After reading the article ”Big Questions About Intergovernmental Relations and Management: Who Will Address Them?’ by Kincaid and Stenberg, Article attached. Choose two of the questions

Intergovernmental Management Symposium

196 Public Administration Review • March | April 2011

John Kincaid Lafayette College

Carl W. Stenberg University of North Carolina at Chapel Hill

Fiscal, administrative, and political tensions among the partners in the federal system have not eased, and perhaps have grown, since the demise of the U.S. Advisory Commission on Intergovernmental Relations in 1996. Yet no governmental organizational capacity exists to address big intergovernmental questions in an ongoing manner through nonpartisan or bipartisan research, data collection, deliberation, and policy formulation.

Since the death of the U.S. Advisory Commis-sion on Intergovernmental Relations (ACIR) in 1996, important intergovernmental issues have remained on the country’s agenda. Shortly after the 2008 presidential election, for example, the Federal Systems Panel (2008) of the National Academy of Public Administration delivered an “Intergovernmen- tal Agenda” to the incoming administration asserting a need to “restructure intergovernmental management across the federal system” on the basis of “collabora- tion rather than command and control.” Th e agenda cited such policy challenges as health care access (e.g., Medicaid) and cost reductions, housing, natural disasters, terrorism, energy consumption, unemploy- ment, and infrastructure. Th e agenda disappeared in the bowels of the White House.

Yet continuing intergovernmental process issues deserve attention. Th ese include, among others, fi scal pressures on all governments; declining federal aid for such place-based functions as infrastructure and economic development; escalating social welfare costs for state and local governments; increasing condi- tions of federal aid; the proliferation of grants to more than 900; federal programs designed poorly for effi ciency, eff ectiveness, and equity; coercive inter- governmental regulations and federal preemptions; unfunded and underfunded federal and state man- dates; tensions in state–local jurisdictional and fi scal relations; impediments to multistate and substate regional collaboration; the nationalization of state criminal law; federal restrictions on state and local taxes; and federal court orders (Kincaid 2008; Posner and Conlan 2008).

Th e following 15 questions—which are not exhaustive and do not include constitutional questions such as those posed by the Patient Protection and Aff ordable Care Act of 2010 and by calls to repeal the Seven- teenth Amendment—are derived from the contribu- tions to this symposium as well as recent literature. In framing these questions, it is diffi cult to distinguish consistently between intergovernmental relations (IGR) and intergovernmental management (IGM). In the main, we take “intergovernmental relations” to be a term that encompasses all types of interactions between elected and nonelected offi cials of federal, state, and local governments. Th e especially important dimension of IGR is policy making—both lawmaking and regulation promulgation—in which elected of- fi cials and agency heads are important actors. We take “intergovernmental management” to be a less compre- hensive term, encompassing the implementation and management of intergovernmental policies. Politics cannot, of course, be divorced from management, but the especially important dimension of IGM is admin- istration, in which nonelected offi cials from agency heads to street-level bureaucrats are prime actors.

We do not seek to answer the following questions, but rather to pose them, sometimes provocatively, for discussion.

1. Can intergovernmental relations generate more eff ective and effi cient policies and implementation without restoring the primacy of the “governmen- tal” in intergovernmental? Th e U.S. ACIR was founded on the democratic premise that elected government offi cials legitimately represent the people. Th e ACIR also was founded on the constitutional premise that American democracy is federal. Th e people’s democratic representatives, therefore, are principally the elected executive and legislative of- fi cials of the nation’s general-purpose federal, state, and local governments, with federal and state offi cials each presiding over a sovereign order of government. Consequently, intergovernmental initiatives should be formulated and overseen by elected federal, state, and

“Big Questions” about Intergovernmental Relations and Management: Who Will Address Th em?

“Big Questions” about Intergovernmental Relations and Management 197

late 1990s, local governments were relegated, perhaps, to a back seat in Washington, D.C.

