financial mng mt
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Questions I'm Attempting toAnswer
What is an unfunded mandate?
What is the cause of unfunded mandates?
What impact has the Unfunded Reform Acthad?
What are the effects of mandates on localgovernments?
Are unfunded mandates a necessary evil?
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Unfunded Mandate
Regulations or conditions for receiving grantsthat impose costs on state or local governmentsor private entities for which they are not
reimbursed by the federal government. Any one of many federal legislations such as the
Clean Air Act, and the Clean Water Act that requireprograms to be sponsored by the governments of
the states, without providing any funds for thoseprograms.
The provisions in the Americans with Disabilities Act that require nearly all American business
owners to make their business premises availableto disabled customers without providing any funds
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Causes of Unfunded Mandates
Mandates were an outgrowth of fundamentalchanges in the nature of the policy makingprocess
Congress changed its institutional structure to openmore opportunities for all members to assert policyleadership
Congressman became policy entrepreneurs to
gain electoral visibility, embracing new policyproposals allowed them to garner nationalrecognition
Far-reaching, non-incremental policy reformsbecame commonplace
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Causes of Unfunded Mandates
The cost of interest group formation decreasedmeaning there would be more groupsproposing and trying to influence legislation
The chronic federal deficit also caused thefederal government to pass on the costs of legislation to state and local governments
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The Shift
Prior to the 70's, members of Congress owedtheir nominations to state and local partyleaders and could be depended on to protect
the institutional and fiscal integrity of states andlocalities
Around 1970, governors and mayors beganlosing their influential positions in the
nomination process for presidential andcongressional offices
By 1983, only 18% of Congressman had previouslybeen elected to a local office (ACIR, The
Transformation of American Politics. 1986)
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Unfunded MandateReform Act
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What is it?
Primary purpose is “to end the imposition, in theabsence of full consideration by Congress, of Federal mandates on State, local, and tribal
governments without adequate Federalfunding.”-2 U.S.C. § 1501(2)
Any mandate with an uncompensated state andlocal cost greater than $50 million a year (CBO)
could be stopped by a point of order raised onthe House or Senate floor
A majority could override the POI and pass themandate
Pro osed le islation containin rivate-sector
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Mandates Excluded From UMRA
enforces constitutional rights of individuals;
establishes or enforces any statutory rights thatprohibit discrimination on the basis of
race, color, religion, sex, national origin, age,handicap, or disability;
requires compliance with accounting and auditingprocedures with respect to grants or other money or
property provided by the Federal Government; provides for emergency assistance or relief at the
request of any State, local, or tribal
government or any official of a State, local, or tribalgovernment;
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Point of Order
A way for members of Congress to raise thepoint that the proposed legislation violatesUMRA
When it is used, a simple majority must vote tooverride the POI. If done, the legislation can bepassed
Argued that it is the most influential part of UMRA
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Impact of POI's
POI's became a political tool
Congress became more concerned with howmuch the bill would cost states and less
concerned with the social problems or benefitsaddressed by the proposed mandates
Enabled states and localities to potentiallycreate new allies in the business communitythrough shared opposition to legislation, thoughfor different reasons
Gave businesses more influence in Washington
Risk-averse and consensus-seeking behavior
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Use of POI
Since UMRA was enacted, a point of order hasbeen raised 12 times in the House, and never in the Senate
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Impact of UMRA
Primary impact came not from blockinglegislation but from UMRA's effect as adeterrent to mandates during the drafting and
early consideration of legislation Bills that had estimates which exceeded the $50
million threshold were often revised by its sponsors'to bring the figure below that line
Bills would also be modified to extend the lengthstate and local governments had to implement themso the cost was still the same to state/local govts.,but just over a longer time
Congress began treating state and local
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Impact of UMRA
Praised as a responsible attempt toinstitutionalize congressional self-restraint onmandates, but its success of UMRA relied onCongress enforcing it upon themselves
Did nothing to pre-existing unfunded mandates
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2 Real Main Goals of UMRA
Reduce the instances of unjustifiable unfundedmandates
Ensure that the legislature considers the full
costs of proposed legislation
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Practice
Between 1996 and 2004,5 pieces of legislationwith intergovernmentalmandates exceeding thestatutory cost threshold
have enacted In the same time, 26
pieces of legislation withprivate-sector mandatesexceeding the statutory
cost threshold have beenenacted
National Conference of State Legislaturesidentified $29 billion infederal cost shifting thatwas still passed on
3 Political Forces Responsible for
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3 Political Forces Responsible for Continuing Mandates
Valence Politics
Partisan Politics Interest Group Politics
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Valence Politics
Issue that is uniformly liked or disliked amongthe electorate
Megan's Law (registering/notifying of sexoffenders) easily exceeded the $50 million pricetag but you could not raise a point of interestbecause it would look like you support sexoffenders
Drug testing state and local prisoners/paroles. If you're against it you are “soft on drugs”
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Partisan Politics
Republicans Support National Welfare
Moral Policy
Immigration Business
Democrats Support Labor Issues
Housing Issues
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Interest Group Politics
Interest groups exert their influence over Congressman regarding legislation theysupport
Big businesses and labor unions supportmandates that benefit them
State and local governments have troublefighting unfunded mandates that are publiclycompelling
Arguments for Unfunded
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Arguments for UnfundedMandates
Fully funding mandates can reduce cost-effectiveness,as sub-national governments then have no incentive tominimize costs in implementation.
