmental grants

This paper formulates a political theory of intergovernmental grants. A model of vote-maximizing federal politicians is developed. Grants are assumed to buy the support of state voters and the ‘political capital or resources’ of state politicians and interest groups which can be used to further increase the support of state voters for the federal politician. The model is tested for 49 states. Similarity of party affiliation between federal and state politicians and the size of the Democrat majority in the state legislature increases the per capita dollar amount of grants made to a state. Likewise, increases in both the size of the state bureaucracy and union membership lead to greater grants for a state. Over time, the importance of interest groups (bureaucracy and unions) has increased relative to political groups (state politicians).     

Targeting Federal Grants: The Community Development Experience, 1950-1986

This article examines the degree to which federal communityand economic development programs target federal assistanceto the nation's neediest communities. Grant allocations to citieswith populations of 50,000 or more were examined for six majorfederal urban programs during 1950–1986. Federal programsthat include both needs-based eligibility and allocational featureswere found to achieve the highest levels of targeting. The analysisfurther shows that while urban conditions in the nation's mostdistressed cities continued to deteriorate during the 1980sin both relative and absolute terms, grant allocations underthe major federal urban program, Community Development BlockGrants, have not responded to the changing incidence of urbanhardship.     

Intergovernmental Relationships and the Federal Performance Movement

Although implementation of the federal Government Performanceand Results Act (GPRA) has provided the framework for the federalperformance effort, other efforts have been undertaken withinfederal agencies to balance the two often conflicting imperatives:to provide states with flexibility and yet maintain a commitmentto performance outcomes that acknowledges the expectations ofthose who fund and authorize programs. This analysis seeks todevelop a typology to examine the ways that the federal governmenthas attempted to bridge the goals of funders with the demandsof those who implement programs. This article highlights sixdifferent approaches that have been taken recently within federalagencies: performance partnerships, incentives, negotiated measures,building performance goals into legislation, establishment ofstandards, and waivers.     

National Representation in International Organizations: The Seat Allocation Model Implicit in the European Union Council and Parliament

What determines the allocation of voting weights to member states in international organizations? What drives the seat and voting weight allocation in the European Parliament (EP) and in the Council of the European Union (EU)? Our objective in this article is to develop a universal logical model and to demonstrate that the resulting equation indeed captures negotiated outcomes on seat and voting weight allocations in EU institutions from their beginning. We predict seat and voting weight allocations for both the EP and the Council of the EU within one general model. Hence, we do not employ actual data on seat allocations or voting weights in either the EP or the Council of the EU, but instead, use logical constraints exclusively, as posed by the following elements: the total number of seats/voting weights ( S ), the number of member states ( N ) and, finally, their respective population size ( P_i ). Only our final model selection among several theoretical options is guided by empirical information. With no post hoc parameters used, our model fits both the Council of the EU and the EP rather well, over a time span of nearly 40 years. Inspired by the 'seat–vote equation' ( Taagepera, 1973 ) for seat allocation in national legislatures, the new 'seat–population equation' calculates the number ( S _i) of EP seats or Council voting weights of member state i as follows:     , where n =(1/log  N − 1/log  S )/(1/log  N − 1/log  P ), P being the total population (as summed over all member states). We posit that this equation is applicable to predict outcomes in practice whenever voting weight or seat allocations in international organizations are allocated on the basis of the population shares of their component entities.     

Making Tradeoffs in Federal Block Grant Programs: Understanding the Interplay Between SSBG and TANF

Welfare reform gave states the option of transferring up to10 percent of their annual federal Temporary Assistance forNeedy Families (TANF) award to the Social Services Block Grant(SSBG). Drawing on administrative data, we consider the impactof TANF transfers on SSBG. We find evidence suggesting thatmore innovative states, states that experienced larger TANFcaseload declines, and states that transferred a higher percentageof TANF funds to the Child Care Development Fund (CCDF) havetransferred higher portions of their TANF allocations to SSBG,all else equal. Preliminary analysis of changes in SSBG expenditurepatterns from FY 1995 to FY 2000 indicates that states are transferringsignificant sums to SSBG, but that TANF transfers do not appearto have a consistent effect on SSBG spending priorities acrossstates.     

The Durability of Carbon Cap‐and‐Trade Policy

The surge of American states' adoption of policies to mitigate climate change in the late 1990s and 2000s appeared to constitute a first wave of expanding use of market‐based policy tools such as carbon cap‐and‐trade in the absence of binding federal constraints. Instead, a substantial number of states have rescinded earlier policy commitments, as have Canadian provincial partners, while others have remained engaged or even expanded their policies. This article examines the durability of the three regional cap‐and‐trade zones that were established with comparable structure and intent but met very different fates. The analysis of these regional entities places particular emphasis on their political resilience across election cycles, their ability to be flexible and adapt administratively through mid‐course adjustments, and their capacity to build constituency support through benefit‐allocation to offset opposition linked to cost imposition.     

Fairness and qualitative portfolio allocation in multiparty governments

How do political parties divide coalition payoffs in multiparty governments? Perhaps the most striking answer to this question is Gamson’s Law, which suggests a strong fairness norm in the allocation of office payoffs among coalition partners. Building upon recent advancements in portfolio allocation research, we extend this approach in three important ways. First, we study fairness with regard to the allocation of policy (rather than office) payoffs. Second, we introduce measures to assess the fairness of the division of policy payoffs following two norms: envy-freeness and equitability. Third, we explore why some allocations of ministerial portfolios deviate from fairness norms. Based on an original data set of party preferences for individual portfolios in Western and Central Eastern Europe, we find substantial variation in the fairness of policy payoffs across cabinets. Moreover, coalitions are more likely to arrive at envy-free and equitable bargaining outcomes if (1) these fair allocations are based on an allocation of cabinet positions that is proportional to party size and if (2) the bargaining power is distributed evenly among government parties. The results suggest that fairness is not a universal norm for portfolio allocation in multiparty governments, but in fact depends on the cabinet parties’ bargaining positions.