Federal Unfunded Mandate Reform: A First-Year Retrospective

Abstract

The Unfunded Mandates Reform Act (UMRA, P.L. 104-4) was enacted in 1995 as part of the Republicans' Contract with America. The act represented a remarkable convergence of interests that had been divergent for decades. Historically, the Congress had been reluctant to restrain itself from passing the costs of new programs and policies on to the states. That reluctance grew in tandem with the federal deficit, to the dismay of the states (see Conlan, 1991; Derthick, 1992; Zimmerman, 1992; St. George, 1995; Kelly, 1995; Ray and Conlan, 1996.) Congress's ability to satisfy the demand for new programs without raising taxes or reducing federal benefits became increasingly valuable as an ever larger share of the budget went to pay interest on the national debt. Bipartisan realization that the growing federal debt was taking on greater public saliency stimulated interest and support for the Balanced Budget Amendment. Many governors were reluctant to support such an amendment however, without some protection from unfunded mandates. They were concerned that the pressure for new programs and policies would remain constant, the budgetary bite of entitlements would increase, and the requirement for balancing the budget would shift the cost of entitlements or new programs and policies to the states. At their 1995 annual association meeting, the governors made their position clear--unfunded mandates protection first. Congressional Republicans agreed, and a new antimandates coalition was born. At the same time, local governments had achieved their own remarkable convergence of interests. The major local government advocacy groups, such as the National League of Cities, the National Association of Counties, and the National Conference of Mayors, had been pursuing antimandates legislation individually for the better part of a decade. Then, in 1994, the National Conference of Mayors and the National Association of Counties engaged the Price Waterhouse firm to survey municipalities and counties on the costs of mandates. They released the survey results on the NUM Day (for National Unfunded Mandates Day), October 27, 1993. They were joined in a rally on the steps of the Capitol by the National League of Cities, the National Conference of State Legislatures, the National Governors Association, and other representatives of state and local governments (see Beam and Conlan, 1995; Conlan, Riggle, and Schwartz, 1995; Kriz, 1995). The conclusions that Price Waterhouse reached about the costs of mandates were staggering (U.S. Conference of Mayors, 1993). The firm estimated that unfunded federal mandates cost localities approximately $11.3 billion in fiscal year 1993. The report figured prominently in the debate over the Unfunded Mandates Reform Act (UMRA), although many outside observers questioned its methods and conclusions (Senate Committee on the Environment and Public Works, 1994). Still, the visibility afforded the issue of unfunded mandates as depicted in the report, when combined with a united coalition of state and local governments and an energized Republican Congress, was powerful enough to provide solid congressional support for the act. As it manifests its goals to improve the information the Congress receives about the effect of federal legislation on state, local, and tribal governments, and the private sector, and to make it more difficult for Congress to impose unfunded mandates on state and localities, the UMRA became the first promise fulfilled in the Republicans' Contract with America. This first-year retrospective examines how the UMRA has affected the legislative process. After a brief summary of the elements of Title I--the section of the law that addresses how mandates are identified and considered at the legislative stage--we examine the role of the Congressional Budget Office (CBO) in identifying mandates and calculating their costs. We then consider how that information was used by members of the 105th Congress as they deliberated five major bills that contained significant intergovernmental mandates. …