Study Predicts Costs of Federal Grants to North Dakotans

Print Friendly, PDF & Email

Press Release:  Study Pre­dicts Costs of Fed­er­al Grants to North Dakotans

ND Policy Council

Bis­mar­ck, N.D. — The North Dako­ta Pol­i­cy Coun­cil has released a study which pre­dicts that North Dakotans can expect their state tax­es to increase between $0.221 and $0.274 for each $1 of fed­er­al grants that is accepted.

The study, con­duct­ed by Colum­bia Eco­nom­ics, L.L.C., con­clud­ed that states which accept fed­er­al grants usu­al­ly encounter three unin­tend­ed con­se­quences: 1) grow­ing demands on state resources, 2) loss of local con­trol, and 3) expand­ed bureau­cra­cy. Each of these con­se­quences results in local and state gov­ern­ment hav­ing to pick up part of the tab when fed­er­al grants are accepted.

Fed­er­al funds are gen­er­al­ly per­ceived as a ‘Free Lunch,’ ” North Dako­ta Pol­i­cy Coun­cil Exec­u­tive Direc­tor Zack Tigge­laar said. “But this study shows that not only do fed­er­al funds end up cost­ing North Dakotans through tax increas­es, but we also lose that local con­trol which North Dakotans val­ue highly.”

In 2010, North Dako­ta received $2.17 bil­lion in fed­er­al grants which amount­ed to more than one-third of total state and local expen­di­tures. That totals over $3200 in fed­er­al aid per res­i­dent, which ranks ND the 6th high­est recip­i­ent of fed­er­al grants in the nation.

Of that total, one-third of it was in the form of Med­ic­aid. The sen­ate is cur­rent­ly mulling over a bill, HB 1362, which would expand Med­ic­aid as direct­ed under the fed­er­al Patient Pro­tec­tion and Afford­able Care Act.

It’s clear that accept­ing these fed­er­al dol­lars is a bad idea,” Tigge­laar said. “Not only will this cost ND in the long run, but we are going to be con­trolled by fed­er­al reg­u­la­tions over on who, how, when, and how much of this mon­ey we can spend.”

The study uses sev­er­al exam­ples of states los­ing local con­trol over laws through accept­ing fed­er­al funds.  The exam­ples include: the nation­al min­i­mum drink­ing age, High­way Beau­ti­fi­ca­tion Act, and No Child Left Behind.

A lot of laws that North Dakotans are strong­ly opposed to are a result of strings-attached fed­er­al dol­lars that come in and are per­ceived as free lunch­es.” Tigge­laar said. “My hope is that this study will give leg­is­la­tors courage to say no to fed­er­al grants and keep the bur­dens off of North Dakotans.”

To see the study, please click here.

The North Dako­ta Pol­i­cy Coun­cil is a 501c3 non-prof­it, non-par­ti­san orga­ni­za­tion.  The event described above is in no way an endorse­ment of any­one for any elect­ed office.

About Staff