A Commission Report 

Mandates: 

Cases in 

State-Local Relations 

Advisory Commission on M-173 

Intergovernmental Relations September 1990 
Advisory Commission on Intergovernmental Relations 

1111 20th Street, NW 

Suite 2000 

Washington, DC 20575 

Phone: (202) 653-5640 

FAX: (202) 653-5429 
PREFACE 

Mandates are a continual source of friction 

among governments; many policymakers and scholars foresee an increase in unfunded federal and state 

mandates. These factors suggest that intergovernmental tensions will continue to rise unless the Congress and state legislatures establish more successful 

and intergovernmentally cooperative methods for 

dealing with mandate issues. 

In its 1978 study of state mandates, ACIR recommended a policy of deliberate restraint. The Commission endorsed inventories of mandates, review procedures for weeding out unnecessary mandates, 

statements of policy objectives to accompany all proposed state mandates, and state reimbursement for 

certain types of mandates. As the number of state 

mandates has risen and experience in dealing with the 

resulting state-local tensions has accumulated, 

ACIR’s recommendations remain as sound today as 

when they were made in 1978. 

Mandates show no signs of slowing. In fact, many 

types of mandates appear to be penetrating substantially deeper into the federal system. Some, such as 

those dealing with the environment and public employees, are touching virtually every unit of government, no matter how small or ill-funded. Consequently, mandates are being debated fiercely among 

policymakers. Mandates raise questions of accountability, equity, and legitimacy, but the greatest controversy, perhaps, is over what is reimbursable. 

States justify the enactment of mandates on local 

governments by citing the need for uniform standards, increased levels of service, and accountability, 

as well as the need topass on federal mandates. Local 

government officials counter that mandates substitute state priorities for local priorities and induce 

unknown, and often significant, costs on governments 

whose revenue-raising capabilities are limited, not 

only by economic factors but by state law. 

The major issue for many local governments is 

whether they can meet the financial demands of federal and state mandates within the financial limits 

imposed by the state, by normal political forces, and 

by citizen initiatives. A number of grass-roots initiatives have been approved to limit local government 

taxes, most notably, Proposition 13 in California and 

Proposition 2V2 in Massachusetts. More such initiatives may lie ahead. Moreover, the federal and state 

courts have been particularly active in the last decade 

in issuing mandates affecting costly functions of state 

and local government, such as education, corrections, 

and mental health services. 

The fundamental issue, however, is local 

self-government, which makes the motivation for reimbursement a very important consideration. If a 

mandate reimbursement rule restrains mandating by 

imposing fiscal discipline on legislators, thcn local 

self-government will be enhanced by default. If demands for reimbursement simply reflect local desires 

for compensation for services performed, however, 

then local self-government will not be enhanced because local governments will be viewed as mere service deliverers, happily providing whatever services 

are paid for by the state and in whatever manner is 

desired by the state. The “hired help” approach to 

mandate reimbursement, therefore, needs to be replaced by a principled federalist approach in which 

states and their local governments are seen as partners in self-government, sharing costs and responsibilities equitably in serving all citizens of the state. 

Under this approach, the state, as the larger jurisdiction, is seen as having a special responsibility to support and encourage citizen self-government in local 

jurisdictions. 

This information report provides examples from 

seven states that have used a variety of approaches to 

address state-local tensions created by mandates. We 

hope this report will help state and local officials in all 

50 states find acceptable intergovernmental means to 

resolve the inevitable tensions created by mandates 

and to restore vitality to local self-government. The 

success of any mandates strategy will depend on the 

extent to which it represents agreement between 

state and local governments and is followed in good 

faith by all parties. 

This report was approved for publication by the 

Commission on June 22. 1990. 

Robert B. Hawkins, Jr. 

Chairman 

... 

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ACKNOWLEDGMENTS 

This information report resulted from the combined efforts of several individuals and organizations. 

It was developed by Jane Roberts and the staffs of 

several state ACIRs. Andree Reeves completed the 

collection and initial editing of the state papers and 

helped to prepare the introductory chapter. Lori Coffel provided secretarial assistance. Joan Casey was 

responsible for the final editing. 

The Commission gratefully acknowledges the assistance of the following state ACIR counterparts that 

contributed papers for this volume: Florida AdvisoIy 

Council on Intergovernmental Relations, Ohio State 

and Local Government Commission, New York State 

Legislative Commission on State-Local Relations, 

Rhode Island State-Local Relations Commission, and 

South Carolina Advisory Commission on Intergovernmental Relations. 

The Commission wishes to thank especially Robert 

Bradley, Mary Kay Falconer, Elizabeth Lines, and 

David Cooper of Florida; Lisa Patt McDaniel and Craig 

Zimmers of Ohio; Paul Moore and Margaret Sherman 

of New York; Gary S. Sasse of mode Island; and Janet 

Kelly and Dan B. Mackey of South Carolina. 

The Commission also would like to thank The 

Urban Institute for permission to reprint the articles 

on Connecticut and Massachusetts. The Commission 

expresses its thanks to Geary Maher, who prepared 

the Connecticut study; to Emily D. Cousens, who 

wrote the article on the application of the Massachusetts mandate statute; and to Anthony D’Aiello, who 

contributed the chapter on cost estimation and reimbursement of mandates in Massachusetts. 

The views expressed in these papers are not necessarily those of ACIR. The Commission staff, which 

prepared the introductory chapter, takes responsibility for its contents. The authors of the individual 

papers in this report accept responsible for the contents of those papers. 

John Kincaid 

Executive Director 

Bruce D. McDowell 

Director, Government Policy Research 

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CONTENTS 

Introduction ................................................................................. 1 

Definitions of Mandates ................................................................... 2 

Why the Mandate Revolution? ............................................................. 2 

Sourcesand Legitimacy ................................................................... 3 

Governments Affected .................................................................... 4 

The Issue of Funding ..................................................................... 4 

Who Should Pay? ..................................................................... 5 

Responsible Parties? .................................................................. 5 

The Greater Good? ................................................................... 5 

Passing the Buck ..................................................................... 5 

Moral Objectives ..................................................................... 6 

State Policy Change ................................................................... 6 

Cost Differentials ..................................................................... 6 

Practical Problems .................................................................... 6 

Need for Mandates ................................................................... 6 

The Issue of Local Autonomy .............................................................. 6 

MandatesasViue and Vice .............................................................. 6 

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ApproachestoMandate Funding ....................................................... 7 

The State Cases .......................................................................... 8 

Ohio: Devising a Workable Solution to the Mandate Dilemma ..................................... 11 

The Commission Study and Recommendations ............................................... 11 

Implementation .......................................................................... 12 

Conclusion .............................................................................. 12 

South Carolina: State Mandated Local Government Expenditures and Revenue Limitations ............. 13 

A Plan of Study .......................................................................... 13 

The Benefit of Experience ................................................................ 13 

Pennsylvania ......................................................................... 14 

Vermont ............................................................................. 14 

Florida .............................................................................. 14 

New York ............................................................................ 14 

Illinois .............................................................................. 15 

Virginia ............................................................................. 15 

Recommendations from the Review ..................................................... 15 

Mandates in South Carolina ............................................................... 16 

Legislative Mandates .................................................................. 16 

Administrative Mandates and Executive Orders .......................................... 16 

What is Being Mandated? ............................................................. 17 

Who is Responsible for Compliance? .................................................... 17 

Federal Pass-Through Mandates ........................................................ 17 

Mandates by Budget Proviso ........................................................... 17 

Repealed and Unconstitutional Mandates ............................................... 17 

Traditional Mandates .................................................................. 17 

The Cost of State Mandates ........................................................... 18 

Cost Analysis Results ................................................................. 18 

Conclusions about Local Mandate Costs ................................................ 19 

Equity ............................................................................... 5 

Summary of State Mandating Policies ....................................................... 
Final Recommendations-A Matter of Perspective ........................................... 19 

Recommendations ........................................................................ 20 

Avoid Reinventing the Wheel .......................................................... Continue Mandate Cost Analysis ....................................................... Clean Up the State Code .............................................................. Comply with the Fiscal Note Legislation ................................................ Make Fiscal Notes Work in South Carolina .............................................. Make Legislative Intent Apparent ...................................................... Developan AppealsProcess ........................................................... Formalize Traditional Mandates ........................................................ Plan for Compliance in the Present ..................................................... Plan for Compliance in the Future ...................................................... Summaryand Conclusions ................................................................. 

Rhode Island Experience with a Mandate Reimbursement Law ................................... What Is a State Mandate? ................................................................. How Reimbursements Are Determined ..................................................... The Impact of Rhode Island Mandating Statutes ............................................. Direct Fiscal Impact .................................................................. Increasing Sensitivity to Mandating Costs ................................................ Conclusion .............................................................................. 

Florida: State Mandates on Local Governments ................................................. Overview ................................................................................ Definition of Mandates ................................................................... Number of Mandates ................................................................. Types of Mandates .................................................................... Table 1 -Distribution of Mandates Enrolled. by Mandate Type. 1981-89 ................. Figure 1 -Distribution of Mandates by Mandate Type. 1981-89 .......................... Cost of Mandates ..................................................................... Overview of the Past and a Look into the Future ......................................... Figure 2- 1989 Mandates. by Functional Classification ................................. 

Limitations of Statutory Provisions ...................................................... Definition of Mandates-Narrow or Broad 

Measures of Multitude and Magnitude .................................................. Monitoring Mandates ................................................................. Concluding Comments .................................................................... References .............................................................................. Appendix A-House Joint Resolution Nos . 139 and 40 ......................................... 

ArticleVIIFinanceandThxation ....................................................... 

Drawing from the Florida Experience ...................................................... 

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Laws Affecting Local Governmental Expenditures or Ability to Raise Revenue 

or Receive State Thx Revenue .................................................. 

Massachusetts: The Mandate Statute and Its Application ......................................... Postscript ................................................................................ 

Massachusetts: Cost Estimation and Reimbursement of Mandates ................................. 

Up-Front Funding Versus Reimbursement ................................................... Up-Front Funding Process ............................................................. The Reimbursement Process ........................................................... Roadblocks to Success .................................................................... Factors Affecting DLM’s Success ........................................................... Conclusion .............................................................................. Post script ................................................................................ 

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Connecticut: Consideration and Rejection of a Mandate Reimbursement Program ................... 45 

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Table 2-Connecticut’s Aid to Municipalities: All Appropriated Funds. 

FY 1982-83 to FY 1989.90 ...................................................... 

New York The “Non-Issue” of Mandates ........................................................ Current Strategies ........................................................................ 

Step 1:The Catalog ................................................................... Step 2 The Fiscal Note 

Step 3: The Mandate Reimbursement ................................................... Alternative Strategies ..................................................................... A Better Approach? ...................................................................... Conclusion .............................................................................. 

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ix 

INTRODUCTION 

States always have mandated functions, standards, tax limits, and other rules for their local governments. These mandates require local governments either to take certain specific actions (e.g., 

undertake obligations) or not to take certain specific 

actions (e.g., comply with prohibitions). In recent decades, the number and costs of state mandates have 

grown, sometimes substantially, in most states. Local 

officials, therefore, have voiced increasing concern 

about them-what New York City’s former mayor, 

Edward I. Koch, referred to as the “mandate millstone.”’ This concern is particularly pronounced 

when considering unfunded state mandates. 

The concern over state mandates centers around 

an array of issues, including the decline in federal aid 

relative to state and local own-source revenues, the 

shift of more programmatic responsibility from the 

federal government to state and local governments, 

questions of accountability, public opposition to rising 

taxes, the difficulties faced by many local governments in meeting the financial demands of mandates, 

and the implications of mandates for local selfgovernment, including the willingness of citizens to 

hold office, especially in small jurisdictions that lack 

the administrative support to cope with mandates. 

These circumstances have produced a renewed focus 

on state-local relations in the 1980s and 1990s. 

This information report on state mandates is an 

effort to shed more light on an increasingly controversial aspect of state-local relations. It continues a 

line of research begun by the Advisory Commission 

on Intergovernmental Relations (ACIR) in 1978.2 

The initial report and a 1982 update3 were the first 

systematic attempts to survey states’ activities concerning mandates to local governments. On the heels 

of ACIR’s 1978 report, Catherine Love11 et al. published a study of issues and impacts of federal and 

state mandates on local government^.^ 

Now, with renewed and growing concern about 

mandates, other organizations also are pursuing the 

issue. The U.S. General Accounting Office (GAO), 

the National Conference of State Legislatures 

(NCSL), and The Urban Institute have studied state 

mandates recently. 

GAO’s study viewed state experiences as a 

source of ideas for the treatment of this issue by the 

Congress. GAO found that the critical factors in 

prompting states to limit or to reimburse mandates 

included legislators’ concern about imposing costs on 

local governments, a healthy fiscal climate, and a 

constitutionally established or voter-initiated requirement that the state reimburse local governments for the cost of mandate^.^ 

NCSEs examination of mandates found them to 

be a major source of concern in state-local relations. 

It recommended that states review mandates to local 

governments and consider relaxing or eliminating 

those requirements, and in some cases assuming the 

cost of complying with them. NCSL encouraged 

states to develop some method, such as requiring fiscal 

notes, to assure that the costs of all prospective mandates are taken into account before they are enacted.6 

The Urban Institute’s book Coping with Mandates: what are the Alternatives? addresses several aspects of federal and state mandates. The contributing 

authors and editors examine the history of mandates 

and the recent experience of federal and state governments in responding to complaints from governments receiving the mandates. They place the mandates issue in three larger contexts: the policy goals 

that intergovernmental regulations are meant to 

achieve, the tensions among governments in the federal system, and the assessment of regulation as an 

instrument of government p0ii~y.7 

The cases in this new ACIR volume come from 

seven states-Connecticut, Florida, Massachusetts, 

New York, Ohio, Rhode Island, and South Carolina. 

ACIR’s state counterparts in Florida, New York, 

Ohio, and South Carolina contributed studies for this 

report. The Rhode Island Public Expenditure Council prepared the Rhode Island study, the General 

Assembly’s Office of Fiscal Analysis provided the 

Connecticut paper, and staff members in the Division 

of Local Mandates furnished the two Massachusetts 

reports. The Connecticut and Massachusetts papers 

are revised versions of works that appeared originally 

in the 1990 Urban Institute publication. 

1 
The papers examine specific approaches to dealing with mandates, including information for legislating and rulemaking, reimbursement of local governments for the costs of individual mandates, 

equalization of the fiscal capacities of local governments as an alternative to reimbursement, and legal 

limits on enforcing unfunded state mandates. 