Even though about 63 percent of federal aid is dedicated to social welfare benefi ts for individuals, which is predominantly a state

responsibility, the health of “places” remains vital to the social welfare of all citizens. As a Canadian initiative put it, “We are rediscov- ering that economic competitiveness, social well-being, and ecosystem resilience depend, in large part, on collective behaviour in specifi c ‘places’” (Shugart and Townsend 2010, 4). Furthermore, some other federal countries have strengthened the intergovernmental roles of local governments, and several have even recognized local, usually municipal, govern- ments as the third order of government in their constitution (Steytler 2009).

3. How will eff orts to induce national economic growth and remedy the inter- governmental system’s unsustainable fi scal condition aff ect state and local revenues

and services? Studies by the U.S. Government Accountability Of- fi ce (GAO), Congressional Budget Offi ce, Peterson Foundation, National Academy of Public Administration, and others point to the unsustainability of current federal, state, and local spending. Th e GAO (2010b) has projected a $9.9 trillion fi scal gap between state and local expenditures and revenues for 2009 to 2058 that could require state and local spending reductions or tax increases of about 12.3 percent every year for the next 50 years. Under current policies, the GAO also expects that demographic changes (mainly a growing senior citizen population), rising health care costs, and defi – cit spending will require the federal government’s major entitlement programs, plus net interest payments, to consume “93 cents of every dollar of federal revenue” by 2030 (2010a, 6). Th ese projections, if accurate, have grave implications for intergovernmental programs and state and local fi nances. In turn, the possibility of reviving a program such as General Revenue Sharing (e.g., Shiller 2010) is virtually out of the question.

No agreement has been reached on solutions, although Medicare, Medicaid, Social Security, defense, and defi cit spending have been identifi ed as prime targets for federal budget reform. Given the high-profi le politics associated with these budget items and the “sacred cow” status of the major programs, lower-profi le programs could bear the brunt of initial cutbacks. For example, discretionary spending for both place (e.g., infrastructure) and person (e.g., social services) functions carried out by states and localities could be re- duced. Also, the federal government could enact new taxes, such as a national sales tax or value-added tax (VAT). A federal consumption tax likely would place downward political pressure on state and local sales tax rates. Conceivably, the states could be pressured or man- dated to abolish their sales taxes and join a national VAT regime, which would make them dependent on revenues distributed by the federal government from its VAT. Th e tax-exempt status of state and local bonds could be reduced further, too. Th ere is a need to identify and measure the possible impact of such federal initiatives on state and local fi nances.

local offi cials. In this respect, assembling these offi cials (and from both political parties) in a peak intergovernmental advisory organi- zation made eminent sense. Th e ACIR refl ected the sine qua non of the idea of cooperative federalism.

However, the rise of “governance” as a theoreti- cal perspective and empirical reality brought into play a competing organizational dynamic rooted in the private sector. Th is dynamic refl ected disenchantment with government as well as enchantment with the thought of a more porous, pluralistic polity made wiser, more eff ective, and more democratic by networks of “governing” organizations in which government is one among many actors and in which government offi cials enjoy no presumption of primacy, even though they are the only democratically elected representatives of the people within governance networks. Furthermore, because the federal government is the preeminent source of fi scal and regula- tory resources for such networks, it is not clear that the governance paradigm even values state and local offi cials and, thereby, intergovernmental relations. Given that state and local governments are entrenched constitutionally, intergovernmental relations remain a necessary—and perhaps, for the paradigm’s proponents, a lamentably frictional—component of governance, but not a component necessarily valued as a principle of democratic self-government and multigovernmental negotiation to enhance policy outcomes.

2. Should local governments have a more prominent seat at the intergovernmental table? Although local governments are not constitutional partners of the federal system, as a practical matter, they are vital to IGR and IGM. Local governments gained a seat at the intergovernmental table during the New Deal, largely because of their Democratic political clout, especially that of big-city mayors. Hence, federal aid often fl owed directly to local governments, and local offi cials cooperated and competed with their state superiors in the federal arena. Local offi cials sometimes distrusted state gover- nors and legislators, and they argued that federal funds for local, especially urban, needs and the poor would not reach their targets if they were passed through state agencies. Th is concern triggered a debate, which was addressed by the ACIR, about whether federal aid bypassing state capitals was benefi cial or detrimental to federal- ism and public policy, and under what conditions federal aid should go through the states.

