An unfunded mandate is a law or regulation that requires action but does not provide funding. This places a financial burden on lower levels of government and taxpayers. The Unfunded Mandates Reform Act (UMRA) was enacted in 1995 to prevent this, requiring analysis and funding for mandates that cost over $50 million. UMRA also requires consultation with state and local governments on proposed legislation.
An unfunded mandate is a statute or regulation that requires a state or local government, or individuals or organizations, to take certain actions, but does not provide money to meet the requirements. When a federal government enforces a law or regulation without the necessary funds, for example, it becomes the responsibility of the state or local government to pay for the implementation of the law. In the end, it’s the local taxpayers who end up footing the bill.
A prime example of an unfunded mandate is a national election. Each state administers elections for its residents. While these elections result in the appointment of federal officials, individual states pay the cost of running local elections.
Unsurprisingly, these orders are a hot topic among leaning politicians. Many believe that federally mandated laws should require federal funding of those laws. They believe unfunded mandates place an unfair burden on lower levels of government, creating huge and unmanageable expenses for state and city governments.
Some politicians complain that much of a city’s budget is determined by the federal government, rather than local government. They say unfunded mandates create such localized financial stress that local governments are unable to create many beneficial programs or reduce taxes for residents. They also claim that these have the effect of taking control out of the hands of the local government.
Other politicians have a different view of unfunded mandate costs. They say local government officials have more control over spending than they care to admit. For example, a federal law may require a state to pay a percentage of the cost of implementing that law, while still giving local government a good deal of choice in determining what services to provide. If the local government chooses to provide very expensive services, the expense for that state could be quite high. Therefore, some politicians argue, it is individual state spending that causes problems.
Many politicians who disagree with limiting unfunded mandates believe that doing so would go against the ties that bind us together as a country. They argue that local governments should pay some or all of the cost of implementing local law. Others agree the concept is unfair, but don’t believe unfunded mandates cause budget problems for most local governments.
On March 15, 1995, the Unfunded Mandates Reform Act (UMRA) was enacted, establishing procedures to prevent congress from charging states without allocating funds. UMRA requires review of any bill expected to cost state, court or local governments more than $50 million. The Congressional Budget Office (CBO) must perform this analysis. The same type of analysis is required for bills expected to cost the private sector $100 million or more.
If a mandate is projected to cost lower levels of government or the private sector more than $100 million, House and Senate committees are required to show where the funding to offset these costs will come from. If a committee fails to provide this information, the bill may be removed from consideration. However, a majority vote can keep such a bill alive, resulting in an expensive unfunded mandate.
Additionally, UMRA requires consultation with state, local and judicial governments on any proposed legislation or regulation that may include an unfunded mandate. Evaluations must be performed for such proposals. If assessments are not performed, the particular law or regulation is subject to judicial review.
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