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+ - IS UNCLE SAM STILL PASSING THE BUCK? THE BURDEN OF UNFUNDED MANDATES ON STATE, COUNTY, AND CITY GOVERNMENTS
+
+[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
+
+ [GRAPHIC] [TIFF OMITTED] T0145.006
+
+ [GRAPHIC] [TIFF OMITTED] T0145.007
+
+ [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:]
+
+ [GRAPHIC] [TIFF OMITTED] T0145.009
+
+ [GRAPHIC] [TIFF OMITTED] T0145.010
+
+ [GRAPHIC] [TIFF OMITTED] T0145.011
+
+ [GRAPHIC] [TIFF OMITTED] T0145.012
+
+ [GRAPHIC] [TIFF OMITTED] T0145.013
+
+ [GRAPHIC] [TIFF OMITTED] T0145.014
+
+ 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:]
+
+ [GRAPHIC] [TIFF OMITTED] T0145.015
+
+ [GRAPHIC] [TIFF OMITTED] T0145.016
+
+ [GRAPHIC] [TIFF OMITTED] T0145.017
+
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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:]
+
+ [GRAPHIC] [TIFF OMITTED] T0145.026
+
+ [GRAPHIC] [TIFF OMITTED] T0145.027
+
+ [GRAPHIC] [TIFF OMITTED] T0145.028
+
+ [GRAPHIC] [TIFF OMITTED] T0145.029
+
+ [GRAPHIC] [TIFF OMITTED] T0145.030
+
+ [GRAPHIC] [TIFF OMITTED] T0145.031
+
+ 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:]
+
+ [GRAPHIC] [TIFF OMITTED] T0145.039
+
+ [GRAPHIC] [TIFF OMITTED] T0145.040
+
+ [GRAPHIC] [TIFF OMITTED] T0145.041
+
+ [GRAPHIC] [TIFF OMITTED] T0145.042
+
+ 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:]
+
+ [GRAPHIC] [TIFF OMITTED] T0145.043
+
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+
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+
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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:]
+
+ [GRAPHIC] [TIFF OMITTED] T0145.051
+
+ [GRAPHIC] [TIFF OMITTED] T0145.052
+
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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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