Where is the state-federal relationship headed?

• Position: Q & A: WILLIAM POUND AND SUE URAHN - Interview

William T. Pound, executive director of NCSL, and Sue Urahn, executive vice president of The Pew Charitable Trusts, shared these insights on the states' evolving relationship with the federal government at a recent NCSL meeting for legislative fiscal leaders.

State Legislatures: How has the state-federal relationship changed in the past 25 years?

William Pound: There were a lot more federal-state initiatives 25 years ago. You saw the creation of the Environmental Protection Agency and welfare programs with significant cooperation between federal and state governments. Congress has increased funding for more programs and services, but also has used matching funds or partial funding to get states to achieve its goals, and that has strained the state-federal relationship. In the wake of the Great Recession, there is also more uncertainty about federal policy. State legislators wonder if the rules of the game may change in a couple of years. The federal government may promise it will cover the costs of some programs, but as it tries to rein in spending, state lawmakers wonder if that promise will hold. If there is a bag out there, who is going to be left holding it?

SL: Do you still see states as "laboratories of democracy?"

Sue Urahn: I wouldn't underestimate the willingness of states to innovate in times of uncertainty. If you look at immigration or Medicaid or how states are finding ways to control costs, there are a lot of interesting strategies happening in the states. States also face balanced-budget requirements, which Washington doesn't, so state lawmakers are going about resolving their problems in really thoughtful ways. The other certainty lies in demographics. The 2010 Census found 13 percent of the population over the age of 65. Some states are going to have an easier time than others. But each state will have to face the realities of an aging population.

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SL: With 50 percent of the members of Congress and many high-level federal officials with state governing experience, why is the state-federal relationship so strained?

Pound: Politics. How quickly they forget where they came from. One problem is that everyone wants to make the decisions, which creates clashes. And as our...