Federal Funding Tap Dance: Are States Puppets Or Partners?

This article is part of a continuing series. If you’d like to read any of the others, just click on one of the titles below:

Are States Puppets On The Federal Government’s String?

Note: I think readers will have “optimum enjoyment” in reading this if the “I’m Your Puppet” song, above, is played while reading.

When considering how to get out of the way of the growing red ink tsunami gushing out of D.C., one of the first questions that comes to mind is what states can do about it. In the last year and a half or so, we’ve all become much more sensitized to “federal mandates”, or at the very least “unfunded mandates”. There is no question a majority of Americans are adamantly opposed to the health care law and the cap and trade legislation. Many of us believe the health care law is unconstitutional for more than one reason, but for the moment we will only concern ourselves with the impact of the bill on the states.

Attention focused sharply on the impact to all states and fomented outrage when there were only a handful of Senators who were “undecided” about their healthcare votes. The special deals brokered to win them over took on names specially tailored for each of those states: “Gatoraid”, the “Second Louisiana Purchase”, and the piece de resistance – the “Cornhusker Kickback”.

Based on what we’ve heard from Republican politicians for the last year and a half and counting – it would seem states don’t want federal money or federal programs because they don’t want the strings (pun intended).

Under this construction, the states are puppets.

Or Are States Eager Dance Partners?

Rewind to the healthcare debate. Republicans, including Nebraska Governor Dave Heineman, objected to the law on the basis that the bill imposed cuts to Medicare. But the Governor’s loudest objection was to the increased costs to Nebraska’s Medicaid program. (Look for upcoming articles examining Medicare, Medicaid, and other government “entitlement” programs.) If you examine most state budgets, the largest program they administer is Medicaid. Nebraska is no exception. The Nebraska Department of Health and Human Services had a total 2009 – 2010 budget appropriation of $2,859,847,595. Of that amount, over half – $1,610,353,750 – was provided by the Federal government. The Nebraska Department of Health and Human Services receives the largest annual appropriation amount in the overall state budget every year, and the lion’s share of that goes to the Medicaid program.

So…was the Medicaid program imposed upon states by the federal government? The answer is, no. When the Medicaid program was created in 1965, it was voluntary. The states were not required to participate. And the simple reason for that is, it would have been unconstitutional to do so.

In my previous article, “Federal Red Ink Tsunami…”, I referenced the 1997 U.S. Supreme Court decision, Printz v United States in pursuing answers to some fundamental questions. What role do the states have in the discussion regarding the constitutionality of laws passed by Congress? What is the real meaning of the oft-abused Supremacy Clause? Does the federal government have the ability to impose legislation on states? To reiterate two of the bedrock principles articulated by Justice Scalia in the Printz decision; only laws that are in direct pursuance of the Constitution are the supreme law of the land and attempts by federal government to compel the states to implement a federal regulatory program are not in direct pursuance.

The decision discussed early enactments of Congress:

“Not only do the enactments of the early Congresses, as far as we are aware, contain no evidence of an assumption that the Federal Government may command the States’ executive power in the absence of a particularized constitutional authorization, they contain some indication of precisely the opposite assumption.”

But this notion just doesn’t seem to fit recent political rhetoric or that now-institutionalized notion of “living constitution”. Trouble is, again, Printz was rendered in 1997, not early in our country’s history. Scalia goes on, citing yet another recent case in the process:

“We have held, however, that state legislatures are not subject to federal direction. New York v. United States, 505 U.S. 144 (1992)”

“We warned that ‘this Court never has sanctioned explicitly a federal command to the States to promulgate and enforce laws and regulations’” [FERC v Mississippi]

Further, Printz lays out that participation by states in federal government programs is voluntary:

“The Government [the plaintiff in the case] points to a number of federal statutes enacted within the past few decades that require the participation of state or local officials in implementing federal regulatory schemes. Some of these are connected to federal funding measures, and can perhaps be more accurately described as conditions upon the grant of federal funding than as mandates to the States; others, which require only the provision of information to the Federal Government, do not involve the precise issue before us here, which is the forced participation of the States’ executive in the actual administration of a federal program.” [Note: emphasis added.]

Note the emphasis on “federal funding measures”. Outside of dispelling the notion states are puppets, the Printz decision makes both direct and indirect references to the fact that while participation in a federal program is voluntary, federal government may offer, invite, request, or even entice states to enter into or accept a program.

Federal programs could be rejected by states, but they aren’t. Obviously, states want the money.

But here is where the trouble lies – quite often the federal programs accepted by states are de-funded after a certain period and/or require matching funds from the state from the beginning. All come with those mandates we’ve heard so much about and ultimately cost the state more money than is ever realized, and of course, at the bottom of it all, are all the strings that come attached. While there is no end to the list of programs that exemplify this problem, I will only provide two and they are very recent:

On August 10, House Speaker Nancy Pelosi called House members back from their August recess to vote on a “jobs” bill, which is actually a $26 billion pay off to teachers’ and government workers’ unions and essentially, a bailout of state Medicaid programs. But Mississippi Governor Haley Barbour’s quote in the Wall Street Journal article “Stimulus Pushers” best states the problem with states accepting federal funds, particularly through this program:

“Governor Haley Barbour of Mississippi did the math and figured out his state will be worse off. Mr. Barbour says the bill will force his state ‘to rewrite its current year [fiscal 2011] budget. Preliminary estimates of the Mississippi Department of Finance and Administration show that we will now have to spend between $50-100 million of state funds—funds that must be taken away from public safety, human services, mental health and other state priorities and given to education—in order for an additional $98 million of federal funds to be granted to education. There is no justification for the federal government hijacking state budgets, but that is exactly what Congress has done.’”

It is more than understandable why Governor Barbour would reject these funds, and I do hope he does. But where are all the other governors, include Nebraska’s in decrying this bill?

The “jobs” bill’s funding problems are obvious upfront. This is not always the case, the problems usually come later. Legislators and executive branch staffers who I’ve spoken with on this subject acknowledge that government officials and bureaucrats are aware of them. One of the most infamous programs of this nature that has rankled people across the political spectrum is No Child Left Behind. The federal funding problems in recent years has now gone beyond the state level into counties and cities. The City of Lincoln, for example is funding several aspects of the police department budget with federal grant dollars. While a recent Lincoln Journal Star story lists the wonderful elements these funds are providing, the story doesn’t bother to list that two personnel salaries must be funded for two years by the City after the federal funding is taken away.

The implications for state sovereignty are clearly not on the radar of our state elected officials. But on the practical side, they are well aware of the strings and the budgetary commitments.

This appears to be a game of kicking the can down the road.

Prior governors and legislators have opted to accept federal funds either to avoid making difficult decisions or to take political credit for accomplishments, handing the strings and increased obligations to the next set of officials.

We will begin looking at the many programs states receive and examine Nebraska’s budget in coming articles.

So the States Aren’t Puppets…Who Is The Better Dancer?

In the meantime, in considering my premise of whether states are puppets or willing partners, to reflect upon a quote about Ginger Rogers (thank you, Linda):

Fred Astaire?

“Sure he was great, but don’t forget Ginger Rogers did everything he did backwards . . . and in high heels!” (Source)

If we use the premise that Fred Astaire is the federal government and Ginger the states, it seems the states are doing much fancier footwork here.

The trouble with this tap dance is, as adept as governors, legislators, state and local bureaucrats think they are, as much fun as they appear to be having, they neither notice nor seem to care that they are actually turning themselves into puppets, and they are doing so willingly. The trouble is, we the people, get tangled up right along with them.

The question for we the people is very simple. How are we going to cut in? How will WE cut these strings?