The Empire Page

“Mandates,” those actions by one level of government that require other levels of government to provide new or expanded levels of government services - - often with added costs - - have long been a source of friction.  “It would be difficult to find an issue that sparks more resentment among local officials than that caused by State mandated expenditures.”[1]

In his 1977 address to the Legislature, New York Governor Hugh Carey talked about the unfairness of the State’s enactment of unfunded mandates on local governments.  In January of this year, some thirty plus years later, Governor David Paterson echoed that sentiment and vowed to relieve the burden on local governments.[2]  During the past thirty years, studies were done, and recommendations were made at both the State and federal level to ameliorate the burden of unfunded mandates. 

The majority of states enacted some form of mandate cost reimbursement or outright prohibition against enactment.  In New York, a fiscal note process was established in 1984 in the belief that knowledge about adding fiscal burdens to local governments would make the State less likely to enact mandates.[3] 

Renewed Effort

This year, Governor Paterson issued Executive Order Number 17 on April 27, 2009, which prohibited Executive branch agencies under his control from recommending, proposing, publishing or submitting legislation or regulations containing a mandate without first analyzing their impact on local governments.[4]  The analysis includes the fiscal impact of the proposed mandate using a cost benefit analysis, documents and other statements from the affected local governments.  The analysis must also include proposed sources of revenue.[5]   Further, the Governor put the Legislature on notice that he would not sign any bill that does not at least take into consideration the fiscal impact that the proposed legislation would have on local governments.[6]   However, legislation that is necessary for protection against an urgent threat to the public’s health or safety can be proposed without first taking into account the fiscal impact, as long as a fiscal note is prepared promptly after the legislation is enacted.[7]  The order also calls for State agencies to review their rules and regulations before December 1, 2009, and produce a report discussing those that could be changed to provide attenuation of mandates and property taxes in New York.[8] 

It is too early to know if this action will have any real impact on the Legislature’s ability or appetite to pass bills that add or shift costs to local governments.  The Government Law Center of Albany Law School has begun to take a comprehensive look at the status of states mandating new or expanded responsibilities on local governments.  This article provides some initial findings and provides a context for the current efforts underway in New York.

A Legacy of Mandates

Studies done in the late 1970s and early 1980s showed New York State had the dubious distinction of imposing more mandates on its local governments than any other state.  The U.S. Advisory Commission on Intergovernmental Relations looked at mandates by broad functional categories and concluded that New York imposed the most mandates of any state - - in 60 out of a possible 77 categories (West Virginia was lowest at only 8).[9]  In 1981, a State legislative commission identified over 2,600 existing mandates on county governments alone.[10]  No additional study or compilation has been done since, but it’s fair to say Governor Paterson’s renewed interest in the topic shows it is still a burr under the saddle of local governments.

The Majority of States Have Statutory Programs

A survey currently being conducted by the Government Law Center has found that 30 of the 50 states (60%) have some sort of authority dealing with mandates.  This ranges from the simple requirement for pending legislation to contain fiscal impact statements; to complex methodologies for determining the cost of complying with mandates and the means for providing reimbursement.  For an example of a state with simple legislation, Arkansas requires pending legislation to have a fiscal impact statement describing the impact on local governments.[11]  Also, the Hawaii Constitution requires the state to share in the cost of mandates on local governments.[12] 

In contrast, Illinois has complicated methodologies for defining the Legislature’s requirements under the State Mandates Act, which is much more detailed and extensive then the statutes of the previously mentioned states.[13]   And perhaps the leading example of a comprehensive state mandate reimbursement program is California’s Commission on State Mandates.[14]  The Commission has a full time staff of 11, operating with an annual budget of about $1.5 million, and this year budgeted $160 million for mandate relief to local governments.

A lot of the statutes defining mandates have common, built-in exceptions.  Most often the exceptions are for federal mandates, minimum amounts, those dealing with public health and safety and those regarding public employee pensions or working conditions.  Unfunded mandates are fully prohibited in 19 states: Alabama, California, Colorado, Florida, Illinois, Iowa, Massachusetts, Michigan, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, Oregon, South Carolina, South Dakota and Washington.

In some of those states that lack any constitutional or statutory authority against unfunded mandates, local municipal organizations have made mandate reform a legislative priority.

What’s next for New York?

States can provide relief from mandates without direct reimbursement of costs.  Local governments in North Carolina, for example, can collect an additional half-cent on the state sales tax to fund mandated programs.  Arizona provides an amount of unrestricted, general purpose aid to its local governments in recognition of the added cost of complying with mandates. 

New York has a general purpose revenue sharing program, but it has been scaled back substantially over the last several decades due to fiscal needs of the State.[15]  New York also provides an option to counties and selected cities to impose a sales tax that is administered as part of the State’s sales tax. Although the effect is the same, these provisions were enacted more in the name of direct property tax relief than mandate reimbursement. 

Although local officials are often quoted in the media railing about the high percentage of their local budgets that are “mandated” by the state, it is very hard to say with any certainty just what the added cost of mandate compliance is.  States that do make an effort to identify which mandates add costs, and then reimburse for those costs, have staff resources devoted specifically to the task.  Still, if there are substantial costs that are being shifted to the local taxpayer to comply with mandates, then any fresh look at the issue should be welcome news.  But is has to be a serious look.  As one local newspaper opined: “With New York’s current fiscal crisis, local governments in New York State can’t expect more state aid anytime soon, and they’ll be very lucky to keep what they have now.  If the state can’t provide money, it can at least provide something that can save money: mandate relief.”[1]

* Paul D. Moore is the Clarence D. Rappleyea Government Scholar in Residence at the Government Law Center of the Albany Law School; Elizabeth Lyons is a second year law student at Albany Law School.