State governments have developed a despicable habit of ignoring what the voters and their representatives identify as the official purpose behind many grants and fee collections. In too many cases, state governments display the arrogance of skilled thieves, diverting funds from the intended destination. Instead the funds are used to plug self-inflicted budgetary holes.
In the process they deprive consumers of the services that elected representatives chose and for which funds were dedicated. The state kleptocrats regard it as their right to pilfer large and small pools of other people’s money, and they ignore laws that forbid such diversions.
The Temporary Assistance for Needy Families (TANF) program is a $16 billion annual grant designed to help needy families achieve self-sufficiency. States receive their portion as a block grant to design and operate programs that accomplish the purposes of the TANF program.
Initially, states used block grant flexibility to divert some TANF funds meant as benefits for families, applying them to child care and welfare-to-work programs. Gradually, “some” became “a lot” when states redirected state and federal TANF funds to fill state budget holes or to substitute for existing state spending. In leaner times, states became addicted to the “free money” and could not restore spending to core welfare reform services. Instead, they made cuts in basic assistance, child care and work programs, precisely the benefits that TANF was intended to fund.
In 2012, a $26 billion settlement was reached between the five largest private lenders (accused of foreclosure processing abuses) and 49 state attorneys general. The funds were supposed to be used for principal reductions and refinancing as reparations for consumers whose homes had been put through abusive foreclosure. Instead, even before the court approved the settlement, California, Georgia, South Carolina, Wisconsin, Missouri, Pennsylvania, Vermont and Maine were publicly discussing which state budget holes they could plug by diverting the funds. Injury to foreclosed consumers was the last thing on state leaders’ minds.
No fund is too small for a state government to snatch. In Oregon, the fee for a report on a driver’s record was increased from $2 to $10 and the surplus above its cost was illegally redirected from use on highway projects. Instead, the annual $4 million in funds were being used to develop state websites.
Likewise in California, fees collected for recreational fishing licenses were “eyed” for diversion to Marine Protection Areas, a non-recreational purpose and therefore a brazen violation of California’s own Fish and Game laws.
In California, a sudden chill of rectitude passed through the assembly when alignment of fees and their intended purpose was codified by legislation. That law required revenues derived from vehicle fees under a specific chapter of the Vehicle License Fee Law to be used solely for transportation purposes. By that act, the legislature confessed that it saw the practice of diversion as a meaningful problem.
The FCC’s latest annual report on 911 fees for year 2016 shows that New Mexico, Rhode Island, Illinois, New Jersey and West Virginia “diverted” 911 funds totaling $128.9 million. Public safety ranks higher than almost every other use of funds, but the state’s wanton thievery endangers consumers during emergency conditions. There should be a special, permanent place in the DMV waiting line for 911 fee thieves. States have been practicing 911 grand larceny for years, but no state official is ever prosecuted for it. Instead they respond with a “the feds should send more money.” Unfortunately, it will.
The federal government hopes to send a $200 billion trough of grant money that must be matched 6-fold by states to pay for the long awaited national infrastructure upgrades. Aside from inflation erosion during decade-long permitting and environmental study boondoggles, the federal grant money risks being hijacked by state government kleptocrats.
On behalf of consumers, we hope the federal government loudly explains the history of state hijacking of important programs such as 911 fees, TANF and the foreclosure abuse settlement. The feds should feel free to name the names of past miscreants. Don’t fall for the pathetic ruse of “settling it in court.” The kleptocrats are skilled at wasting public money in their own defense and running the clock until all witnesses are deceased.
Going forward, grants need to include unbreakable claw-back provisions for any state diversion of any grant monies, especially the new $200 billion infrastructure piñata. A state that employs any person (elected or not) who diverts grant money should become ineligible for any federal grants for a period of 10 years — or enough to secure a road construction permit, whichever is longer. Only then will voters be more selective about the integrity of state employees and elected officials.
Alan Daley writes for the American Consumer Institute, a nonprofit educational and research organization. For more information about the Institute, visit www.theAmericanConsumer.Org.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.
