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	<title> - IS UNCLE SAM STILL PASSING THE BUCK? THE BURDEN OF UNFUNDED MANDATES ON STATE, COUNTY, AND CITY GOVERNMENTS</title>
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	[House Hearing, 109 Congress]
	[From the U.S. Government Publishing Office]





	IS UNCLE SAM STILL PASSING THE BUCK? THE BURDEN OF UNFUNDED MANDATES ON
	STATE, COUNTY, AND CITY GOVERNMENTS

	=======================================================================

	HEARING

	before the

	COMMITTEE ON
	GOVERNMENT REFORM

	HOUSE OF REPRESENTATIVES

	ONE HUNDRED NINTH CONGRESS

	FIRST SESSION

	__________

	MARCH 8, 2005

	__________

	Serial No. 109-6

	__________

	Printed for the use of the Committee on Government Reform


	Available via the World Wide Web: http://www.gpo.gov/congress/house
	http://www.house.gov/reform

	______

	U.S. GOVERNMENT PRINTING OFFICE
	20-145 WASHINGTON : 2005
	_____________________________________________________________________________
	For Sale by the Superintendent of Documents, U.S. Government Printing Office
	Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800
	Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001

	COMMITTEE ON GOVERNMENT REFORM

	TOM DAVIS, Virginia, Chairman
	CHRISTOPHER SHAYS, Connecticut HENRY A. WAXMAN, California
	DAN BURTON, Indiana TOM LANTOS, California
	ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York
	JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York
	JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania
	GIL GUTKNECHT, Minnesota CAROLYN B. MALONEY, New York
	MARK E. SOUDER, Indiana ELIJAH E. CUMMINGS, Maryland
	STEVEN C. LaTOURETTE, Ohio DENNIS J. KUCINICH, Ohio
	TODD RUSSELL PLATTS, Pennsylvania DANNY K. DAVIS, Illinois
	CHRIS CANNON, Utah WM. LACY CLAY, Missouri
	JOHN J. DUNCAN, Jr., Tennessee DIANE E. WATSON, California
	CANDICE S. MILLER, Michigan STEPHEN F. LYNCH, Massachusetts
	MICHAEL R. TURNER, Ohio CHRIS VAN HOLLEN, Maryland
	DARRELL E. ISSA, California LINDA T. SANCHEZ, California
	GINNY BROWN-WAITE, Florida C.A. DUTCH RUPPERSBERGER, Maryland
	JON C. PORTER, Nevada BRIAN HIGGINS, New York
	KENNY MARCHANT, Texas ELEANOR HOLMES NORTON, District of
	LYNN A. WESTMORELAND, Georgia Columbia
	PATRICK T. McHENRY, North Carolina ------
	CHARLES W. DENT, Pennsylvania BERNARD SANDERS, Vermont
	VIRGINIA FOXX, North Carolina (Independent)
	------ ------

	Melissa Wojciak, Staff Director
	David Marin, Deputy Staff Director/Communications Director
	Rob Borden, Parliamentarian
	Teresa Austin, Chief Clerk
	Phil Barnett, Minority Chief of Staff/Chief Counsel


	C O N T E N T S

	----------
	Page
	Hearing held on March 8, 2005.................................... 1
	Statement of:
	Graham, John D., Ph.D., Administrator, Office of Information
	and Regulatory Affairs, Office of Management and Budget;
	and Douglas Holtz-Eakin, Director, Congressional Budget
	Office..................................................... 16
	Graham, John D........................................... 16
	Holtz-Eakin, Douglas..................................... 24
	Kyle, Angelo, president, National Association of Counties;
	Gerry Connolly, chairman, Fairfax County Board of
	Supervisors; John Hurson, president, National Conference of
	State Legislatures; and Mick Cornett, mayor, Oklahoma City,
	OK......................................................... 50
	Connolly, Gerry.......................................... 58
	Cornett, Mick............................................ 75
	Hurson, John............................................. 60
	Kyle, Angelo............................................. 50
	Letters, statements, etc., submitted for the record by:
	Cornett, Mick, mayor, Oklahoma City, OK, prepared statement
	of......................................................... 77
	Cummings, Hon. Elijah E., a Representative in Congress from
	the State of Maryland, prepared statement of............... 95
	Davis, Chairman Tom, a Representative in Congress from the
	State of Virginia, prepared statement of................... 4
	Graham, John D., Ph.D., Administrator, Office of Information
	and Regulatory Affairs, Office of Management and Budget,
	prepared statement of...................................... 18
	Holtz-Eakin, Douglas, Director, Congressional Budget Office,
	prepared statement of...................................... 26
	Hurson, John, president, National Conference of State
	Legislatures:
	Information concerning Federal mandates relief........... 61
	Prepared statement of.................................... 67
	Kyle, Angelo, president, National Association of Counties,
	prepared statement of...................................... 52
	Norton, Hon. Eleanor Holmes, a Representative in Congress
	from the District of Columbia, prepared statement of....... 98
	Waxman, Hon. Henry A., a Representative in Congress from the
	State of California:
	Letter dated February 7, 2005............................ 8
	Prepared statement of.................................... 11


	IS UNCLE SAM STILL PASSING THE BUCK? THE BURDEN OF UNFUNDED MANDATES ON
	STATE, COUNTY, AND CITY GOVERNMENTS

	----------


	TUESDAY, MARCH 8, 2005

	House of Representatives,
	Committee on Government Reform,
	Washington, DC.
	The committee met, pursuant to notice, at 2 p.m., in room
	2157, Rayburn House Office Building, Hon. Tom Davis (chairman
	of the committee) presiding.
	Present: Representatives Davis, Shays, Mica, Duncan,
	Turner, Westmoreland, Foxx, Waxman, Van Hollen, and Norton.
	Staff present: David Marin, deputy staff director/
	communications director; Jim Moore, counsel; Robert Borden,
	counsel/parliamentarian; Rob White, press secretary; Drew
	Crockett, deputy director of communications; Brian Stout,
	professional staff member; Teresa Austin, chief clerk; Sarah
	D'Orsie, deputy clerk; Corinne Zaccagnini, chief information
	officer; Kristin Amerling, minority deputy chief counsel;
	Michelle Ash, minority senior legislative counsel; Krisa Boyd,
	minority counsel; Earley Green, minority chief clerk; and Jean
	Gosa, minority assistant clerk.
	Mr. Davis. This meeting will come to order.
	I want to welcome everybody to today's hearing on the
	burden of Federal mandates on State, county, and city
	governments. This hearing will provide a look back at the
	Unfunded Mandates Reform Act of 1995--we call it UMRA--a decade
	after its passage, and begin this committee's work to determine
	how best to fulfill the promise of UMRA and strengthen the
	partnership among all levels of Government. The reports,
	surveys and testimony provided by our witnesses today are going
	to provide us with a good starting point in this discussion. As
	we begin, let me say that this issue is of particular
	importance to me.
	As a former county official, I have personally experienced
	the strain that is often times placed on our localities by
	overly prescriptive and burdensome mandates from the Federal
	Government.
	Over the last decade, Congress and the rest of the Federal
	Government have rightfully worked to transfer power out of
	Washington, DC, down to State and local governments, who can
	more effectively and efficiently administer many governmental
	programs. Rooted in the belief that all issues not national in
	scope are most appropriately and effectively addressed at the
	levels of government that are closest to the people, UMRA was
	designed to restore balance to the Federal system. The law
	accomplishes this goal through ensuring informed decisions by
	the Congress and the executive branch about the effects of
	Federal mandates on other levels of government, as well as the
	private sector.
	While many of the requirements placed on States and
	localities by the Federal Government are necessary, we need to
	be reasonable in their application. We also need to view the
	unfunded mandates issue through a post-September 11 prism,
	understanding that a lot has changed over the last 4 years. A
	21st century homeland security mission requires unprecedented
	coordination, not only in terms of planning and information
	management sharing, but also in the dedication of resources.
	Looking at the world after September 11, it is clear that not
	every Federal mandate--whether or not it is 100 percent
	funded--is a bad idea. Citizens expect all governments to take
	necessary actions to provide for their safety and security, and
	all governments must share in the costs.
	There is no denying States and localities are the backbone
	of our Nation. They deliver an overwhelming majority of
	government services, and are primarily responsible for the
	issues most important to our citizens--from crime prevention to
	education to transportation to economic development, to name
	just a few. If the Federal Government is not responsible in the
	imposition of Federal mandates, we will be heaping additional
	costs on our State and local governments that will inevitably
	displace and replace worthy and important State and local
	programs. It is basically a transfer, if you will, from the
	Federal income tax, which is progressive, to local property
	taxes, which are very, very regressive.
	There have been signs that UMRA is working. According to
	CBO, the number of bills containing intergovernmental mandates
	decreased by one-third between 1996 and 2002. In addition, the
	GAO has found that only three proposed intergovernmental
	mandates, as defined by UMRA, with annual costs exceeding the
	thresholds, that have become law, an increase in the minimum
	wage in 1996, a change in Federal funding for food stamps in
	1997, and an adjustment in premiums for prescription drug
	coverage in 2003.
	Despite the improvements made in the last decade,
	disagreements between the various levels of government on the
	definition, the size and the scope of Federal mandates
	continues and are detrimental to the inter-governmental
	coordination and cooperation that UMRA was meant to foster. The
	situation is all the more problematic when the Federal
	Government is running deficits, eliciting complaints that we
	are simply shifting tax increases to lower levels of
	government.
	It has become clear to this committee that, while UMRA has
	been a significant step in the right direction, it has not
	proven to be a ``silver bullet.'' Indeed, many have begun to
	express concern that UMRA is not an effective tool in
	preventing the imposition of unfunded mandates as a result of
	exclusions in coverage and various loopholes in the law that
	exists. The fact is, Congress would exempt itself from the laws
	of gravity if it could. [Laughter.]
	Questions and challenges remain, and it is our hope to
	begin the process of answering some of them today. Our new
	Subcommittee on Federalism and the Census, ably chaired by
	Chairman Mike Turner, a former mayor of Dayton, OH, will delve
	deeper into this topic in the coming months in the hopes of
	providing proposals to strengthen UMRA. We are fortunate to
	have him on this committee. I look forward to working with him
	as the subcommittee's chairman on this and other issues as we
	move forward in the 109th Congress.
	We have two panels today, with extensive experience working
	on this important issue, and I look forward to their testimony.
	I want to especially thank NACo, the National Association of
	Counties, for their work in putting together a snapshot of the
	costs of Federal mandates, at our request, which is only a
	beginning, but it helps to bring home the importance of
	examining this issue carefully.
	For instance, it is estimated that the $40 billion cost
	estimate reported in the survey only accounts for approximately
	5 percent of actual costs stemming from Federal mandates.
	Imagine if all the counties who responded only provided 5
	percent of their federally mandated costs, the $40 billion
	estimate could rapidly climb to as much as $800 billion, a
	crippling burden.
	I am also particularly pleased that Gerry Connolly, who is
	the chairman of the Board of Supervisors from Fairfax County,
	my home county, was able to join us today. I look forward to
	Gerry's testimony and continuing to work with them on these
	important issues.
	[The prepared statement of Chairman Tom Davis follows:]

	[GRAPHIC] [TIFF OMITTED] T0145.001

	[GRAPHIC] [TIFF OMITTED] T0145.002

	Mr. Davis. I would now like to recognize the distinguished
	ranking member, Mr. Waxman, for an opening statement.
	Mr. Waxman. Thank you very much, Mr. Chairman.
	This year is the 10th anniversary of the passage of the
	Unfunded Mandates Reform Act [UMRA]. And it is amazing what a
	difference 10 years can make.
	Ten years ago, the Republicans had just taken control of
	the Congress, and we were debating the Contract with America.
	One of the fundamental planks of the contract was the idea that
	Washington should respect States' rights.
	In this committee, we heard speech after speech about how
	State and local governments were closer to the people and
	should have the freedom to design their own solutions to local
	problems. There was a lot of merit in those speeches. In our
	Federal system, State and local governments have enormous
	responsibilities. And our system of government depends on
	vibrant State and local institutions.
	Yet now, just 10 years later, all this seems to be
	forgotten. Now that Republican leaders are entrenched in the
	White House and Congress, deference to States has been replaced
	with a ``Washington knows best'' mentality.
	Congress has passed environmental laws curbing the
	authority of States to regulate major sources of local
	pollution. The House has repeatedly passed energy legislation
	that strips States of authority over their coastlines, the
	siting of power lines, and hydropower projects. Just last
	month, the Congress passed legislation that told State courts
	that they could no longer hear certain types of class actions.
	The track record on budget issues is the same. We push
	responsibilities on the States and then we cut funding. The
	President's latest budget is particularly bad for State and
	local governments. Important programs such as Medicaid and
	Community Block Grants are facing major cuts.
	The topic of today's hearing is unfunded mandates, and
	these too are growing. The No Child Left Behind Act is one
	prominent example. It imposes new mandates on States, but the
	President's budget does not provide adequate funding. As a
	result, State legislatures now are considering opting out of
	the No Child Left Behind program, including the State
	legislature in the chairman's home State of Virginia.
	Just last month, the House passed the REAL ID Act. This law
	preempts State authority to determine who should get drivers'
	licenses. It also imposes new Federal standards for the
	issuance of drivers' licenses. The National Governors
	Association and the Association of Motor Vehicle Administrators
	recently wrote, ``The cost of implementing such standards and
	verification procedures for the 220 million drivers' licenses
	issued by States represents a massive unfunded Federal
	mandate.''
	The Congress also is forcing costs onto the local
	governments in more creative ways. One example is MTBE, which
	oil companies use as an additive to gasoline. When MTBE leaks
	from tanks, it contaminates water supplies. Local governments
	have successfully sued the oil companies to pay for the clean-
	up costs. Yet House Republicans leaders want to pass
	legislation that would protect the oil companies and shift
	clean-up costs to the local taxpayers by preempting these
	lawsuits.
	Local government organizations, many of whom are
	represented here today, recently wrote to Members of Congress
	stating, ``The liability waiver amounts to a massive unfunded
	mandate on local governments and ratepayers.'' And I would like
	to enter that letter into the record at this time.
	Mr. Davis. Without objection, the letter will be entered
	into the record.
	[The information referred to follows:]

