Gov. Pawlenty has come under criticism for refusing “free” federal money to expand Medicaid–just the latest instance in which state officials have to ask, “Is taking this money worthwhile?” A new report suggests the answer is no.

The Mercatus Center says “it is likely that temporary federal grants create permanent (future) ratchets in state taxes.”

How much do state taxes go up in response to temporary federal grants? According to Russell Sobel, George R. Crowley, both of West Virginia University, one dollar in federal grants leads to an additional 40 cents in state and local tax increases down the road.