Requiring full funding of mandates would make
regulation more difficult to pass
The threat of unfunded mandates can lead subnationalgovernments to act earlier in the process to stave off national action; eliminating unfunded mandates would
allow state and local governments to not act withregards to important issues
These arguments address what seems to underliemuch of the debate on unfunded mandates – a sense
by opponents of unfunded mandates that government
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4 Main Criticisms of Mandates
Preempt local authority and restrict the ability of local officals to respond to local problems
Obscure the lines of accountability by removing
decisions from elected officials who have closecontact with constitutents
“One-size-fits-all” policies rarely achieve their objective in an efficient or effective manner
Heavy financial burden passed on because of them
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Other Criticisms
State and local government interest groups andproponents of federalism argued that unfundedmandates undermine political accountability.
By separating regulations from thefundingsource, these groups argue, unfundedmandates reduce accountability by confusingcitizens about which level of government is
responsible. Proponents of UMRA also contended that
unfunded mandates distort policy makingbecause federal legislators who lackinformation do not consider the costs of a
UMRA:
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UMRA:Success or Failure
It has been successful inreducing the number of mandates, though many arguethis isn't really true because of the narrow scope of the act.
“[The] very threat of a CBOreport has engendered efforts toreach out to state and localleaders before the fact –instead of after. It has changedthe nature of our intergovernmental discussion ina very positive way”-RaymondScheppach (Director, Nat'lGovernors Assoc.)
Provisions not contained inauthorizing bills or notreported by an authorizingcommittee are not subjectto CBO review beforegoing to the floor.
The Act doesn't requireautomatic review of provisions added after
CBO's initial review The narrow definition of an
unfunded mandate stillallow the passage of
unfunded mandates
S f f
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Suggestions for Reform
Eliminate minimum thresholds so that anymandate can trigger a point of order becausethe cumulative effects of mandates that areunder the minimum threshold can createproblems for subnational governments
Require a supermajority vote to override a pointof order which would make passing unfunded
mandates more difficult Extend the point of order to apply to bills that
pertain the private sector
P bl t th l l l l
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Problems at the local level
Local govts had to suffer from having to spendmoney according to state guidelines whilehaving their local taxing authority restricted
Some states have laws requiringreimbursement, but it is up to the state toreimburse the local government and they havebeen very hit or miss
Problems are not exclusively financial Some local officials feel as if they are being micro-
managed
S l ti
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Solutions
Create a dialogue between levels of government that allow search side to see their common goals as well as the variation in their constituents' policy priorities
Use of local government networks to developcost estimates, periodic review of mandatesinitiated by local governments, mandate
explanations that provide a clear rationale for the mandate and an explanation of theappropriate role for each level of government
Local governments often speak out againstmandates but their actions make them seem
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State and local governments must rely on their own political resources and prowess, not theconstitution, to protect their prerogatives andcosts from federal encroachments-JusticeBlackmun's majority decision in the Garcia case
I t l l t
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Impact on local governments
Local governments have been forced to forminterest groups to lobby Congress
Because the members of these interest groups
are elected officials, it is difficult for them toachieve the internal cohesion needed toeffectively formulate and communicate grouppositions on the important intergovernmental
issues of the day. -80 Internal consensus is a prerequisite to the groups'
articulation and advocacy of positions.-80
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A federal mandate helps state officials achievepolicy goals by presenting controversialpositions as federal decrees.
Progressive states with stronger environmentalregulations or public welfare would haveinterest in putting a floor under intergovernmental competition by pressing for
national mandates.-83 State policy activism can prompt federal mandates
every bit as muc as can state policy inaction
Benefits of mandates are often immediatelyvisible whereas the costs are often va ue and
State legislatures are becoming
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State legislatures are becomingincreasingly “congressionalized” State political leaders rely less on party labels
and gubernatorial coattails
Have become more like policy entreprenuers
running candidate-centered campaigns insearch of visibility, campaign financing, andvotes.-219, Posner
Same can be said of Governors in their
gubernatorial campaigns
Conclusion
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Conclusion
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