However, three developments largely unseated local governments from being infl uential intergovernmental lobbyists. First, President Ronald Reagan and subsequent Republican presidents defi ned IGR as primarily a federal–state relationship. Democratic presidents have been more attentive to local governments, but only insofar as it has been politically advantageous to do so. Second, after 1987, federal aid shifted sharply from places to persons, signifi cantly reducing federal funding for local place functions such as economic devel- opment, urban renewal, housing, education, transportation, and government operations. Th ird, the ACIR was eliminated in 1996. Local governments occupied 27 percent of the ACIR’s seats. By the

[T]he rise of “governance” as a theoretical perspective and

empirical reality brought into play a competing organizational dynamic rooted in the private

sector. . . . in which government is one among many actors and in which government offi cials

enjoy no presumption of primacy, even though they are the only democratically elected

representatives of the people within governance networks.

198 Public Administration Review • March | April 2011

In 2005, the President’s Advisory Panel on Federal Tax Reform recommended eliminating income tax deductions for state and local taxes. Most state and local offi cials oppose the elimination. Th is issue has a partisan dimension, though: in 2005, for instance, the average state and local tax payment in Democratic states was $7,487, compared to $4,834 in Republican states (Maggs 2005). Because most state income taxes are coupled to the federal tax code, state offi cials fear that changes in federal tax laws, especially tax cuts and retroactive changes, will reduce state tax revenues. Federal offi cials feel no obligation to coordinate tax policies with state and local offi cials.

At the same time, many state and local governments have been less than fi scally responsible. Th e GAO found, for instance, that tax increases boosting state and local own-source revenues increased faster than the growth of personal income in 43 states during 1977–2007. State and local general expenditures increased faster than personal income growth in 47 states during 1977–2007 (GAO 2010b). Al- though most states are formally complying with their balanced budget rules, some are making questionable choices or unwarranted fi scal assumptions in order to do so. Many states also have exhausted their “rainy day” funds. It has become evident, as well, that most state and local governments have underfunded pension programs and health care benefi ts for their employees, placing a potentially huge fi scal burden on taxpayers in future years. Th ere is a need to monitor the complex interactions of federal and state tax laws and revenues, as well as trends in funding commitments and capacities to meet obligations.

6. Should functional responsibilities be “sorted out” with turn- backs or partial de-intergovernmentalization in order to achieve greater effi ciency and eff ectiveness? Attempts to “divide the job” of service delivery among intergovernmental actors originated in the early days of cooperative federalism, but eff orts to do so have not been undertaken since President Reagan’s unsuccessful “swap”

initiative in 1981–82. Some observers contend that “sorting out” is futile because of the com- plexity of intergovernmental management, the resilience of functional picket-fence silos, the widely varying appetites for taxes and services among states and localities, and the lack of political rewards. Others contend that sorting out is unrealistic because of the complex inter- governmental interdependence of most policy functions. Still others add that “bigger is not necessarily better.”

To these skeptics, consolidation or integration of services and better coordination among state, regional, and local agencies are more practical and promising ways to bolster the performance of governmental functions. Yet these modest steps might not be suffi cient. If revenue constraints and spending cutbacks prove to be long-term IGM conditions that cause public offi cials to fundamentally rethink

their service delivery strategies, then bold “idea federalism” studies could help challenge the status quo and highlight innovations from across the world for consideration by federal, state, and local policy makers.

