Why Local Governments Become Dependent on Central Government Grants: Roots of Administrative State Failure: 2/12/16: Jason Sorens, Dartmouth College, Mercatus Center.

Feb 13, 2016, 06:51 AM

HOUR THREE (Photo: March 27, 2010) Why Local Governments Become Dependent on Central Government Grants: Roots of Administrative State Failure: 2/12/16: Jason Sorens, Dartmouth College, Mercatus Center. "In the United States and many other countries, state and local governments receive a lot of money from the federal government. Often these governments lack control over the money they are given: “vertical fiscal gaps” are the proportion of state or local government expenditures funded by central government grants and shared revenues these local governments don’t completely control. Such grants often come with conditions, and in some countries are based on local need in an attempt to equalize welfare across the nation. In the United States, Congress is debating changing some of the programs that give money to state and local governments. "This new paper for the Mercatus Center at George Mason University examines evidence in the economics literature and finds that when local governments in the United States and other developed nations become more dependent on the central government’s grants, they tend to become less efficient, spending more and taxing more for the same level of services. Voters can also find it difficult to understand which level of government is responsible for which policy." http://mercatus.org/sites/default/files/Sorens-Vertical-Fiscal-Gaps-v1.pdf