President Trump’s administration is noted for reducing bureaucratic obstacles. A new focus is on easing restrictive conditions tied to state grants. These conditions are often referred to as ‘green tape’ and hinder state governance. The White House Office of Management and Budget is addressing this issue with significant revision tools.
Regulation Proposal
In May, a significant proposal emerged: Regulation for Federal Financial Assistance. This aims to release states from several legally dubious requirements attached to federal grants for years. An example includes relief from applying disparate impact liability theory, which diverts funds away from intended beneficiaries.
Federalism Scorecard and State Policies
My organization scores states based on a “Federalism Scorecard.” It evaluates policies that shield citizens from excessive federal control. A key criterion is whether state legislatures decide on accepting federal grants and any related stipulations. Currently, 17 states insist on legislative approval for accepting and utilizing federal grants. We advocate for more states to adopt this practice.
These efforts reveal some unforeseen requirements tied to grants. Frequently issued as guidance or within a “notice of funding opportunity,” these conditions can be surprising. For instance, the Department of Housing and Urban Development’s homelessness grant in 2023 demanded applicants boost “climate resilience.” Similarly, the Department of Education attached supplementary priorities like “culturally informed discipline policies” to their grant programs. The Department of Agriculture also emphasized climate change priorities in their 2023 Composting and Food Waste Reduction Cooperative Agreements.
Impact on State Legislatures
Although individual requirements might have merit, they don’t align with Congressional intent. State legislators and governors rarely anticipate these hidden regulations with federal grant dollars. By limiting conditions to Congress’s original aims, project costs decline, speeding money delivery to intended targets.
Financial Implications
While monitoring expenditure in line with original purposes is valid, many requirements drain state resources. For instance, the James Madison Institute notes Florida spends an extra 40 cents for every federal grant dollar received.
Future of Grant Procedures
The proposed rule enhances focus on intended purposes without forcing states into illegal actions or particular ideologies. Federal grants aid essential state programs. Removing green tape ensures efficiency, preventing bureaucratic entanglements that serve Washington interests over public good.
Jonathan Wolfson is a senior fellow at the State Policy Network’s Center for Practical Federalism.
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