DEFINITIONS OF MAiVDATES 

In general, mandates arise from statutes, constitutional provisions, court decisions, and administrative regulations or orders that demand action from 

“subordinate” governments under pain of civil or 

criminal sanctions. There are, however, many variations on this basic definition. 

Those who subscribe to a strict legal definition 

construe mandates as direct orders with clear intent 

to demand positive action allowing no legal choice but 

to carry out that action. Others view mandates from a 

broad financial perspective-considering the aggregate financial impact induced by a “superior” government. By this definition, mandates are interpreted as 

covering a wide array of governmentally induced 

costs. These added costs may result, for example, 

from conditions of grants-in-aid accepted “voluntarily” by recipients. These conditions may add a new 

function for local governments to administer; require 

that local governments fund part of this new function 

themselves; set higher standards of service than local 

governments would set for themselves; and require specific, unnecessarily expensive, or inappropriate means 

of achieving the mandate locally. In addition, mandates 

sometimes are defined to include commands that local 

governments not raise certain revenues, thereby MUSing revenue losses or “negatively” induced costs. 

State laws contain many variations in the definition of mandates. For instance, Connecticut, Florida, 

Massachusetts, and Rhode Island focus on provisions 

that require local governments to spend more. Massachusetts mandates take effect only if the state assumes the cost.8 Florida includes state actions that 

impose “costs” through an erosion of the local tax 

base9 and encompasses actions that place limitations 

or requirements on local governments without compensatinf, them for the costs necessary for compliance.1 Connecticut specifically excludes court orders and any legislation necessary to comply with a 

federal mandate.ll In Rhode Island, only that portion 

of a state mandate that exceeds the federal requirement 

is defmed legally as a state mandated cost.12 

In addition to the legal variations, different working definitions have been developed by state-local 

relations bodies assigned to catalog mandates or to 

prepare fiscal notes. For instance, the South Carolina 

ACIR’s working definition includes “statutes, regulations or orders that require the locality to undertake 

an activity or comply with some standard, even when 

the locality would have undertaken the activity or 

complied with the standard voluntarily.” By the same 

token, it includes actions that prevent the locality 

from undertaking the activity, “even when the locality 

would not consider undertaking it in the absence of 

statute, regulation, or order.”I3 The definition 

crafted by the Ohio Local Government Advisory 

Commission includes any constitutional, statutory, or 

regulatory provision requiring local governments to 

establish or modify a specific activity or rovide a 

Much of the variation among definitions of mandates stems from the imposition of unfunded service 

mandates. For those who take a broad interpretation, 

what counts is the bottom line, namely, net costs. 

Those who subscriie to a narrow interpretation of mandates believe that money is sewn-, if something is 

mandated, it must be done, regardless of the cost. 

A central controversy, therefore, arises froin the 

question of what is reimbursable. Some analysts think 

the term “mandate” is pejorative because it characterizes regulations as imposing excessive, and thus 

compensable, costson state and local government^.'^ 

Others accept the term as a nonprejudicial descriptor 

of a common class of intergovernmental activities. 

service to meet minimum state standards. 8 

WHY THE MANDATE REVOLUTION? 

The rise of mandating as a salient issue in the 

federal system still remains to be explained in an 

adequate fashion. No doubt, a number of factors have 

combined to spark the mandate revolution. 

One likely factor is that the policy demands on 

the Congress and state legislatures often outrun the 

fiscal resources needed to meet the demands. In the 

absence of sufficient funds-whether by legislative 

choice or economic constraint-there is a strong 

temptation to satisfy policy demands by mandating 

that functions be performed by other governments. 

Furthermore, policy demands tend to grow continually. Many policy demands of the past are institutionalized in today’s budgets, thus requiring policymakers 

to expand their budgets with new resources or to shift 

new demands onto other budgets. 

Another possible factor has been the growing 

professionalization of state governments. Better 

staffing for governors and legislatures, four-year gubernatorial terms, annual legislative sessions, enhanced administrative capacities, and other reforms 

advocated during the post-World War I1 era were 

intended to increase the policymaking abilities of 

state governments. The situation is not unlike Parkinson’s Law: work expands to fill the time available for 

its completion. Key assumptions underlying these reforms were that states are better able than local gov2 
ernments to raise revenue, and that states actually 

would raise sufficient revenues to exercise their new 

capabilities, especially in light of what was then a 

rising tide of federal aid. Furthermore, the reform of 

state courts, coupled with the models of activism 

forged by federal courts, has resulted in growing state 

judicial activism and, thus, more state judicial mandates. 

In addition, the professionalization of state 

governments attracted more interest groups to 

state capitols, a trend that appears to have accelerated again as the federal government shifts more 

responsibilities to the states and as states assume 

more responsibilities on their own. Interest groups 

have incentives to focus on state government rather 

than on many different local governments, just as 

they have incentives to focus on the Congress rather than on 50 state legislatures. 

Thus, state governments are much more powerful policy engines than they were in the past, but the 

fiscal fuel needed to operate those engines is often in 

short supply. To some extent, therefore, to make use 

of their policymaking abilities and also to comply with 

federal mandates, states must commandeer the engines of their local governments. 

The reform of state government, moreover, often was accompanied by attempts to centralize 

policymaking so as to provide for better policy coordination, more efficient administration, and more uniform implementation of public policy. The logic of 

state centralization frequently benefited local governments when states could provide some support to 

fund new policies and assume the performance of 

certain local functions; consequently, there was a tendency to overlook the inevitability that centralization 

would produce unfunded mandates. 

Another likely factor in the rise of mandating is 

that citizens expect governments to conform to much 

higher standards and to protect individual rights more 

extensively than was true in the past. Movements to 

improve individual rights protection, consumer protection, environmental protection, social welfare, 

public service provision, government efficiency, and 

public accountability, for example, all require governments to behave in new ways, some of which were 

virtually unheard of a few decades ago. Many of these 

issues, moreover, are not subject to local variability, 

at least below certain levels. If the environment is to 

be protected, for example, then all governments must 

conform to and enforce certain minimum standards. 

State and local governments might be permitted to 

set higher standards, but not lower ones. Hence, 

states are called on to set or enforce standards in a 

wide variety of fields-standards that must be applied 

uniformly to all local jurisdictions or to jurisdictions of a 

certain type, regardless of the variability of local jurisdictions’ capacity to cope with the costs of compliance. 

Ironically, it is quite possible that local innovations contribute to state mandating, too. That is, 

when a local government comes up with a good idea, 

the state legislature may think that it is a good idea for 

all local governments and, therefore, mandate it 

statewide, even though what works in one locality 

may not work well or at all in other localities. 

Sometimes, local officials request state mandates, not usually for themselves but for other local 

officials. A mayor may desire a state mandate tocounteract city council opposition to a policy, and vice 

versa. County officials may want the state to mandate 

certain municipal policies, and vice versa. Suburbs 

may want the state to mandate certain policies for 

central cities, and vice versa. Independently elected 

county treasurers or sheriffs may ask the state to 

mandate salary increases, jail conditions, service levels, and so on. As one observer has noted, “Counties 

can be their own worst enemies when it comes to 

mandates.”16 

Of course, mandates also stem from genuine deficiencies in local government performance. Where one 

or more local governments dccline to remedy a problem, the state may be compelled to mandate a remedy. 

Local deficiencies may give rise to interest group activity 

and media coverage demanding state action. 

SOURCES AND LEGITIMACY 

State mandates come from many sources-constitutional provisions, citizen initiatives, legislative statutes, judicial decisions, and administrative regulations. 

It can be argued that those sources closer to the people 

have more democratic legitimacy, while those farther 

removed from the citizenry have less democratic legitimacy because their political accountability is less direct. 

Constitutional mandates have the closest links to 

direct democracy because, in effect, the people are 

imposing these mandates on themselves by ratifying a 

new constitution or constitutional amendment. Citizen initiatives, whether they result in constitutional 

amendments or new statutes, also have direct linkages to the electorate and have a potentially high 

degree of accountability. Perhaps the principal problem with such mandates is that citizens are not always 

aware of the policy consequences or tax costs of the 

proposals they support at the ballot box. 

Statutory mandates have less direct links to citizen consent because they come (with gubernatorial 

approval) from the legislature, which is elected to 

represent the people. Here, questions can be raised 

about whether a mandate is motivated merely by political pressures to shift costs from the state to local 

governments or by careful, disinterested consideration of the extent to which the mandate represents 

3 
genuine statewide (or greater than local) interests 

and whether it really should be paid for by the state. 

Mandates issued by state courts are linked to the 

people insofar as they are tied closely to specific pro- visions of state constitutions and statutes. Judges do 

interpret the law, however, and their interpretations 

adhere more or less to the intentions of the citizens or 

elected officials who made the law. Court mandates, 

especially those based on constitutional grounds, 

tively removed from state regulation. Other districts, 

however, have responsibilities in such fields as environmental protection and transportation, in which 

district activities cross local boundaries and take on 

“state” purposes. 

THE ISSUE OF FUNDING 

generally are perceived by voters as having a high 

degree of legitimacy, thus making the courts an attractive forum for interests seeking to promulgate mandates. If a mandate is perceived as being too onerous, 

however, citizens can respond by amending the con- stitution, initiating a new law where this is permitted, 

or, in most states, unseating judges in selection or 

retention elections. 

Administrative mandates are more likely to be 

created by processes more insulated from the people 

than those that emerge from the legislative process. 

A classic problem with administrative mandates is 

that they can be more rigorous, detailed, and inflexible than originally envisioned by the governor or 

legislature. Once embedded in the bureaucracy, 

moreover, a mandate sometimes can be hard to dislodge. At times, however, the executive branch may 

weaken a mandate or decline to enforce it vigorously. 

Hence, the executive branch itself can become a 

battleground for mandate compliance and enforcement. Administrators, of course, can be held accountable by judicial challenge and by corrective action by 

the legislature and the governor. 

GOVEMMENTS AFFECTED 

State mandates also can be considered in terms of 

the governments they affect. The legitimacy of imposing requirements or induced costs perhaps can be said 

to differ for home rule municipalities and counties, 

cities and counties without home rule, school districts, 

and special districts. These differences depend on the 

relationship of a local government to the state. 

It may be argued, therefore, that mandates undermine home rule and should be applied more sparingly to home rule municipalities and counties. By 

contrast, non-home rule municipalities are subject to 

many state restrictions in any event, and non-home 

rule counties usually are considered to be administrative arms of the state, at least in part, and naturally 

subject to a broad range of state mandates. School 

districts, once largely a local concern, now are viewed 

as so important to equal rights, equal opportunity, 

and economic development that states have come to 

play a stronger role in financing and setting standards 

for them. Some special districts, by contrast, perform 

such obviously local functions that they remam relaLocal governments face their public responsibilities with varying degrees of fiscal capacity to respond 

to federal and state mandates. Governmental theory 

aside, the major mandate issue for many local governments is whether they can meet the financial demands of state mandates within the financial limits 

imposed by the state, that is, limits on local taxing, 

borrowing, and/or spending authority, plus limits on 

state and federal funding. Decisionmakers in state 

governments are pressured strongly by policy advo- cates to consider only the substantive merits of indi- vidual programs when weighing whether to assign 

specific responsibilities and costs to local governments. Local governments, however, have to contend 

with the aggregate impact of all mandates, compared 

with their total taxing capacity and any federal and 

state aid that is available. State officials do not always 

consider local tax capacities before making decisions 

that require the expenditure of local revenues. In 

addition, states sometimes simultaneously place further limits on local taxing or borrowing authority as 

they expand mandates. 

Much of the mandate controversy surrounds the 

mismatch between mandated responsibilities and local funding capacities. Several means can be used to 

close the gap. These include expansion of local revenue 

authority, increased state aid for specific and general 

purposes (with or without fiscal capacity equalization 

features), state reimbursement of specific mandates, 

and provisions making certain types of state mandates 

unenforceable if they are not funded by the state. 

One potential side effect of state mandates when 

they place financial burdens on local governments is 

that they can induce privatization. Costs passed from 

the federal government to state governments, and 

from state governments to local governments, in 

turn, can be passed on to the private sector. One 

example is the rise of residential community associations (RCAs) that remove some demands for public 

services from the local budget.” Another example is 

the use of developer fees (and privately donated public facilities) in some states to cover a portion of the 

costs of new roads, schools, sewers, parks, and other 

facilities that must be built before development is 

allowed to proceed.ls Such privatization can increase 

the influence of private developers in the develop- ment of communities and diminish the influence of 

public policies. Jurisdictions in need of economic de4 
velopment may be particularly prone to passing on 

mandated costs to the private sector. 

Who Should Pay? 

Obviously, someone has to pay for mandates, but 

answering the question of who should pay is not easy. 

This question is most complicated in the case of 

state-local relations because, unlike the relation of 

the states to the federal government, local governments do not have msovereign status with their 

state. In the absence of specific state constitutional 

provisions regarding mandates or local autonomy, a 

state has broad legal authority to promulgate mandates for local governments. 

Responsible Parties? 

One argument for reimbursement is that those 

who make policy should bear the responsibility of 

paying for it. By this reasoning, the state should either 

raise revenue or take revenue from other state 

sources to provide payment for local mandate compliance. A mandate reimbursement requirement 

would compel the state to confront the real costs of 

public policy and to weigh priorities. In the absence of 

a reimbursement requirement, state officials do not 

have a strong incentive to assess costs, short term or 

long term. Weighing priorities is also important because an unfunded mandate may displace not only a 

local priority but also another state priority embedded in another unfunded mandate with which local governments are expected to comply. 

The Greater Good? 

The counter argument is that the legislature and 

the governor represent all of the people of the state 

and therefore can be understood as representing the 

people’s interests. As such, state officials may be said 

to have a broader perspective on policy issues and to 

be less tied, as a group, to particular parochial interests. Given that citizens must pay for a mandate in any 

event, the state is obligated to consider the wisdom of 

a mandate itself, but is free to decide whether the 

costs of compliance are to be paid through local revenues, state revenues, or some combination thereof. 

Furthermore, if a state is obligated to reimburse all 

mandates, then the state may at times be deterred 

from making policy where it should make policy. If 

local officials, who also represent citizens in their 

various local capacities, object to a mandate, then the 

appropriate arenas for settling this local-state difference can be said to be the legislative, judicial, and 

electoral arenas. If local officials cannot prevail in 

those arenas, then the state cannot be said to be 

obligated to reimburse local governments for the cost 

of complying with the mandate. 

