What does flexible federalism actually mean and look like?

Most Americans, drawing on their high school civics class, would readily say that the United States operates as a federalist system.

by Dane Stangler, Director of Policy Innovation| Progressive Policy Institute

Despite decades of steadily expanding federal authority, there is still a fairly well-defined division of labor among national, state and local governments. The latter, for example are chiefly responsible for law enforcement and criminal justice, land use, education (mostly), and so on.

In recent years, moreover, local government has been lauded for its effectiveness and responsiveness. Mayors have been told that they should run the world (maybe that’s why so many are running for president). In their excellent book, The New Localism, Bruce Katz and the late Jeremy Nowak declared that “power increasingly belongs to … the local level” because of regional collections of assets, institutions, and networks.

So why does PPI call for a renewal of flexible federalism?

One big reason is that Washington — paralyzed by political extremism and tribalism — is failing to rise to large-scale and urgent national challenges. These include universal health care, climate change, immigration, inequality, and more. The public knows this. Congressional approval is at 20 percent — although, to be fair, this is more than twice as high as the 9 percent approval rating recorded in November 2013. President Trump thinks he is aggrandizing the presidency but, according to some, he may actually be weakening it.

Another good reason to renew flexible federalism, according to Katz and Nowak, is that “problem solvers now congregate disproportionately at the local level.” And, because mayors, county commissioners, and other metro leaders are already demonstrating their abilities to address persistent problems of national importance.

Traditionally, federalism implies a division of responsibilities among federal, state, and local government. School districts are mainly funded by local property taxes and follow state-set standards. Systems such as Medicaid, with federal funding, are operated by states, with service delivery occurring at the county level. Cities maintain roads and parks, with some financial support from state and federal government.

Federalism has allowed the United States to learn from its “laboratories of democracy” in states, cities, and counties. It has encouraged adaptation to local needs and regional differences. At PPI, we’ve captured innovations by local mayors in administration and infrastructure.

Today, however, we need a renewed flexible federalism that more broadly supports the efforts of local leaders to solve problems that are national and global scope.

In Massachusetts, for example, the Global Entrepreneur-in-Residence (GEIR) program was adopted by the state through the University of Massachusetts. Capitalizing on universities’ exemption from the H-1B visa cap, the GEIR helps retain global talent in the state and facilitates the growth of new businesses. The program has expanded to sites in Colorado, Missouri, and Alaska. The GEIR is a perfect example of flexible federalism: with Washington deadlocked on immigration reform, states and universities are working within the existing system to revive local economies through attraction of foreign immigrants.

Meanwhile, as the Trump administration struggles to sort out a North American trade strategy, multiple organizations along the U.S.-Canada border are working to harmonize relationships and collaborate on economic development. The Pacific Northwest Economic Region (PNWER) is a public-private partnership that has been working for almost 30 years to coordinate regional policy in several different areas. Similar cross-border organizations and networks exist in the Detroit-Windsor and Buffalo-Niagara regions. Unheralded and under the radar, these initiatives have sought, as the participant in one recent event put it, to make the border “inconsequential” in terms of regional development. While the federal governments, on both sides of the border, are involved, the energy and implementation come from local leaders.

Examples of local and regional innovation abound. Counties in Ohio and West Virginia have taken response to the opioid crisis into their own hands. Smart sensor technology is being installed in sewer and water pipes in Kansas City and elsewhere to make infrastructure more resilient and efficient. Counties in Utah and Maryland are seeking to mitigate intergenerational poverty. New York City’s “moonshot challenges,” which invite startups to help solve city problems, are spurring entrepreneurship and bridging persistent gender and racial gaps.

A few patterns emerge from this activity:

  • In some cases, local innovation is supported financially by the federal government, whether through grants or competitions;
  • In others, local and regional organizations are taking the lead on an issue, with some support (or at least minimal intervention) by state and federal government;
  • We also see local leaders addressing certain issues by working around (or through) federal and state obstacles.

Many of our Democratic candidates for president, however, seem unfamiliar with all this. Some remain fixated on Washington-driven solutions. Nor has it reached Republicans, who have evidently lost the interest and ability to govern.

Local and regional leaders need more help. We need to demand that our national leaders — including those aspiring to be president — tell us how they will help local leaders overcome barriers to innovation and problem-solving.

Those barriers include:

  • Lack of flexibility — in those cases where federal government funding is available for local governments, that support is segmented in ways that limit local ability to respond to their needs. This includes unfunded mandates in many areas;
  • Complexity — local leaders often lament that, while they welcome federal support, it’s sometimes not worth taking because of burdensome restrictions and requirements;
  • Uncertainty — especially in areas such as immigration and cross-border development, even though local leaders are trying to address them, they’re unsure whether the direction of federal policy will undercut their efforts.

Local leaders, both public and private, frequently operate with an overwhelming sense that their state and federal counterparts do not understand local context. Perhaps, with so many of the Democratic presidential candidates boasting state and local government experience, this will be remedied. Maybe they’ll recall their own frustrations and difficulties in trying to innovate locally.

What they need, however, is a new framework for flexible federalism and how that can guide a new era of empowering local and regional innovation.

Radically Pragmatic. We seek to advance progressive, market-friendly ideas that promote American innovation, economic growth, and wider opportunity.

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