“Dependency on the federal government is nothing to celebrate, it can come at a deep cost to taxpayers and our state’s sovereignty.”
I repeat often the mantra that there are no free lunches in government. At the end of the day, all government spending must eventually be paid for by the taxpayer in the form of higher taxes, “non-tax” special assessments, fees, or some more creative burden. Federal money of course is no exception.
Yet, we often see our state and local government leaders insisting there is no downside to accepting federal money. Some officials act like it’s basically leaving “free” money on the table. If we don’t take it, some other state will, they say.
This flippant attitude towards federal money has been reflected in state and local policy decisions. Federal money now makes up over 40% of Montana’s state budget. And local governments are accepting large amounts of federal money too, often in the form of grants. But dependency on the federal government is nothing to celebrate, it can come at a deep cost to taxpayers and our state’s sovereignty.
According to the 2024 Federalism Scorecard from the Center for Practical Federalism, Montana ranks 47th out of 50 states in vulnerability to federal influence on state policy-making. Montanans are among the most exposed to Washington DC’s overreach, in large part because our state and local agencies chase federal grants with little legislative scrutiny.
Federal grants sound like free money, when they’re anything but – especially if used irresponsibly for ongoing government expenses. Grants come laced with strings that can dictate policy, impose matching requirements, and generate expenses for auditing, staffing, and compliance. And when the federal spigot runs dry, local communities can be left holding the bag.
An article I ran across in July from the Western Montana News titled “Missoula County Wants $5.76 Million More From Property Taxpayers to Fund Grant Bureaucracy and Climate Activism” illustrates this problem well. The article covers Missoula County requesting $350,000+ in new spending, funded by property taxes, to pay for ongoing expenses and positions previously funded by expiring federal grants. This is on top of requesting an additional $200,000+ to staff up their grant administration department. This illustrates both the direct and indirect costs to local taxpayers that can result from federal grants.
But the risks of federal money go beyond purely finances. The Center for Practical Federalism’s Scorecard highlights how Montana lacks state legislative oversight of grants sought by state and local agencies, intervention mechanisms, and contingency plans for fund loss—leaving our governments unprotected against federal influence. Un-elected agency officials can commit the state to federal grant terms without our elected representatives weighing in. And we don’t systematically account for the un-reimbursed costs of accepting federal grants, further reducing our democratically-elected officials’ ability to keep a lid on the state budget. These gaps make us prime targets for federal bullying that doesn’t align with Montana values or state government priorities. As the report warns, states can become “branch offices” of D.C., with federal conditions overriding local priorities.
Montana can reclaim sovereignty with improved oversight over the federal money flowing into the state. The Legislature could pass laws requiring legislative approval for seeking federal grants exceeding a cost threshold, similar to “REINS Act” models. Mandate full cost-benefit analyses that tally all hidden burdens, including long-term fiscal impacts, administration, and policy strings. Finally, insist on contingency planning for grant-funded programs to avoid disruptions requiring taxpayer bailouts like the example from Missoula.
These reform ideas affirm our Tenth Amendment rights, boost accountability, and let us innovate without D.C.’s thumb on the scale. By reining in reliance on federal money, we’ll protect our independence, reduce bureaucracy, and ensure government decisions reflect Montanans’ values, not federal whims.
B: Kendall Cotton, Frontier Institute