€Pity 

Meeting compliance costs with local revenues 

rather than state revenues is not necessarily inequitable if it means that citizens pay for their own jurisdiction’s compliance and not for compliance by other 

jurisdictions. Reimbursement from state revenues 

could mean that citizens in some jurisdictions will 

bear the costs of compliance in other jurisdictions as 

well as their own. This arrangement could be inequitable if citizens in jurisdictions that already behave in 

ways that conform to the mandate must pay for compliance in those jurisdictions whose deficient behavior prompted the state mandate. Thus, under a reimbursement system, citizens of an environmentally 

progressive jurisdiction, for example, may end up paying 

for the environmental insensitivities of other jurisdictions. A reimbursement system, therefore, could encourage less enlightened jurisdictions to sit on their 

hands waiting for state money mther than acting on 

their own. Such behavior could produce a general climate of local reluctance to initiate change and innovation. At the same time, if the state is obligated to provide reimbursement for all or most mandates, the state, 

too, could become less open to change and innovation. 

An argument for reimbursement, however, is the 

extent to which the state tax system imposes tax burdens more equitably than most local tax systems. If 

local tax systems are more regressive than the state 

tax system, or are too limited geographically to match 

costs with beneficiaries equitably, then unfunded mandates may exacerbate these conditions. Yet, a reimbursement system may aggravate other problems, such 

as fwl disparities, if revenues are transferred to both 

poor and wealthy jurisdictions for mandate compliance. 

When a state or the voters statewide impose limits 

on the taxing, borrowing, and spending authority of 

lmI governments, however, the state cannot then 

equitably impose unfunded mandates on those local 

jurisdictions. It also would appear inequitable for a state 

to set limits on its own taxing, borrowing, and spending 

authority, and then shift the costs of policy initiatives to 

local governments in the form of unfunded mandates. 

Passing the Buck 

Virtually everyone recognizes, however, that unfunded mandates sometimes represent little more 

than an unwillingness on the part of state officials to 

confront voters directly with the true costs of public 

policy. Unfunded mandates can give citizens the impression that they are getting something for nothing. 

If local officials later must raise taxes or fees to comply with mandates, they are not likely to be able to 

shield themselves from adverse voter reaction by 

pointing to a state mandate millstone. Consequently, 

a constitutional or statutoq mandate reimbursement 

requirement can act as a check on the ability of state 

officials to pass the tax bill on to local officials. 

5 
Moral Objectives 

Even if the principle of reimbursement is accepted, however, not all mandates carry a clear moral 

obligation for reimbursement. Is a state, for example, 

obligated to reimburse a jurisdiction for compliance 

with a mandate that is intended to remedy racially 

discriminatory policies or corrupt activities long practiced by the jurisdiction? In other words, some mandates fall into a category in which it can be said that the 

mandate is a state response to some abuse or dereliction 

of responsibility by a few or many local jurisdictions. In 

these cases, one might argue that local officials ought to 

be required to face up to their responsibilities. 

State Policy Change 

At the same time, however, a case for reimbursement can be made where a mandate requires local 

governments to do something previously prohibited 

by the state or to stop doing something previously 

permitted or required by the state. In other words, 

when a state changes its policy, it would seem to be 

under some obligation to bear some of the costs imposed on local governments by that change. 

Cost Differentials 

Reimbursement systems also can mask the true 

costs of living in particular kinds of communities. 

That is, certain kinds of costs to citizens arise from 

living in a big city, a suburban municipality, or a rural 

community, for example, and in different areas of a 

state. A particular mandate, therefore, may impose a 

heavier burden on one type of jurisdiction than 

another; yet, to the extent that citizens choose to live 

in one type of jurisdiction rather than another, a reimbursement system can mask the true cost of that choice 

and allow citizens to enjoy a residential choice at less 

than true cost to themselves and more cost to others. 

Pracfical Problems 

It is not always easy, of course, to estimate the 

fiscal impacts of mandates across time and across a 

multiplicity of jurisdictions. No matter how refined 

and nonpartisan the estimating techniques used in 

fiscal notes processes, those techniques are subject to 

error. Estimating equitable rates of reimbursement 

becomes all the more problematic when reimbursements are to be provided over a period of years or, 

theoretically, in perpetuity. 

Another practical problem is that legislators are 

inclined to circumvent mandate reimbursement requirements. Debates arise over cost estimates, definitions of mandates, and whether a particular act is a 

mandate falling within a reimbursement requirement. Thus, the process can become politicized, with 

the state seeking to pay the least and local govern- ments seeking to obtain the most. 

Need for Mandates 

The debate over reimbursement, however, obscures the more fundamental questions, namely, 

what and how should the state mandate? It is not 

self-evident that states need to enact a large number 

of mandates. The problem for local governments often lies in the proliferation of highly detailed mandates, and mandates that serve mainly to microman- age local governments and public services. Where 

such mandating occurs, an argument can be made for 

reimbursement because such detailed mandating con- verts local governments into mere administrative arms 

of the state, thus defeating one of the major purposes of 

having local governments in the fii place. 

~~ 

THE ISSUE OF LOCAL AUTONOMY 

State mandates are of considerable concern to 

local governments because they reduce local autonomy. Essentially, a mandate substitutes state priorities 

for local ones, although state and local priorities 

sometimes may coincide. Some local officials believe 

that by depriving local governments of control over a 

significant portion of their budgets, state mandates 

diminish local governments’ ability to respond to their 

own citizens’ needs and priorities. In some cases, however, localities may be happy to shift the political re- sponsibility for a necessary but unpopular mandate to 

the state, and let state officials take the heat. 

State mandates also may be inappropriate because the state is not close enough to the operating 

details of mandated programs to establish them in the 

most effective and efficient forms. On the other 

hand, being too close to the problem and all of its 

political controversies, as local officials often are, may 

paralyze needed public action. Although local government decisionmakers have to maintain their accountability to their own citizens, they also are accountable to 

the state and have a responsibility to help meet state- wide needs that have effects beyond the borders of 

individual localities. This spillover effect, however, 

creates arguments for state financial responsibility. 

MANDATES AS VIRTUE AND VICE 

The issue of mandates is difficult to deal with, 

in part because mandates are both a virtue and a vice 

of a federal system. They are a virtue in the sense that 

citizens can turn from one government to another in 

order to obtain action on their concerns. If local government j, not responsive to a particular concern, then 

citizens may turn to their state government or to the 

6 
federal government. Such forum shopping, or “pragmatic federalism,”19 expands citizen choice and opportunities to influence government. This is a major reason 

for not having centralized government. 

At the same time, mandating is a vice in the sense 

that it encourages centralization and reduces accountability by removing decisionmaking from local 

arenas and, in the case of unfunded mandates, by 

allowing one government to satisfy a set of citizen 

concerns while requiring other governments to confront citizens with the taxbill. Mandating encourages 

citizens to do end runs around their local govern- ments rather than engaging their fellow citizens in 

the debate and action that might be necessary to alter 

or introduce a local policy. 

Mandates rarely are invented by legislators out of 

thin air; instead, they are generated by constituents 

seeking action for their own benefit or for the benefit 

of their neighbors. As more legislators become 

full-time legislators, moreover, they are likely to face 

more constituent pressures for mandates. Conse- quently, whether or not there are constitutional or 

statutory provisions for reimbursement or fiscal relief, local governments will have to be attentive to the 

political dynamics of mandating in today’s highly interdependent and intergovernmentalized environment. 

SUMMAlw OF STATE 

MANDATING POLICIES 

State mandating policies include a substantial 

number of different elements. Each of the following 

strategies has been drawn from the practices and 

recommendations of states represented in this report, as well as other states. 

A definition of mandates acceptable to 

all parties concerned. 

A comprehensive inventory of mandates, updated periodically. 

A mandate review program to modify or 

repeal mandates as appropriate. 

Use of mandating as a last resort, after 

other cooperative approaches fail, and 

after careful consideration of whether a 

state interest really needs to take priority 

over the right of local self-government. 

Involvement of local officials in the formulation of necessary mandates. 

Use of the state ACIR as a key point of 

interaction and mediation. 

Requirements that legislative intent and 

compliance criteria be clear, perhaps requiring the legislature to specify a policy 

objective in a statement attached to or 

combined with mandate legislation. 

Procedural requirements for commit- tees and each house of the legislature 

for action on mandates (e.g., recommis- sion to a substantive committee on a 

point of order, an extraordinary major- ity-vote rule) 

Emphasis on results rather than process 

in mandates. 

Provision for local flexibility in methods 

of compliance. 

An appeals process, especially for locali- ties that may have particular compliance 

problems, and especially when process is 

detailed in a mandate. 

Inclusion of a sunset provision in mandates. 

A fiscal notes process-or at least establish that fiical notes are important in 

principle-to determine the probable 

fiscal impact of mandates on local governments. (About 42 state legislatures 

have some type of fiscal notes process, as 

does the Congress.) 

A mechanism for measuring local government fiscal stress, with mandate 

costs included in the measure. 

Approaches to Mandate Funding 

dates to local governments: 

Several options are available to fund state manMandate reimbursement. As of 1988, at 

least 14 states had either a constitutional 

or a statutory general mandate reimbursement requirement*O (Consrimional: California, Hawaii, Michigan, Missouri, New Hampshire, New Mexico, 

and Tennessee. Sraruroty: Colorado, 

Florida, Illinois, Massachusetts, Montana, Rhode Island, and Washington).*l 

Rules that allow local governments to ignore certain mandates that are not 

funded by the state. (This still requires a 

definition of mandates, however.) 

State assumption of responsibility for selected local functions, or swaps of func- tions between the state and local govern- ments. (A state ACIR could examine such 

issues and make recommendations.) 

7 
Specific functions or services treated as 

shared state-local responsibilities and, 

therefore, financed on a cost-sharing 

basis. 

Expansion of local government revenue 

authority to help localities meet mandate compliance costs. 

Provision of more general aid to local 

governments, especially through a 

program of fiscal capacity and fiscal 

equalization revenue sharing. (So long 

as the state assumes responsibility for 

ensuring local capacity to perform 

functions, both mandated and 

non-mandated, state mandates are 

less likely to be burdensome, and the 

state itself can link policies with costs. 

This approach does not solve the prob- lem of determining the costs of mandates, but it may simplify matters and 

be more equitable than mandateby-mandate reimbursement.) 

THE STATE CASES 

The studies presented in this volume represent a 

variety of approaches to state mandates. They are 

organized along a continuum of responses to mandates: informational approaches (catalogs and fiscal 

notes) to aid in decisionmaking, reimbursement of individual mandates, legal limits on mandating, and fiscal 

equalization as an alternative to reimbursement. 

The Ohio study, prepared by the Local Government Advisory Commission, describes the process of 

a state just beginning to deal with some of the effects 

of mandates by providing information about them in 

the legislative process. 

The South Carolina report, written by the South 

Carolina ACJR, describes its experience with cataloging mandates and implementing fiscal note requirements. The study includes a comprehensive discussion of a variety of approaches to mandates drawn 

from an examination of six other states. 

The Rhode Island case describes the state’s experience with a statutory reimbursement requirement. 

The paper discusses the process of reimbursement, 

the direct fiscal impact of reimbursement, and the 

requirement’s ability to make state officials more sensitive to local fiscal needs and conditions. 

The Florida paper, prepared by the Florida 

ACIR, also discusses a statutory reimbursement re- quirement, along with other available strategies. It 

examines the state ACIR’s monitoring and review 

activities, and explains that Florida reimbursements can 

take the form of either direct compensation for funds 

expended or additional local revenue-mising authority. 

The two Massachusetts papers concern a provi- sion in the Proposition 2V2 local tax limitation law 

initiated by the voters that requires state funding of 

state laws or agency rules or regulations that impose 

additional costs on cities or towns. If the commonwealth does not assume these costs, its mandates 

cannot be enforced. The first Massachusetts paper 

discusses the mandate funding rule itself; the second 

discusses the rule’s implementation via cost estimation, reimbursement, and up-front funding. 

The Connecticut and New York studies take a 

different approach to mandates. After careful study 

of the mandates issue and reviews of the use of fiscal 

notes, Connecticut rejected a reimbursement re- quirement and opted for voluntary reimbursement by 

the legislature, an option that has yet to be used. Like 

New York, Connecticut placed its primary reliance on 

increased general state aid to municipalities. 

The New York study discusses the pros and cons 

of several approaches and concludes that increased 

general state aid answers most of the objections of 

local government officials. It cites significant administrative and financing problems with the reimbursement processes in California and Massachusetts, and 

calls for “sorting out” the proper state and local service responsibilities as a foundation for a strategy of 

better service delivery. 

These studies are presented to help inform state 

and local officials in states considering mandate is- sues. These issues are at the heart of sound statelocal relationships. The success of any given strategy 

will depend on the extent to which it represents 

agreement between state and local governments and 

is followed in good faith by all parties. 

Notes 

Edward I. Koch, “The Mandate Millstone,” The Public Zntemt, No. 61 (Fall 1980), pp. 42-57. 

US. Advisorv Commission on Interpovernmental Rela- tions, State Mandating of Local Expen&tures (Washington, 

DC, 1978). 

U.S. Advisory Commission on Intergovernmental Rela- tions, State Mandates: An Update (Washington, DC, No- vember 1982) 

Catherine H. Lovell, Robert Kneisel, Max Neiman, Adam 

Z Rose, and Charles A. Tobin, “Federal and State Man- dating on Local Governments: An Exploration of Issues 

and Impacts,” (Riverside, CA Graduate School of Ad- ministration, University of California, 1979) 

General Accounting Office, Legislative Mandates: State 

Eqxriences Offer Insights for Fedeml Action, September 

1988, GAO/HRD 88 75, p. 30. 

Steven D. Gold, Reforming State-Local Relations: A Pmetical Guide (Denver. National Conference of State Legisla- tures, 1989) p. 105. 

’Michael Fix and Daphne A. Kenyon, eds., Coping with 

Mandates: Wid are the Alternatives? (Washington. DC: 

Urban Institute Press, 1990). p. xiv. 

8 
8MassaChuse.tts General Laws c 29, s. 27C. 

‘“Florida State Mandates on Local Governments,” this 

loFlorida Statutes, Section 11.076. 

“Public Act 83 12, (June Special Session), An Act Concern- ing State Mandates to Local Government. 

‘*General Laws of Rhode Island, 45 13 7, “State Mandated 

Costs Defined.” 

”“South Carolina: State Mandated Local Government Ex- penditures and Revenue Limitations,” this volume, p. 13. 

14‘‘Ohio: Devising a Workable Solution to the Mandate Di- lemma,” this volume, p. ll. 

US. Department of the Treasury, Fedeml-State-Local Fis- cal ReIatiom: Report to the President and the Congress 

(Washington, DC, 198S), p. 80. 

