THE DUAL IMPACT OF FEDERAL AID ON STATE AND LOCAL GOVERNMENT EXPENDITURES

THERE aid to state is little and doubt local governments that federal aid to state and local governments will have a positive impact on those functions to which it is directed.1 However, whether such aid will "stimulate" expenditures on the functions to which it is directed or serve largely as a substitute for state and local revenue has not received adequate attention. A second and related area of inquiry is the impact which the receipt of federal aid for other functions may have on a particular function. This paper will concern itself with the investigation of the dual role of federal aid, that is, the possible stimulation of expenditures on a particular function by aid to that function, and the impact which federal aid to all other functions may have on a given function.