4. What design features should accompany federal economic stimulus programs, health care and fi nancial regulation reform, and other national policy initiatives in order to facilitate more eff ective state and local implementation in times of austerity? Federal responses to the 2007–9 national recession, banking and securities failures, stock market collapse, housing crisis, and soaring health care costs have focused more on money than on manage- ment. While this is understandable, little attention has been given to the implementation of national remedial actions by state and local governments, many of which have reduced managerial capacity in the wake of retirements, hiring freezes, and personnel cutbacks. For example, from September 2009 to September 2010, state and local government employment declined by 1.3 percent, while fed- eral employment grew by 3.4 percent (Cauchon 2010). Traditional channels for awarding funds have usually been followed, producing delays and distortions, and performance measures have been modest or nonexistent, as exemplifi ed by the sole metric of the American Recovery and Reinvestment Act (ARRA): the number of jobs cre- ated by stimulus funds, an indicator developed by auditors, not managers (Posner 2010, 26–27). Th e success of these national initia- tives is largely in the hands of state and local public administrators who are operating with minimal guidance and support, whose ranks are stretched thin, and whose oversight abilities are diminished. Having an organizational capacity to anticipate and prepare for the IGM dimensions of national policy making could improve imple- mentation and avoid micromanagement and “horror stories.”

Th e experience with ARRA also suggests that the federal govern- ment has not developed a capacity to provide eff ective counter- cyclical aid to states and localities. Generally, ARRA’s economic outcomes are consistent with analyses of previous federal eff orts to assist states and localities during recessions, which suggest that such programs are less than optimal because they are not usually timed well, triggered adequately, or targeted eff ectively (Mattoon 2009).

5. How can state and local governments be viable intergovernmental partners without greater fi scal capacity and fi scal responsi- bility? One characteristic of contemporary federalism is federal preemption of state taxes through legislation and judicial action usually undertaken pursuant to the commerce clause, beginning especially with the enactment of limits on tax-exempt private activity bonds in 1984. Federal judicial and statutory prohibi- tions of state taxation of Internet services and interstate mail-order sales are among the most prominent constraints. In October 2007, President George W. Bush signed a seven-year extension of the moratorium on state and local taxation of Internet access.

A number of states negotiated the Streamlined Sales and Use Tax Agreement to collect taxes on interstate mail-order sales. Th e agreement was implemented voluntarily among consenting states in October 2005. Although several large retailers comply voluntarily with the agreement, Congress has not sanctioned the agreement or otherwise authorized states to require sales tax collections by out-of-state vendors.

One characteristic of contemporary federalism is federal preemption of state

taxes via legislation and judicial action usually undertaken pursuant to the commerce clause, beginning especially with the enactment of limits

on tax-exempt private-activity bonds in 1984. Federal judicial

and statutory prohibitions of state taxation of Internet services and interstate mail-

order sales are among the most prominent constraints.

“Big Questions” about Intergovernmental Relations and Management 199

offi cials a cornucopia of choices, it also creates problems, such as the limited capacity of most local governments to access grants or manage multiple grants, time-consuming grant seeking, diffi culties coordinating grant activities within states and localities, distortions of recipient priorities, and negligible impacts of small grants on long-term state and local capacities.

Th ere also is a growing need to coordinate grants across federal agencies such as housing, environmental protection, and trans- portation so as to promote sustainable communities, among other things. To what extent are systems performance approaches to policy programming frustrated by a stovepiped grant system, and how can public offi cials be held adequately accountable for producing results under such conditions?

If worsening federal budget conditions make discretionary pro- grams targets for cutbacks, it would be valuable to have impartial information about where to begin and what impacts will result. Reviews under the Government Performance and Results Act and Program Assessment Rating Tool (PART) provide some data about program eff ectiveness, and GAO evaluations off er additional insights, but these are federal perspectives that sometimes fail to consider state and local management conditions. For instance, block grants have been ranked relatively low in PART reviews rela- tive to accomplishing national goals, even though these instruments are intended to maximize recipient fl exibility in achieving their objectives and are popular with state and local offi cials and manag- ers (Radin 2008).

8. How can the fl exibility, discretion, and innovative aspects of block grants be balanced against the performance and trans- parency expectations of Congress and the presidency? As noted earlier, research suggests a mismatch between PART expectations and the design of block grants. Yet there has been no eff ort to reconcile the confl ict between discretion and fl exibility for state and local recipients with the accountability and transparency needed by federal offi cials (Stenberg 2008). At the same time, the original vision of many block grant promoters that block grants would foster more systems-wide planning and programming has, for the most part, not seen the light of day, although the surface transportation program has moved somewhat toward systems- wide thinking.