	[GRAPHIC] [TIFF OMITTED] T0145.003

	[GRAPHIC] [TIFF OMITTED] T0145.004

	Mr. Waxman. I want to be clear that there are times when
	Federal standards are important. Air pollution is a good
	example. What happens in Las Vegas may stay in Las Vegas, but
	what is emitted in Ohio certainly does not stay in Ohio.
	Uniform Federal standards are essential to set a level playing
	field to protect residents in downwind States.
	Good judgment is needed, as well as healthy respect for the
	prerogatives of States. And too often, this is exactly what
	seems to be missing in Washington. Just because one party in
	Washington controls the Government and has the power to impose
	its will does not make it right.
	I look forward to the hearing today on unfunded mandates. I
	thank the witnesses for coming and I look forward to their
	testimony.
	[The prepared statement of Hon. Henry A. Waxman follows:]

	[GRAPHIC] [TIFF OMITTED] T0145.005

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	[GRAPHIC] [TIFF OMITTED] T0145.008

	Mr. Davis. Thank you very much. I turn for an opening
	statement to the gentleman, the chairman of the subcommittee,
	the gentleman from Ohio, Mr. Turner.
	Mr. Turner. Thank you, Mr. Chairman.
	Chairman Davis, I would like to thank you for reviving what
	has been and continues to be an important subject, the issue of
	unfunded Federal mandates. As a former mayor, I lived with the
	impact of Federal mandates and, yes, from a purely financial
	standpoint, they were a burden. However, I also recognize that
	mandates do serve a purpose. And although there is a cost
	associated with these mandates, there is likely a corresponding
	benefit as well. The question usually comes down to, does the
	cost of the mandate outweigh the benefit, and if so, what can
	we do to reduce the burden on our local and State governments?
	This is an issue of jurisdiction, and protecting the
	authority and control of State and local governments. In
	addition to the tax burden that these mandates represent, State
	and local governments face reduced resources for basic
	services, community priorities and economic development
	initiatives. At the root of the unfunded mandate debate is the
	fact that the ultimate responsible party is the taxpayer.
	Whether those taxes are paid to the State, the city or the
	Federal Government matters little. What matters to that
	individual taxpayer is that they can identify the government
	ultimately making the decision to tax and hold them responsible
	for that decision.
	On this 10th anniversary of the Unfunded Mandates Reform
	Act of 1995, it is fitting that we again ask ourselves what we
	do when the Federal Government passes along mandates and how we
	can lessen that burden.
	Chairman Davis, in organizing the Federalism and the Census
	Subcommittee, has charged us with working to improve
	communication between State and local stakeholders so that
	these issues are better understood on the Federal level.
	Mr. Chairman, thank you for your leadership, and the
	opportunity to keep this issue in the forefront.
	Mr. Davis. Thank you very much.
	Any other Members wish to make opening statements?
	Thank you. Then Members will have 7 days to submit opening
	statements for the record.
	On our first panel we have Dr. John Graham, the
	Administrator of the Office of Information and Regulatory
	Affairs [OIRA], within the office of OMB, charged with
	reviewing agency regulations containing Federal mandates.
	Joining Dr. Graham is the Director of the Congressional Budget
	Office, Mr. Douglas Holtz-Eakin, whose office plays a vital
	role, under Title I of UMRA, in assessing Federal mandates
	contained in legislation being considered by congressional
	committees.
	As you know, it is our policy to swear you in before you
	testify. If you would rise with me and raise your right hands.
	[Witnesses sworn.]
	Mr. Davis. Thank you very much for being with us today.
	Your entire statement and reports are in the record.
	Dr. Graham, we will start with you, and thank you for being
	with us.

	STATEMENTS OF JOHN D. GRAHAM, Ph.D., ADMINISTRATOR, OFFICE OF
	INFORMATION AND REGULATORY AFFAIRS, OFFICE OF MANAGEMENT AND
	BUDGET; AND DOUGLAS HOLTZ-EAKIN, DIRECTOR, CONGRESSIONAL BUDGET
	OFFICE

	STATEMENT OF JOHN D. GRAHAM

	Mr. Graham. Thank you, Mr. Chairman and members of the
	committee.
	No topic is more worthy of continued discussion and dialog
	than the topic of unfunded mandates.
	Let me just summarize my testimony briefly so we can get to
	the questions and dialog, and summarize it by reminding us,
	conceptually, what are the options available to us when we face
	a potential unfunded mandate.
	One option is to rescind or to block the unfunded mandate.
	Rescind it if it is currently in place or block it if it is
	about to be imposed. And conceptually, that is certainly a
	possibility.
	However, we need to keep in mind that some of these
	unfunded mandates are rooted in the laws that Congress has
	passed, and those may be difficult to remove. Or, in some
	cases, we may have unfunded mandates that have such a strong
	justification that we want to move forward and enforce those,
	even if they are not fully funded. An example would be civil
	rights laws, where the Federal Government takes a stance that
	certain expenditures will be taken, and the Federal Government
	does not necessarily provide funds for those.
	A second conceptual solution would be to fund the unfunded
	mandate at the Federal level. And as you can imagine, that
	particular solution draws the attention of the Office of
	Management and Budget and other Federal policymakers concerned
	about the deficit and Federal spending. But it is,
	conceptually, definitely one of the options that has to be
	considered, and it needs to be part of the dialog.
	Option three, fund the unfunded mandate at the State and
	local level or in the private sector. And while some of us in
	the Federal Government may like this outcome, you will hear
	plenty of discussion this afternoon about people who are having
	difficulty with that approach to this problem. But,
	conceptually, it is one of the possibilities, it has to be
	considered.
	A fourth option is to modify the unfunded mandate, to
	reduce its costs, to make it more flexible, or to provide some
	arrangement so that it is a more practical approach to
	addressing public need. This particular approach, modify the
	unfunded mandate, is one that we at the Office of Management
	and Budget frequently engage in when we deal with Federal
	agencies that are developing regulations. We ask questions
	like: Is there a less costly way to achieve this public
	objective? Have you analyzed the costs of the alternative ways
	of addressing this public objective, and at a minimum, made
	sure that this information is available?
	So each of these four are possibilities for addressing
	concerns about unfunded mandates.
	My staff has looked back over the last 10 years to try to
	learn what has, in fact, changed in the way the Federal
	Government reviews regulations as a result of the Unfunded
	Mandates Act. And it turns out, if you look at Title II of the
	act carefully, which is the analytic requirements for
	regulations, we would argue that the Executive order
	requirements that were already in place at the time, put into
	effect by President Clinton, actually mirror pretty closely
	what was put in the statute. So, from a standpoint of analytic
	requirements, it is not obvious to us that a lot changed as a
	result of the Unfunded Mandates Act.
	However, we do believe the consultation, requirements that
	there be consultation by the Federal regulators with State and
	local authorities before they impose unfunded mandates, has
	been a subject of more attention, and we at OMB are trying to
	give that consultation requirement more life as we review
	regulations.
	We certainly agree with the general principles of the
	Unfunded Mandates Act, that cost and benefit information about
	regulations should be made available to regulators and the
	public, and used whenever possible in the development of
	regulations.
	So, in summary, it is an excellent topic for a discussion.
	None of the answers are particularly easy. The one that we have
	found, in practice, the most constructive is option four in the
	four I gave you, which is find ways to achieve the goals of the
	mandate in a less costly way.
	Thank you very much.
	[The prepared statement of Mr. Graham follows:]

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	Mr. Davis. Thank you very much.
	Mr. Holtz-Eakin, thank you for being with us.

	STATEMENT OF DOUGLAS HOLTZ-EAKIN

	Mr. Holtz-Eakin. Chairman Davis, Mr. Waxman, members of the
	committee, the Congressional Budget Office is pleased to be
	able to be here today. We have submitted testimony for the
	record and as well recently released a report on our activities
	during the year 2004 under UMRA. That report is the larger
	document out of which my comments will be drawn.
	Since 1996, Congress has attempted to recognize the costs
	of mandates as imposed on State and local governments and on
	the private sector in the course of the budget process. In the
	testimony that we have provided to you and in the screens, what
	I thought I would do is begin first by reviewing some of the
	key facts out of those reports.
	CBO has over the course of the 9-years reviewed over 5,000
	bills as a part of this process. There are slightly more in the
	way of reviews on inter-governmental and private sector
	mandates, but in total there is a large experience in the
	operation of UMRA.
	Next slide. Among the key features that comes out is that
	relatively few bills actually have mandates. Over 85 percent
	contain no mandate whatsoever. About 10 percent of bills on
	both the private sector and the inter-governmental side, have a
	mandate which lies below the threshold as specified in the law.
	$15 million for inter-governmental mandates, $100 million for
	the private sector originally, those are indexed for inflation.
	And somewhere between 1 and 3 percent of the mandates exceeded
	the threshold, had bills, had mandates that exceeded the
	threshold.
	Next slide. To our eye at least, there has been relatively
	little trend through time. In both the costs of inter-
	governmental mandates, those which do and do not exceed the
	threshold, and also--next slide--in the private sector,
	performance since 1996 has been pretty uniform Congress by
	Congress, a relatively small fraction take this feature. And
	finally, if one looks at the actual experience of bills with
	substantial mandates, very few are enacted. Only five bills
	with substantial inter-governmental mandates have been enacted.
	Twenty-six private sector mandates have been enacted,
	reflecting the relatively low threshold for private sector
	mandate.
	This performance reflects the design of UMRA under which a
	mandate occurs when there is an enforceable duty to compel or
	prohibit an action when there is a new condition or reduction
	in financial aid and if no flexibility is given to offset that
	reduction in a mandatory program, or if there is a reduction in
	funding for an existing mandate. And very importantly, some
	things are not considered mandates. There are specific
	exclusions for activities in the area of national security,
	constitutional rights, such as voting, and in parts of the
	Social Security system.
	And also, a mandate cannot exist under UMRA if it is a
	condition of Federal aid. A grant program of that type is quite
	common.
	Where Congress goes next in considering the recognition of
	the costs of mandates and the budget process will be a topic of
	great interest. One possibility would be to simply clarify some
	of the issues in UMRA which the CBO has struggled with over the
	years. For example, is the extension of an existing mandate a
	mandate in and of itself, and does the threshold apply to new
	costs or total costs under that mandate? Or alternatively, are
	indirect costs imposed by a mandate appropriate for calculation
	in contributing toward the threshold?
	Alternatively, it is possibly to extend UMRA either by
	modifying the thresholds in some way so as to include or
	exclude more bills. To alter the legislative features of UMRA,
	increase points of order, impose a point of order for private
	sector mandates, have a higher threshold for overriding a point
	of order, and an inter-governmental mandate.
	Or finally, it would be possibly to extend the scope of
	mandates by limiting the exclusions or otherwise redefining a
	mandate under UMRA. In any event, the CBO has been pleased to
	work with this committee and the Congress in general in the
	pursuit of the recognition of these costs, and I look forward
	to your questions.
	[Note.--The CBO Report entitled, ``March 2005, A Review of
	CBO's Activities in 2004 Under the Unfunded Mandates Reform
	Act,'' may be found in committee files.]
	[The prepared statement of Mr. Holtz-Eakin follows:]