16Jane Massey, “Approaches to the Mandate Problem,” in 

Tanis J. Salant, ed., Rethinking State County Relations uucson: Office of Community and Public Service, University 

of Arizona, May 1990), p. 79. 

volume, p. 29. 

U.S. Advisory Commission on Intergovernmental Rela- tions, Residential Community Associations: Private Govemments in rhe Intergovernmental System? (Washington, DC, 

1989). 

“Arthur C. Nelson, ed., DeveIopment Impact Fees Policy 

Rationale, Pmctice, Theoly, and Xwes (Chicago: American 

Planning Association, 1988). 

l9 Pams N. Glendening and Mavis Mann Reeves, Pragmatic 

Fedemlism, 2nd edition (pacific Palisades, CA Palisades 

Publishers, 1984). 

2o U.S. General bunting Office, Legislative Mandates: State 

eeriences Offer Insights for Fedeml Action (Washington, 

DC, September 1988). 

’lmorida has a constitutional amendment for mandate re- imbursement on the November 1990 ballot. Connecticut 

has a voluntary reimbursement program, but no reim- bursements have been made yet. The state has increased 

general aid to local governments. 

9 
10 
OHIO: DEVISING A WORKABLE SOLUTION 

TO THE MANDATE DILEMMA“ 

The State and Local Government Commission of 

Ohio chose state mandates to local governments as a 

topic for research and action in February 1987. Lieu- tenant Governor Paul R. Leonard, chairman of the 

commission, appointed six of the commissioners to a 

subcommittee to determine the effect of mandates 

on local governments and to devise a plan of action 

for the commission’s approval. 

Prior to the commission taking up the study of 

state mandates to local governments, other organizations had considered the dilemma. The Ohio Township Association, the Ohio Municipal League, and 

the County Commissioners’ Association of Ohio had 

an interest in curbing state mandates. The County 

Commissioners’ Association is continually making 

suggestions and recently appointed a Mandate ask 

Force. In Ohio, county government may perform only 

functions detailed by the General Assembly. Moreover, a county’s ability to raise revenues is limited by 

the state constitution and the Ohio Revised Code. 

Within these limitations, counties usually bear the 

brunt of state mandates without additional funding, 

so they had ample reason to be concerned. 

Bills had been introduced pericdically in the state 

legislature to curb state mandates on local govemments, without result. A few legislative task forces 

touched on the mandate problem, but none followed 

up with action. Finally, in “Helping Ohio’s Communities Respond to Federal Cutbacks: Life after Dearth,” 

the Select Committee to Study the Effects of Federal 

Cutbacks on Local Governments recommended that 

the State and Local Government Commission compile a catalog of mandates. 

In 19n, the legislature passed a law requiring the 

Legislative Budget Office to prepare fiscal notes for 

bills that ‘‘appear to dect the revenues or expenditures 

of the state, a county, municipal corporation, township, 

school district, or other governmental agency” (ORC 

103.14) and are ready for a floor vote. An actual dollar 

impact estimate was attempted but not always achieved 

because of the unavailability of reliable data. 

*Lisa pdtt McDaniel wrote this report 

THE COMMISSION STUDY 

AND RECOMMENDATIONS 

An important starting point for the commission’s 

work on mandates was deciding on a definition. Real- izing that mandates come from various sources and 

take different forms, the commission chose the fol- lowing broad definition. It defined a mandate as a 

legal requirement, a constitutional specification, a 

statutory provision, an administrative regulation, or a 

court order that local units of government must es- tablish or modify a specific activity or provide a service 

to meet minimum state standards. 

The commission’s mandate subcommittee established an advisory committee to help review the issue 

and help develop final recommendations to the State 

and Local Government Commission. Both committees met together to review national studies of the 

mandate problem and other states’ responses, and to 

listen to the local government associations’ concerns. 

The mandate subcommittee sent a survey to all 

state legislators in July 1988. It covered the major 

mandates for solid waste, contract bidding, prevailing 

wage, and jail standards. A follow-up letter in Septemberbrought the response rate up to 17 percent of 

the state representatives and 16 percent of the state 

senators. The returned surveys were split evenly 

among Democrats and Republicans. Overall, the legislators who responded were sympathetic to local governments and open to some kind of reform. Few, 

however, indicated any initiative in leading the battle 

against mandates. 

By December, the mandate subcommittee submitted four recommendations to the State and Local 

Government Commission. The first recommendation was to compile a comprehensive document out- lining legislative, administrative, and executive order 

mandates. This catalog would serve several purposes: 

(1) the total number of mandates currently imposed 

on local governments could be determined: (2) analy- sis would reveal time frames during which mandates 

were likely to be passed; (3) outdated and unneces11 
sag mandates could be reviewed; and (4) funding, or 

lack thereof, could be analyzed. 

The second recommendation called for the formation of a mandate review committee to work in 

conjunction with the legislative budget office and the 

local government associations. At the end of each 

legislative session, this committee would analyze laws 

passed for trends in mandates and funding. The committee also would devise a review procedure for 

weeding out unnecessary and outdated mandates. 

The third recommendation called for a fiscal 

note network to be developed among representative 

cities, villages, townships, and counties to provide 

information on the fiscal consequences of various 

legislative proposals on local government. This information would be included in the fiscal notes attached 

to legislation. The idea behind this recommendation 

was to increase the accuracy of the fiscal note and to 

make the information more concrete in a legislator’s 

mind by using actual local governments as examples. 

The final recommendation called for strongly 

worded legislation to be introduced by the commission’s legislative members. This legislation required 

that the state fund the cost of a mandate or provide a 

means of funding for the local government. It also 

provided that no bill be voted on by the General 

Assembly without a complete and accurate fiscal note 

attached. The last component of the legislation expanded the fiscal note requirement to include administrative rules and executive orders. 

IMPLEMENTATION 

The State and Local Government Commission 

approved all four recommendations and directed the 

staff to begin implementation. The fiscal note network was the first to be implemented. Local governments asked to participate were enthusiastic to be 

able to make a direct contribution to the legislative 

process, and the Legislative Budget Office was open 

to having access to more accurate fiscal information. 

The network was in operation by the first half of the 

legislative session. 

The procedure for compiling the catalog waspatterned after that developed by the South Carolina 

ACIR. A third-year law student was hired to review 

the Ohio Revised Code to extract all current mandates, each of which was categorized by the local 

governments it affected, approximate amount of fiscal impact, and the function of government to which 

the mandate applied. The process took three months. 

The information will be entered into a data base management program so that it canbe used and printed in 

an easily understandable format. 

Mandate legislation was introduced on January 

30,1990, by the four legislative members of the State 

and Local Government Commission: Sen. Richard 

Schafrath, Sen. Lee Fisher, Rep. Jerry Krupinski, and 

Rep. Ron Amstutz. The commission made every effort to get as much input as possible on the legislation 

from the local government associations, key legislators, 

and other players in the process before it was introduced. The legislation did not pass in the 1990 session. 

The legislation is summarized by its first section: 

Any bill that, according to the local impact 

statement [fiscal note] prepared by the Legislative Budget Office, has the effect of requiring a county, townships, or municipal 

corporation to perform or administer a new 

or expanded program or service having a net 

additional cost . . . for some or all affected 

counties, townships, or municipal corporations, shall include an appropriation sufficient to fund such net additional cost of compliance with that requirement. 

If the legislature chooses to exempt itself from this 

requirement, it must take a separate vote on whether 

the bill will be exempt before voting on passage. 

Other key points included are: Executive orders 

and agency rules must have fiscal notes attached. 

Fiscal notes for bills must be completed before the 

third hearing. Executive orders are exempt from the 

appropriation requirement. 

The bill provided that the State and Local Government Commission would serve as an appeals 

board for local governments that argue that a mandate did not have sufficient appropriations. The decision of the commission would be final. 

CONCLUSION 

The mandate issue has been around for a long 

time. It is not unique to Ohio or to local governments. 

Every state has imposed unfunded mandates on its 

local governments. In turn, state governments, as 

well as local governments, are subject to mandates 

imposed by the federal government. Acknowledging 

that government is at a period of significant change, 

and that the relationship between state and local 

governments is an important component of that 

change, the State and Local Government Commission of Ohio will continue to work toward strengthening that relationship. A workable solution to Ohio’s 

mandate problem will further that agenda. 

12 
SOUTH CAROLINA: STATE MANDATED LOCAL GOVERNMENT 

EXPENDITURES AND REVENUE LIMITATIONS* 

A mandate, defined in its broadest sense, is a 

mechanism by which local decisionmaking authority 

is inhibited. The U.S. Advisory Commission on Inter- governmental Relations (ACIR), in a study of state 

mandates on local governments, focused on the substitution of state priorities for local priorities as a basis 

for examining the scope and influence of mandates. 

ACIR defined a mandate as a “legal requirement, 

constitutional provision, statutory provision, or ad- ministrative regulation that a local government undertake a specific activity or rovide a service meeting 

minimum state standards.”4The idea of substituting 

priorities suggests that the mandated activity is not 

desired mutually by the state and locality. If there is a 

mandate on the local government, then a strict interpretation of the definition forces the conclusion that 

the mandate represents a state objective and that a 

similar local objective does not exist. 

Beyond the definitional problems, mandates 

tend to elicit strong feelings from state and local 

leaders. To many, at the core of the controversy is a 

power struggle between state and local leaders over 

control of the locality. Even when the state compensates the locality for the mandate, local leaders sometimes believe that their ability to do the job to which 

they have been elected is diminished. When there is 

no reciprocal support for an imposed mandate, the 

locality is forced to find new ways to generate revenue 

or strain existing revenue sources to comply with the 

mandate. There is no guarantee of support for many 

state mandates. Legislators can impose unwanted 

and possibly unnecessary standards on local governments effectively without taking any fiscal responsi- bility for having done so. One of the most frustrating 

situations encountered by localities involves a new 

mandate requiring additional revenue when an existing mandate limits the ability of the local government 

to raise revenues to fund the new mandate. 

One of the more popular justifications for mandating is to shift responsibility for services from the 

state to local governments. While most agree that lo- 

* Janet Kelly wrote this report. 

cal service provision generally is more responsive to 

the needs of residents, local leaders argue that the 

shift comes without adequate fiscal assistance from 

the state or with preexisting mandates that make gen- erating additional revenues impossible without raising property tax rates. Localities, on average, are 

amenable to receiving responsibility for local services 

when there is adequate fiscal assistance or fiscal flexibility from the state. When localities are given a ser- vice provision task without assistance or autonomy to 

provide it, local leaders charge that the state budget 

has been kept viable at the expense of local budgets. 

From a purely political standpoint, a mandate can en- sure that the responsibility for unpopular tax increases 

rests with local officials rather than state legislators. 

A PLAN OF STUDY 

The South Carolina Advisory Commission on In- tergovernmental Relations (SCACIR) responded to 

these concerns about mandates with a five-part series 

of reports. 

Part one offered an elaboration of the issues and 

problems and a justification for a long-term commit- ment to the study of mandates. Part two examined 

selected mandate studies from other states, with careful 

attention to methodology, scope, policy recommendations, and implementation criteria. The results were 

considered in light of South Carolina’s needs. Part 

three provided an indexed catalog of existing state 

mandates and a look at legislative and agency mandating behavior. Part four contended with the cost of 

mandates to the locality. The fii phase of study summarized the insights gained from the previous reports 

and translated them into policy recommendations. 

~~ ~ 

THE BENEFIT OF EXPERIENCE 

Decreasing federal and state revenues and in- creasing mandates to local political subdivisions have 

left many localities with a choice of either discontinu- ing services or raising property taxes. Because both 

alternatives are unpopular, local leaders have turned 

13 
to their state legislatures to relieve the mandate bur- den, increase state aid to localities, or free localities 

to generate revenue from some source other than the 

property tax. When legislatures have attempted man- date reform, the approach generally has taken one of 

two forms. 

First, some states have constitutional amend- ments that free localities entirely from the cost of 

state-imposed mandates. This approach follows from 

the belief that compensatory financial aid must follow 

a mandate. In cases where the mandate requires the 

locality to do something (mandates service or program quantity or quality), the state fully reimburses 

the cost of the activity. Less frequently, the state also 

will compensate the locality for any restrictive mandate. The more common restrictive mandates involve 

tax exemptions and other revenue limiting statutes. 

Fifteen states have some type of constitutional 

amendment regarding mandate costs. The experience of these states' programs suggests that the wnstitutional amendment approach is effective only 

when the legislative commitment to the amendment 

remains strong through changing membership. Many 

states that have chosen to restrict mandating through 

a constitutional amendment report routine circum- vention of the intent of the amendment. 

The second alternative, fiscal notes, usually accompanies any reimbursement or full funding consti- tutional amendment. Fiscal notes also are used in 

many states where there is no commitment to full or 

partial funding. A fiscal note statute ensures that 

each mandate will be accompanied by an economic 

impact statement that estimates the cost to localities. 

There are, however, few guarantees that the note will 

be prepared by a disinterested party, that there will be 

sufficient information, expertise, and resources to estimate costs accurately, and that legislators will consider 

the costs to localities and feel obligated to mitigate 

them when the mandate bill is before them. Most states 

that have a f& note statute report that the practice 

rarely accomplishes the intent of the statute. 

The states selected for review were examined 

from the introduction of their study through the legislative process to implementation, with a discussion of 

the shortcomings and strengths of their programs 

based on interviews with those responsible for the 

programs. The six states discussed here-Pennsylvania, Vermont, Florida, Illinois, New York, and Vkginia-were chosen for their diversity of experience 

with the mandates problem and not for their comparability with South Carolina. Some of the programs 

are successful, some are not. In each case, the state 

has a unique perception to bring to the mandates 

issue and a different message for other states. 

South Carolina could benefit from the experience 

of these six states if fiscal notes and mandate reimbursement legislation prove to be warranted by further study. 

14 

Pennsylvania 

The Pennsylvania Local Government Commis- sion demonstrated how a well planned inventory 

methodology can serve as the basis for further man- dates study. The necessity of describing the mandates 

problem in exact terms has been shown in Pennsylva- nia, as well as in other states. Pennsylvania reports 

that its catalog is used frequently by state and local 

agencies, local governments, public interest groups, 

and the academic community. The state also tackled 

another difficult issue-periodic investigation of previously enacted mandates to determine whether the 

intent is being preserved in implementation. This 

difficult and subjective task helps ensure that the 

meaning of the original legislation is not convoluted 

by practice and initiates the first step toward elhnination of mandates that have outlived their usefulness. 

