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November 22, 2016 12:02 PM, EST

Republican Governors Seek Changes in Federal Aid to States

Daniel Acker/Bloomberg News
MADISON, Wis. — With Republicans taking full control in Washington, GOP governors across the nation will seek a bedrock shift in how the federal government helps states pay for highway projects, worker training and health care for the needy.

Wisconsin Gov. Scott Walker, the newly elected head of the Republican Governors Association, said his group is seeking to move federal aid to states to a looser model that would come with greater flexibility and fewer rules but also the likelihood of much less money, especially over the years to come.

This “block grant” concept is a favorite of House Speaker Paul Ryan (R-Wis.) and has also been endorsed by President-elect Donald Trump, giving it the possibility of gaining real support among Republicans next year.

“We just think there’s a great ally in the Congress to take things like Medicaid and block grant it to the states and we’d like to see it with workforce education and transportation money, too,” Walker said in an interview.

Now, federally funded programs like Medicaid carry many requirements from the federal government such as minimum eligibility thresholds for the needy and basic levels of medical coverage. Conservatives such as Walker say those rules stifle innovation, like a so-far unimplemented proposal by Walker to require drug testing of Medicaid applicants.

Liberals say the federal government already waives some of these rules at states’ request and that, if reasonable, more of these rules could be waived or repealed at any time for states. They say the real point of block grants is to reduce taxpayer spending on behalf of the poor by removing guarantees that federal aid keeps pace with fast-growing health care costs or the growth in needy applicants during recessions.

In transportation, block grants could lead to the removal of so-called prevailing wage requirements that mandate minimum salaries for construction workers on federally funded road and bridge projects. That could potentially save money on projects in Wisconsin, though there’s a sharp debate about whether paying workers less would provide better long-term value for taxpayers.

Removing federal rules for worker training funds could make it easier to fill open jobs in states like Wisconsin, where some manufacturers complain of too few job applicants. But existing programs also include popular goals, such as helping veterans and disadvantaged minorities.

The block grants could also provide opportunities for the states to hold down spending of their own tax dollars in Medicaid, which is costing Wisconsin $2.9 billion in state taxes alone this year. 

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