State Administration of Non-Entitlement CDBG Programs: Institutional Choices and Transaction Costs.

The main argument of this paper is that variation in state level institutions and local government administrative capacity are key factors in explaining the distribution of non-entitlement Community Development Block Grants (CDBG) in states. More specifically, we argue that local government capacity is positively associated with access to non-entitlement CDBGs, and decentralized state-level allocation institutions enhance access to these intergovernmental block grants as well. This paper provides a comparative institutional analysis of the allocation of non-entitlement Community Development Block Grants across four states: Texas, California, Kentucky, and Utah. We use probit, Poisson, and Tobit models to determine whether access to non-entitlement CDBGs is a function of variance in local government capacity and state-level institutional variation. We find that from 1999-2001, state institutions influence the odds of receiving a grant and the number of grants, but not the funding levels in dollars. These findings raise important questions about whether state administration of the non-entitlement CDBG program prevents local governments most in need of federal assistance from receiving federal assistance. [ABSTRACT FROM AUTHOR]