Arizona is awash in federal money. In fiscal year (FY) 2007, Arizona received close to $8.5 billion in federal funds. This money funds programs that most Arizonans are familiar with, such as Medicaid and the No Child Left Behind Act (NCLB). Even though the inflow of federal dollars appears attractive, there is a catch: As federal dollars flow in, state dollars are fixed to ever-growing demands connected to these programs. In 2000, the State of Arizona used general funds at close to $463 million for Medicaid alone. By 2005, that figure had risen to $914 million, and it is projected to grow to $1.3 billion in FY 2008.
Federal spending in Arizona displaces the legislatures authority to act on its own. Currently, the legislature appropriates, or has control over, less than half of the funds in the state. The structure of federal funding programs, combined with Arizona's own propositions to limit legislative authority, is the reason for this constraint. As Arizona locks itself into federal dollar-for-dollar matching programs, it is unable to ever release those funds. That type of funding constrains the legislature and continues to do so more and more every year, to the point that the state becomes a servant to Washington.
Federalism is rooted in the concept of dual sovereignty. State governments and the federal government operate to keep each other in check. Federalism has as its sounding principle that both state and federal governments have sufficient power to operate independently. Yet as a states reliance on federal mandates increases, the nations underlying system of federalism shifts from one of partnership to a master-servant relationship.
This paper sketches possible reform solutions in both the short and long term. In the short term, it is advisable for the state to withdraw from NCLB. That would free Arizona of the laws convoluted requirements and permit it to exercise greater control over the direction of education policy for children in the state. And it can do so with minimal costs to the people of Arizona.
For the long term, several structural reform efforts exist that would help free Arizonans from the grip of overarching federal authority. Citizens may amend the U.S. Constitution to outright prohibit federal mandates or provide for a states veto option to protect against them. Federal legislation that has already been enacted can be strengthened to provide genuine defense against these mandates. Lastly, when states have reached their limit, they can bring their federal taskmasters to accountability by bringing litigation defending the sovereignty of the states.
Read the full report here: Arizona's Struggle for Sovereignty