Paved With Good Intentions - When Federal Spending Hurts State Budgets

Since 2000, the Federal government has sent a tidal wave of money to state and local governments. Federal grants to states and localities increased by 73% in the past decade and will reach roughly $439 billion this year alone.

Designed to aid states struggling with budget shortfalls, and to promote particular federal policy objectives, this flood of cash is widely seen as an unqualified good by both Federal and State legislators.

Mercatus Senior Research Fellow Eileen Norcross and Mercatus Research Fellow Matt Mitchell lay out the many ways that well-intentioned federal grants to state and local governments contributes to skyrocketing state budget shortfalls, and how the interplay of state and federal budgeting rules promotes a cycle of pernicious deficits.

By adopting simple, widely used budgeting practices, and recognizing the unintended consequences of certain kinds of federal-state transfers, legislatures can avoid this downward spiral and overcome the unintended consequences, while providing the kind of help they intend, and states need. Mitchell and Norcross will discuss what Congress should know about the state budgets and the important role that federal budgets play in harming or helping state and local governments.

This course is free and open to all full-time Congressional and Agency staff. Due to space constraints, please no interns without prior approval. For more information, please contact Aaron Merrill, Program Manager for Outreach, at 703.993.7729 or amerril2@gmu.edu.