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