ABSTRACT
This chapter describes the relevant history of intergovernmental grants in the US It examines intergovernmental grants from the perspective of their role in a federal system of government. The chapter focuses on describing the evolution of federal grants to state and local governments in the US and presents trends in intergovernmental grants over the past 50 years. It describes the literature and policy issues that presume some knowledge of the relevant history of federal intergovernmental grants and state and local government expenditure in the US Intergovernmental grants are a key mechanism for devolution in a federal system; other methods include the judicial and legislative delegation of fiscal responsibilities. Intergovernmental grants are justified on various grounds, including externality in the benefits of a public service provided by a jurisdiction, equalization of fiscal capacity across jurisdictions, and to promote equity and efficiency of the tax system.
