[Congressional Record Volume 141, Number 15 (Wednesday, January 25, 1995)]
[Extensions of Remarks]
[Pages E177-E178]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                            FEDERAL MANDATES

                                 ______


                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                       Wednesday, January 25, 1995
  Mr. HAMILTON. Mr. Speaker, I would like to insert my Washington 
Report for Wednesday, January 25, 1995 into the Congressional Record.
                            Federal Mandates

       Local officials and small business owners in Indiana often 
     tell me of the difficulty they have paying for unfunded 
     federal mandates. One of their top priorities is to limit the 
     ability of Congress to shift costs to businesses or state and 
     local governments by requiring them to meet certain federal 
     standards. I agree. Congress is responding to these concerns 
     by considering a bill this week in both the Senate and the 
     House to limit the practice of imposing unfunded federal 
     mandates. This bill is similar to legislation I cosponsored 
     in 1993.
       In the past, state and local governments have been told 
     they must do things such as provide safe drinking water, 
     reduce asbestos hazards, or impose tough criminal penalties. 
     Businesses were required to improve workplace standards, 
     protect their customers from fraud or abuse, and comply with 
     numerous environmental regulations. The objectives of these 
     federal requirements are almost always worthy: clean water, 
     safer roads, trustworthy banks, or consumer protection. But 
     collectively they often drain funds from local governments 
     and discourage business growth. For example, compliance with 
     the Clean Water Act is expected to cost state and local 
     governments $32 billion this year. By one estimate, 
     compliance with twelve other federal mandates will cost $33.7 
     billion over the next five years. In all, federal mandates 
     consume an average of 12.3% of local revenue. In the private 
     sector, an EPA study found that environmental compliance 
     costs can at times exceed profits for some small businesses, 
     including many dry cleaners, truckers, farmers, and wood 
     finishers.
       Unfunded mandates have imposed costs and inflexible rules 
     on governments and business. They often dictate priorities to 
     those who must comply without considering their views. But 
     since many of the laws and regulations in question prevent 
     discrimination, promote worker safety, and protect health, 
     safety, and the environment, the proposals to reduce unfunded 
     mandates must be approached with great care. The challenge is 
     to alleviate the financial burden of unfunded mandates 
     without letting the worthy objectives slip away.


                          federal budget cuts

       The major impetus behind growing federal mandates is the 
     federal budget deficit. In the 1960s and 1970s, federal money 
     to state and local governments grew steadily as a percentage 
     of state and local outlays, peaking at 27% in 1978. More 
     recently, the federal government's response to budget 
     deficits has been to reduce its share of state and local aid 
     to about 18% of their budgets. But mandates did not decrease, 
     and local costs escalated.


                          congressional action

       There is broad support in Congress to curb unfunded 
     mandates. At a minimum, the House and Senate should be 
     required to take a separate vote on any measure that would 
     place costs on state or local governments.
       Without such a vote, the House bill's ``no money, no 
     mandate'' provision would require the federal government to 
     provide funds for new mandates. Before Congress takes action 
     on a bill, the Congressional Budget Office (CBO) would have 
     to determine if the costs of the proposed legislation would 
     exceed $50 million for states and localities, or $100 million 
     for the much larger private sector. For bills that exceed 
     these thresholds, any one Member of Congress could demand a 
     separate vote on whether or not to impose an unfunded 
     mandate.
       In addition, federal agencies would be prohibited from 
     imposing unauthorized costs on states and localities when 
     issuing new regulations. There would also be reports to 
     Congress on the costs incurred by state and local governments 
     and the private sector in meeting existing mandates.
                               drawbacks

       There are, however, several drawbacks to any blanket 
     prohibition on federal mandates. First, civil rights 
     advocates fear restrictions on mandates could gut 
     constitutional rights and anti-discrimination laws. Thus, the 
     measure should not apply to laws protecting constitutional 
     rights. It should also exempt laws to protect against fraud, 
     provide emergency assistance, and protect national security. 
     Second, eliminating mandates may make it more difficult to 
     apply worthy existing health and safety standards. Third, 
     protection from mandates should apply equally to the public 
     and private sector. For example, local governments should not 
     be exempt from labor safety laws just because the federal 
     government does not subsidize their implementation. Fourth, 
     the analysis of mandates should include potential benefits as 
     well as costs. It would be shortsighted to abolish public 
     health requirements that pay for themselves many times over 
     in long-term health care savings. Fifth, estimating the 
     effect of complex legislation is extremely difficult. 
     Calculating direct and indirect costs of a mandate is so 
     exacting that analysts will be hard-pressed to present 
     accurate figures.
       While this bill is not perfect, it is a good start in 
     dealing with the complex problem of unfunded mandates. It can 
     and will be improved over time. A major flaw in the bill is 
     that it delays taking effect until October. We should curb 
     unfunded mandates now, not later.
                        [[Page E178]] conclusion

       The unfunded mandates bill will cause Congress to think 
     twice before shifting costs to local governments and 
     businesses. It will shift power from the federal government 
     to the states, and provide businesses and local officials a 
     forum to discuss the cost-effectiveness of rules with federal 
     regulators before rules take effect. These costs will now be 
     considered as an integral part of the legislative process. 
     Members who approve legislation without funding will be 
     required to explain their actions to those faced with the 
     costs of compliance.
       Government that works better and costs less must consider 
     all costs, including those incurred by the private sector, 
     and encourage cooperation among all levels of government. We 
     accomplish little if we balance the federal budget with 
     unfunded mandates on the backs of others. Enactment of 
     unfunded mandate legislation will be an important step in 
     improving the performance of government.
     

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