[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

                                 ______

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                     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:]

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    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:]

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    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:]

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

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

                  STATEMENT OF JOHN D. GRAHAM

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

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

                STATEMENT OF DOUGLAS HOLTZ-EAKIN

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

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

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

                    STATEMENT OF ANGELO KYLE

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

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

                  STATEMENT OF GERRY CONNOLLY

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

                    STATEMENT OF JOHN HURSON

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

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

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

                   STATEMENT OF MICK CORNETT

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

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

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