' 

Vermont 

While Vermont and South Carolina have few common characteristics, the Vermont experience was helpful in pointing out the resentment that legislators and 

local government leaders may harbor toward each other, especially where mandates are concerned. Believing 

that the struggle for control over local functions inhibits 

good government, city and county leaders in Vermont 

suggested that they and state legislators should interact 

before, during, and after a mandate is passed. This point 

was reinforced by Florida ACIR. 

Vermont-Iike New York-has offered an en- hancement of state revenue sharing money as an 

alternative to difficult and controversial cost analysis 

of individual mandates. This approach requires only 

that legislators recognize that mandates exist and cost 

money. Both states have concluded that less-thanfull reimbursement in the form of aid enrichment is 

better than no support while cost quantification issues are being debated. 

Florida 

The Florida experience was most instructive. The 

statutory limitation on the cost of mandates required a 

fiscal note and a financing plan for each mandate. Without the note, it is impossible to create a means of 

financing the mandate. The Florida legislature hasbeen 

quite adept at circumventing the fiscal note statute, and 

the constitutional problem that prevents the legislature 

from being bound in advance is one that any state con- sidering such legislation must research fully. 

New York 

The New York Legislative Commission on Ex- penditure Review (LCER) offered some startling 

conclusions about mandates based on its survey work 
with local government officials, who were guaranteed 

anonymity. The survey results suggest that local leaders are not burdened by mandates. Because New 

York restricted its analysis to active mandates and did 

not include revenue-restrictive mandates, the finding 

is plausible. Several other states, including Vermont 

and Virginia, concluded that revenue-restrictive 

mandates were much more troublesome than those 

that required localities to provide a service or program, or that established quality or quantity levels for 

a service or program. 

New York made two substantial contributions to 

the literature. First, LCER concluded that local leaders cannot distinguish effectively between voluntary 

compliance and a mandate. This conclusion is supportedby ACIRs 1978 study. While the finding points 

to a serious problem with local leaders and gives merit 

to the suggestion that interaction between state and 

local leaders is advisable, it calls into question other 

conclusions drawn from New York’s survey. For instance, if an inventory of mandates is generated from 

a survey of respondents who cannot specify mandates, how accurate and comprehensive can the inventory be? Similarly, if respondents are unsure 

about the extent of mandates, how can they conclude 

that mandates are not a problem for local governments? 

LCER offered a second important hypothesis. It 

suggested that some mandates may be perceived as 

state imposed while, in fact, they are “passed 

through” the state from the federal government to 

the localities. So far, little attention has been given to 

this problem, but the issue has considerable research 

merit and should be explored fully in a comprehensive study of mandates in any state. 

Illinois 

The Illinois reimbursement program benefits 

from the experiences of California and Montana, 

leaders in reimbursement legislation. The fiscal note 

flaws that trouble Florida so greatly have not surfaced 

in Illinois. From all indications, the economic impact 

statements are thorough, methodologically sophisticated, and always accompany any mandate bill. But 

Illinois has another kind of problem. Instead of circumventing fiscal notes to avoid reimbursing localities, the legislature has amended the reimbursement 

bill to exclude pending mandates. Five years after the 

bill was passed, the state never had reimbursed a 

locality for any mandate. But there have been only 

two mandates passed since 1981, both involving pensions and both exempted by amendment to the original reimbursement bill. Despite this shortcoming, the 

conspicuous absence of additional mandates since the 

passage of the bill suggests that the Illinois system, 

while not perfect, is one of the more effective. 

Virginia 

Two things make the Virginia study unique. First, 

mandates were found tocontribute toa largerproblem-fiscal stress among local governments. The 

Legislative Audit and Review Council (LARC) took 

the position that when the causes of fiscal stress were 

identified and addressed, mandates would become 

less burdensome for the localities. It recommended 

full funding of mandates in conjunction with equalization legislation for cities and counties and increased state formula revenue sharing. The Virginia 

legislature made an historical commitment of support 

to local governments and directed that a study be 

undertaken on the impact of mandates. This con- trasts with the experience of other states. whose legislatures have been either nonsupportive or antagonis- tic toward efforts to reduce the burden of mandates 

on local governments. 

Recommendations from the Review 

The South Carolina Advisory Commission on Intergovernmental Relations offered the following recommendations based on its study of other states’ experiences: 

w 

w 

m 

8 

w 

15 

SCACIR should continue to study the 

mandates issue and provide local government leaders with timely information through a comprehensive inventory 

of state mandates. 

The comprehensive inventory should be 

generated and made available to all interested groups. A comprehensive classification indexed by subject and locality 

can serve informational needs best. Appropriate features of other states’ inventories should be incorporated. 

Local government leaders should be encouraged to participate more fully in the 

state legislative process, and legislators 

should be encouraged to be more receptive to local government participation. 

Fiscal notes should accompany each mandate bill. They should be prepared by a 

disinterested group charged with preparation of all notes. They should be sophisticated methodologically and should contain precise language in referencing the 

cost of the bill under consideration. 

Previously enacted mandates should be 

reassessed periodically to determine 

whether their legislative intent is preserved in implementation. Recommendations for revision or repeal should follow each reassessment. 
If a constitutional amendment on state 

mandates is considered, the amendment 

should be researched carefully to ensure 

that it does not violate any other provisions of the state constitution. 

If a reimbursement program is considered, the six factors that contniute to 

success should be implemented fully.* 

Any exclusion to a reimbursement program should be identified clearly and 

well documented. 

Aid enhancement should be considered as 

an alternative to a constitutional amendment or full reimbursement program if 

the cost of such programs are prohibitive. 

The impact of mandates on local government finance should be incorporated into 

any composite index of fiscal stress designed to determine those localities that 

are most in need of financial assistance. 

If the purpose of possible mandates legislation or any other response to the burden of mandates on local governments is 

to address the source of the greatest fiscal stress, particular attention should be 

given to revenue-restrictive mandates. 

MANDATES IN SOUTH CAROLINA 

South Carolina appears to have more state mandates on local governments than any of its southeastem neighbors. Most mandates have been imposed 

legislatively (88 percent), while the remainder were 

imposed administratively (12 percent). The first mandate appeared in the late 17th century; it prohibited 

worldly work on Sunday, except by those who practice 

a faith that observes Saturday as the Sabbath and who 

happen to reside in Charleston County. One of the 

latest mandates involves the distribution of assets seized 

during arrests for trafficking in illegal substances. 

The definition of mandates used by SCACIR to 

generate its catalog is broader than most others. 

Those statutes, regulations, or orders that require the 

locality to undertake an activity or to comply with 

some standard, even when the locality would have 

undertaken the activity or complied with the standard 

voluntarily, is a mandate. Similarly, any statute, regulation, or order that prevents the locality from undertaking an activity, even when the locality would not 

consider undertaking it in the absence of the statute, 

regulation, or order, is a mandate. Finally, even though 

pass-through mandates are not wholly’creations of the 

state, they still affect the decisionmaking ability of local 

governments and are treated as mandates. 

Legislative Mandates 

SCACIR research indicates that 608 legislative 

mandates had been enacted as of 1986. Of these, 568 

are enforceable; 34 either have been repealed or 

found unconstitutional by subsequent case law. 

The first dramatic increase in legislative mandates 

occurred in the decade 1%1-1970, when 71 were enacted (approximately seven per legislative year). In the 

following decade, 1971-1980, there were 105 mandates 

enacted, approximately ten per legislative year. From 

1981 through 1986, 57 mandates were enacted, maintaining the ten per year average of the prior decade. 

In 1983, the legislature enacted a law that requires a fiscal impact statement to accompany all bills 

that impose an expenditure by local governments. 

Section One of the “fiscal note” bill states: 

Whenever a bill or resolution is introduced 

in the General Assembly requiring the expenditure of funds by a county or municipality, the principal author shall affix thereto a 

statement of estimated fiscal impact and cost 

of the proposed legislation. Prior to reporting thebill out of committee, if the amount is 

substantially different from the original estimate, the committee chairman shall cause a 

revised statement of the estimated fiscal impact of the bill to be attached to the bill. As 

used in this section, “statement of estimated 

fiscal impact” means the opinion of the person executing the statement as to the dollar 

cost to the county or the municipality for the 

first year and the annual cost thereafter.” 

The intent of such legislation generally is to require 

legislators to consider the economic consequences of 

their directives to local governments. The effect, in 

most states, is a signif;cant reduction in the number of 

mandates passed by the legislature. In South Carolina, 

43 mandates have been passed by the General Assembly between the time the fiscal note bill became law in 

1983 and 1986, an average of 14 per legislative year. 

Since ten mandates was the average per legislative year 

prior to the requirement, the fiscal note law does not 

seem to have had an inhibiting impact. 

Administrative Mandates and Executive Orders 

There are currently 72 mandates to local govemments imposed by state agencies. All of them are 

enforceable. Seventy percent of the mandates are 

imposed by the Department of Health and Environmental Control. They deal with health care standards, communicable disease control, inspection of 

public areas and products, and standards for water and 

waste disposal systems. The state Budget and Control 

Board imposes 13 percent of these mandates, and the 

remaining 17 percent come from the state retirement 

16 
system, Land Resources Commission, TAX Commission, 

Department of Education, Law Enforcement Division, 

Public Service Commission, Health and Human Services, and the Contractors Licensing Board. 

Only three executive orders imposed mandates on 

local governments. One, issued during the administration of Governor James Edwards (1974-1978), requires 

magistrates to dispose of their cases expeditiously. The 

other two, issued by Governor Richard Riley 

(1978-1986), deal with issuance of tax-exempt private-activity bonds under the Ta Reform Act of 1984 

and the TarRefom Act of 1986. The latterorder was set 

to terminate when the legislature acted on the matter. 

What is Being Mandated? 

The mandates were classified by function. The 

most common mandates involve the general operation 

of local government. Other significant categories include education, public safety, and revenue exemptions. 

Who is Responsible for Compliance? 

Of the 683 mandates, 93 percent (638) were applicable to counties, 39 percent (268) to municipalities, 

and 17 percent (113) to special purpose districts. 

Many mandates apply to more than one unit of local 

government. Thirty-four of the mandates are no 

longer enforceable. 

The total number of mandates to specific local 

government officials is 344. Law enforcement personnel (63), treasurers (36), auditors (29), magistrates 

(24), and clerks of court (20) account for 50 percent of 

the total state mandates to local government officials. 

Federal Pass-Through Mandates 

The analysis was expanded to include mandates 

originating from the federal government because 

they require as much compliance as those from the 

state. Frequently, studies have failed to make the 

distinction between state-initiated and federal 

pass-through mandates because the latter often appear in the state statutes and are not easily identifiable as pass-through mandates. 

When a mandate is imposed by the federal government, the state often is charged with ensuring 

compliance. For this reason, the mandate is incorporated into the body of state laws affecting local governments and appears, at least on its face, to be a 

creation of the state. Further, some federal mandates 

are strengthened at the state level. When a state 

wishes to impose clean air standards on its localities at 

a level greater than that required by federal standards, it may do so in the form of a mandate. These 

also are incorporated into state law and are the most 

difficult pass-through mandates to categorize because they are not, strictly speaking, either federal or 

state mandates, but a combination. Of the 200 mandates reviewed by the agencies responsible for their 

enforcement, 13 (7 percent) were determined to be 

federal pass-through mandates. 

Mandates by Budget Proviso 

Each year, the South Carolina General Appropriations Act contains temporary provisos that affect 

state agencies, employees, and local governments in 

the same way as a permanent mandate. The locality is 

required to comply fully with the language of the 

provisos, some of which are repeated from year to 

year while others appear only once. These provisos 

cannot be incorporated into a catalog of state mandates because of their temporary nature, but they 

must be mentioned in any discussion of state authority over local decision processes. 

Repealed and Unconstitutional Mandates 

The state legislature has repealed 31 mandates 

since 1976. Most of these statutes set fee schedules 

that have become outdated. Other repeals, however, 

indicate some change in legislative attitude, such as 

repeal of the blue laws prohibiting certain sales on 

Sundays. The majority of mandates that have been 

repealed were enacted more than 50years ago. There 

are many other mandates still in effect that might be 

candidates for repeal during future legislative sessions. Only three legislative mandates have been determined to be unconstitutional by case law. 

Traditional Mandates 

Some mandates exist not so much formally as in 

the perceptions of state and local government officials. Commonly called “traditional” mandates, these 

are based on custom rather than law. While there are 

many kinds of traditional mandates in South Carolina, none seems as irksome to local government officials as the provision of office space and supplies to 

state agencies. In some cases, this is specified by law, 

as for officers of the circuit court, but in other cases, 

an historical series of events has led to the common 

belief that the locality is responsible for housing and 

supplying a state agency. 

Most traditional mandates have some justification in the general perception that the locality should 

carry out the function. Office space for state agencies 

and a requirement that localities provide free transportation to children enrolled in public schools seem 

unique to South Carolina localities. Another traditional (not obligatory) mandate with the perception 

of local benefit is the yearly payment to state-run 

mental health facilities for the care of the counties’ 

retarded and handicapped citizens. 

17 
The examination of traditional mandates suggests that state and local leaders should reassessperiodically the nature of state-local cooperation within a 

locality and reach new agreements about the cost 

burdens involved. 

for counties to allocate a portion of their revenue for 

assistance to the medically indigent came at about the 

same time that South Carolina cities and counties 

were faced with a loss of over $71 million in federal 

General Revenue Sharing funds. 

The Cost of State Mandates 

SCACIR contracted with the Bureau of Govern- ment Research and Service of the University of South 

Carolina to study the problem of assigning costs to 

state mandates and to analyze the costs of selected 

mandates in localities throughout the state. The bu- reau selected six state mandates for cost analysis: 

medically indigent assistance funds, court administra- tion, space provision for state agencies by county governments, landfill regulations, collection and payment of state additions to finesand fees, and the state 

Highway Department’s policies relating to right-ofway acquisition. Two examples of constraint mandates-the local option income tax and the merchants’ 

inventory property tax-also were analyzed. Data for 

the cost analysis were collected in 14 counties and ten 

municipahties. Cities with populations of 10,ooO or 

more were divided into five groups based on their FY 

1984 per capita revenue. A random number table was 

used to select municipalities from the groups. 

Cost Analysis Results 

The cost analysis results for each of the sixdirect 

mandates and the two constraint mandates are sum- marized below. The review of the state’s fiscal impact 

statement law also is discussed. 