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	Mr. Davis. Thank you very much.
	I am going to start the questioning with Mrs. Foxx.
	Mrs. Foxx. Thank you very much, Mr. Chairman.
	Dr. Graham, we appreciate your testimony very much. I know
	you are trying to add value to our work.
	Could you tell us what is a common problem you are
	encountering in working to ensure that the regulations are
	complied with? What is the biggest obstacle?
	Mr. Graham. I think the biggest obstacle we see in
	addressing the issues around unfunded mandates quite frankly
	are the actual requirements in statute that Congress has placed
	on the executive branch with regard to unfunded mandates. And
	we have to keep in mind that the laws that underpin these
	unfunded mandates extend back many years, sometimes decades. A
	lot of them were developed without a clear consideration of how
	the consequences of them would be financed.
	So if the thrust of your question is, what is the biggest
	problem we commonly face when we are dealing with an agency
	around what is argued to be an unfunded mandate, it is that we
	have a law, a statute passed by Congress which is basically
	forcing an agency to move in a direction that creates that
	unfunded mandate. There is not necessarily a lot of discretion
	in the executive branch to handle that.
	Where there is discretion to handle it, and oftentimes
	there is such discretion, we work very hard at OMB with the
	agencies to try to find ways to reduce the cost of the unfunded
	mandate while maintaining whatever the public objective is,
	whether it be civil rights, public health, environment, worker
	safety or whatever.
	Mrs. Foxx. Mr. Chairman, could I do a followup?
	Mr. Davis. Sure. You can go until your red light is on.
	Mrs. Foxx. Have you made any recommendations on ways that
	those requirements could be modified? Or do you see that as
	your responsibility?
	Mr. Graham. I don't think that we have, and quite frankly,
	we are very well burdened at OMB just making sure that we keep
	track for each of these 500 rulemakings a year that we review
	that agencies are in fact addressing their obligations under
	the Unfunded Mandates Act and the Executive order. So we have
	been in the trenches, working hard just making sure that we're
	trying to get compliance with what we currently have out there.
	Mrs. Foxx. One more question, then. Could you, without our
	creating another agency, which I don't think anybody really
	wants to do, is there a way that we could deal with that with
	the problem that you brought up, the requirements themselves,
	other than doing it on a case by case basis? Is there any other
	vehicle for taking care of that problem that you know of?
	Mr. Graham. I think there are two aspects of the problem.
	One is the legislative creation of unfunded mandates by the
	U.S. Congress and the President, because presumably the
	President signs these laws into enactment. And I think frankly,
	my colleague Dr. Holtz-Eakin from CBO probably knows better
	than I do the actual ways in which the Unfunded Mandates Act is
	actually informing the Congress and how it addresses those
	issues.
	Within the executive branch, in areas where we have
	discretion in this area, I think one of the things that
	Congress can do that's very constructive is actually have
	oversight hearings on specific regulations that involve an
	unfunded mandate and ask Federal agencies and OMB if you will,
	what exactly they did in the course of that rulemaking to
	cushion and keep to a minimum the cost burden of that
	regulation while still achieving their objective. I think the
	process of doing that oversight would, I think, offer insight
	into how to move forward.
	Mr. Davis. Thank you very much.
	Mr. Waxman.
	Mr. Waxman. The administration, Dr. Graham, claims that it
	deeply cares about and is concerned about unfunded mandates.
	But as my opening statement indicated, I do not think it is
	being supported by the administration's actions, and the energy
	bill is a good example. The President and Vice President have
	urged we pass the energy bill.
	But I want to talk about one of the provisions mentioned in
	my opening statement. There is this fuel additive MTBE, it has
	contaminated groundwater and surface water throughout the
	Nation. There are internal documents in the oil industry that
	indicated that in the 1980's, they knew that there was a
	serious problem MTBE would pose for the Nation's water
	supplies. They knew about the difficulty communities would face
	in cleaning up MTBE.
	Yet each year they ramped up its use, and by 1990, the
	industry admits it was using more than 80,000 barrels of MTBE
	each and every day. Now communities are facing this
	contamination problem and the cost of cleaning it up, which
	could cost $29 billion or more in the coming years. The energy
	bill proposes a solution. But it is a very troubling one. They
	said, let's protect the oil industry and protect it from having
	to be responsible.
	I indicated, I had a letter opposing this provision from
	the National League of Cities, the U.S. Conference of Mayors,
	the National Association of Counties, National Association of
	Towns and Townships, and many water groups. They say this is a
	massive unfunded mandate on local governments and ratepayers,
	while oil companies like Exxon Mobile are announcing record
	setting profits, legislation is pending to shift the cost from
	the oil companies to the local governments.
	So my question for you is, has the administration been
	silent on this provision, which is a massive unfunded mandate?
	Does the administration support shifting $29 billion or more in
	cleanup costs from the oil companies to local governments and
	ratepayers?
	Mr. Graham. As usual, you offer a provocative question. Let
	me start by saying, there are plenty of unfunded mandates out
	there. They are the responsibility of both Republican and
	Democratic administrations. I'm going to go right to your
	example.
	Mr. Waxman. No, no, I want an answer. I only have 5
	minutes. I want an answer to my question. My question is, what
	is the administration's position on this particular provision,
	not that there are other problems in the world.
	Mr. Graham. Our position would be that you have given a
	good example of a mandate by the Congress that was imposed on
	the executive branch in the Clean Air Act Amendments of 1990.
	You have then argued that it has turned out to be an unfunded
	mandate. But it's a good example of one that is congressionally
	imposed.
	Mr. Waxman. You're wrong, because I was involved in that
	Clean Air Act.
	Mr. Graham. It was well known at the time that the most
	cost effective solution to the mandate was in fact MTBE.
	Mr. Waxman. We have a problem right now. MTBE is being used
	around the country. It's contaminated ground water. If you left
	the law alone, then there would have to be, as in my own city
	of Santa Monica, the oil companies helping to clean up. If this
	energy bill is adopted, that would all be shifted.
	What is your position on that provision in the energy bill?
	Mr. Graham. I would have to get you a written answer to
	that, frankly, because I don't know exactly what the position
	is. But I do know it's a good illustration of my general point,
	the topic of this hearing, which is that congressionally
	imposed unfunded mandates are a serious problem.
	Mr. Waxman. Yes, but this is going to be a congressionally
	funded, unfunded mandate imposed upon the country if the
	administration supports it, which to me, the rhetoric about
	opposing unfunded mandates sounds great, but disappointing,
	however, when you are presented with a very concrete example,
	and the administration won't give us its opposition to it.
	That's a lot of money involved.
	Now, Dr. Graham, I think everyone agrees that Federal
	mandates are crucial in setting minimal protections for the
	health of our citizens. We have the Clean Air Act, we have
	drinking water laws, Superfund, they have strong, strong public
	support because no matter where you live in this country, you
	ought to be able to breathe clean air and drink safe water. But
	the administration is presiding over a weakening of a lot of
	these public health and environmental protections. Your office
	has had a key role in the process.
	Specifically, I want to ask you about how EPA has failed to
	carry out its obligation of the Clean Air Act to control
	emissions from toxic mercury. Widespread mercury pollution is a
	serious threat to our children's health and development. Every
	year 600,000 babies are born in the United States with mercury
	in their blood above the levels considered safe. EPA is under a
	court order to approve the deadline to issue a regulation next
	week to reduce mercury emissions from coal-fired power plants,
	which are the largest remaining source of mercury emissions in
	the United States.
	Yet EPA's mercury rulemaking today is a travesty of
	environmental regulation. Just a few weeks ago the Inspector
	General for EPA issued a scathing report on EPA's mercury rule,
	saying the resulting weak rule would minimize clean-up costs
	for the utility industry but sacrifice benefits for public
	health.
	Dr. Graham, even today, we have a report from the
	Government Accountability Office that finds that EPA distorted
	an analysis of its mercury proposal in order to make it appear
	more effective than it is. My question to you is, did your
	office urge EPA to analyze any mercury control option more
	stringent than the administration's preferred option?
	Mr. Graham. Yes, indeed, we did, sir. And in fact a 70
	percent reduction in mercury emissions over the next 15 years
	would represent a very substantial environmental
	accomplishment. And also an unfunded mandate.
	Mr. Waxman. Did you look at an analysis that would have
	been less controversial than the one that has been proposed,
	that might have been more stringent in reducing mercury
	emission levels?
	Mr. Graham. Yes, I think that was your previous question,
	which is yes.
	Mr. Waxman. Would you provide that for us?
	Mr. Graham. As soon as the rulemaking is completed,
	certainly, sir.
	Mr. Waxman. Will you ensure that EPA corrects its analysis
	prior to issuing the final rule?
	Mr. Graham. Pardon?
	Mr. Waxman. Will you ensure that EPA corrects its analysis
	prior to issuing the final rule?
	Mr. Graham. We are in fact engaged in the process of
	reviewing that final rule right now. We are working as hard as
	we can.
	Mr. Waxman. If a corrected analysis supports stronger
	mercury regulation, will you work to ensure the EPA modifies
	its proposals accordingly before it is finalized?
	Mr. Graham. That is our standard job, and we are doing it
	on mercury, sir.
	Mr. Waxman. OK. Thank you, Mr. Chairman.
	Mr. Davis. Thank you very much.
	Mr. Westmoreland.
	Mr. Westmoreland. Thank you, Mr. Chairman.
	Dr. Graham, could you tell me how clean air would have to
	be before some people would be happy with how clean air needs
	to be? I mean, I think if you ask everybody in this room who
	wanted to breathe clean air, I think everybody would raise
	their hand, or who wanted to drink clean water. I certainly
	want to drink clean water, I would raise my hand.
	But how clean is clean? In Georgia you could drink two
	liters of our water at a level that they say is bad for you,
	you could drink two liters a day for 65 years and you would
	have a better chance of getting struck by lightning than you
	would of dying from that water. So when you look at the Clean
	Air Act, or the Clean Water or whatever, is there a cost
	benefit analysis that's run on it as to how many lives that
	we're saving trying to get our air to a certain point or our
	water to a certain point, versus doing other things that may
	save more lives?
	Mr. Graham. The premise of your question, I share the logic
	behind. We do at OMB insist that agencies provide even for
	environmental regulations a cost and benefit justification for
	the particular proposal that they are making.
	I think it's oftentimes easy to forge the dramatic progress
	this country has made over the last 30 or 50 years, both in
	clean air and in clean water and the continuing progress that
	is occurring. So I think when you hear the crisis kinds of
	stories, you have to keep in mind what the actual data say,
	about what the trend lines are in this country.
	There are of course serious public health problems in this
	country that may even be more serious than some of these
	environmental issues. You know the administration has bene
	trying to draw attention to concerns about obesity in this
	country and its impact on premature death and disease and cost
	in the health care sector. That's a concrete example of the
	need to provide that comparative analysis.
	Mr. Westmoreland. Mr. Chairman, could I have one other
	question, please?.
	Mr. Davis. You can keep going until your light turns red.
	You have 5 minutes.
	Mr. Westmoreland. Thank you. Dr. Graham, you state that the
	inter-governmental consultation should take place as early as
	possible, even before the issuance of a proposed rule, and that
	these consultations should be integrated explicitly into the
	rulemaking process of some of these agencies. Do we need as a
	Congress to put these into statute, these guidelines into
	statute?
	Mr. Graham. I think we already have that in statute, I
	believe, the requirement for consultation. Though I guess I
	would have to double check and make sure I stated that
	correctly. I guess I don't see any evidence yet that there has
	been widespread non-compliance with the consultation
	requirement. But if in the process of developing the record of
	these hearings we do find substantial evidence of that, then
	either we at OMB need to do our jobs better or we need to
	consider some form of codification of those guidelines.
	Mr. Westmoreland. Thank you, sir.
	Mr. Davis. Thank you very much.
	Mr. Van Hollen.
	Mr. Van Hollen. Thank you, Mr. Chairman, thank you,
	gentlemen, for your testimony.
	I just want to pick up on a point that Mr. Waxman mentioned
	in his opening statement with respect to some of the education
	programs, which although they don't come under the strict
	definition of these unfunded mandates, I think if you talk to
	people in the States, and I know we're going to have testimony
	from people representing local jurisdictions and State
	jurisdictions, and certainly as someone who came from a State
	legislature, you look at these as mandates from the Federal
	Government. Specifically, No Child Left Behind, the IDEA
	special education legislation.
	In both cases, I think the Federal Government, on balance,
	had the right policy, especially with IDEA, ensuring that every
	child, regardless of his or her disabilities, gets a good
	education. At the time, with that law as well as No Child Left
	Behind, the Federal Government made certain commitments.
	We talked about what the significance and authorization
	level is or is not, but I would say that especially with
	respect to those two programs, the commitments that the Federal
	Government made, 40 percent funding with respect to special
	education, and the authorized levels that went back and forth
	through quite a bit of negotiations between the Congress and
	the White House were considered by many to be a commitment and
	obligation made by the Federal Government that is not being
	met. The most recent budget submitted by the White House with
	respect to No Child Left Behind is $12 billion underfunded.
	Special education is nowhere near the 40 percent commitment
	that we have made.
	When you review these obligations, do you make any
	assessment as to what impact, whether they should be somehow
	discussed within the overall umbrella of unfunded mandates or
	just say, that's kind of too bad and you're on your own?
	Mr. Graham. We look hard at the question of the appropriate
	Federal funding role. Just to get some facts on the table, the
	actual fiscal year 2006 budget request from the President
	represents a 46 percent increase for No Child Left Behind
	programs, compared to 2001. With the money targeted
	particularly at those programs, with the greatest promise for
	improving student achievements, such as Title I, Reading First,
	and the President's High School Intervention Initiative.
	Specifically, the total request for No Child Left Behind
	programs in 2006 is $25.3 billion, an increase of nearly $1
	billion or 4 percent over the 2005 level, and nearly $8
	billion, or 45 percent over the 2001 level. Now, whether by
	some people's definition that's fully funded or not funded
	enough, let there be no mistake about where the President is on
	this subject of expansion in Federal support for No Child Left
	Behind.
	Mr. Van Hollen. Well, I guess the question is whether the
	additional funds match the mandates and obligations that were
	placed on the States. At the time that those decisions were
	made, the policy committees, Education and the Workforce
	Committee in the House, the other committees in the Senate and
	the President in negotiations with the Congress determined that
	in order to meet the requirements, expectations within No Child
	Left Behind, the full authorized level would be the amount that
	people set out as the appropriate amount.
	So while there is no doubt there have been increases in
	funding under the No Child Left Behind bill, the issue when you
	are discussing unfunded mandates is whether or not the amounts
	provided are sufficient to match the obligations placed on the
	States. Clearly there is a big gap between what the White House
	budget has in it and the amount that the Congress, that was in
	the bill signed by the White House originally.
	I think you will have testimony later, and I don't want to
	belabor this point, but we are hearing from our constituents
	who have a much broader definition of unfunded mandates than is
	suggested in this particular analysis. Those are the unfunded
	mandates that people are having to struggle with every day at
	the State and local level. I just think it's important that
	when we put together our budgets and establish our priorities
	here in Congress, we do a better job of meeting the promises
	that we made at the time that we undertook these obligations,
	imposed these obligations on the State.
	Thank you, Mr. Chairman.
	Mr. Davis. Thank you very much.
	The gentleman from Tennessee.
	Mr. Duncan. Thank you, Mr. Chairman.
	Dr. Graham, I was first elected in 1988. Every year, once a
	year, our Governor for those first 6 or 7 years was a real fine
	man, Governor McWhorter, a Democrat. He would always start out
	every meeting, he would say, please, no more unfunded mandates.
	And I would sit there and I would think, well, it's your party
	that's putting all these things on.
	Then Speaker Gingrich came in, and he wanted our first
	hearings in all our committees to be on unfunded mandates,
	because he wanted this to be a real Republican emphasis. What
	I'm wondering about, Government, of course, the Federal
	Government keeps growing and growing and growing and it seems
	that the rules and regulations and red tape just keep growing.
	The National Conference of State Legislatures has gotten us
	some, they've got three laws that they consider examples of
	continued unfunded mandates, the American Job Creation Act of
	2004, the Individuals with Disabilities Education Act, the
	Medicare Prescription Drug Improvement and Modernization Act.
	What I'm wondering, I'm sorry, I just got here just a few
	minutes ago, and I didn't get to hear your testimony and your
	answer to previous questions, but are we making any progress on
	these things? You were just asked about the No Child Left
	Behind law.
	Well, the Democrats always complain about the funding on
	that. What they don't say is, President Bush has given more
	money than any president in history, far more, for instance,
	than President Clinton and so forth. But the fact is, it's such
	a political thing, if we Republicans said we were going to
	spend half the Federal budget on education, they'd have to top
	us. But I do read that some States are wanting to pull out of
	the No Child Left Behind thing, not because so much of the
