Arizona’s Struggle for Sovereignty: The Consequences of Federal Mandates

Arizona is awash in federal money. In fiscal year (FY) 2007, Arizona received close to $8.5 billion in federal funds. This money funds programs that most Arizonans are familiar with, such as Medicaid and the No Child Left Behind
Act (NCLB). Even though the inflow of federal dollars appears attractive, there is a catch: As federal dollars flow in, state dollars are fixed to ever-growing demands connected to these programs. In 2000, the State of Arizona used
general funds at close to $463 million for Medicaid alone. By 2005, that figure had risen to $914 million, and it is projected to grow to $1.3 billion in FY 2008.

Federal spending in Arizona displaces the legislature’s authority to act on its own. Currently, the legislature
appropriates, or has control over, about one-fourth of the spending in the state. The structure of federal funding
programs, combined with Arizona’s own propositions to limit legislative authority, is the reason for this constraint.
As Arizona locks itself into federal dollar-for-dollar matching programs, it is unable to ever release those funds. That
type of funding constrains the legislature and continues to do so more and more every year, to the point that the state
becomes a servant to Washington.