An unfunded mandate is a statute or regulation that requires a state or local government, or private individuals or organizations, to perform certain actions, yet provides no money for fulfilling the requirements. When a federal government imposes a law or regulation without necessary funding, for example, it becomes the responsibility of the state or local government to pay for the implementation of the law. In the end, it is local taxpayers who end up footing the bill.
A prime example of an unfunded mandate is a national election. Each state administers the election for its residents. Though these elections end with the appointment of federal officials, it is the individual states that pay the cost of running the local elections.
Not surprisingly, these orders are a hot topic among the politically inclined. Many believe laws imposed by the federal government should require federal funding of those laws. They feel unfunded mandates place an unfair burden on lower levels of government, creating huge, unmanageable expenses for state and city governments.
Some politicians complain that a large portion of a city's budget is determined by the federal government, rather than by the local government. They assert that 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 local government.
Other politicians have a different view of unfunded mandate costs. They assert that local government officials have more control over spending than they want to admit. For example, a federal law may require a state to pay a percentage of the cost of implementing that law, yet allow the local government a good deal of latitude in determining which services to provide. If the local government chooses to provide very costly services, the expense for that state could be quite high. Therefore, some politicians claim, it is individual state spending that causes problems.
Many politicians who disagree with limiting unfunded mandates believe that doing so would work against the ties that bind us together as a country. They argue that local governments should pay some or all of the cost of local law implementation. Others agree that the concept is unfair, but do not believe that unfunded mandates cause most local governments' budgetary problems.
On 15 March 1995, the Unfunded Mandates Reform Act (UMRA) was enacted, setting up procedures to keep congress from imposing costs on states without appropriating funds. The UMRA requires analysis of any bill expected to cost state, tribunal, or local governments more that US$50 million. The Congressional Budget Office (CBO) must perform this analysis. The same type of analysis is required for bills projected to cost the private sector US$100 million or more.
If a mandate is expected to cost lower levels of government or the private sector more than US$100 million, house and senate committees are required to show where funding will come from to offset these costs. If a committee fails to provide this information, the bill can be removed from consideration. However, a majority vote can keep such a bill alive, resulting in an expensive unfunded mandate.
Furthermore, the UMRA requires consultation with state, local, and tribunal governments about any proposed laws or regulations that may include an unfunded mandate. Assessments must be performed for such proposals. If assessments are not performed, the particular law or regulation is subject to judicial review.