Do In-kind Grants Stick? The Department of Defense 1033 Program and Local Government Spending 

Journal of Urban Economics

Donald J. Bruce, Celeste K. Carruthers, Matthew C. Harris, Matthew N. Murray, Jinseong Park

Abstract

The U.S. Department of Defense 1033 program transfers decommissioned military goods to local police departments. This is one of the largest grant-in-kind initiatives in the country’s history, accounting for over $5.2 billion in transferred goods and vehicles since 1997. Two features of this program are unique among intergovernmental grants, each working against the tendency to let grants supplant local resources: goods from the 1033 program are less directly fungible than monetary grants, and their acquisition entails little to no oversight by officials outside of law enforcement. While previous research shows that intergovernmental grants crowd out a large or equivalent degree of local spending, we find no evidence of crowd-out in the wake of1033 acquisitions. The features of this program may therefore be useful when designing grants to increase local spending in a targeted category, but welfare is likely tempered by the absence of local oversight.

Keywords: Grant in-kind; Flypaper; Crowding out