Nowak Metro Finance Lab

In 1959, President Eisenhower called for national goals and highlighted the need for shared responsibility across government levels. His “marble cake” model of federalism, showing the overlap of federal, state, and local roles, remains relevant today as states and cities take on more responsibility in complex policy areas like housing and defense.

Federal retrenchment is triggering fiscal, economic, and structural shocks nationwide, forcing local and state leaders to navigate cascading impacts and lead regional responses as federal support pulls back.

The United States is undergoing a rapid, uncoordinated defederalization, where responsibilities traditionally held by the federal government are being shifted to states, localities, and other sectors without a clear plan or adequate support.

As federal funding shifts from investment to cuts, local governments must act now. Conducting “stress tests” will help assess risks, engage stakeholders, and develop response plans. Proactive planning ensures communities can adapt and protect essential services amid fiscal uncertainty.