Unfunded Federal Mandates Surge Again, Study Says

Unfunded Federal Mandates Surge Again, Study Says
July 1, 2004

In the late 1980s, state legislators were "mad as hell" and they weren't going to take it anymore. They were angry about unfunded federal mandates. Democrats and Republicans alike railed against specific mandates, such as elements of the Safe Drinking Water Act and crumb rubber requirements in the highway law. And, more fundamentally, they viewed unfunded mandates as a sign of a troubling one-size-fits-all, top-down imbalance in the federal system.

For several reasons, including passage of the federal Unfunded Mandate Reform Act (UMRA) in 1995, the firestorm of complaints about unfunded mandates largely abated during the latter half of the 1990s. Less than a decade later, however, unfunded mandates are back with a vengeance.

A new study released by the National Conference of State Legislatures in March indicates state governments in the current fiscal year are confronting at least $29 billion in cost shifts from the federal government--almost 6 percent of state general fund budgets. The figure is projected to rise to nearly $34 billion in FY 2005. The study confirmed what many legislators know from personal experience: The federal government is imposing numerous requirements, standards, and conditions on the states, but is not providing adequate funds to cover the costs.

"Even in good economic times," says Pennsylvania Representative David Steil (R-Bucks County), "costs like these are insidious. They cause state and local officials to cut services and to steal funds from worthy state programs to pay for federal ones. In bad economic times, these mandates are intolerable."

Despite a fourth consecutive year of projected state budget gaps, Congress continues to add to the problem, according to the latest issue of NCLS's Mandate Monitor.

Washington lawmakers have enacted or are considering nearly 50 bills during the 108th Congress that would leave states holding the bag. Medicare prescription drugs, special education, homeland security, and enforcement of federal immigration laws will all compound states' budget woes.

Over the past four fiscal years, states have been forced to deplete reserve accounts, reduce or eliminate programs, and increase fees and taxes in order to close a cumulative budget gap of more than $200 billion. Despite an improving economy, a recent NCSL report noted states still must close a $720 million collective budget gap for fiscal year 2004 and a $36 billion gap in fiscal year 2005. (See "State Budget Gaps Shrink, NCSL Survey Finds," page 11.)

Previously enacted federally mandated cost shifts to states already account for at least $33 billion in fiscal year 2005. (See table.)

"Unfunded federal mandates are a growing concern to state legislators," said Steil, who chairs NCSL's Budgets and Revenue Committee. "As Washington struggles to address its own budget problems, their answer seems to be to pass the buck. Unfortunately, they're trying to get water from a stone--states literally have few resources left. The policy of pushing federal program costs to the states is irreconcilable with the partnership we share."


Molly Stauffer and Carl Tubbesing are on the staff of the National Conference of State Legislatures. Stauffer's email address is molly.stauffer@ncsl.org. This report first appeared in the May 2004 issue of State Legislatures magazine and is reprinted with permission. © 2004 National Conference of State Legislatures.

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Federal Mandates on States

Projected Cost, 2004-2005
  Cost to States
Federally Mandated Program FY2004 FY2005
Food Stamps $197 million $197 million
Help America Vote Act $2.4 billion $2.94 billion
Environment $1 billion $1.45 billion
No Child Left Behind $9.6 billion $10 billion
Individuals with Disabilities Education Act $10 billion $9 billion
State Criminal Alien Assistance Program --- $297 million
Transportation Sanctions $19 million $38 million
State Drug Costs for Dual-Eligibles $6 billion $6.6 billion
Medicaid --- $1.88 billion
Homeland Security --- $1.145 billion
Bioterrorism --- $105.5 million
Workers' Grants --- $161 million
TOTAL $29.3 billion $33.8 billion