Medically Indigent Assistance (MIAF). When 

county expenditures for assistance for the medically 

indigent in FY 1985 are compared to the MIAF administration costs, plus the mandated medicaid and 

MIAF assessments for FY 1987, the 14 counties in the 

study fall into three distinct groups. For four of the 

counties, the FY 1987 assessments, plus administrative costs, totaled less than the amount that had been 

spent on medical indigence in FY 1985. %o counties 

experienced little change between their FY 1985 expenditures and their mandated FY 1987 expenditures. Of the eight counties required to increase their 

efforts, five had to increase their expenditures by over 

100 percent between FY 1985 and FY 1987. Man- dated FY 1987 per capita expenditures for medical 

indigence assistance ranged from $2.53 to $4.89. 

Based on the value of one mill of property tax (the 

amount of revenue that one mill will raise), counties 

estimated that the assessments represented from 

about 1.5 mills in Oconee County to about 4.5 mils in 

the poorer counties of Bamberg and Dillon. The timing of the mandate caused the financial impact to be 

particularly significant. The requirement by the state 

Court Administration. County officials perceive 

court-related mandates as the most costly. Surprisingly, court revenues tended to exceed expenses in 

most counties studied. On average, the courts gener- ated a net revenue of $.66 per capita. Still, the constant growth in case loads and frequent changes in 

laws, procedures, and reporting requirements are a 

burden that has significant impact on county budgets, 

staffing, and space requirements. 

Onice Space for State Agencies. County officials 

perceive the requirement to provide office space for 

state agencies to be the second most costly state man- date. The 14 counties studied provide an average of 

almost one-half square foot bf office space per capita 

to the departments of Social Services and Health 

alone. Using an imputed rent figure of $6.50 per 

square foot for full service leased space, the average 

per capita cost for the two departments is $3.17. That 

figure varies from $6.03 in Orangeburg County to 

$1.97 in Cherokee County. Six of the seven counties 

with the highest per capita costs for space (based on 

imputed rent) also have the highest rates of poverty. 

Landfill Regulations. All of the counties and one 

of the ten cities in the study group operated landfills 

under domestic waste permits issued by the state De- partment of Health and Environmental Control. Per 

capita landfill operation costs ranged from $1.40 in 

Richland County to $13.48 in Colleton County. Landfill costs exceeded revenues in all but three of the 

counties. County officials were most concerned about 

the stricter regulations expected to be promulgated 

by the Environmental Protection Agency and the 

state department. Officials estimate that the pro- posed regulations will increase landfill costs from two 

to five times current levels. Unless federal and state 

funds are made available to assist local governments 

to comply with these proposed regulations, only the 

wealthiest localities will be able to continue to operate sanitary landfills. 

Collection of State Fees. The state raises revenue 

for a variety of purposes by adding fees to fines and 

forfeitures. While this mandate is not overtly costly 

for local governments, it is perceived to be burdensome. The impact of this mandate is primarily in the 

administrative time needed to track and rebate the 

fees. The cost and burden of this activity is heavily 

dependent on the extent to which the municipal 

government utilizes computers for its court-related 

record keeping. Smaller and poorer municipalities 

still rely on manual records. The cost of administra18 
tive time spent complying with this type of state mandate is difficult to estimate. Most likely, for individual 

mandates, the cost would be negligiile. But thefinancia1 burden of this type of mandate might be termed 

insidious since the impact is gradual and cumulative. 

State Highway Department Right-of-way Policy. 

The South Carolina Highway Department’s policy is 

that, as a condition of selecting a municipal street to 

be added to the secondary system, the municipality is 

responsible for acquiring the right-of-way. The counties do not have to assume that responsibility. Only in 

a few cases was the acquisition of right-of-way a significant expense. Many municipal officials were concerned, however, about what appear to be unwritten 

and inconsistent Highway Department policies. 

These types of mandates are resented at the local 

level and are perceived to be burdensome. 

Local Option Income Tax. The local option income tax was studied as an example of a constraint 

mandate. Since South Carolina local governments 

have limited revenue sources they are allowed to use, 

constraints or restrictive mandates have a significant 

impact. Because of their smaller share of state aid 

funds (21.67 percent in FY 1986), municipalities appear to be burdened particularly by revenue constraints. Estimates for 1979 local income tax receipts 

were developed because of the availability of U.S. 

Census data on household income. Based on those 

estimates and assuming a fairly low income tax rate of 

10 percent of state income tax liability, the 14 counties 

studied could have raised from about 30 percent to 

120 percent of 1979 property tax receivables with an 

income tax. Municipalities could have raised between 

about 20 percent and 117 percent of 1979 property tax 

revenues with an income tax. 

Merchants’ Inventory Tax. In 1984, the General 

Assembly passed legislation to phase out the merchants’ inventory property tax over a period of three 

years (S.C. 12-37-450). Beginning in 1988, merchants’ 

inventory is exempt from property taxation, and state 

reimbursement for this loss is capped at the 1987 tax 

level. Local government officials were most concerned about this growing local revenue source becoming another form of capped or declining state aid. 

Based on the General Assembly’s need to produce a 

balanced state budget, most local officials expect less 

than full reimbursement. The state’s reimbursement 

plan does not reflect merchants’ inventoly growth 

rates. In the counties studied, the average growth in 

the merchants’ inventory assessed valuation from 

1985 to 1986 was 16.64percent. The growth from 1986 

to 1987 was much slower, averaging only 8.48 percent. 

Merchants’ inventory assessed valuation averaged 

slightly over 3 percent of the total assessed valuation 

of property in the 14 counties in 1985. 

Fiscal Notes. Of the 35 state mandates to local 

government enacted since South Carolina passed the 

fiscal note law in 1983, only six were accompanied by a 

fiscal note, none of which addressed the fiscal impact 

on local government. The lack of compliance with the 

fiscal note requirement can be attributed, in part, to 

political realities. By passing mandates on local governments without raising state taxes, the legislature is 

able to ignore the actual costs and appear to be responsive to both interest groups and taxpayers. The 

burden is passed on to local officials, who must either 

raise taxes, cut local services, or postpone other local 

expenditures in order to comply with the mandates. 

Conclusions about Local Mandate Costs 

Based on the data collected, MIAF, the provision 

of space for state agencies, and sanitary landfill regulations account for 36 percent of the state aid funds 

received by counties. These mandates were selected 

for study because they were perceived by local government officials to be the most costly, but it is unclear that the current level of state aid is sufficient to 

offset the costs of state mandates. Additionally, it is 

apparent that mandates place more of a financial 

burden on the poorest counties, which are, by definition, least able to generate additional revenue to 

comply with state aid requirements. 

Federal pass-through mandates regulating environmental protection are the most costly. While this 

study looked only at landfill operations, the mandates 

on air quality, water testing, waste water treatment, 

and the handling of hazardous wastes are expected to 

be increasingly stringent and expensive. Compliance 

with these regulations may be beyond the financial 

capacity of most local governments. 

The major impact of mandates is in the cumulative effect of years of incremental change. The information collected on the selected group of mandates 

indicates that they tend to become more expensive 

over time. A recurrent theme during the interviews 

with local government officials was the feeling of 

powerlessness in the face of increasing demands and 

limited resources. Because mandates shift decisionmaking authority, local officials find it difficult to 

formulate plans that reflect local priorities. 

FINAL RECOMMENDATIONS - 

A MATTER OF PERSPECTIVE 

The 16-month study of mandates by SCACIR 

provided a clearer focus on the problem. That problem, it seems, is one of perspective. The state frames 

the issue in terms of individual mandates while the 

localities focus on the cumulative effect of all mandates. 

There is no substantive disagreement between 

the state and localities over the mandate-by-mandate 

19 
issues. Any given mandate will have served a purpose 

or currently serves a purpose of making local government better. Are individual mandates outrageous? 

Generally, no. Are they expensive? Sometimes. Does 

that expense cripple the local budget? No. Would 

some localities, in the absence of a mandate, fail to 

meet the standard that the mandate requires? Probably. Is it necessary to look at ways to relieve the 

mandate burden in South Carolina, given that state 

officials believe that the more they intervene in the 

local process the better the result becomes? From the 

state perspective, not really. From the local perspective, 

a reexamination of the mandates issue is imperative. 

Local officials in South Carolina believe that the 

state has a legitimate role to play in the operation of 

local government. From SCACIR research and interviews, it seems that resentment begins when the mandates create unreasonable burdens. Specifically, local 

government leaders ask for a mandates policy that 

embodies three principles: 

A mandates policy should make sense. 

Local input is necessary for a good policy 

process. 

State government must permit local flexibility in compliance with state mandates. 

The SCACIR report elaborates on each of these 

three policy imperatives and concludes with ten practical recommendations for dealing with mandates in 

the future. 

RECOMMENDATIONS 

The policy recommendations grew from the better 

insights afforded by the review of the literature and 

discussion of the problem in part one of the study, the 

experience of other states offered in part two, the cata- log of existing mandates summarized in part three, and 

the wealth of material on mandate costs and local concerns presented to the SCACIR by the University of 

South Carolha in part four of the mandates study. 

Avoid Reinventing the Wheel 

The SCACIR catalog of mandates is not without 

flaws. A few laws or rules likely are absent from the 

document. At times, the staff had to make a decision 

about whether something was a mandate, especially 

when a law required a standard but did not suggest 

who was responsible for ensuring that standard. On 

the whole, the SCACIR staff believes that the 683 

mandates included in the catalog represent existing 

situation accurately. 

Compiling this list was difficult, time consuming, 

and absolutely essential in order for state and local 

officials to discuss the mandates issue on the basis of 

fact rather than perception. There should be a firm 

commitment to keeping the catalog current so that an 

informed dialogue may continue. A compilation of 

fiscal notes to accompany the catalog would be an 

important and useful enhancement. 

Continue Mandate Cost Analysis 

The university’s attempt at cost analysis is one of 

the most elaborate and comprehensive in local government literature today. Despite the fact that the 

marginal costs of all mandates never can be quantified precisely for all the reasons presented in the 

report, it is vitally important that students of local 

policy never stop trying to fiid better ways to quantify 

mandates. Monitoring the academic and professional 

literature, as well as attempting innovative quantification methods independently, will ensure that South 

Carolina remains at the forefront of this issue. The 

closer we come to comprehensive quantification, the 

more accurately the relationship between state aid to 

localities and state mandates to localities can be seen. 

Clean Up the State Code 

Our survey and discussions have led to the conclusion that local leaders would like to have more 

respect for the requirements with which they are 

expected to comply. In practical terms, that means 

striking archaic and inappropriate mandates from the 

code, amending mandates that may be outdated but 

appropriate, revising mandates that are vague, and 

enforcing mandates that pass all these tests. A committee should be formed and charged with taking 

those mandates to the legislature for action. While 

the composition of the committee is a flexible matter, 

some groups would seem appropriate for representation on the committee. The South Carolina Association of Counties, the Municipal Association of 

South Carolina, the Councils of Governments, the 

Advisory Commission on Intergovernmental Relations, the legislature, and the agency responsible for 

preparing fiscal notes might be represented on the 

committee. This group should publish an annual legislative update reporting the mandates for which 

change was proposed and the action taken on them. 

Comply with the Fiscal Note Legislation 

The Bureau of Research and Service reported 

widespread noncompliance and inappropriate compliance with the fiscal note bill. Mandates often did 

not have an accompanying economic impact statement when put before the legislature. Some of the 

fiscal notes that accompanied mandates missed the 

point. One reported that a state mandate to local 

government would not constitute an additional cost 

20 
to the general fund. The statement was accurate given that it was the local government that would fund 

compliance with the mandate. There was never any 

mention of local cost in the note. 

Make Fiscal Notes Work in South Carolina 

The 1978 report on state mandates by the US. 

Advisory Commission on Intergovernmental Relations found that almost half of the states had a fiscal 

note requirement on state mandates, that notes usually pertained only to legislative mandates, and that 

cost estimates generally were accurate. Part two of 

the SCACIR study demonstrated that those states 

employing a professional staff to compute economic 

impact of proposed state mandates had more accurate and complete cost analysis. South Carolina 

should designate one qualified agency to prepare 

notes and recommend that a standard form or approach be used for cost analysis to permit comparability among mandates. 

While the matter of designating a group to prepare fiscal notes should be handled by the legislature, 

the charge to the group should be to explore the 

individual and cumulative costs of a single mandate. 

When the cumulative perspective of a potential mandate that may be added to an existing pool of mandates is addressed by the group and delivered to the 

legislature, we can expect the gap in perspective between state and local leaders to narrow. The point of 

cumulative impact analysis might be explained best by 

an example of such a situation in South Carolina. 

When Rule 53 required the county clerk of court to 

review child support payments monthly and report 

those more than five days in arrears, the counties had 

to add staff and computers. These were the initial 

costs. The cumulative impact on the locality involved 

increased demands on law enforcement personnel to 

take action on the clerk’s report, a new annex to one 

court house to store the additional paperwork (tripled 

by Rule 53), and finally undertaking the construction 

of a new office building in another county to house 

the county employees that had to be moved from the 

court house to accommodate those state officials required by mandate to be housed at the courthouse. 

While a fiscal note group could not be expected to 

explore each potential cost down to the penny, a note 

containing only the cost of two new clerks and a computer would not have done justice to the complexity 

of the local problem. If the note had been augmented 

by a plan for housing the tripled paperwork associated 

with the mandate and a discussion of the capacity of 

existing facilities to accommodate the increased personnel, the legislature would have a much clearer 

idea of the impact of its decision on the local level. 

Finally, the group responsible for the preparation 

of fiscal notes should determine whether other mandates compete with or limit the locality’s ability to comply with the prospective mandate. If, for example, the 

state directed a new and expensive sexvice to be provided by the locality at local expense while another 

mandate limited the amount of property tax increase 

and prohibited alternative forms of local taxation, a 

conflict clearly would exist. The fiscal note group should 

be alert for such matters and offer resolutions to them. 

Make Legislative Intent Apparent 

When a legislator proposes a mandate, it should 

be indicated clearly how it is to be funded. When the 

locality sees that it is expected to fund the mandate 

fully or partially, it can make appropriate budget 

plans based on the estimated cost contained in the 

fiscal note. If the state intends to fund the mandate 

fully, the locality can proceed with budgeting for its 

needs without regard to the cost of the new mandate. 

Without a clear idea of the legislative intent forfunding the mandate, the locality is forced to guess-a 

process that has a deserved reputation for inefficiency. The fiscal note bill should be amended to include a 

mandatory statement by the author detailing how the 

mandates will be funded. 