	funding but just because of all the mandates and requirements.
	Are you working on that, or what's your response to those
	States that say it is too burdensome? And are we making
	progress in other areas on this?
	Mr. Graham. I can provide you for the record a variety of
	detailed ways in which the administration has worked to make
	the requirements of the No Child Left Behind law more flexible,
	to leave room for State and local governments to make cost
	effective choices on a local basis.
	The one thing I want to make very clear is, the suggestion
	that the authorized level for a funding program is necessarily
	the definition of the mandate about whether it's funded is a
	very new idea as far as I am concerned. I don't know that there
	is any, there are very few Federal programs that are literally
	appropriated at exactly the level they are authorized at. If we
	are going to call every one of those an unfunded mandate, we'd
	better get CBO into action and figure out exactly what we have
	done to the Federal deficit by pulling all these programs up to
	their authorized level.
	The commitment of the President to funding No Child Left
	Behind is pretty darned clear on the numbers I gave to you. So
	I think there shouldn't be any question about that.
	Mr. Duncan. What I was getting at, though, getting away
	from the issue of funding, and you're exactly right, there is
	hardly any program that is ever funded to the authorized level.
	But are we working to try to make sure that these requirements
	under the No Child Left Behind Law and these other laws are not
	unduly burdensome? Because that was supposed to be the goal of
	the unfunded mandates effort in the first place. Do you think
	we are making progress in that regard?
	Mr. Graham. We are making progress on that. There is, with
	the Department of Education, a process of negotiated
	rulemaking, where the various stakeholders that include the
	State and local representatives work with the legislation as
	passed and the discretion that's available to it, to achieve
	the most sensible regulation. So there is progress in that
	direction. And at the same time, we have been expanding Federal
	support to make it financially more viable to implement those
	programs. More flexibility and Federal funding make it a more
	practical approach.
	Mr. Duncan. All right, thank you very much.
	Mr. Davis. Thank you very much.
	Mr. Turner.
	Mr. Turner. Thank you, Mr. Chairman.
	Our chairman, in working with the National Association of
	Counties, has taken a lead in trying to get examples of
	unfunded mandates and a quantification of their impact. As you
	read the report that we have in the record and listen to the
	testimony that is going to follow, they have given us a
	snapshot of several areas in which an unfunded mandate has been
	identified and its actual costs, or the experiences that these
	counties are having as a result of that unfunded mandate.
	I was wondering to what extent OMB or CBO, in retrospect,
	looks at the issues of the actual expenditures that local and
	State governments have when an unfunded mandate is identified,
	both in items that occurred prior to UMRA, whether or not the
	annual increase of those mandates exceeds our threshold
	expectation, whether or not the actual numbers exceed the
	threshold estimates that we have, because in some instances
	where you identified the threshold, it's below the number an
	action can be taken.
	The actual experience may be different. Do you look then as
	to whether or not the actual experience really does fall under
	the threshold, and also in the areas of the amount of funding.
	And in part of the testimony you discuss the issue of doing a
	benefits analysis of a mandate. To what extent retrospectively
	do we go back and figure out the actual costs that are being
	expended and whether or not that changes the picture of the
	cost benefit analysis?
	Mr. Graham. I think you asked an excellent question. That
	is, even if we analyze and project the costs or benefits of
	these unfunded mandates before they are enacted, what do we
	actually learn over time about how much they actually cost and
	what their actual benefits are. I regret to report to you that
	there are probably over 20,000 Federal regulations, new Federal
	regulations that have been adopted since 1980 in this country.
	Most of them have never been looked at to determine what their
	actual costs were and what their actual benefits were.
	There is a small literature in this area that is
	developing. What it finds is in some cases the costs of
	regulation proved to be less than expected, but in other cases,
	they proved to be more than expected. We don't yet have
	concrete evidence of a pattern across all these regulations
	that we could give you that would give you a simple result.
	Mr. Holtz-Eakin. CBO concentrates under UMRA looking at the
	prospective costs of mandates and as a result, has no formal
	responsibility to go back and re-examine the cost of existing
	mandates. To do so would change dramatically the character of
	our responsibilities from identifying costs in the budget
	process to being more of a regulatory budget. It would be quite
	an undertaking.
	Nevertheless, there are circumstances in which the ongoing
	review of responsibilities does give us indications that things
	didn't turn out the way we expected. We always try to learn
	from the experience of previous analyses, and some examples
	jump to mind. For example, no one anticipated the costs of HIPA
	to be what they turned out to be. And by staying in
	consultation with the State and local governments, we have
	leaned a great deal about the cost of that mandate over time.
	That informs our future analyses, but is not brought into the
	process in any formal way.
	Mr. Turner. One of the issues that Mr. Waxman raised
	touches on the area of economic competitiveness, which is not
	necessarily an issue that was laid out in the Unfunded Mandates
	Act. Does OMB undertake any effort in looking at these to
	measure or consider what the impact might be on local
	communities and their economic competitiveness?
	Mr. Graham. I don't recall there being any formal
	requirement in either Executive order or in statute that we
	review regulations for their impact on the competitiveness of a
	community or an industry or the country as a whole. There is an
	economic analysis requirement, and cost impact requirement. But
	it is not focused specifically on the competitiveness question,
	so you raise a good point.
	Mr. Turner. Thank you. Thank you, Mr. Chairman.
	Mr. Davis. Thank you very much.
	Mr. Holtz-Eakin, I want to commend you and the CBO for the
	way you handle and administer UMRA. It's clear to me you're not
	only complying with the letter of the law, you're sincerely
	working to give Congress a product that assists in our
	decisionmaking.
	Director, in your statement you report that between 1996
	and 2004, CBO found 617 legislative proposals containing inter-
	governmental mandates and 732 proposals containing private
	sector mandates. The vast majority of these mandates fell
	beneath the threshold set in UMRA. In spite of this fact, has
	CBO looked at the aggregate effect of all these mandates?
	Mr. Holtz-Eakin. No, we have never undertaken an
	aggregation exercise, which again would translate this into
	more of a regulatory budget kind of exercise.
	Mr. Davis. I wonder if you could go back and have somebody
	look at these and see what the cumulative effect is. We set a
	threshold, but I don't think anybody anticipated hundreds of
	proposals flying under the radar screen that when accumulated
	could be worse than two or three giant mandates.
	Mr. Holtz-Eakin. As a matter of doing the arithmetic, I
	think that's probably an insurmountable task. In many cases, we
	don't know the exact dollar figure of the mandate. It's either
	clearly well above the threshold, or clearly well below. The
	time necessary to identify the particular dollar figure didn't
	merit it under the circumstance. We didn't really have that in
	the records.
	Mr. Davis. You also pointed out that hundreds of bills
	impose requirements on inter-governmental partners as a
	condition for receiving grant money. It's kind of a new
	unfunded mandate. Is there an aggregate of the cost of these
	requirements to State and local governments?
	Mr. Holtz-Eakin. The CBO hasn't put that together. I know a
	variety of the interested parties have put together aggregates.
	One of the real difficulties there is trying to examine the
	history and imagine what would have happened in the absence of
	this legislation, would the State governments themselves, for
	example, undertake some policy. So trying to figure out the
	incremental cost of the mandate per se is difficult in looking
	back.
	Mr. Davis. In your statement, you give us a working
	definition of what an unfunded mandate that would be covered
	under UMRA would look like. I'm looking for a practical example
	of how CBO decides to call a proposal a covered mandate. For
	example, let me give you two essentially voluntary acts: No
	Child Left Behind, which I think a lot of my legislators think
	is an unfunded mandate; and the driver's license requirement in
	H.R. 10 last year, which came from this committee. Neither act
	required a specific State action. Yet one is covered under UMRA
	and the other one isn't.
	Mr. Holtz-Eakin. With respect to the No Child Left Behind,
	that's clearly a condition of Federal aid, and as a result is
	not a mandate under the definition by UMRA. The driver's
	license issue is one where the Federal Government essentially
	has made it impossible for States to continue under the status
	quo their own programs of licensing and provide a widely usable
	driver's license. It would be the case, for example, that
	driver's license would not allow you to get onto an airplane,
	you would not be able to use it to get a passport.
	Mr. Davis. But you could use the driver's license to drive.
	Fundamentally that's what driver's licenses are for.
	Mr. Holtz-Eakin. But effectively as a means of
	identification, it would no longer be widely acceptable. The
	enactment of those provisions made it impossible for the States
	to continue voluntarily with the status quo and have their
	program continue in its current form.
	Mr. Davis. I thought a driver's license is to be a driver's
	license. I guess if you want to call it driver's license and
	i.d., that would be different.
	Mr. Holtz-Eakin. In both H.R. 10 and then more recently in
	H.R. 418, it was focusing on identification.
	Mr. Davis. OK. I obviously disagree with you on that, but
	at least I understand your thinking.
	Has OIRA considered scoring agencies' rulemaking processes
	based on their ability to comply with the mandate in UMRA to
	analyze alternative rules and select the least costly, most
	cost effective or least burdensome one?
	Mr. Holtz-Eakin. A good question on that. The current
	Executive order that governs OIRA's rulemakings has language
	similar to the Unfunded Mandates Act. We already score agencies
	on their compliance and regulatory analysis with the Executive
	order requirements. So while technically we may not score
	agencies exactly on the Unfunded Mandates Act language, we
	score them something very similar in Executive Order 12866.
	Mr. Davis. OK, thank you very much. Mr. Waxman, I will
	yield, I've got time. I know you had one more question.
	Mr. Waxman. Yes, Mr. Chairman. I find this all very
	interesting to find out what is and is not an unfunded mandate.
	I guess whenever we tell State and local governments we have an
	offer you can't refuse, it's going to cost you money, I think
	they look at it as an unfunded mandate.
	I want to go back to this MTBE issue, because it's an issue
	that's now pending before the Congress. I think it's important
	to look at this issue, because what we have now is a very high
	cost that's going to be imposed by somebody because of the
	dangers of use of this chemical additive. Dr. Graham lashed out
	and said this was a congressionally mandated provision that
	MTBE use. I think the record would show otherwise. I don't
	think that's an accurate statement. I know he's taken that
	position, the API, American Petroleum Institute, took that
	position as well.
	But I have correspondence that I want to make a part of the
	record with API in 2000. API provided data that shows the oil
	industry was ramping up its use of MTBE prior to the 1990
	amendments. From 1986 to 1990 the oil industry was increasing
	its use of MTBE on average by more than 2.6 million barrels per
	year. So before even Congress came to the Clean Air Act
	amendments or even considered the idea of reformulated gasoline
	requirements, MTBE was increased in use to the point where the
	oil industry was using 84,000 to 100,000 barrels every day in
	the United States by the time the act was even adopted.
	If you look at the, according to the API, prior to passage
	of the 1990 amendments, the oil industry was using some 40
	percent of the amount of MTBE that would ultimately be used in
	1990. Republicans have acknowledged that Congress never
	mandated MTBE use. I also want to put in the record a memo from
	the Oversight and Investigations Subcommittee from 1995,
	beginning on the bottom of page 8, the memo discusses at some
	length how the Clean Air does not mandate any specific fuel
	additive. The memo states: ``A major aspect of the debate on
	the 1990 Clean Air Amendments was the issue of fuel neutrality.
	In essence, since various fuels and fuel constituents compete
	for the RFG and alternative fuels market, an effort was made to
	avoid dictating any particular fuel choice. On this matter, the
	May 17th, 1900 report of the Committee on Energy and Commerce
	on H.R. 3030 could not have been more clear.''
	Dr. Graham, I say this because I'm disappointed you decided
	to repeat the oil industry argument today that Congress
	mandated. Congress mandated a fuel neutral provision.
	But that really has nothing to do with anything, because
	the oil companies are using MTBE. We have a problem with the
	cost of cleaning up the MTBE. The reality is going to be who
	should pay for that cost. What I want to know is, is the
	administration going to oppose this imposition on the State and
	local governments and ratepayers in order to protect the oil
	companies.
	That to me, no matter how you slice it, is an unfunded
	mandate and in order to live up the rhetoric of not wanting
	unfunded mandates and recognize that this is something that we
	shouldn't impose on local governments, I would hope the
	administration would be wiling to put its position where it's
	rhetoric is and not just side with the oil companies. You said
	you don't even know if the administration has a position on
	this issue. It's a huge amount of money. I hope we can get an
	administration position. And I hope they'll propose it. I know
	you support the energy bill, but this position should not be
	supported by the administration.
	I look forward to hearing from you further on this.
	Mr. Graham. Just to clarify, if it's true that MTBE use was
	going to increase even without the Clean Air Act requirements,
	which was the thrust of the first half of what you just
	presented----
	Mr. Waxman. That's right.
	Mr. Graham [continuing]. Then how is it an unfunded
	mandate? It would have happened anyway without the Clean Air
	Act.
	Mr. Waxman. But the unfunded mandate is what is now in the
	energy bill, which would say that the oil companies are no
	longer going to be responsible for----
	Mr. Graham. But what I'm saying is, if you take the view
	that the Clean Air Act requirements didn't stimulate MTBEs----
	Mr. Waxman. Oh, it stimulated it.
	Mr. Graham. Oh, so we are in agreement then that the Clean
	Air Act was a substantial factor in stimulating the growth of
	MTBEs----
	Mr. Waxman. It stimulated a growth of what we already had--
	--
	Mr. Graham. Then we're much closer than I thought we were.
	Mr. Waxman [continuing]. It would have happened anyway, but
	the reality now----
	Mr. Graham. Because if it's going to happen anyway, it's
	not an unfunded mandate by the Federal Government.
	Mr. Waxman. That's not the unfunded mandate. The unfunded
	mandate would be if you excuse the oil companies and make the
	local governments have to pay for the cost, rather than have
	the oil companies stand in litigation now and take on those
	costs.
	Mr. Graham. I think that's more of a liability question,
	not a mandate question.
	Mr. Waxman. Well, it's a mandate if you excuse them from
	liability. That's where----
	Mr. Graham. I think we understand each other.
	Mr. Davis. Thank you. I might add, if the energy bill comes
	to the floor, you could raise a point of order at that point
	under UMRA and you could force a separate vote under the House
	rules, Mr. Waxman.
	Mr. Waxman. Let me ask----
	Mr. Holtz-Eakin. Yes, sir, under UMRA it would be an
	unfunded mandate. There would be a point of order against it on
	the floor.
	Mr. Waxman. And that could be waived by the rule adopted by
	the House?
	Mr. Davis. No, it probably could not.
	Mr. Holtz-Eakin. Under 418, there was a point of order
	raised against the rule itself, which was lost on the vote.
	Mr. Davis. You get a separate vote. You are guaranteed a
	separate vote on that issue.
	Mr. Holtz-Eakin. Yes, a separate vote.
	Mr. Waxman. Well, I hope State and local governments will
	realize that and come in and press against this as they have in
	this letter that I read. But I would hope that the
	administration would not leave them holding the buck for the
	costs which has resulted from the oil industry turning to MTBE
	as opposed to any other alternative that they might have chosen
	in cleaning up the gasoline.
	Mr. Davis. I want to thank this panel. It has been very,
	very helpful. We appreciate the work that you have done. I will
	dismiss you now, and we will take a 5-minute recess as we get
	our second panel on. Thank you very much.
	[Recess.]
	Mr. Davis. We are ready for our second panel. This is
	comprised of representatives from State, county and city
	governance. We have Angelo Kyle, who is the county board
	chairman from Lake County, IL, working his way up. Nice to see
	you, met him on Sunday. We also have Mayor Mick Cornett of
	Oklahoma City, OK, here on behalf of the U.S. Conference of
	Mayors. Thank you very much, we look forward to your testimony.
	Mr. Van Hollen, do you have someone you want to introduce on
	this panel?
	Mr. Van Hollen. Yes, thank you. I would like to introduce
	John Hurson, who is a friend and colleague. We actually ran for
	the Maryland State Legislature together in the same year, back
	in 1990. Since then, John was the majority leader in the
	Maryland House of Delegates. He now chairs the Health and
	Government Operations Committee and is doing a terrific job as
	president of the National Conference of State Legislators.
	Mr. Davis. He didn't serve with Mr. Dennis, too, did he, on
	our staff? Did he serve with Mr. Dennis?
	Mr. Van Hollen. Mr. Dennis, council member Dennis was just
	before, Senator Dennis was there just before we were.
	Mr. Davis. OK, good, not corrupted, that's great.
	[Laughter.]
	Mr. Van Hollen. But he did a great job, too.
	Mr. Davis. Thank you very much.
	I am also pleased to introduce someone I alluded to in my
	opening remarks, the chairman of our county board in Fairfax
	County, Gerry Connolly. I have always noted with pride that
	when I was chairman of the county board, Fairfax County was
	selected the best financially managed county in the country. I
	was proud of that for years, and now under Mr. Connolly they
	have obtained the same thing. So I no longer have sole
	ownership of that.
	Gerry, thank you for being here on behalf of NACo. I know
	that Gerry Hyland, our Mount Vernon supervisor, had hoped to be
	with us today and his mother has passed away. I hope you will
	send him all the best wishes from all of us as well. I'm going
	to start, Mr. Kyle, with you. We will swear everybody in, and
	then we will go straight down. I think you know the rules. You
	try to keep it to 5 minutes as best you can. Rise with me and
	raise your right hands.
	[Witnesses sworn.]
	Mr. Davis. Mr. Kyle, you are on.

