Block grant

In a fiscal federal form 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, in contrast to a categorical grant, which has stricter 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. Disadvantages are that it is very difficult to compare the results of such spending and reach a conclusion and that regional governments might be able to use the money as if they collected it through their own taxation systems to spend it, without any restrictions from above. Also, the formula can be manipulated for partisan advantage, and favoritism occurs more easily than with categorical grants.

United Kingdom

Since devolution in the United Kingdom was implemented in the late 1990s, creating the Scottish Parliament, Welsh Assembly and the Northern Ireland Assembly, the devolved governments of Scotland, Wales and Northern Ireland have been funded by block grants from the government of the United Kingdom because only a relatively small percentage of the tax revenue is collected by the devolved governments. Westminster provides a block grant for Transport for London reflecting the expense of operating the London Underground and the fact the London Authority is unable to raise a Transport Levy on Council Tax unlike other metropolitan counties in the UK (Though since 2012 the Mayor of London’s Community Infrastructure Levy has been introduced allowing the Mayor to attach a levy on property development to serve a similar function).

Under the terms of the Scotland Act 2012, the block grant from the United Kingdom government to Scotland will be cut, but the Scottish Government will be able to collect an equivalent amount of income tax.

United States

Since the 1970s, 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." Block grants replaced the previous policy of revenue sharing (1972–87).

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, transportation, housing and counterterrorism.

The formulas for how much money states receive favors small states. Most grant programs have a minimum amount per state, usually 0.5% or 0.75% of the total money given to states in the program.

For instance, in 2003, under the state Homeland Security Grant Program and Critical Infrastructure Protection, the least populous state, Wyoming received $17.5 million and the most populous state, California, received $164 million. In fiscal year 2004, Wyoming was guaranteed to receive at least $15 million, California $133 million. Wyoming thus received $35.3 per person, California only $4.7 per person.

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

Additionally, individual states may provide block grants to their political subdivisions, such as counties, towns, and school districts.

See also

• Categorical grant