Develop an Appeals Process 

Even though a competent and unbiased group of 

people will be charged with preparing the fiscal impact statement and will consider the cumulative impact of the proposed mandate, they cannot be expected to understand fully the complexities of local 

conditions. The cost analysis portion of the study has 

demonstrated clearly that mandates affect different 

localities to different degrees. What may be a negligible expense for a metropolitan locality may be a 

crippling blow to a rural locality. Local governments 

should have an opportunity to respond toa fiscal note 

with additional information that would help the legislature with the mandate decision. 

The appeal should be presented to the Mandates 

Advisory Group discussed earlier. In addition to being 

charged with periodic review of existing mandates, this 

group or a designated subcommittee also should sewe 

as an ad hoc appeals committee. After review of the 

fiscal note and independent study of the problem, it 

should hear appeals and intervene with the legislature 

on behalf of the appealing localities if appropriate. 

This process spedicalIy addresses one of the most 

common complaints from local leaders regarding state 

mandates. In South Carolina, as in all other states 

studied, local leaders describe exclusion from the process as much more disturbing than any mandate, even 

the costly ones. When state and local officials contribute jointly into the policy process, enhanced understanding can lead to better voluntary compliance. 

21 
Formalize Traditional Mandates 

According to the study, county leaders indicate that 

the provision of office space, equipment, and supplies to 

state agencies is one of the most difficult state-local 

issues with which they have to contend. While most 

county administrators are not particularly anxious to 

evict state agencies from county buildings, they ask that 

their responsibilities to those agencies be more clearly 

defined. Among the more pressing questions: Is there 

any limit to the ability of the state to demand equipment 

and supplies? Must the county comply with frivolous 

requests? What will happen if a county refuses a request? The tension between the state and its localities is 

never more evident than on this issue. 

In order for the localities to understand the limits 

of their responsibilities to state agencies, traditional 

mandates must be codified. It may be more appropriate for them to appear as administrative regulations 

rather than legislative mandates, but they should be 

formally enacted. Effective wording would include 

the standards of accommodation required, limits to 

local responsibility, a formal appeals process, and the 

consequences of noncompliance. 

Plan for Compliance in the Present 

Mandates by budget proviso have much the same 

effect on the local budget as traditional mandates; 

they inhibit local efficiency in budgetary planning. 

When a locality can anticipate a mandate, decisionmakers can budget for it. No city or county wants to 

collect more taxes than it needs, nor does it want to 

make difficult midyear adjustments. The proliferation of procedural mandates to local governments in 

South Carolina suggests that the legislature is concerned with local efficiency. The effect of traditional 

mandates and mandates by budget proviso haveopposite consequences. 

A mandate by budget proviso might be entirely 

appropriate in any single budget year, but if the intent 

of the mandate is permanent, it should be submitted 

to the legislature for enactment. Mandates to local 

governments should take one of three forms: legislative enactment, administrative regulation, or executive order. No mandate should appear as a proviso to 

the budget bill for more than two consecutive years. 

Plan for Compliance in the Future 

The university study reported an anticipated 

fourfold increase in the cost of landfill operations in 

order to comply with new standards of the Department of Health and Environmental Control. A 1986 

amendment to the Safe Water Drinking Act requires 

localities to pay for water testing-a service previously supplied by the department at no charge-and simultaneously increases the number of tests and test 

stringency. All localities will find that these ever increasing pass-through mandate costs strain the budget. For some smaller localities and for those that are 

finding that the consequences of years of postponed 

capital improvement to their fiscal plant have caught 

up with them, the impact is devastating. 

Development specialists agree unanimously that 

adequate infrastructure is one of the most important 

parts of the industrial location decision. Some South 

Carolina localities face a moratorium on development as a result of their outdated facilities-some so 

antiquated that compliance with federal and state 

standards is practically impossible. Other localities 

have adequate facilities at the present time but have 

no growth capacity at the existing site. The financial 

drain of ever-higher quality standards has made new 

construction difficult. Without new construction 

there will be no new development and, hence, no new 

sources for funding new development. Meanwhile, 

the costs of compliance rise. 

The state should develop a stronger partnership 

approach to the solution of these problems. No general 

reimbursement bill has been proposed as a solution to 

the mandate burden as a result of the study, but state 

aid for compliance with these standards is crucial to 

continning growth and development in South Carolina’s localities. Without strong and prosperous local governments, the state cannot be strong and prosperous. 

Legislation to assist localities in compliance with 

new and higher quality standards in environmental 

programs would help relieve the local budget, create 

a positive partnership between state and local leaders, and typify the kind of united commitment to 

strong infrastructure and strong state and local government that developers find so attractive. 

SUMMARYAND CONCLUSIONS 

South Carolina is not unlike other states with 

regard to the issue of state mandates to local governments, even though it has more mandates than most 

other states. Local leaders accept mandates as a part 

of the relationship localities have with the state. Local leaders in South Carolina want the state to review 

its mandates and eliminate those which no longer 

serve the purpose for which they were enacted. They 

want the impact of future mandates to be discussed 

thoroughly before enactment, and they want to participate in that discussion. 

Many of South Carolina’s mandates are procedural-enacted to enhance efficiency in local government. The intended effect and the actual effect are 

sometimes disparate. The disparity arises when the 

cumulative impact of mandates is ignored. Local 

leaders believe their participation in the enactment 

and review processes will result in a better understanding of cumulative consequences and a higher 

22 
quality of state requirements, both in the present and 

in the future. 

Finally, local leaders want an informed dialogue 

on mandates to continue. They want reliable and 

complete information on all the issues surrounding 

mandates, and they want to work in partnership with 

state government to find new ways to fund compliance with existing mandates and those that will 

result from higher environmental quality standards. 

The specific policy recommendations offered by 

SCACIR are: 

Future mandates should be incorporated into the existing catalog at the end 

of each two-year session and their fiscal 

notes retained for the record. 

As new approaches and techniques for 

assessing the cost of mandates become 

available, they should be employed to 

study the costs of mandates to local governments. 

Existing mandates should be subject to a 

periodic review of their relevance. Mandates that are archaic, not implemented, 

not enforced, or unclear either should 

be removed from the code or revised and 

enforced. 

Fiscal note legislation should be complied with in the spirit in which the legislation was enacted. The notes should reflect the cost to local governments, as well 

as the cost to the state, and should accompany each legislative and agency mandate. 

The fiscal note should be prepared by a 

neutral, quantitatively sophisticated 

group. Periodically, that group should 

conduct internal validity studies that 

compare their estimated economic impact of mandates with the actual economic impact. Predictions should include the cumulative impact of the 

proposed mandate. When a previous 

mandate competes with or limits ability 

to comply with a proposed mandate, a 

resolution method should be offered. 

Fiscal note legislation should be amended 

to require a statement by the author of 

mandate legislation as to how the mandate is to be funded. 

Local government officials should be 

permitted to appeal a prospective mandate and present an independent assessment of the cumulative economic impact 

of a proposed mandate and present their 

findings to the appropriate legislative 

committee before a mandate is enacted. 

State government should clarify local 

government responsibilities regarding 

traditional mandates, such as provision of 

office space and supplies to state agencies. 

Mandates should be in one of three 

forms-legislative enactment, administrative regulation, or executive order. 

While there may be good reason to include a mandate to local government in 

the budget bill one year, mandates by 

budget proviso should not recur. 

10) The state should consider the impact of 

federal pass-through mandates on the 

localities, especially those that relate to 

water, air, and landfill standards, and 

work with local officials to find creative 

ways to fund compliance. 

Notes 

U.S. Advisory Commission on Intergovernmental Rela- tions, State Mandating of Local Expeiidifum (Washington, 

DC, July 1978), p. 2. 

'The six factors of a successful reimbursement program, as 

recommended by the South Carolina study, are: 

1. 

2. 

3. 

4. 

5. 

6. 

Mandates to be considered for reimbumement must be clearly identified. 

Increased service mandates should be in- cluded along with service mandates. 

Legislative and administrative regulations 

should also be eligible for reimbursement. 

Reimbursement legislation should apply to 

revenue raising restrictions as well as to ser- vice requirements. 

Costs must be accurately established for re- imbursement to be fair. 

A systematic and complete reimbursement 

process must be created, including a means of 

appeal. 

23 
24 
RHODE ISLAND: 

EXPERIENCE WITH A MANDATE REIMBURSEMENT LAW* 

In 1979, the Rhode Island General Assembly enacted the Property l3x and Fiscal Disclosure Act. The 

key provisions of this act were aimed at improving 

state-local fiscal relationsby providing “truth in property taxation,” including disclosure of local budget 

needs, limiting local deficit spending, requiring decennial revaluation, and reimbursing cities and towns 

for the cost of certain state-mandated programs. 

This reform legislation was enacted in the heyday 

of the taxpayer revolt. In November 1978, the electorates in ten states approved tax and spending limitations, and an outcry was emerging in Rhode Island 

over the high level of property taxes. In 1979, for 

example, Rhode Island’s per capita property tax burden was 35 percent above the national average, and 

ninth highest in the United States. 

Political and community leaders recognized that 

something needed to be done to create a more ac- countable intergovernmental fiscal system. There- fore, at the request of then Governor J. Joseph Garrahy, the Rhode Island Public Expenditure Council 

and the Rhode Island League of Cities and Towns 

developed what was promoted as a thinking-man’s 

response to the property tax revolt-the Property ’Ilur 

and Fiscal Disclosure Act. It was hoped that this legislation would result in: 

lbpayers being better informed regarding how tax rates are set, what their local 

budgets proposed, who was making certain program decisions affecting their 

tax bills, and whether their tax bills represented an equitable distribution of 

their local tax levy; and 

Local officials having some assurance 

that the state would reimburse them for 

mandates and would have a system in 

place ensuring their input toward the 

determination of mandates and which 

ones will be reimbursed. 

Gary Sasse of the Rhode Island Public Expenditure Coun- cil wrote this article. 

This article focuses on Rhode Island’s experience 

with one aspect of the property tax reform packagestate mandate cost reimbursements. 

WHAT IS A STATE MANDATE? 

In Rhode Island, a state mandate is defined as 

“any state initiated statutory or executive action that 

requires a local government to establish, expand or 

modify its activities in such a way as to necessitate 

additional expenditures from local revenue sources.”1 

When state mandates are intended to comply with 

federal regulation, laws, and court orders, only that 

portion of the state mandate that exceeds the federal 

requirement is considered to be a state-mandated 

cost. Furthermore, there are seven specific types of 

state mandates that are not subject to state reimbursement. These are: 

Holding elections; 

Assuring due process; 

Notifying the public and conducting 

public meetings; 

Assuring procedures for administrative 

and judicial review of actions taken by 

cities and towns; 

Protecting the public from malfeasance, 

misfeasance, or nonfeasance by local 

government officials; 

Administering finances, including the 

levy, assessment, and collection of taxes 

and 

Preparing and submitting reports necessary for the efficient administration of 

state laws. 

Reimbursements are not required if a state aid 

program exists, even if that program provides for only 

partial reimbursement. Finally, state mandates costing less than $500 are not reimbursable. 

25 
HOW REIMBURSEMENTS 

ARE DETERMINED 

The Office of Municipal Affairs in the Department of Administration is responsible for administering Rhode Island’s mandated-cost reimbursement 

law. This responsibility involves the annual review of 

proposed mandates; determination of those that fit the 

definition of “reimbursable mandates”; identification of 

allowable reimbursable costs; and promulgation of regulations for the submission of reimbursement requests. 

Basically, the procedure operates as follows: 

By September 30, the Office of Municipal Affairs conducts a public hearing, at 

which time local officials and other interested parties identify proposed mandates and their related costs. 

By January 1, the Office of Municipal 

Affairs must issue a report identifying 

reimbursable state mandates established during the preceding fiscal year 

(July l-June 30). It should be noted that 

this report does not include all legislative mandates; it contains only those that 

have been defined to be reimbursable. 

Cities and towns (Rhode Island does not have 

county governments) may submit a statement by 

April 1 of actual local costs incurred for items eligible 

for reimbursement and for state reimbursements that 

were effective in the preceding fiscal year. For statutory mandates, the effective date is the date the statute becomes law. For administrative rules and regulations, the effective date is the date stated in the rule 

or regulation. 

Actual local costs incurred means the actual expenditures from local source revenues for the reporting period in accordance with TJniforrn Accounting 

and Reporting Standards for Rhode Island Municipalities,” promulgated by the Office of the Auditor 

General of the State of Rhode Island. The Department of Administration may review and audit all documentation required in support of reimbursement 

requests by cities and towns, as well as any other 

municipal records related thereto. 

Once the Office of Municipal Affairs reviews 

municipal reimbursement requests, it submits a report to the State Budget Office. This report shows the 

cost of all mandates for each municipality and serves 

as the basis for the state appropriation to reimburse 

general purpose local governments for state mandated costs. Based on the adopted state budget, the 

state Treasurer will reimburse the communities in 

accordance with the Department of Administration’s 

report. Because of the need to compile actual cost 

data, reimbursements to the cities and towns occur 

two years after the expense was incurred. 

THE IMPACT OF RHODE ISLAND 

MANDATING STATUTES 

There has been no comprehensive analysis of the 

Rhode Island state mandated-cost reimbursement, 

which makes it difficult to evaluate systematically 

what impact this law has had on state-local fiscal 

relations during the last eight years. In making such 

an assessment, two fundamental questions should be 

explored. First, what direct financial impact has the law 

had on state-local fiscal relations? Second, has the law 

served to heighten the legslatwe’s consciousness about 

the effect state laws can have on local fiscal systems? 

Direct Fiscal Impact 

If Rhode Island’s mandated-cost reimbursement 

program is measured by the level of payments, the 

conclusion would have to be that the law was nothing 

more than a paper tiger in the jungle of state-local 

relations. 

Between fiscal years 1986 and 1990, statewide reimbursements totaled $225,000. In the current fiscal year, 

the General Assembly has appropriated approximately 

$75,000 out of a $1.5 billion budget to reimburse local 

govenunents for state mandated expenditures. 

Included in this $75,000 are ten identified mandates that deal largely with personnel practices and 

environmental regulations. Over two-thirds of state 

reimbursements are for two mandates- educational 

incentive pay for tuition and supplies for police officers obtaining a master’s degree and compliance with 

permit regulations for underground storage tanks. 

Further evidence of the financial insignificance 

of the state-mandated reimbursement requirement 

can be seen in the number of localities that actually 

request state reimbursements. In fiscal year 1990, 

only about one-third (14 of 39 cities and towns) of 

Rhode Island’s general local governments have asked 

to be reimbursed for state mandates. 

