One of the aims of Nixon's "New Federalism" reforms was to promote political decentralization in the federal system. An examination of the impact of revenue-sharing and block grant programs in El Paso, Texas, reveals that the New Federalism sees to have had the opposite effect in that city. El Paso is now more dependent, politically and economically, on federal grants than it was prior to the New Federalism and local autonomy is significantly reduced. The reasons for this paradoxical impact in El Paso and the applicability of these findings to other cities are discussed.