Local
government may be loosely defined as a public organization authorized to decide
and administer a limited range of public policies within a relatively small
territory which is a subdivision of a regional or national government (Local
Government, n.d.) .
Within the pyramid of government institutions, the local government finds
itself at the bottom, with the national government at the top and the
intermediate governments at the middle. The intermediate governments could be
state, regions, or provinces. Five broad categories of local governments have
been postulated: 1) federal-decentralized, 2) unitary-decentralized, 3)
Napoleonic-perfect, 4) communist, and 5) postcolonial.
The
federal-decentralized system decentralizes much authority to its regional
governments. In truly decentralized federal systems, a considerable degree of
local independence prevails, though the degree of autonomy of local governments
vary from country to country. This is the local government system that will be
discussed, in relation to the nature and importance of grants to its proper
functioning.
A
government grant according to Investopedia, is a financial award given by the
federal, state or local government to an eligible grantee. The grantee is not
expected to repay a government grant. Grants exclude technical assistance or
other varieties of financial assistance like loans, loan guarantees, interest
rate subsidies, direct appropriation or revenue sharing. Generally, grant
recipients are required to provide periodic reports on the progress of their
grant project. Federal
governments use grants to achieve national objectives. They are an important
tool used by federal governments to provide program funding to state and local
governments.
Some
governments like the unitary-decentralized governments (e.g. Great Britain)
categorize local government grants into conditional grants and unconditional
grants. Conditional grants are funds transferred for a specific purpose. Such
monies cannot be used for any other purpose/project. Unconditional grants on
the other hand can be used for any purpose deemed appropriate by the recipient.
In British Columbia for instance, unconditional grants include regional
district basic grants, small community grants and traffic fine revenue sharing
transfers.
In
the federal-decentralized system of government, grants to local governments are
of three categories: categorical grants, block grants and general revenue
sharing.
Formula
grants are given by the federal government based on mathematical formulas
designed to create fairness and equity in the distribution of the grants.
Formula grants ensure that more populated states and towns receive more funding
than the less populated ones. They also ensure that the states with higher
poverty levels get more money than those with lower poverty rates.
Project
grants on the other hand are funded for the completion of specific projects
e.g. the pavement of roads. Project grants are competitive in nature. Local
governments submit proposals in bid to win government money.
Investopedia
defines ‘block grant’ as money that is awarded, or granted, by a national
government to state and local officials. There typically exists guidelines as
to how such monies can or should be expended. There are no specific provisions
on the spending pattern of the money. Block grants are issued for general
areas of need. The Mental Health Block Grant is a well-known example of a block
grant in the U.S. This block grant disburses huge amounts of money to
individual states as assistance in the treatment of mental illnesses. Another
example is the Social Services Block Grant in the U.S.
General
revenue sharing grants can be used for any purpose, on condition that the
purpose in question isn’t prohibited by federal or state law. Among the three
main types of local government grants, general revenue sharing is the grant
type that imposes the least restraint on recipients. Federal administrators
have little discretion over who receives general revenue sharing. Legislation
specifies formulae for the allocation of such funds to states.References
Local Government. (n.d.). Retrieved January 07, 2015, from encyclopedia.com:
http://www.encyclopedia.com/doc/1G2-3045000726.html
Comments
Post a Comment