Discussion question responses and analysis

¶ … fiscal federalism on finance and budgeting in public organizations.

Federalism is a political concept in which groups are bound together by a representative governing body. This is usually constitutionally divided between a central authority and political units; in the United States, the Federal Government and the 50 State Governments. The issue of federalism was actual controversial during America's revolutionary period when some feared that too much power at the Federal level would reduce State's rights. Certainly, after the Civil War the Federal Government increased its influence and power, particularly as transportation technology allowed for greater commerce and travel between States (Gerston, 2007). In its most basic form and application, fiscal federalism is a concept that is concerned with deciding which functions of government are best centralized and which are more appropriately placed in decentralized levels of government. As a study, it looks at how the expenditure side and revenue side work together, are allocated across the administration, and impact the public. When looking at government, the concepts of fiscal federalism are both horizontal and vertical in nature. Horizontally, or across governmental platforms, fiscal issues focus on regional imbalances and competition. Vertically, fiscal relations refer to the Federal and State governments, and who controls the disposition of dollars. It is, in fact, this imbalance that defines most of the debate about fiscal federalism's role in the efficient use of funds for needed projects (Sharma, 2011).

When we consider public administration and its overall role in society, we find some dichotomies with the idea of fiscal federalism. One could convincingly argue that public administration has changed from a strict reliance on just the Federal system to one that is inclusive of the differing, and more egalitarian, needs of the States. Certainly, with the rise of literacy and technology, the crux of societal needs must also evolve, and with it, expectations about individual actualization (Denhardt and Denhardt, 2008).

However, we now see some issues that are even more serious in States: California cancelled many of its summer educational programs and has a tremendous fiscal crisis; Washington has a budget deficit that has extended into education; and Medicaid spending has caused a fiscal crisis in Texas, New Jersey, and New York (State Budget Crisis Task Force, 2012). Additionally, it now appears that transferring of regulatory and fiscal authority to States sometimes causes better incentives to follow Federal policy, but all too often allows states to undercut economic policy and even adapt programs with a poorer design and execution than intended, often causing those programs to underperform (Super, 2005).

Health care is certainly a prime example of the disconnect between Federal and State governments. States and localities deliver, finance, administer and even monitor health systems. Any serious reform, though, must begin at the Federal level with Medicaid, which is hurting state budgets. In fact, most States lack the administrative tools and expertise to manage health care budgets at all, evidences by the tripling of State and local expenditures since 1980 (Pollack and Kilgore, 2009).