Block grant

In a federal system of government, a block grant is a large sum of money granted by the national government to a regional government with only general provisions as to the way it is to be spent. This can be contrasted with a categorical grant which has more strict and specific provisions on the way it is to be spent..

An advantage of block grants is that they allow regional governments to experiment with different ways of spending money with the same goal in mind, though it is very difficult to compare the results of such spending and reach a conclusion. A disadvantage is that the regional governments might be able to use the money if they collected it through their own taxation systems and spend it without any restrictions from above.

The USA

Since the 1980s, the United States government has provided large sums of money through block grants, under a policy that has come to be known as "devolutionary" or "new federalism."

According to the General Accounting Office, from 1980 to 2001 the number of federal block grant programs went from 450 to 700. The grants are aimed at a wide range of activities from education, to healthcare, to transportation, to housing, to counterterrorism.

In the United States, the formulas for how much money states receive favor small states. Most grant programs have a minimum amount per state - usually 0.5 % or 0.75 %.

For instance, in 2003, under the State Homeland Security Grant Programs and Critical Infrastructure Protection Grants, Wyoming, the least populous state, received $17.5 million and California, the most populous state, received $164 million. In 2004 FY2004 Wyoming is guaranteed to receive a minimum of $15 million and California, the most populated state, $133 million. Wyoming receives $35.3 per person, California receives $ 4.7 per person.

Similar patterns exist for other block grant formulas. An analysis exists in the book "Sizing Up the Senate".

Major criticisms of block grants are that:
* the award process can be manipulated so that grants can be distributed to reward the federal administration's own party (by favoring states with governors of that party, for example);
* at the local level, the same sort of partisan favoritism may occur when the state distributes the funds to local government units;
* dispersing the funds through state or local governments makes federal oversight of their proper use very difficult.

The Scottish parliament within the United Kingdom

The Scottish parliament, which came into being in May 1999, is financed by an annual Block Grant from the UK Chancellor of the Exchequer. The size of this block grant is adjusted each year by a formula called the Barnett formula which gives the Scottish parliament additional revenues in proportion to addition government spending in England which has no devolved parliament but is governed directly by the UK government. An alternative to the Block grant that has been suggested would be for Scotland to have Fiscal autonomy though this is opposed by those who fear that giving all tax-raising powers to the Scottish parliament would be a further step towards Scottish independence.

ee also

* Federalism
* Fiscal policy
* Categorical grant