	STATEMENTS OF ANGELO KYLE, PRESIDENT, NATIONAL ASSOCIATION OF
	COUNTIES; GERRY CONNOLLY, CHAIRMAN, FAIRFAX COUNTY BOARD OF
	SUPERVISORS; JOHN HURSON, PRESIDENT, NATIONAL CONFERENCE OF
	STATE LEGISLATURES; AND MICK CORNETT, MAYOR, OKLAHOMA CITY, OK

	STATEMENT OF ANGELO KYLE

	Mr. Kyle. Thank you, Chairman Davis. Again, we appreciate
	you making your presentation at our legislative conference just
	a while ago. To Ranking Member Waxman, also to Congressman
	Turner, we had an opportunity to testify before his
	subcommittee on the CDBG block grant. To other members of the
	Committee on Government Reform, I would like to thank you for
	this opportunity to participate in the hearing this afternoon.
	My name is Angelo Kyle, Commissioner of Lake County, that great
	county in Illinois. I am also proud to serve as president of
	the National Association of Counties.
	As you know, county governments play a vital and growing
	role in the lives of America's families, bringing crucial
	services to communities from rural America to our suburbs and
	central cities. Too often, county governments are viewed as
	just another interest group in Washington. We are not an
	interest group. We are elected representatives of the people,
	serving our role in a partnership with States and the Federal
	Government.
	Too often, the Federal Government decides that it knows
	best how to handle issues in our communities and dictates a one
	size fits all approach. County officials resent decisions being
	taken out of our hands and being made instead by others
	hundreds and even thousands of miles away in Washington, DC,
	especially when we have to pay for it.
	A decade ago, you and other Members of Congress agreed that
	the Federal Government should not enact mandates without paying
	for them. You responded to the outcry from State and local
	elected officials who were fed up with unfunded Federal
	mandates by enacting the Unfunded Mandates Reform Act of 1995.
	Mr. Chairman, you should be proud of your role as a lead
	sponsor in enacting the Unfunded Mandates Reform Act. The tools
	that UMRA provides for estimating and highlighting the costs of
	mandates have largely worked as they were intended.
	We have also found that the unfunded mandate point of order
	is in effect a deterrent. Passage of the Unfunded Mandate
	Reform Act was a landmark achievement in the history of
	federalism. But it is not a comprehensive or perfect solution
	to the problem of unfunded mandates. The Federal Government
	continues to impose mandates on State and local governments and
	many of our counties report that the burden is increasing.
	Counties continue to struggle with mandates that were adopted
	prior to the passage of the Unfunded Mandates Reform Act, such
	as the Clean Air Act and the Clean Water Act.
	Phase 2 storm water regulations increasingly require
	counties to monitor and treat runoff from construction sites,
	car washes and other sources of groundwater pollution. Within
	the last year, new ozone and fine particle standards have
	increased the burden on counties for monitoring air quality and
	addressing sources of pollution. Regulatory mandates such as
	these have become more strict and expensive to implement over
	time, especially for counties with fewer resources.
	Another expensive mandate facing counties is the Help
	America Vote Act. The voters of my county, my county clerk and
	the U.S. Justice Department will all tell you that Lake County
	is required to comply with HAVA. Not so, according to UMRA.
	HAVA is not considered a mandate because it enforces a
	constitutional right. Mr. Chairman, I believe that every
	individual has a right to vote and to have that vote counted. I
	do not agree that those costs are irrelevant within the Federal
	legislative process. The exclusions for certain kinds of
	legislation do a great disservice to the transparency in
	Government and to State, counties and cities throughout the
	Nation.
	Another huge unfunded mandate on counties is uncompensated
	health care. When a patient enters the hospital, the Federal
	Government dictates many of the decisions that will be made
	about his treatment, the services his doctor will perform, the
	hospital facilities he will use and the products the pharmacist
	will supply. From the Emergency Medical Treatment and Active
	Labor Act to eligibility for Medicaid, the Federal Government
	dictates much of the who, what, when, where and why of
	providing health care services. Counties shoulder an enormous
	burden of cost for uncompensated health care. The Federal
	Government has not only failed to step forward and take
	responsibility for the plight of the uninsured, it has
	persisted in shifting the costs to counties.
	The answer to the spiraling costs of health care at the
	Federal Government is not to cut costs at the expense of
	shifting them onto counties and other local governments, but to
	engage with us in a process of identifying changes that we can
	all make together to improve the Nation's health care delivery
	system.
	The message that I want to leave with you is not that
	counties are unwilling to provide these needed services, but if
	the Federal Government believes that it knows best how to
	provide clean water supplies or run county elections or manage
	county hospitals, then it should at least pay for the mandates
	that it passes on to county officials. Mr. Chairman, the
	Nation's county officials look forward to working with you to
	explore options for strengthening UMRA. We believe that the
	best approach is to build on its success, and by expanding the
	current process for attaching cost estimates to proposed
	mandates.
	We also believe that it is time to strengthen the
	enforcement power of point of order. In so doing, we must find
	a way in the appropriations process to enforce the creed, no
	money, no mandate.
	Mr. Chairman, that concludes my testimony. I want to thank
	you for the opportunity to share the views of the National
	Association of Counties on this important issue and look
	forward to any questions that you and other members of the
	committee might have. Thank you.
	[The prepared statement of Mr. Kyle follows:]

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	Mr. Davis. Thank you very much.
	Mr. Connolly, thanks for being with us.

