How Fares Federalism in the Mid-Seventies?

Abstract

American federalism and the intergovernmental relations that sustain it are in a major transitional period. The recent emergence of several different theories—es pecially Creative Federalism and New Federalism—are symptomatic; yet neither of these schools of thought were applied consistently, nor were they in conflict with each other in all instances. Moreover, neither provides helpful answers to some of the emerging problems confronting the system. The many changes in fiscal federalism are another dimension of this transition. The federal govern ment still plays a dominant role in economic affairs, but a reduced one in intergovernmental financial assistance. Most states have strengthened their revenue systems, are enjoying surpluses or balanced budgets, and are beginning to act like major fiscal middlemen. All levels now have large intergovernmental components in their budgets, making fiscal relations more interdependent than ever before. Ad ministratively and jurisdictionally, a number of myths have emerged that impede the management of the system's current business. These include such notions as: all categorical grants have similar operational traits, block grants are easy to administer, decentralization is devolution, devolu tion of authority to elected officials is a simple under taking, local governmental fragmentation preserves local autonomy, and all general units of local government are general governments. A clearer understanding of the sources of conceptual confusion, a greater awareness of the new features of fiscal federalism, and a better appreciation of current administrative and jurisdictional conditions are vital for policy makers at all levels.