In the recent history of the long-running intergovernmental wars, the high-water mark for states and localities was undoubtedly passage of the federal Unfunded Mandates Reform Act of 1995. At the time it passed, UMRA was hailed as a substantial victory for those who wanted to break the federal government's habit of shoveling responsibilities down to states and localities, and refusing to consider (let alone cover) the cost of the new or reassigned work.
UMRA was designed to blunt that federal inclination by requiring that the Congressional Budget Office analyze both legislation and rules for their potential cost to states and localities (and also to the private sector, not incidentally). Mind you, it didn't prohibit Congress or federal agencies from passing along unfunded mandates. It simply required that Congress and the agencies be clear about it whenever they actively pursued what for years had been accurately--if crudely-- described as "shift and shaft" federalism.
As UMRA's 10th birthday approaches, it is certainly worth reflecting on whether UMRA has fulfilled anything like its promise. And appropriately, there has been a flurry of retrospection about just how effective the law has been. In particular, a newly released General Accounting Office report, "Unfunded Mandates: Analysis of Reform Act Coverage," goes into extensive detail about UMRA's intent versus its actual affects. The report was produced at the behest of one of the few federal legislators who regularly evinces genuine concern over how federal action affects state and local government: former Cleveland mayor and Ohio governor, and now U.S. senator, George Voinovich.
The GAO report findings square with the opinions of other interested observers. Having UMRA in place has certainly been better than not having it. "It has at least opened the eyes of Congress and the administration that unfunded mandates exist," says Ed Rosado, legislative director for the National Association of Counties. Rosado's counterpart at the National Conference of State Legislatures, Carl Tubessing, goes a baby step further: "I think it at has least slowed Congress down," says Tubessing.
According to the GAO report, "UMRA may have indirectly discouraged the passage of legislation identified as containing intergovernmental mandates at or above UMRA's cost threshold. Since 1996, only three proposed intergovernmental mandates with annual costs above the applicable threshold have become law." That certainly sounds good. In fact, just looking at the ratio of mandates to total laws passed in recent years, it would appear that UMRA is having more than a modest impact. The GAO reports that of the 108 laws passed by Congress in 2001, 12 contained intergovernmental mandates. In 2002, there were 269 laws, and only eight mandates.
The bottom line, though, says Rosado, is that "mandates continue to grow." According to Mandates Monitor, the NCSL's watchdog report, unfunded mandates already in place have states lined up for $33 billion in costs in FY 2005 alone; the GAO report puts the annual cost as high as $42 billion, if costs to the private sector are taken into account.
The reason for the apparent contradiction between numbers of mandates and total cost? UMRA was a product of compromise, and so it was liberally seasoned with thresholds, exceptions and caveats. For starters, the fiscal impact on states and localities considered high enough to trigger UMRA review is $50 million ($100 million for the private sector). To twist Senator Everett Dirksen's famous observation, $49 million here and $49 million there and pretty soon you're talking real money. Meanwhile, UMRA doesn't apply to federal grant programs, or bills that enforce constitutional rights, or legislation related to national security. Nor does the bill apply to all federal agencies.
And so UMRA has no traction at all when it comes to legislation such as the No Child Left Behind Act, the additional cost of which has some states threatening revolution. Nor does UMRA apply with regard to the new law on election procedure--which lines states and localities up for millions of dollars in investment costs to upgrade voting technology. Meanwhile, UMRA is totally AWOL on homeland security costs. "When the country goes on a Code Orange footing, we obviously take that seriously in the interest of public safety," says Rosado. "But no check comes from federal government for the cost of that."
What state and local officials would like is a tightening of exceptions and a stricter adherence to the original spirit. "I think UMRA's 10th birthday is a very appropriate moment to look at procedures, definitions and exceptions," says Rosado.
Certainly it would be a fine time for Congress to take a fresh look at UMRA, particularly in light of the very thorough and thoughtful Voinovich report. Perhaps some coalition of government and business groups can push the next Congress to get real about the real costs of mandates. More likely, though, UMRA will continue to be what it is, which is better than nothing. Given how the feds frequently treat their state and local government partners, that may be as good as it gets.
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