	STATEMENT OF GERRY CONNOLLY

	Mr. Connolly. Thank you, Mr. Chairman, and I want to thank
	you for your gracious welcome today. I also want to say a
	special hello to Chris Van Hollen, with whom I worked in the
	U.S. Senate a number of years ago. Great to see Chris up at the
	dais.
	My name is Gerry Connolly, and I serve as both the chairman
	of the Fairfax County Board of Supervisors, and as the
	president of the Virginia Association of Counties, which of
	course is an active member in NACo. I want to thank you, Mr.
	Chairman, for the opportunity to participate today and to
	testify on the burden of unfunded Federal mandates. On behalf
	of the county officials throughout Virginia in particular, I
	want to thank you, Mr. Davis, for your commitment to conduct
	oversight hearings on the Unfunded Mandates Reform Act.
	We also want to applaud your decision to create a new
	Subcommittee on Federalism and the Census, and particularly
	your selection of Congressman Michael Turner as its new
	chairman. We know that he brings much to the role, given his
	experience as the former mayor of Dayton, OH, like yourself,
	somebody with a lot of experience in local government who would
	appreciate the impacts of congressional legislation on local
	government.
	The advisory commission on Inter-Governmental Relations
	issued a report in 1994, noting that the full cost of federally
	induced State and local expenditures is unknown in part,
	because no Government agency or individual has developed a
	comprehensive tabulation of such costs. Two years later, the
	commission was disbanded and its information about the lack of
	comprehensive information on the cost of unfunded mandates is
	still true today.
	I want to say that I think Congressman Waxman put his
	finger on the definition of unfunded mandates from the point of
	view of State and local entities. Anything you make us do that
	you don't fully fund is an unfunded mandate. Anything that is
	cost offloaded, either by the State or by the Federal
	Government, on local government, is an unfunded mandate.
	The Congressional Budget Office and Federal agencies only
	estimate the anticipated costs of certain individual mandates.
	No entity is responsible for reviewing those costs after
	they've been imposed. Whether you recreate the advisory
	commission on inter-governmental relations or assign the duty
	to an existing or new agency, we would respectfully suggest
	that conducting comprehensive research on unfunded mandates be
	among the eventual proposals for strengthening UMRA.
	Hundreds of Federal laws impose mandates on State and local
	government. State and local government take different
	approaches to comply and their expenses may vary widely from
	month to month and year to year. Once Federal mandates are
	issued, however, they are accepted as a cost of doing business
	and become marbled throughout the county or local budget.
	However, despite these challenges, NACo agreed last month
	to conduct a rapid response survey of its members on the cost
	of 10 selected Federal mandates for the consideration of this
	committee. I ask that a copy, Mr. Chairman, of NACo's full
	report be included in the record of this hearing.
	Mr. Davis. Without objection, so ordered.
	Mr. Connolly. I thank you, sir.
	I would like to provide a few examples of the responses we
	received. Marion County, FL, for example, reported a 1-year
	cost of more than $59 million from mandates related to the
	Clean Water Act alone. Given the size of the county population,
	that's the equivalent of $990.54 tax burden on the typical
	family of four in that county. In Brevard County, FL, they
	reported an annual cost associated with the Safe Drinking Water
	Act, cost taxpayers of that county $418.51 per family of four
	per year.
	In Hillsborough County, FL, they spent a total of $73.08
	per family of four to comply with the Americans with
	Disabilities Act. In Chester County, PA, they spent more than
	$8 million of local tax revenues on HAVA compliance that Mr.
	Kyle just referred to, in fiscal year 2004, or $71.79 per
	family of four. In Kitsap County, WA, they expect to spend
	$40.23 per family of four in fiscal year 2005 for planning and
	mitigation related to the Endangered Species Act.
	In Gaston County, NC, Mrs. Foxx, they expect to spend
	$18.03 per family of four to comply with the Health Insurance
	Portability and Accountability Act in fiscal year 2005. In Lee
	County, FL, they expect to spend an amazing $315.52 per person,
	or $1,262.06 per family of four, in uncompensated health care
	costs in fiscal year 2005. Several counties reported multi-
	million dollar gaps over the 3-year period.
	In Kern County, CA a taxpaying family of four is
	responsible for an unbelievable $252.42 over 3 years for the
	costs of incarcerating criminal illegal aliens not reimbursed
	by the State criminal alien assistance program. While the
	problem of illegal immigration is generally associated with
	border counties, residents of Douglas County, NE, pay the
	equivalent of $75.68 per family of four between fiscal year
	2003 and fiscal year 2004 and that problem is only growing.
	NACo did not survey the cost of education mandates, because
	counties in most States are not responsible for funding
	education. However, the burden of Federal unfunded mandates
	contained in the No Child Left Behind Act is going to leave
	local governments the most behind in paying the cost.
	My county, as you know, Mr. Chairman, having been chairman
	of Fairfax County, does have responsibility for funding
	education. We have spent, so far, $132 million over the last 4
	or 5 years in implementing No Child Left Behind, and we have
	received exactly $9 million from the Federal Government to
	offset those costs. This amount is likely to double or even
	triple as benchmarks rise and sanctions increase with respect
	to full compliance.
	Counties participating in the NACo survey were only able to
	provide costs for an average of about six mandates per county.
	As you noted, Mr. Chairman, NACo projects that if these costs
	are typical of other counties, the nationwide costs to counties
	for just these six would be $40 billion. That's a very
	conservative estimate.
	Fairfax County, for example, has spent more than $540
	million to comply with Federal mandates in fiscal year 2004, or
	approximately 21 percent of the county's general fund. The
	Federal Government only reimbursed our county part of that
	amount, leaving our taxpayers a net bill of $395 million, or 73
	percent of the full cost. In particular, our county spent $21
	million for mandates in public safety, $72 million in human
	services, $47 million in employee administration for including
	FICA and retirement mandates, $125 million related to Metrobus
	and Metrorail, $72 million for mandates related to wastewater
	operations, $13.7 million for Clean Air Act compliance, $3.3
	million for Resource Conservation and Recovery Act, $2.5
	million for ADA and over $1 million for HIPA. Only 5 percent of
	these costs are captured in the NACo report.
	If this is true of other counties' responses to NACo, as
	you indicated, Mr. Chairman, the full cost to counties across
	the country could approach $800 billion. Needless to say, the
	fiscal condition of counties would be worsened if Congress
	added to this burden by adopting any of the several mandates
	currently being considered in the 109th Congress. We hope that
	while you work with NACo to identify and pursue improvements to
	the Unfunded Mandates Reform Act, the committee will also work
	to oppose creating new unfunded mandates for counties in this
	Congress.
	That concludes my testimony, Mr. Chairman, and thank you
	for this opportunity to be with you today.
	[Note.--The National Association of Counties report
	entitled, ``Unfunded Mandates: A Snapshot Survey, March 2005,''
	may be found in committee files.]
	Mr. Davis. Thank you very much.
	Delegate Hurson, thank you for being with us.

	STATEMENT OF JOHN HURSON

	Mr. Hurson. Thank you very much.
	Chairman Davis, Ranking Member Waxman, my Congressman and
	former Maryland legislative colleague, Mr. Van Hollen,
	distinguished members of the Government Reform Committee, I'm
	John Hurson, president of the National Conference of State
	Legislatures and a member of the Maryland House of Delegates. I
	appear before you on behalf of NCSL, a bipartisan organization
	representing the 50 State legislatures, the 7,000 plus members
	of those legislatures, and the legislatures of our Nation's
	commonwealths, territories, possessions and the District of
	Columbia.
	Thank you for the opportunity to testify before you today
	about the Unfunded Mandates Reform Act of 1995. And thank you,
	Mr. Chairman, for your efforts and the leadership that helped
	UMRA become a reality a decade ago.
	My presentation today will highlight the effectiveness and
	the limitations of UMRA, the impact of those limitations on
	State budgets and the need for substantive and technical
	changes to UMRA. I would like to request that a copy of NCSL's
	March 8, 2005 mandate monitor and NCSL's Federal mandate relief
	policy be submitted for the record.
	Mr. Davis. Without objection, so ordered.
	[Note.--The Mandate Monitor, Vol. 2, Issue 1: March 8,
	2005, may be found in committee files.]
	[The information referred to follows:]

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	Mr. Hurson. Thank you.
	NCSL applauds the success of UMRA and the work of the
	Congressional Budget Office in particular in bringing attention
	to the fiscal effects of Federal legislation on State and local
	governments, improving Federal accountability and enhancing
	consultation. CBO's recent report identifying but five
	provisions in law that crossed UMRA's threshold, speaks loudly
	for its effectiveness. And the hundreds of fiscal analyses
	completed by CBO show a commitment to carry out the spirit and
	the letter of the law.
	Both of these facts, however, mask some of the statute's
	shortcomings that NCSL urges you to address. UMRA is limited.
	As a result, much is slipping under UMRA's radar and
	intensifying pressures on State budgets. NCSL has identified a
	$51 billion cost shift in Federal funding to States for fiscal
	years 2004 and 2005 collectively, 5 percent of States' general
	revenue funds annually. The cost shift continues and will most
	likely grow by 20 percent in fiscal year 2006, if Congress
	adopts the President's budget. This increase to a potential $30
	billion doesn't take into account the adoption of proposed
	changes in Federal Medicaid spending.
	Mr. Chairman, legislators view mandates more expansively
	than UMRA's definition. We believe there are mandates when the
	Federal Government establishes a new condition of grant and
	aid, reduces the Federal match rate on administrative funds
	available without a reduction in requirements, extends or
	expands existing or expiring mandates, compels coverage of
	certain populations under a current program without providing
	full or adequate funding for this coverage, or creates an
	unfunded national expectation.
	To illustrate our concerns, I'd like to provide you with
	examples of provisions contained in three bills enacted during
	the 108th Congress that were not considered inter-governmental
	mandates under UMRA, but did create significant cost shifts to
	the States. Legislators look at the provision in the American
	Jobs Creation Act and see an unfunded mandate. They see an
	excise tax on vaccines as increasing their costs for Medicaid.
	UMRA doesn't call it a mandate, because it's an indirect cost
	and not a direct cost.
	Legislators view IDEA, which was reauthorized last year, as
	one of the biggest unfunded mandates of all time. UMRA, though,
	said IDEA is a grant condition. So States really don't have to
	participate. They don't, but they do. Any State that refuses to
	participate in IDEA would almost certainly be sued for
	violating civil rights.
	Legislators consider the requirements to conduct
	eligibility determinations for the low income subsidy for
	Medicare Part D to be a mandate. In particular because it's a
	condition of participation in the Medicaid program. UMRA says
	it's a mandate only if States lack the flexibility to offset
	the costs with reduction somewhere else. Well, maybe they do,
	but given State budgets, we really don't have that flexibility.
	We seek your support to strengthen UMRA. This hearing is an
	excellent start. We suggest that members of this committee sit
	down with legislators, counties, courts and city officials and
	other elected officials to develop broader protections under
	UMRA to States and localities against these cost shifts.
	Specifically, NCSL encourage the Federal Government to examine
	the definitions, revisit how it treats entitlement and
	mandatory spending, establish greater executive branch
	consultation, and consider developing a look-back process.
	Mr. Chairman, in closing, I would like to add that NCSL
	remains steadfast in its resolve to work with Federal
	policymakers to reduce the Federal deficit and to maintain
	critical programs. Controlling the deficit is a daunting task,
	involving difficult choices, many of which involve our inter-
	governmental partnerships. We recognize that the pressure for
	mandatory Federal spending and restrictions on the growth of
	discretionary spending promote a tendency to seek the
	accomplishment of national goals through Federal mandates on
	State and local governments.
	However, NCSL is encouraged that many Federal lawmakers,
	including yourselves, have recognized the difficulties posed by
	these cost shifts to States, and we look forward to working
	with you on these important issues. I thank you for this
	opportunity to testify and I would be happy to answer any
	questions.
	[The prepared statement of Mr. Hurson follows:]

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	Mr. Davis. Thank you very much.
	Mayor Cornett, thank you for being with us.

	STATEMENT OF MICK CORNETT

	Mayor Cornett. Thank you, Mr. Chairman, members of the
	committee. I appreciate the opportunity to be here today to
	speak to you. I am Mick Cornett, I am the mayor of Oklahoma
	City, the 29th largest city in the United States. I am here on
	behalf of mayors across the country at the requests of the U.S.
	Conference of Mayors. I serve on the Urban Economic Policy
	Committee for the U.S. Conference of Mayors.
	The message I want to leave with members of this committee
	today is that we wholeheartedly support UMRA. The good news is
	that Members of Congress, as well as the public and the press,
	are being notified about mandates before a vote takes place.
	Most importantly, we believe they act to establish a mechanism
	for holding members more accountable for how they vote on
	unfunded mandates.
	Unfortunately, there are still some loopholes in the act
	that are allowing some mandates to move unchecked through the
	legislative process. The Federal Government is also finding
	more creative ways to shift the cost of Federal programs to
	State and local governments. We are in favor of strengthening
	UMRA to close up the loopholes and shut down these Federal cost
	shifts.
	Mr. Chairman, I have been notified by members of the
	Conference staff of the critical leadership role that you
	played in the passage of UMRA. I understand you were the
	chairman of the board of Fairfax County, you were one of the
	key leaders of the National Association of Counties Unfunded
	Mandates Task Force, which played an important role in urging
	the passage of this legislation. I also understand that as a
	newly elected Member of Congress in 1995, you were one of the
	key co-sponsors of UMRA. On behalf of the Nation's mayors, I
	not only commend you for your past leadership but also for your
	continued commitment and outstanding support for State and
	local governments in the fight against unfunded mandates.
	Mr. Chairman, it is easy to understand why so many in
	Washington can get hooked on sponsoring unfunded mandates. It's
	a way of addressing national problems, but it offers them the
	best of both worlds. Congress can take credit for solving the
	problems and then send the bill to State and local governments.
	They never have to face the angry voters, as we do, to explain
	why there is a need to cut services or increase taxes to offset
	the cost of the mandates.
	Let me take some time to share a couple of examples of how
	these mandates are directly affecting Oklahoma City and my
	citizens. In our efforts to provide safer water, citizens often
	do not perceive the benefits of our capital improvements. They
	only see the added burden of the higher utility bills. Before I
	continue, I want to point out that as manger of a nationally
	acclaimed publicly owned water supply system, Oklahoma City
	does support public health protection that is based on sound
	science.
	Nevertheless, when the cost of passing new Federal mandates
	are included in our utility rates, the economic rates are
	greater on the low and moderate income customers. In 1996, when
	Congress passed additional amendments to the Safe Drinking
	Water Act, the process the EPA uses to develop drinking water
	standards accelerated, but no Federal money was sent to assist
	us in implementing these new regulations.
	Although Oklahoma City is blessed with one of the best raw
	water supplies in the Nation, it still must make substantial
	changes to its treatment processes, to remove an additional 25
	to 35 percent of total organic carbon. Oklahoma City is now
	constructing over $10 million in improvements to its water
	treatment plants and will require an additional $1.5 million
	annually in operating costs, just to meet the newest
	regulations for total organic carbon removal.
	Another Federal mandate the mayors feel strongly about is
	the Individuals with Disabilities Education Act, which was
	authorized in 2004. A commitment was made in the
	reauthorization to create a glide path to fully fund IDEA by
	2011. However, including the President's increase for fiscal
	year 2006 in his proposed budget, appropriations for IDEA would
	still be $3.6 billion below what the reauthorization calls for
	in the glide path. This is a good example of not an unfunded
	mandate, but an underfunded mandate.
	In closing, Mr. Chairman, we believe we have made a lot of
	progress with UMRA. However, we believe the law needs to be
	strengthened to capture those mandates that are falling through
	the cracks and other Federal actions that continue to impose
	huge financial burdens on State and local governments. Mr.
	Chairman, members of the committee, cities across the United
	States are hurting. Let me give you an example. Our personnel
	costs, and remember, as a city government, we are largely
	driven by personnel costs, our personnel costs are rising at
	the rate of about 6 percent a year. There is no way that our
	sales tax and property taxes are going to increase to cover
	that amount.
	As a result, we are forced to lower expectations, forced to
	lower the services that we deliver. This year, in our 2006
	budget, we are going to lower our services to our citizens 1\1/
	2\ percent. And this is a good year. We are in an economic boom
	time right now in Oklahoma City, but we cannot keep up as long
	as we have unfunded and underfunded mandates and at the same
	time, continual erosion of our tax base.
	I understand we are at the bottom of the food chain a lot
	of times when it comes to funding. But cities across the United
	States should not feel compelled to hire lawyers and lobbyists
	to protect themselves from their own legislatures at the State
	level and their own legislatures at the Federal level. That is
	what is happening.
	I appreciate the opportunity you have given me to address
	the committee on UMRA. I look forward to working with you on
	other inter-governmental relationships at the State level and
	the Federal level. I have great respect for the work that you
	all accomplish here in Washington. Thank you for having me here
	today.
	[The prepared statement of Mayor Cornett follows:]

