States, counties, cities, schools and recreation districts are among the plethora of entities that apply for grants for special projects. If grants are awarded, there’s cause for celebration and local media takes notice.

Following a complex and time-consuming application process, the federal government awards significant funding to selected state and local governments and programs.

The American Heritage dictionary defines a grant as giving funds for a specific purpose.  Grants aren’t paid back. Grant programs require the funds to be spent according to the specifics of the programs. Private grants from corporations and philanthropists are different from federal grants and aren’t addressed in this column.

Government grants come from tax collections and budget allocations. These grants are authorized, targeted at specific goals and appropriated as bills enacted through Congress. Applying for and receiving federal grants has become commonplace for state and local governments. But the practice didn’t began until after the Great Depression and the election of President Franklin D. Roosevelt.

According to the 2022 summary report on the Citizens Against Government Waste website, President Lyndon Johnson instituted in the 1960s a form of coercive federalism by using grants to force states to fund his administration’s policy priorities. The establishment of Medicare and Medicaid combined with the expansion of federal housing programs increased the role of the federal government and allowed it to make further inroads into state affairs.

Granting federal money to states has evolved since it was introduced in the early 1930s. Janelle Fritts, a policy analyst with the Tax Foundation Center for State Tax Policy, described the role federal grants play in state funding in a February 2020 article titled “Which States Rely the Most on Federal Aid.” Federal aid is allocated to states for a variety of purposes, primarily to supplement state funding on projects deemed to be of a national interest. Fritts delineated the differences between federal competitive grants and grants awarded according to formulas established by law. She noted that states that rely heavily on federal grants tend to have sizable low-income populations and comparatively lower tax revenues.

The expansion of federal grants to states blurs the division between federal and states rights as established by the Constitution. A Supreme Court ruling in South Dakota v. Dole deemed it constitutional for the federal government to attach conditions to grants to states as long as they’re reasonable. This ruling allowed the federal government to design and implement policy preferences that could be inconsistent or contradictory from one administration to the next.

Donald J. Mizerk, a notable litigator of patent infringement and author of
“The Coercion Test and Conditional Federal Grants to the States,” said the reasoning behind the South Dakota v. Dole ruling was that state and local governments could theoretically decline participation in federal grant programs. In reality, do these entities have the option to decline? Have state and local governments become dependent on grant funding as a substitute for sound budgeting?

The 10th Amendment of the U.S. Constitution states: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.”

Accepting and using grant money to subsidize state and local budgets sets the stage for states to abdicate their constitutional rights. The state and local governing powers have preferred government largesse with strings attached to having less funding and more freedom to design projects. The federal government has perfected this managed funding to states for more than 90 years.

It is understandable why states and local governments apply for grants. Refusing to participate in the grant application funding process because it will compromise independence and negate the constitutional rights of states will do nothing to change the way government operates. That train left the station far too long ago. Grant applications will continue, and the receipt of grant funding will still be celebrated.              

“When all government, domestic and foreign, in little as in great things, shall be drawn to Washington as the center of all power, it will render powerless the checks provided of one government on another, and will become as venal and oppressive as the government from which we separated.”  — Thomas Jefferson