New federalism: impact on state and local governments

Abstract

This paper explores the changing nature of federalism in the United States. While the paper highlights different phases of federalism and its impact on sub-national governance, the focus is on “New Federalism” a reform initiative begun in the 1970s that emphasizes decentralization from the national to state and local governments. Today, federal programs and funding are transferred to the states; however, these program responsibilities are then devolved from state to local governments. This creates tension across governments in a good economy; however, it can be a formula for disaster in times of severe budget shortfalls. The argument is made that, though devolution is largely a positive development, collaboration among interdependent national and sub-national governments needs to be advanced.