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	Mr. Davis. Thank you very much, thank all of you very, very
	much.
	Mr. Connolly, let me start with you. I think in the
	prepared testimony we note that Fairfax County spent $540
	million to comply with Federal mandates, $148 million
	reimbursement. Basically that means a $395 million deficit in
	terms of what the Federal Government is forcing you to do.
	Now, maybe the county would have chosen to do some of these
	things, maybe they would not have. But these are priorities set
	from Washington that we tell you you have to pay for. What does
	$395 million, how many cents of that is a tax rate?
	Mr. Connolly. If we divide that by 17.9, this year, that
	would be----
	Mr. Davis. I won't ask you to do that.
	Mr. Connolly [continuing]. That would be about 20 cents on
	our tax rate.
	Mr. Davis. So that's a pretty good--and the tax rate is
	going down to what this year?
	Mr. Connolly. It will go down to at least $1.03 from $1.13.
	Mr. Davis. So that's almost 20 percent?
	Mr. Connolly. Very significant.
	Mr. Davis. And in local jurisdictions in Virginia, and I
	don't know what it's like in Oklahoma City or Maryland, or Lake
	County, IL, property tax is basically it for you. You don't
	have a lot of options, do you?
	Mr. Connolly. No, sir, the only source of revenue that we
	outright control is the real estate tax rate. All other sources
	are capped or controlled outright by the State of Virginia.
	Mr. Davis. What's the story in Illinois, Mr. Kyle? Is it
	similar?
	Mr. Kyle. Yes. We also have tax caps in the State of
	Illinois, Mr. Chairman.
	Mayor Cornett. Mr. Chairman, most of our money comes from
	sales tax in the State of Oklahoma. That's how municipalities
	are largely funded.
	Mr. Davis. So basically you're moving it from a progressive
	income tax that the Federal Government paid for to a much more
	regressive taxation at the local level, which is sales taxes
	and property taxes, which everybody--similar situation in
	Maryland?
	Mr. Hurson. Yes, it is. We have a fairly progressive income
	tax structure in Maryland. But at the same time, moving all
	these costs down to the States, to a situation where we have
	balanced budget requirements in most of the States, it means
	that $1 that we're spending on this is going to be taken away
	from some other program somewhere else.
	Mr. Davis. OK, thank you very much. I think that puts it in
	perspective, what we're talking about. I know when I was in
	local government, we always tended to just put on the bill the
	Federal Government sent us as just an additional bill, I'm not
	suggesting you do that. [Laughter.]
	But it does bring home. What is the problem with State
	mandates, Mr. Connolly?
	Mr. Connolly. I am so glad you asked, Congressman Davis.
	[Laughter.]
	Mr. Davis. This was not rehearsed, by the way.
	Mr. Connolly. I would say that the State mandates, for our
	county including education, would actually exceed the Federal
	burden. We think that if a State paid its bills or lifted its
	mandates, we could probably reduce our tax rate another 20
	cents or so.
	Mr. Davis. So if 20 percent of your budget is dictated but
	unfunded from the Federal Government, another 20--that makes
	you basically a tax collector.
	Mr. Connolly. Yes, in many ways, that's right. [Laughter.]
	I can give you even one little example, and I know with
	respect to Federal incarceration, it does apply to States
	sometimes. But in the Commonwealth of Virginia, for example, in
	Fairfax County, for us to incarcerate a prisoner costs $125 a
	day. And once someone is convicted of a State crime, the State
	takes its time about picking that prisoner up and taking them
	to a State penal institution, and meanwhile the State only
	reimburses us $14 a day. That's called an outright unfunded
	mandate.
	Mr. Davis. Pretty good deal.
	Mr. Kyle, let me ask, one of the problems with UMRA is that
	it allows for death by 1,000 cuts. If you are underneath the
	review threshold, you can have an unfunded mandate, hundreds of
	them that go down to State and local governments, but they
	don't total enough, any one by itself, to be subject to the
	review that we would get under the act.
	Should we look at the threshold? Should the law require a
	review of the compounding cost of multiple mandates on State
	and local governments?
	Mr. Kyle. Yes, most definitely, Mr. Chairman. And to also
	piggyback on what Mr. Connolly was saying, we reflect some of
	that also with the Medicaid program through States, where we
	are required--in Lake County, IL, we run Winchester House,
	which is primarily a senior facility, a nursing home if you
	will. With the various cuts in Medicaid, the difference in the
	funding that Medicaid provides is quite inadequate in what we
	are able to provide as far as quality health care. So there is
	a major gap in those services.
	However, we are required by law to provide adequate quality
	health care and medical services to those individuals. So there
	is a great gap of difference between the appropriations and the
	budgeted amount.
	Mr. Davis. Mr. Hurson, let me ask you a question, and you
	can include your answer to that. Medicaid is just killing the
	Virginia budget, it's forcing them to force more unfunded
	mandates on the States as they pay for this, which is probably
	the largest--it's partially funded, but as you know, the impact
	on State government, what's happening in Maryland with that?
	Mr. Hurson. Medicaid is the Pac-Man of State budgets. It is
	the thing that is absolutely eating away at every State budget.
	It is in many States now becoming the largest expense, even
	over education. A lot that is driving that is mandates from the
	Federal Government. It is not a program, people act like it's a
	partnership that we can choose to participate in. Not any more.
	Medicaid is for many States the sole thing that takes care of
	many of our uninsured.
	So Medicaid is a major expense at the State level. With
	requirements that we recently got in the Medicare Part D
	program to fund a lot of the eligibility determinations for
	Medicare Part D, that is in and of itself a huge expense for
	States, that is again an unfunded mandate.
	Just to respond quickly to your other question, I would
	applaud the chairman's call for OMB to really aggregate all of
	those unfunded mandates that never meet the threshold. Because
	altogether, they cause enormous impacts upon the States. I
	think that's an excellent suggestion to try to aggregate all
	the ones that don't reach up to the threshold, because they
	have impacts nonetheless, even though they don't pass the
	threshold.
	Mr. Davis. Thank you. There was in fact in the Medicare
	Part C and D that we--there was a huge clawback provision. I
	don't think Members were even aware of it. I appreciate your
	raising that.
	Mr. Hurson. Right. The clawback provision is the first of
	its kind, where the States are actually going to be paying for
	Federal programs.
	Mr. Davis. It's how we hold the costs down and look tough
	to our Members trying to sell it.
	Mr. Van Hollen.
	Mr. Van Hollen. Thank you, Mr. Chairman. Thank you all for
	your testimony. I also want to welcome my old friend Gerry
	Connolly. As he said, we worked many years together on the
	Senate Foreign Relations Committee staff. Now he's doing a
	great job over in Fairfax County.
	Let me just ask a question of Mr. Hurson, actually Chairman
	Davis asked a question regarding Medicaid. My question was, as
	you probably know, the President has a proposal that is in
	formation that would essentially result in a $45 billion
	reduction over 10 years in Medicaid payments to the States. You
	referenced that in your testimony.
	Just taking our State of Maryland as an example, what
	impact would that have on Maryland budget, the decisions that
	have to be made in the Maryland legislature?
	Mr. Hurson. It's going to have a huge effect, Congressman.
	Just to give you a small example, one of the things that's in
	the President's proposal is that they would start limiting what
	are called sort of indirect governmental transfers. We are
	facing in our State, in order just to keep our budget balanced,
	a massive cut in nursing home funding. One of the proposals
	that's been put on the table by folks prior to the President's
	proposal was for us to do a provider tax, which 30 other States
	actually do.
	Well, let me tell you, we've taken it off the table as a
	way to solve this problem, because frankly, because of the
	President's budget cuts. We see that direction of cutting back
	on Medicaid a direct impact upon States, where we are going to
	have to fill in the gaps. We can't leave people who are at 45
	percent of the Federal poverty level on eligibility in our
	State in the streets.
	We are going to have to find a way to pay for that out of
	State dollars.
	Mr. Van Hollen. Right. Given the fact, I don't know what
	the exact percentage is, but a great amount of the Medicaid
	budget, as we know, goes to people who are in nursing homes, in
	some cases people who spend down in order to become eligible
	for Medicaid. There has been discussion, clearly from the State
	perspective, I can understand this, about whether or not some
	of that spending more properly belongs in the Federal Medicare
	program. Could you comment on that from a policy point of view,
	not just as cost shifting point of view?
	Mr. Hurson. I think the States and the Federal Government
	at some point have to renegotiate our partnership on health
	care. Part of that renegotiation is going to be Medicare and
	Medicaid. But frankly, most of the elderly costs in this
	country are in the final stages of life, which often are taking
	place in nursing homes. The theory behind Medicare was that
	would be a Federal responsibility. Frankly, we all know that in
	fact, that has shifted to a Medicaid program, where people
	spend down and now it is frankly a State and Federal
	partnership. If we are ever going to solve the problem on the
	elderly in nursing homes, we are going to have to figure out a
	new relationship between the Federal and State governments.
	That is just inevitable.
	Mr. Van Hollen. Thank you, and thank you, Mr. Chairman. I'm
	going to apologize, I'm already late to a meeting. Thank you
	all for your testimony.
	Mr. Turner [presiding]. Thank you, Mr. Van Hollen. We
	appreciate all your testimony today on this important issue and
	the insight that you bring to the issue of unfunded mandates.
	One of the things we discussed with the last panel was the
	issue that under UMRA, there of course are estimates as to
	whether an action meets the threshold and/or whether or not an
	action would result in moneys that assist in the
	implementation. But I'm fascinated with the comparison of the
	actual experience and the estimates. We have the National
	Associations of Counties' estimation of what the financial
	impacts are.
	And I'm wondering two things. One, do State and local
	governments have the ability to, on a retrospective basis,
	quantify the costs associated with complying with the mandates
	that would be useful information on the Federal level. And two,
	at this point, do you have a mechanism with which to share that
	information other than obviously issuing the reports and coming
	to Congress, is there in the process a--we had the CBO
	statement of, well, this information is helpful to us as we
	estimate the future mandates. But are you really consulted, is
	there an opportunity for you to use information that you learn
	when a mandate's cost are actually being quantified, so that it
	will help you in the process in the future.
	Mr. Kyle. Thank you, Mr. Chairman. The National Association
	of Counties selected 30 counties from among those who responded
	as being representative of an entire Nation demographically,
	regionally as well as by population. These counties responded
	to an average of 6 out of 10 mandates which were listed in the
	survey. Their responses totaled over $1.5 billion, or $137 per
	person.
	Projecting the per capita figure across the entire Nation
	results in a figure which comes to $40 billion. Since this
	figure is based on an average of only six mandates per county,
	the actual costs could very well be a lot higher.
	Mr. Connolly. Mr. Turner, if I may, as we entered into the
	record, the snapshot survey which was generated by your
	committee, in collaboration with NACo, I would hope working
	with your new subcommittee we and other local governments could
	perhaps be more systematic at collecting data comprehensively
	about the cost of unfunded mandates. That is going to
	contribute to the dialog, hopefully, in this body, and in our
	State legislatures, about the impact of well-intentioned but
	unfunded mandates on our local taxpayers. Because when the cost
	burden is shifted, inevitably it filters down to the local
	government, because at the local government, we don't have a
	choice. We have to provide the services, we have to meet the
	mandates.
	As Mayor Cornett indicated, we either have to then offset
	that by cutting other services or raising taxes, neither of
	which is very palatable to our constituents or to us as
	policymakers.
	Mr. Hurson. Mr. Chairman, you will find on page 5 of our
	Mandate Monitor a listing of our estimate of what these
	unfunded mandates have done in terms of the $51 billion figure
	that we indicated. It's our sense as an organization that CBO
	works very well with groups like ours to do some estimates on
	what these mandates cost. And the collaborative process with
	CBO is working well in terms of that process.
	Obviously, that could be enhanced with an equal amount of
	cooperation with OMB. I think that's something that would be
	beneficial if we could work cooperatively with CBO and OMB to
	try to create a three-way discussion, if you will, about where
	these mandates are leading us and what their impacts are going
	to be. We do our best in trying to estimate it and CBO has been
	very helpful.
	Mayor Cornett. We have not actually conducted a study to
	determine the total cost of the mandates. It's obviously in the
	billions of dollars. There is little consistency, when you talk
	about city governments, what's unfunded, what's funded.
	Sometimes I think some of these matching programs almost become
	mandates by the time they get to us and our citizens imply to
	us that they definitely want us to fund it, they don't want to
	leave money on the table.