Similarly, since the demise of the ACIR, little attention has been given to the eff ects of “recategorization” of existing block grants on intergovernmental management. Th is trend has been in response to congressional, federal agency, and interest group concerns about the priorities and projects chosen by state and local recipients, and it undercuts the intent of this instrument and the spirit of cooperative federalism. Th e rise of earmarking also has reinforced narrow proj- ect-by-project thinking and, at times, even distorted or contradicted systemic plans prepared by state or local governments pursuant to federal grant requirements. An example is the Water Resources Act of 1986, which largely displaced project initiation rooted in river basin planning in favor of locally initiated projects and congressio- nal earmarks (NAPA 2007). Assuming that one strategy for cutting federal discretionary spending might be to consolidate functionally related categorical programs into block grants, analyses of the rede- sign features and management issues would be useful.

Although the federal government has a poor track record of approv- ing turnbacks, they are still worth considering. For example, some observers have long regarded surface transportation (and motor fuels taxes) as a prime candidate for a federal turnback to the states (see, e.g., ACIR 1987a). Nothing intrinsic to federalism requires a federal role. In Canada, for example, since 1867, “the provision of highways has been mainly a provincial responsibility, with only a small role played by the federal government” (Turgeon and Vaillan- court 2002, 179).

Is education a candidate for partial de-intergovernmentalization? (Kincaid 1992). Since 1965, the federal regulatory role in K–12 education has increased tremendously, while the federal fi scal role has grown modestly; yet education outcomes remain unacceptably low, and President Barack Obama acknowledged on NBC’s Today Show in early October 2010 that “our per-pupil spending has gone up during the last couple of decades even as results have gone down” (quoted in McGurn 2010, 10). To what extent has the federal role increased the bureaucratization, legalization, unionization, and nationalization of education to the detriment of the state- and, especially, local-specifi c factors associated with better outcomes, such as teacher qualifi cations, rewards for good teaching, principal and superintendent leadership, challenging curriculum, and parental involvement? By contrast, K–12 and postsecondary education are predominantly provincial responsibilities in Canada (Simeon and Papillon 2006) and cantonal responsibilities in Switzerland (Fleiner 2006); in each case, the federal government plays small fi scal and regulatory roles. What other policy fi elds might be candidates for turnbacks or partial de-intergovermentalization?

Some governors have argued that “a crisis is a terrible thing to waste.” Current economic conditions and fi scal projections might signal an opportunity to reconsider the Reagan swap proposal with respect to Medicaid. Federal assumption of fi scal responsibility for the long-term care component of Medicaid would relieve the states (and local governments in states that require a local contribution to Medicaid) of a huge fi scal burden. Perhaps the swap could be even larger: Medicaid and children’s health care entirely could become a federal responsibility in exchange for turnbacks of education, trans- portation, housing, community development, and other human services. Such a swap would be about fi scally even overall (Harkness 2010), although its impacts would vary from state to state, the pros- pect of which would generate confl ict between expected winners and losers in any swap.

7. Should federal categorical grants-in-aid be consolidated in order to reduce overlap, target resources, and improve results? For most of its life, the ACIR called on Congress to consolidate grant programs, especially those of relatively small fi scal size, on the grounds that they are overlapping and duplicative. Th e rise of block grants potentially off ered elected state and local offi cials both more discretion and more authority over program design and implemen- tation. However, congressional policy entrepreneurs, working with interest groups and federal agencies, resisted these calls, leading to de facto recategorization of many block grants, severe limits on the amount of funds delivered through block grants, and a steady increase in the number and costs of categorical grants, with only two exceptions during the presidencies of Jimmy Carter and Ronald Reagan. Although the multiplication of grants off ers state and local

