An important early victory - limitations on unfunded federal mandates - Column

Should the federal government have power to force increases in state and local taxes and in consumer prices?

The new Congress answered that question with a resounding "no" when it addressed the issue of unfunded mandates, an official designation that tends to obscure the high stakes involved for individual Americans.

Congress had long used such mandates to force the public and private sectors not only to take specific actions the legislators deemed important but also to pay the costs. That arrangement has enabled the federal lawmakers to claim political credit for results without having to trouble themselves with the matter of financing.

Indeed, such considerations as the practicality of the directives, compliance costs, and financial status of the affected parties have generally been secondary.

Says Sen. Dirk Kempthorne, R-Idaho, a former mayor of Boise and a leader of the move to end this particular legislative gambit: "Unfunded federal mandates are passed on as higher local taxes or reduced local services. Businesses pass their share of unfunded federal mandates on to consumers through higher costs."

Across the nation, governors, mayors, state and local legislators, school-board members, and other officials on the receiving end of unfunded mandates demanded change in a federal policy that excluded them from the decision-making process but forced them to pay the bills.

The demand for reform was bipartisan-leaders of the movement included Democratic Mayor Richard M. Daley of Chicago.

And no wonder. At a time when cities are desperately strapped for revenue, unfunded mandates drive their annual budgets up at least 12 percent, according to one study.

And the private sector has seen the impact of countless rules and regulations imposed by Congress on the smallest to the largest businesses. The problem became so severe that the nation's largest broad-based business organization, the U.S. Chamber of Commerce, made unfunded-mandate reform a top priority. Noting that business suffers doubly under such dictates--as taxpayers who must help pay higher costs imposed on state and local governments and as the direct targets of mandates--Chamber President Richard L. Lesher said, "We will commit all necessary time and resources to ensuring its passage early in this session."

As the leading representative of business in the reform drive, the Chamber insisted from the outset--and actually wrote the applicable legislative language--that the private sector be covered in reform efforts.

Kempthorne recognized that key contribution, made on behalf of all business, when he wrote to the Chamber after passage of his bill: "I am grateful for the Chamber's help in writing the private-sector provisions included in the bill." The senator said that the organization's assistance in writing the measure and its strong endorsement of the final product "were key reasons why the bill attracted 62 [senators as] cosponsors.... The Senate passage of S.1 shows the U.S. Chamber of Commerce is an effective force in Washington."

As approved by both houses, the new rules on mandates would require Congress to determine the cost of compliance with federal laws applying to the public and private sectors. If the expected cost is more then $50 million for state or local governments, Congress would have to provide full funding. If a proposed mandate fails to include a cost estimate and funding, it could be ruled out of order. The Congressional Budget Office would develop both immediate and long-range cost implications on consultation with state and local officials.

Under the Senate bill, any measure that would impose a cost of more than $200 million on the private sector would have to include a CBO analysis of its effects on the general economy, productivity, jobs, and U.S. trade. Any legislation lacking such an analysis could not come to a vote.

The House set a $50 million threshold for the private-sector analysis, and that was among the differences that the House and the Senate were working out in drafting a single bill for both houses to endorse.

The next stop is the desk of President Clinton. Although the mandate problem took root and flourished while his fellow Democrats controlled Congress, he has indicated that he has read the 1994 election returns closely and is receptive to the mandate-reform bill.

The public- and private-sector leaders who started this reform battle when the odds were strongly against them can be proud of this ultimate victory.

COPYRIGHT 1995 U.S. Chamber of Commerce
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