[Congressional Record Volume 141, Number 16 (Thursday, January 26, 1995)]
[Extensions of Remarks]
[Page E183]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                      UNFUNDED MANDATES REFORM ACT

                                 ______


                          HON. JOHN D. DINGELL

                              of michigan

                    in the house of representatives

                       Wednesday, January 25, 1995
  Mr. DINGELL. Mr. Speaker, as the House continues to debate H.R. 5, 
the Unfunded Mandates Reform Act, I think it is important that we 
consider some of the insights discussed in an article which appeared in 
the Washington Post on January 22.
  I commend this article to my colleagues and hope that reflection on 
the facts will yield a more common sense mandates relief bill.
              [From the Washington Post, January 22, 1995]

Governors Bite Helping Hand in Mandates Fight--Federal Payments, Breaks 
                       On Taxes Subsidize States

                            (By Dan Morgan)

       California Gov. Pete Wilson (R) has scored political points 
     with voters and fellow governors by blasting the federal 
     government for making his state pay the medical, educational 
     and correctional costs of illegal immigrants--who he says are 
     in California only because of the failure of federal 
     immigration policy.
       Wilson contends, Washington should pick up the bill.
       But when it comes to paying California's 10 percent share 
     of the costs of rebuilding public facilities after the 1994 
     Los Angeles earthquake, Wilson is the deadbeat. California 
     voters in June defeated a ballot initiative to raise the 
     money. Wilson, who promised to cut state taxes despite a 
     budget deficit, owes Washington $90 million and has yet to 
     say how he will come up with the money.
       The federal government, by contrast, has shelled out or 
     obligated nearly $1.2 billion of $2.8 billion promised for 
     repairs of facilities from buildings to sewer lines, and 
     Wilson is seeking another $500 million in federal relief as a 
     result of the recent mudslides and floods in the state.
       Such broad-based federal assistance to every state 
     represents the other side of the debate about the financial 
     burdens the federal government places on states, counties and 
     cities. While governors and the Republican majority in 
     Congress press for legislation that will make it more 
     difficult for Congress to impose rules and regulations that 
     cost local jurisdictions money, local governments continue to 
     take for granted enormous federal subsidies and benefits.
       Federal grants to state and local government this year will 
     total $230 billion, and will account for nearly a fifth of 
     state budgets. The payments include the $5 million allocated 
     to the ``distance learning and medical link program'' 
     benefiting rural communities and the $89 billion it pays out 
     under Medicaid for the medical care, rehabilitation and 
     nursing home bills of poor or, elderly state residents.
       The tax exemption of state and municipal bonds, and the 
     deductibility of most state and local taxes under federal 
     income tax law will be worth another $68.9 billion in 1995, 
     according to the Office of Management and Budget.
       By issuing bonds on which interest payments are exempt from 
     federal taxes, local jurisdictions can pay less interest to 
     borrowers than if the income were taxed. Allowing taxpayers 
     to deduct local income and property taxes make it easier for 
     cities, states and counties to raise revenues.
       In addition, the federal government subsidizes local 
     governments in dozens of hidden ways, such as allowing states 
     to shift parts of existing health programs into Medicaid, 
     qualifying them for federal matching funds.
       This is the part of the story that Democrats and some 
     Republicans in Congress say is not getting through in the 
     debate over unfunded mandates, which are federal requirements 
     that states take certain actions but for which the federal 
     government provides no money.
       ``The issue of unfunded mandates is very legitimate,'' said 
     Rep. David R. Obey (D-Wis.), ranking member of the House 
     appropriations Committee. ``But you have to distinguish 
     between what's legitimate and what isn't.''
       Obey said it was proper for states such as California, 
     Florida, Texas and New York to demand the federal government 
     do more to defray the financial impact of refugees and 
     illegal immigrants.
       In fact, the Justice Department has begun expediting 
     payments of $33.4 million to California, and smaller amounts 
     to six other states, to help cover costs of imprisoning 
     illegal immigrants, the Los Angeles Times reported in 
     October.
       But Obey said Wilson ``ought to be ashamed of himself 
