Texas has no centralized system for tracking the federal grants flowing to its more than 5,500 local governments, according to a new policy report that recommends creating an Office of State Sovereignty to scrutinize those funds before they are accepted.
The report, authored by Texas Public Policy Foundation (TPPF) researchers James Quintero and Ben Crockett, argues that federal grants can include conditions that influence Texas policy, increase government spending, and create long-term fiscal dependence.
In 2023, Texas’ state and local governments received a combined $84.3 billion in federal aid, according to the report’s analysis of data from the U.S. Census Bureau. Excluding state to local transfers, federal aid accounted for between 32 and 44 percent of Texas state government revenue and between three and six percent of local government revenue. Texas’ reliance on federal aid was greater than the national average based on this data.
Quintero and Crockett warned that federal grants also come with conditions that influence state and local policy and potentially increase government spending.
Among the examples cited in the report are federal awards to Fort Worth’s Diversity, Equity, and Inclusion program and an Environmental Protection Agency grant to Dallas for an environmental justice initiative.
Fort Worth received nearly $5 million through 14 federal awards for its program, while Dallas received $652,662 from the EPA.
The financial impact of federal funding can extend beyond the grants themselves. Fort Worth estimated that replacing its federal funding would require a 19.8 percent increase in the local property tax rate.