200 Public Administration Review • March | April 2011

bying, given the substantial impacts of these regulatory tools on the fl exibility and resources of states and localities. However, the demise of the ACIR, resulting in part from its 1995–96 work on federal mandates, had a chilling eff ect on studies seeking to assess the ben- efi ts and costs of regulatory federalism. One exception to this regu- latory trend is the Unfunded Mandates Reform Act of 1995, which, despite signifi cant loopholes in coverage such as homeland security, welfare, and education, seems to have reduced unfunded mandate enactments while also acting as a useful lobbying tool for the state and local interest groups and a procedural tool for the Congressio- nal Budget Offi ce to monitor mandate initiation and fi scal impacts. Few studies of state mandates on local governments have been undertaken recently (although the Pennsylvania Local Government Commission was mandated by the state senate in 2010 to undertake such a study), perhaps because of their politically volatile nature and the decrease in state ACIRs, which sometimes were charged with conducting such studies. Furthermore, the federal government is, arguably, circumventing the Unfunded Mandates Reform Act by enacting more conditions of aid that are unfunded or underfunded de facto mandates. Given the currently anemic economy and the dismal long-term fi nancial prospects for state and local govern- ments, rigorous analysis of the benefi ts and costs of mandates would seem to be imperative.

Similarly, preemption is a hot-button issue in Washington, D.C., and in some state capitals. In a global economy especially, debate over whether the nation should have a single national standard or 50 standards on commerce, health and safety, banking and fi nance, the environment, natural resources, and many other matters has been contentious. Generally speaking, many conservatives and Republi- cans who once championed states’ rights now favor federal preemp- tion in a number of fi elds; many liberals and Democrats who once championed federal preemption now oppose it in a number of fi elds or support partial preemption in certain policy fi elds, such as envi- ronmental and consumer protection. (Under partial preemption, the federal government usually establishes a minimum national standard to which all states and localities must adhere but allows state and local governments to enact higher, more rigorous standards.)

Another regulatory device, waivers, has become more prevalent since the ACIR’s demise. Th is executive tool is also politicized. Presidents Reagan and George H. W. Bush, for example, issued some waivers, but they were constrained by Democratic Congresses fearing that these presidents would deploy waivers to gut social programs. Presi- dent Bill Clinton faced a Democratic Congress and then Republican Congresses more friendly to waivers, especially in social policy. Un- der Clinton, several Republican governors (e.g., Tommy Th ompson of Wisconsin) became national fi gures by using waivers to reform welfare and lay the groundwork for the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. Although waivers can facilitate innovation, little attention has been given to their con- stitutional and normative problematics insofar as “[t]hey jeopardize the integrity of the rule of law and potentially enhance executive power over legislative power . . . pose issues of democratic account- ability insofar as they are negotiated and implemented by executive offi cials outside of fl oodlit legislative processes . . . raise questions of equity . . . insofar as they introduce variability in the implementa- tion of law and, thus, equal-protection concerns, and insofar as they politicize law enforcement” (Kincaid 2001, 22).

9. How has the “state” of state–local relations changed, and what actions might be taken to improve these relationships? Competi- tion for grants, funding cutbacks, unfunded mandates, and restric- tions on local authority continue to strain state–local relations. Th e ACIR devoted substantial research and recommendations to actions that states could take to reduce tensions and strengthen relation- ships with their local units, including granting more “home rule” or discretionary authority; devolving more power over functions, per- sonnel, and fi nances; providing more state grants and discretionary fi nancial assistance to cities and counties; restraining state mandates; providing compensatory aid for regulations with statewide impacts; assuming greater fi scal and operational authority from local govern- ments for social welfare, courts, mental health, elementary and sec- ondary education, corrections, transportation, and other functions; and creating a state ACIR equivalent to consider state–local issues, conduct research on intergovernmental topics, and provide technical assistance. Although each state monitors its own state–local rela- tions in various ways, there is a need for a nationwide overview and comparative perspective on state–local relations in order to discern trends, spot emerging problems, and disseminate useful innovations.

10. Should incentives or requirements be provided in federal and state grant and regulatory programs to promote greater interlo- cal collaboration? For decades, the structures of local governments in metropolitan areas have been debated, and research has not confi rm