March 21, 1996

March 21, 1996 | Commentary on Regulation

ED032196a: The Unfinished Agenda on Unfunded Mandates

One year after Congress passed a law to deal with the problem of "unfunded mandates," the results are not encouraging.

Few Americans have any idea that Washington forces all sorts of laws and regulations on state and local governments -- concerning everything from storm-water drainage to health care for illegal immigrants -- without giving states and localities so much as a penny to pay for them.

State and local government officials and business leaders met recently in Washington to examine the preliminary recommendations of the Advisory Council on Intergovernmental Relations (ACIR). This is the body Congress assigned last year to examine how "unfunded mandates" are hurting state and local governments, as part of its Unfunded Mandates Reform Act of 1995.

As the ACIR's recommendations show, unfunded mandates are still busting state and local budgets, diverting much-needed money from law enforcement, fire fighting, education and other activities people really need. In short, Congress accomplished little with last year's reforms. This should come as no surprise. After all, the Unfunded Mandates Reform Act of 1995 did absolutely nothing to address existing mandates -- except to have the ACIR study them.

But the study is proving useful. Based on information from the National Governors' Association and dozens of other state and local governments and organizations, ACIR identified 14 mandates it sees as the biggest problems.

The report recommends that seven federal laws, including the Family and Medical Leave Act, the Occupational Safety and Health Act, and the Fair Labor Standards Act, no longer apply to state and local governments. Another seven laws, including the Americans with Disabilities Act, the Safe Drinking Water Act and the Clean Air Act, should be made more flexible or be funded more by the federal government instead of forcing state and local governments to pay.

Of course, the report has its shortcomings. It doesn't say anything about how unfunded mandates affect the private sector and whether reforms should extend that far. There also are countless environmental, health and education mandates the report doesn't address. And while the ACIR acknowledges that laws like the Occupational Safety and Health Act may not have a legitimate scientific basis, the ACIR's report doesn't reach into whether the laws themselves should be changed. Asking Congress to exempt states and localities from laws that are ill-conceived in the first place sets a bad precedent and creates a double standard for treatment of the private sector.

In short, the ACIR report just scratches the surface of a huge problem. Costly requirements imposed by Washington are undermining the fiscal health of state and local governments. For example, every three years the Safe Drinking Water Act requires the Environmental Protection Agency to identify 25 new substances localities must test for in their water supplies -- forcing cities across America to bear the cost of testing for substances that literally have been banned for decades.

Another example: A study by The Heritage Foundation showed that state spending on Medicaid will increase from $32 billion in 1990 to $104 billion in 2002, a 325 percent boost, if there is no reform of the current program. States like California and New York will have to raise additional billions just to pay for their share of this program.

Unfunded mandates can force states to raise taxes; reduce spending on education, infrastructure, law enforcement or some other service; or both. For example, in September 1995, Fairfax County, Va. reported that half its non-school budget is being consumed by programs and mandates issued by Congress and the Virginia General Assembly, for which the county receives no funds. In February, the county executive was forced to propose one of the largest tax increases in the county's history, as well as dramatic reductions in education and social service programs..

Despite their limitations, the ACIR recommendations should give states and localities hope. They confirm that the burden of unfunded mandates is real and significant. The ACIR's final report could create the foundation for a new round of legislative initiatives. These could range from full federal funding of mandates to outright repeal.

However, if state and local communities expect change, they will have to continue badgering Washington through legislation and the courts. Unless states and localities are vigilant in keeping Congress and the president focused on addressing the problem of unfunded mandates, there will be no reform at all.

Washington will be all too happy to keep passing the buck.

Note: Angela Antonelli is former director of economic policy studies at The Heritage Foundation, a Washington-based public policy research institute.

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