Airports

Historically, the goal of U.S. aviation policy was to stimulate the development of the industry. The 1926 Air Commerce Act declared the role of the federal government to promote aviation for commercial transportation. In 1946, the Federal Airport Act authorized federal aid to airports and financed almost half of all capital spending on airports between 1947 and 1969 (U.S. Congressional Budget Office, 1988). In 1970, the Airport and Airway Development Act established the Airport and Airway Trust...

Composition of Federal Aid by Form of the Grant

In measuring the fiscal effects of intergovernmental grants on the grant recipient's spending and other budgetary decisions, the disaggregation of federal grants by form is of crucial importance (Wilde 1971 Oates, 1972 Gramlich, 1977 Inman and Rubinfeld, 1997). The data on federal intergovernmental grants published by the U.S. Census Bureau and U.S. Office of Management and Budget are organized along functional lines. This has always been a major obstacle for those doing empirical work on the...

References

Advisory Commission on Intergovernmental Relations. RTS 1991 State Revenue Capacity and Effort. Washington, D.C. ACIR, 1993. Aronson, J.R. and Hilley, J. Financing State and Local Governments, 4th ed., Washington, D.C. The Brookings Institution, 1986. Bahl, R. and Duncombe, W. State and local government debt burdens in the 1980s a study in contrast. Public Administration Review 53 31-40, 1993. Barro, R. On the determinants of public debt. Journal of Political Economy 87 940-971, 1979. Barro, R....

Taxonomy of Federal Aid Design Features

The key features of federal aid programs include form of the grant, the limits on funding, and the formula for distribution of grants across the grant recipient jurisdictions. The federal grant forms considered in the U.S. can be classified as categorical, block, and shared revenues (Table 9.2). A categorical grant is one that is directed to a narrowly specified activity. Block grants provide a broader functional focus and greater * Oates (2003) cautions that an excessive use of central...

Theories of Grant Utilization

Economic theory can help illuminate when and where a specific characteristic of a grant is most useful and appropriate. Lump-sum and matching grants tend to produce different incentives for grant recipients. The effects of lump-sum and matching intergovernmental grants on the recipient government's decision making are influenced by two factors the income effect and the substitution effect. The additional income from a lump-sum grant will cause the demand curve to shift out as shown in Figure...