	My colleague, Mayor Daley of Chicago, is currently starting
	a grassroots campaign to try to determine a lot of these
	numbers that we can come up with and perhaps provide a more
	comprehensive figure for you in the future.
	Mr. Turner. I appreciate your efforts to clarify these,
	because having served as a mayor, one of the things I'm aware
	of is that the actual application can be much different than
	the science of estimating. Also when you get into the process
	of judicial interpretation of the requirements and how they are
	imposed, and what ultimately you are required to do. So it's
	important for us to continue the discussion not only in the
	process that we currently have, but in the look-back as to how
	they are being applied to your individual communities.
	Ms. Norton.
	Ms. Norton. Thank you very much, Mr. Chairman.
	Obviously everyone up here represents the same people you
	do, and we are inherently sympathetic with your testimony. I am
	more sympathetic than most, because my city has all of the
	unfunded mandates that you are talking about and then a
	colossal one. The District of Columbia is a city that is
	treated as a State. So the Federal Government claims to be our
	``State'' when it wants to be, but in fact makes us pay for
	State fundings that would send all of you under if you had to
	pay for the State roads and the State costs, for example, of
	special education, imagine where you would be left.
	So obviously I'm very much in sympathy with what you're
	saying, indeed, I have put into the record a statement
	indicating that when you have the peculiar unfunded mandates
	that we have as a city-state plus the unfunded mandates that
	we've heard about today there is a huge problem. To the credit
	of the chairman of this committee, and every member of the
	House of this region who are co-sponsoring a bill to correct
	the structural imbalance that the District of Columbia labors
	under because of the unfunded mandate that comes from being a
	State costs, in hearing your testimony, I can't help but
	believe I'm hearing you talk back to the Federal Government or
	at least to our statute, like ships passing in the night.
	I think it begins with the UMRA having over-promised. I
	remember it, I was in Congress when with great fanfare the
	Contract on America came forward and said, this is the end, we
	are here now, this is the end of unfunded mandates. Never has a
	piece of legislation been passed with more tongues in cheeks
	than this legislation was. We are here, to the credit of the
	chairman, to discuss what can be done about it.
	I have a question about what can be done about it. Because
	I'm really very doubtful about what can be done about it. All
	of you and your predecessors have testified that UMRA has done
	the most to bring these costs to the attention of us all. Hey,
	really? I don't think that it's mattered that these costs were
	brought to the attention of us all, if that's what it was meant
	to do, because I haven't seen a lot of response, if that was
	the point of the legislation.
	There seems to be a problem at two levels. I have a
	question about where you think the problem is most serious. One
	has to do with testimony that law is essentially observed in
	the breach, that we don't even do what we say we would do under
	the law. The other seems to be a difference between States and
	local governments on the definition of an unfunded mandate.
	This is very, very dangerous.
	I could see State and local governments actually opposing
	entire Federal laws that they really are for because they know
	it would be in the best interest of their people to have it. I
	can see people saying, let's say we were enacting the Safe
	Drinking Water Act for the first time saying, oh, no, we don't
	want it. Whatever happens, let the chips fall where they may,
	we know that we are going to get all these costs as a result of
	it. Somehow or the other, we have to come to an understanding.
	Mayor Cornett, in your testimony for example, you very
	honestly bring forward what the GAO has found. The GAO is
	considered by Members of Congress a very reliable and objective
	source. You cite that the GAO found that only, that of the
	bills passed in 2001 and 2002, only five contained costly
	mandates. And all of these were, the report found that only 5
	contained, of the 377 statutes, only 5 contained costly
	mandates, and all of these were mandates imposed on the private
	sector. If the chairman was here, I would ask him where is the
	private sector, because they really have something to complain
	about, according to the GAO, apparently.
	Then they found that in 1996 to 2000, there were 18 costly
	mandates that the Congressional Budget Office had identified as
	costly mandates. Two were imposed on State and local
	governments and 16 on the private sector. Well, you see, I'm
	confused, when I see the GAO saying this, and even in Mr.
	Cornett's testimony he goes on to complain about unfunded
	mandates after citing the GAO findings, are we dealing here
	with, as I began this question, two ships sailing through the
	night, that essentially this law does not work because it is
	not dealing with what you are talking about? Do you accept, in
	other words, the GAO evaluation that if you look at what the
	law says, literally, maybe so, but if you look at where the
	costs really are, we need some change in the law?
	Mayor Cornett. Ms. Norton, I think part of the answer is in
	the environmental issues, it seems to me that the Federal
	Government tries to take a cookie cutter approach and pretend
	that every city's water supply and the source of every city's
	water supply is similar or exact. And it's not. It forces
	cities like Oklahoma City, which has a very good water supply,
	to put in regulations that shouldn't be necessary. Those costs
	are directly attributed on to our citizens.
	I think that's an example of the type of governmental
	control that is best left to the local government, because they
	can deal with their specific water needs.
	Ms. Norton. You seem to be making an argument against
	Federal regulation of water. That's what I fear here. Because
	I'm not sure you really mean that. I understand what you mean
	about unfunded mandates. But I'm not sure you would mean that
	if regulations were required that would make the water for
	pregnant women safe, for example, that shouldn't be done.
	I'm trying to figure out, given what the GAO says, and
	their word isn't gospel, but given what they say, I'm trying to
	figure out whether we need to look at a more realistic
	definition of an unfunded mandate, given the experience we have
	had with the law or whether you believe that even given the law
	as it stands, the Congress is imposing on you unfunded
	mandates.
	Mr. Connolly. Ms. Norton, if I may, I take your point. I
	think UMRA was a good start, because we at least got, in a big
	way, really, the camel's nose under the tent in the discussion
	about what about the unfunded mandate here. I think the dilemma
	is one of intentions versus impacts. Let's stipulate that the
	intentions are almost always noble, the goals are very
	desirable. But the analysis feeding those intentions in the
	legislative process about impacts, what will it cost and who
	will bear those costs unfortunately is far less perfected than
	are the intentions.
	I think if we can move in an evolutionary way, using UMRA
	as a baseline and as a start to tighten up a sense of
	obligation for those who propose with good intentions, all
	right, but where is your analysis on the impacts, so that we
	understand what the State of Maryland, the State of Virginia,
	the State of Oklahoma, the State of Illinois, would have to
	bear in their localities in order to implement this, and what
	is our obligation as the Federal Government if we are going to
	require those noble standards, regulatory intent, whatever it
	may be. I think that would be a major step in the right
	direction.
	But I think UMRA is a good base from which to build.
	Ms. Norton. So you see us, just to summarize, we started,
	the first round was to get the costs up front. The second
	round, or to be using that information to at least close some
	of the loopholes or narrow the law somewhat, so we see how much
	of that works, all in an evolutionary way.
	Mr. Hurson. I think you put your finger on it. It's the
	issue of definitions. It's the issue of what is defined as a
	mandate. That is really the second phase of trying to really
	move UMRA, I think, in the right direction. This is really
	about, on so many levels, environment, health care,
	transportation, the relationship and the partnership between
	the Federal Government and the State and local governments.
	Understanding the contract and the partnership between us means
	understanding the definitions. That's where I think UMRA needs
	improvement. That is, what is a mandate, what is an unfunded
	mandate, and understanding--and you said it--definitions is key
	to that.
	Mr. Connolly. Ms. Norton, if I may, I want to go back to
	Mr. Waxman's definition of an unfunded mandate. While I agree
	with Mr. Hurson that's important, I don't know that it's rocket
	science. If there is a new standard, a new regulation or a new
	metric that I have to meet that you, the Federal Government,
	require of me, and you don't fully fund the implementation of
	that, as far as I am concerned the delta between what you fund
	and what I have to fund is an unfunded mandate.
	Mr. Kyle. Also if I might add, Congresswoman Norton, the
	dilemma, as you so eloquently put it, the loophole that we find
	here is that most of these mandates were enacted prior to UMRA.
	The Help America Vote Act, for example, enforces a
	Constitutional right, so it falls under an explicit exclusion
	from the definition of a mandate under UMRA. That's the dilemma
	that we find ourselves in.
	Ms. Norton. I understand what you're saying, given where we
	are, how dissatisfied you are with the law, it seems to me to
	go ex post facto, back in fact, to catch up might be
	impossible. If we could get some tightening going forward, it
	seems to me we would be making some progress.
	Mayor Cornett. If there is a change in legislation or
	regulation, if it's your idea, you pay for it, if it's our
	idea, we pay for it. [Laughter.]
	Ms. Norton. With that, I really ought to go, Mr. Chairman.
	[Laughter.]
	Mr. Davis [presiding]. Mr. Shays.
	Mr. Shays. Thank you, Mr. Chairman. Just one question. When
	the executive branch comes in and tells us they are reaching
	out to State, local, county and local governments for
	rulemaking issues, I wonder if you can share with us instances
	in which you are aware where agencies are reaching out to State
	and local governments to consult in early stages of drafting
	the rules? Can you give me an example or two of where this is
	happening?
	Mr. Davis. Would the gentleman yield? Are you asking
	basically if they have been consulted, or maybe your groups,
	maybe you can have a minute to confer with groups and see if in
	fact the executive branch is reaching out.
	Mr. Shays. So if you don't have an answer now, we would
	like one for the record.
	Mr. Kyle. I can say on behalf of the National Association
	of Counties, for the most part we have not been consulted in
	these areas.
	Mr. Davis. If you're not consulted, you end up paying for
	it.
	Mr. Kyle. Correct.
	Mr. Davis. If you're not in the room, that's where it ends
	up going.
	Mr. Hurson. On behalf of the State legislatures, I would
	say that in terms of homeland security, we have had an
	excellent relationship with that department in terms of them
	reaching out, in terms of rulemaking. We have had a fairly good
	situation with DHS and with EPA, at least this is what the
	staff is telling me, not reaching out to me down in Annapolis,
	but they are reaching out to the staff here in Washington.
	Mr. Connolly. Mr. Shays, I would agree, especially in the
	homeland security relationship that has, there has been a lot
	of consultation in part because Congress was wise enough to
	create a national capital region coordinator who has
	facilitated a lot of input from us in the National Capital
	Region. But you know, in other areas, frankly, the relationship
	is one of regulation, here are the regulations you must comply
	with. I don't think that the mentality is always very cognizant
	of, and here are the costs that go along with that regulation.
	That is your problem. I think that is kind of the mentality
	that all too often occurs.
	If we could shift that mentality, in what your committee is
	about today, if we could shift that mentality so that there
	actually is the requirement of the cognizance of the costs, I
	was saying earlier, I think the game here is intention versus
	impact. We can stipulate the attorney is almost always noble
	and good, but the impacts can be quite severe. You are asking
	local taxpayers all too often to bear that burden of your good
	intentions.
	As the Mayor pointed out, if it's your idea, you pay for
	it, and if it's our idea we'll pay for it.
	Mr. Shays. Thank you, Mr. Chairman.
	Mayor Cornett. The EPA has some level of communication with
	the U.S. Conference of Mayors, and mayors in general. We don't
	feel like it is enough, we feel like it should be a higher
	level of communication.
	Mr. Shays. Thank you.
	Mr. Davis. Thank you. All that will be part of it as we
	move to the next stage. This will not be our last hearing on
	this. I think Mr. Turner has expressed a willingness to try to
	pursue this at the subcommittee level, and we will at the State
	level.
	This has been very helpful to us and we appreciate all of
	you coming forward with your testimony today and answering our
	questions on behalf of each of you and your organizations. We
	thank you.
	Does anybody want to add anything?
	Mr. Connolly. Thank you for your leadership, Mr. Davis, in
	this issue.
	Mayor Cornett. I would also like to thank you, Mr. Davis.
	The only thing I would add is that these costs are really
	filtering down to our citizens in some very basic services that
	are not being provided at the level they need to be provided.
	Thank you for your time.
	Mr. Davis. Thank you very much. Hearing is adjourned.
	[Whereupon, at 4:10 p.m., the committee was adjourned.]
	[The prepared statements of Hon. Elijah E. Cummings and
	Hon. Eleanor Holmes Norton and additional information submitted
	for the hearing record follow:]

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