     coming here with his hand out for federal aid because [flood 
     victims in his state are suffering the consequences of 
     decisions by local zoning and building authorities.''
       Obey, who said he was fighting mad about California's 
     slowness in coming up with its share of earthquake money, 
     said this week he will introduce legislation that would 
     replace the current practice of direct federal aid for 
     disasters with a private insurance plan into which states 
     would contribute their own money, with premiums based on a 
     risk assessment.
       Some legislators say the implications for local 
     jurisdictions of the GOP-backed constitutional amendment to 
     require a balanced federal budget by 2002 are far more dire 
     than whatever relief a reduction in unfunded mandates might 
     provide.
       ``To think, as many Republicans do, that the federal 
     government can just get out of all of this--nothing in health 
     care, nothing in welfare, nothing in highways and let the 
     states and locals go off on their own--that's crazy. You pass 
     a balanced budget amendment, let me tell you, there won't be 
     any flood aid anymore and there won't be any earthquake aid. 
     Maybe that's what we want to do,'' House Minority Leader 
     Richard A. Gephardt (D-Mo.) said recently.
       If Congress does pass a balanced budget amendment and 
     begins implementing it with deep spending cuts, states would 
     be hard pressed to maintain the same level of services 
     without increasing taxes substantially, according to data 
     published in the current issue of Newsweek.
       Louisiana, home state of Rep. Bob Livingston (R), chairman 
     of the House Appropriations Committee, would have to raise 
     its taxes by 27.8 percent to keep up.
       Other poor states such as Mississippi and Tennessee would 
     not be far behind. Richer states, including Maryland and 
     Virginia, would feel relatively little effect.
       ``We as a nation collectively decide to achieve a certain 
     objective, which can be paid for at the national level or in 
     some combination of the state and local level,'' said Robert 
     D. Reischauer, director of the Congressional Budget Office.
       The real issue, he added, is whether the federal government 
     is imposing obligations on local jurisdictions which they 
     would choose not to provide on their own.
       In the case of laws requiring local jurisdictions to meet 
     certain environmental, safety or health standards, the 
     federal government has often backed up its mandates with 
     large sums of money covering most, if not all, of the costs.
       Since passage of the Clean Water Act of 1972, the federal 
     government has spent more than $60 billion on local water and 
     sewer projects. More recently, the federal crime bill passed 
     last year calls for the federal government to spend billions 
     over six years to pay for hiring 100,000 new police officers 
     and building more prisons.
       Although governors have been complaining about rising costs 
     of the Medicaid health program for the poor, the federal 
     government pays nearly 60 percent of the overall costs and, 
     in the cases of poor states, as much as 79 percent.
       Beginning in the late 1980s, states were confronted by 
     slackening tax revenues and recession-driven demands on 
     social services. Many responded not by tightening belts but 
     by using a loophole in Medicaid rules to extract billions of 
     additional federal Medicaid dollars from Washington.
       Federal Medicaid payments to states under an obscure 
     program that subsidizes hospitals treating large numbers of 
     low-income patients went from $300 million in 1989 to $10.8 
     billion in 1992, while there was little increase in state 
     money going into health care.
       New Hampshire, for example, used the no-strings-attached 
     federal money to prop up the state budget and avoid imposing 
     new taxes.
       An August General Accounting Office report concluded some 
     states ``used illusory approaches to shift the costs of the 
     Medicaid program to the federal government.''
       Many other benefits the states receive from the federal 
     government are not readily apparent, but are well known to 
     governors and county executives.
       For example, the federal government returns half of the 
     revenues it receives from the sale of minerals, timber and 
     other commodities on public lands--a total of $1.3 billion a 
     year--to states, counties and local road and school 
     districts. Portions of what is left is allocated to fighting 
     fires, killing predators and eradicating troublesome weeds 
     such as the creosote bush.
       People should not be ``slapping [Washington] with one hand 
     while they have the other hand out,'' a House Democratic 
     congressional aide said.


     

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