The limited use of the reimbursement program is 

not attributable to a lack of interest in state-local 

fiscal relations in the Ocean State. The program has 

had little financial impact during a period of significant changes in state-local relations. For example, 

during the past five years, the General Assembly has 

enacted legislation prescribing personnel practices in 

several areas: teacher pension laws were modified to 

allow retirement with full pension after 28 years of 

service instead of 30 years; part-time municipal employees were given the right to bargain collectively; 

fire departments now are required to comply with the 

National Fire Protection Association’s health and 

safety standards (NFRA 1500); and new impasse pro26 
cedures were legislated to help resolve school district 

labor-management disputes. These types of mandates 

are examples of incremental adjustments to existing 

state requirements. One problem in administering a 

state cost reimbursement program is establishing the 

actual expense associated with incremental changes. 

Also during the last five years, legislation and 

regulations were adopted requiring that local services 

meet certain standards. For instance, school bus safety legislation mandates the use of bus monitors, and 

the State Board of Regents for Elementary and Secondary Education adopted a so-called “Basic Education Program,” which contains numerous service 

mandates in all phases of public school operations. 

School districts also were required to use a portion of 

their state aid for specific state mandated programs. 

A National Conference of State Legislatures 

task force observed that mandates deserving the closest scrutiny are those dealing with personnel policies, 

environmental standards, service levels, and tax-base 

exemptions. The mandates outlined above indeed 

were concerned with personnel practices and service 

levels; however, the Rhode Island reimbursement 

process has not been utilized fully. 

This limited application of the mandating statutes did not mean that the Executive and Legislative 

branches took a cavalier approach to state-local fiscal 

relations. Quite the contrary. The impact of state 

mandates on local governments was addressed in substantive legislation directed at major public policy 

concerns. For example, in return for comprehensive 

planning mandates, cities and towns received grants 

to develop plans consistent with statewide land use 

programs. School reform legislation was enacted that 

has made the state a senior partner in funding public 

schools as part of a comprehensive program that 

placed additional state imposed requirements on local school systems. 

The salient point about these experiences is that 

decisionmakers viewed the delivery of specific services as a shared state-local responsibility and developed separate cost-sharing approaches to finance 

them outside the mandate statute. The cost-sharing 

programs generally were guided by the principle that 

state aid and reimbursement for major government 

functions should consider differences in local fiscal capacity and need. Nevertheless, mandates for relatively 

inexpensive administrative and procedural functions, 

such as providing information and keeping records, 

could be handled through the reimbursement program. 

Rhode Island had mandates that relate to personnel practices long before there was a cost reimbursement program. As noted, since adoption of the 

mandating law, the General Assembly continued to 

enact statutes that affect retirement benefits of local 

employees and labor-management collective bargaining procedures. 

Increasing Sensitivity to Mandating Costs 

Measured solely from the viewpoint of actual 

reimbursements, the Rhode Island law does not appear to have had a significant impact on state-local 

fiscal relations. Nevertheless, its success or failure 

cannot be measured only by direct financial impact. 

Of greater importance is whether the program has 

made state government more conscious of and sensitive 

to local fml needs and conditions. There is no empirical evidence to enable one to answer this question. 

Procedurally, accountability mechanisms have 

been built into the system. This process, commonly 

referred to as a “fiscal note,” is an attempt to identify 

the fiscal impact of proposed mandates as legislation 

is being considered. The law permits the Rhode Island League of Cities and Towns to request fiscal 

notes on any bill or resolution that it believes affects 

local government. This provision is particularly important because, as the principal lobbying organization for local government in Rhode Island, the league 

is in a position to monitor the legislative process. 

Therefore, if municipalities believe that any legislation could have a fiscal impact, they can demand that 

the legislature receive a fiscal note. 

What influence fiscal notes have on legislative 

decisionmaking is not clear. A 1988 report of the 

United States General Accounting Office found that: 

Cost estimates provide important information to legislators, and the benefits of the 

process outweigh its costs, according to both 

federal and state officials. Nevertheless, the 

estimates had little effect in detemng, modifying, or funding mandates unless there was 

also strong legislative concern about the impact of imposing mandates on subordinate 

levels of governments. 

In addition to legislative proposals, fiscal notes 

also are required for potential administrative rules. 

When a state agency proposes to adopt administrative 

rules that affect local government finances, it must 

prepare a fiscal note in cooperation with the Rhode 

Island League of Cities and Towns. 

Another device to keep the public informed 

about the cost of state mandates is an annual inventory of mandates and their costs. An inventory of mandates in existence before 1979 was published, and an 

annual report identifies additional mandates that are 

subject to reimbursement. Unfortunately, a complete 

inventory of mandates and their costs, whether reimbursed or not, is not published. 

CONCLUSION 

In Rhode Island, a state mandated-cost reimbursement program was included in a program to 

27 
help control the growth in local property taxes. This 

initiative was part of a broader strategy that included 

full disclosure of property tax levies, reform of revaluation procedures, and control of potential municipal deficits. These reforms, enacted in 1979, were 

necessary first steps in strengthening the state-local 

fiscal structure. 

Nevertheless, these reforms largely were process-oriented and aimed at promoting greater accountability for local fiscal decisions. As such, they 

were not expected to address the fundamental fiscal 

problem in Rhode Island-an over-reliance on the 

property tax to fund municipal services. Therefore, 

subsequent legislation has reformed the method of 

funding public schools and replaced the defunct federal revenue sharing program with state tax dollars 

with the “quid pro quo” of limits on the growth in 

future property tax burdens. Nonetheless, the state 

mandating law has helped focus attention on intergovernmental fiscal relations, and the impact of the state 

mandated-cost reimbursement system should be viewed 

in the overall context of state-local relations. 

Endnote 

I General Laws of Rhode Island, 45 13 7, “State Mandated 

Costs Defined.” 

28 
FLORIDA: STATE MANDATES ON LOCAL GOVERNMENTS* 

The enactment of state mandates on local governments is not a new phenomenon in Florida. 

Plagued by the perceived and real inadequacies of the 

current taxing and revenue structure for local governments, the issue of state mandates on local governments is a perennial source of friction among 

Florida’s governmental entities. When enacting legislation, state policymakers cite the need for statewide uniformity, higher levels of service, and accountability. Local officials, on the other hand, argue 

that their limited revenue sources, coupled with the 

unknown cost implications of state mandates, lead to 

the dismantling of locally established priorities. The 

struggle to find an equitable solution to the competing perspectives continues. 

OVERVIEW 

General law passed in 1978’ required the Florida 

legislature to estimate the cost of state mandates on 

municipalities and counties and to provide funds or a 

means of funding to pay for thecost of new mandates. 

Even though the relevant statutory provisions 

have been relatively ineffective, clarifying provisions 

allow for partial funding of joint state-local objectives 

and require that the means of financing bear a reasonable relationship to the actual costs incurred. 

General laws in which the required expenditure of 

additional local funds is “incidental to the main purpose of the law” are exempted. 

The Florida Advisory Council on Intergovernmental Relations (Florida ACIR) assumed responsibility for the identification of state mandates on local 

government beginning in 1978.2 Each year, Florida 

ACIR prepares a report on mandates and submits it 

to the governor, the Senate, and the House of Representatives. Florida’s approach is relatively compre- 

*The contributions of the staff of the Florida Advisory 

Council on Intergovernmental Relations are acknowl- edged in the preparation of this report, in particular, Robert Bradley, Mary Kay Falconer, Beth Lines, and 

David Cooper. 

hensive, encompassing a wide range of fiscal impacts 

on local governments. 

Even with the enactment of home rule for municipalities and co~ntics,~ unrestricted discretionary 

revenue sources available to local governments appear to be limited. Ad valorem or property taxes are 

reserved for local governments in the Florida Constit~tion,~ but are limited to 10 mills for municipal purposes and 10 mills for county purpose^.^ All “other 

forms of taxation” are “preem ted to the state except 

municipal utility taxes, which are limited to 10 percent of the payments received by the seller,’ and 

occupational license taxes, which, with one exception 

in 1980, have been frozen since 1971.8 

Another component of the revenue structure, 

state revenues shared with local governments, appears to present a more favorable picture of state 

mandates. The Florida Constitution allows the state 

to share “state funds” with local government^.^ The 

major programs are the local government half-cent 

sales tax program, enacted in 1982,1° and the county 

and municipality revenue sharing program, enacted 

as part of the Revenue Sharing Act of 1972.” According to estimates from the state Department of Revenue, for fiscal year 1988-89, $683 million was returned 

to the municipalities and counties in the “half-cent 

program,” and $210 million went to the counties and 

$212 million to municipalitic.; through the Revenue 

Sharing Act program. Another program, the Municipal Financial Assistance Trust Fund, provided $27 

million for municipalities. The state revenue sharing 

programs are important for ensuring limited success 

of state mandates on local governments. Nevertheless, there is no clear indication that these programs 

come close to covering the costs of state mandates on 

local governments. 

as provided by general law. ,?t Other forms include 

~ ~~ ~ 

DEFINITION OF MANDATES 

The most critical aspect of any attempt to study 

state mandates on local governments is the definition 

of a “mandate.” In Florida’s statutes, state mandates 

29 
on local governments are labeled “general laws affecting local financing” and defined as: 

Any general law . . . which requires a municipality or county to perform an activity or to 

provide a service or facility, which activity, 

service, or facility will require the expenditure of additional funds. . . . Additionally, any 

general law which grants an exemption or 

changes the manner by which property is assessed or chan es the authorization to levy 

Simply stated, state mandates on local governments 

are laws that place requirements on municipalities or 

counties through: 

local taxes. . . . f2 

1) An erosion of the local tax base; 

2) A requirement to perform an activity; or 

3) A requirement to provide a service or fa- cility. 

A definition appearing in the Florida ACIR 1980 Catalogue of State Mandates includes any duty, activity, 

responsibility, procedural, or programmatic requirement, constraint, limitation, or exemption that imposes costs in time or money, without compensation, 

on a local unit of government. 

Using the mandates definition to prepare the 

annual mandates review has led to the development 

of complex criteria that accommodate a more complete analysis of the actual fiscal impacts associated 

with mandates. These criteria are: 

Acts that require a municipality or 

county to perform an activity or to provide a service or facility; 

Acts that restrict a municipality’s or 

county’s revenue-generating capacity; 

Acts that repeal or amend previouslyimposed mandates or previously imposed 

restrictions; 

Acts that will reduce costs, increase the 

revenue-generating capacity, or share 

additional state funds with municipalities and counties; 

Acts that have a significant long-range 

fiscal impact on municipalities and counties; and 

Acts that preempt, or place limits on, local discretionary authority. 

Using a more balanced approach in identifying legislation for review, the first, second, fifth, and sixth criteria cover the actual mandates. The remaining criteria identify legislation that potentially reduces the 

negative fiscal impacts. In addition, it should be noted 

that school districts and special districts have not 

been included in the review. 

Number of Mandates 

Florida municipalities and counties must comply 

with hundreds of state mandates. A single mandate is 

actually one piece of legislation or Chapter Law. In 

some cases, more than one mandate is included in a bill, 

and a primary mandate is then identified. For example, 

a primary mandate might be a requirement that county 

building departments forward the fees collected with 

building permits to a trust fund for radon testing. A 

secondary mandate might be to require that an annual 

report documenting the transfer of this money be submitted to a state agency by a specified date. The primary 

mandate serves as “the mandate” used for tabulations 

and subsequent classification. 

Using a single piece of legislation as the unit for 

enumeration purposes, from the beginning of state 

laws through 1987, the Florida ACIR 1988 Catalogue 

of State Mandates cites 342 mandates on local government~.~~ An additional 65 mandates were identified 

in 1988, and 38 in 1989, resulting in a total of 445 

through 1989 (see nble 1). 

Types of Mandates 

Further classification of state mandates has relied on a typology that appeared in Federal and State 

Mandating on Local Governments: An Explanation of 

Issues and Zmpacts14 and in the U.S. Advisory Commission on Intergovernmental Relations publication 

State Mandating of Local expenditure^.^^ Each mandate is labeled as either a requirement or a constraint. 

Requirements are subdivided as programmatic and 

procedural. Between 1981 and 1989, the majority of 

mandates imposed procedural requirements (57.9 

percent). Constraints (24.4 percent) and programmatic requirements (17.7 percent) were enacted less 

often (see Figure 1). 

Mandates also are assigned to the following functional categories: 

community service 

community development 

environment 

general government 

health 

personnel 

public assistance and welfare 

public protection and the judiciary 

recreation and culture 

taxation and exemption, and 

transportation. 

30 
Table 1 

Distribution of Mandates Enrolled, by Mandate Type, 1981-89 

(percent) 

Mandate me 1981 1982 1983 1984 1985 1986 1987 1988 

Programmatic 

Program 4.8 - 3.7 3.2 8.6 9.1 6.1 12.3 

Program Quality 14.3 12.5 3.7 9.7 5.7 6.8 - - 

Program Quality 19.0 6.3 - - 2.8 2.3 - - 

Total 38.1 18.8 7.4 12.9 17.1 18.2 6.1 12.3 

Procedural 

Reporting 4.8 6.2 18.6 12.9 8.6 22.7 12.2 20.0 

Fiscal 19.0 18.8 11.1 9.7 - 2.3 - 6.2 

Personnel 19.0 12.5 22.2 16.1 5.7 15.9 6.1 9.2 

Planning/Evaluation - - 11.1 12.9 8.6 - - - 

Record Keeping 14.3 - 4.1 3.1 

Performance - 6.2 11.1 16.1 31.4 13.6 42.9 15.4 

Other - - 

Total 57.1 43.7 74.1 67.7 54.3 54.5 65.3 53.9 

Constraints 

Revenue Base 4.8 31.3 18.5 19.4 25.7 18.2 22.5 32.3 

Revenue Rate - 6.2 - - 2.9 9.1 4.1 1.5 

Total 4.8 37.5 18.5 19.4 28.6 27.3 28.6 33.8 

Mandates Enrolled 21 16 27 31 35 44 49 65 

- - - - 

- - - - - - 

Expenditure Limit - - - - - - 2.0 - 

Total Number of 

1989 

28.9 

- 

- 

28.9 

13.4 

5.2 

2.6 

28.9 

50.1 

- 

- 

- 

18.4 

2.6 

21.0 

38 

- 

Average 

8.5 

5.8 

3.4 

17.7 

13.3 

7.5 

12.4 

3.6 

2.7 

18.4 

57.9 

- 

21.2 

2.7 

.5 

24.4 

326 

Figure 1 

Distribution of Mandates by Mandate Type, 1981-89 

1981 1982 1983 1984 1985 1986 1987 1988 1989 

Year 

31 
Public protection and the judiciary accounted for 

an average percentage of 26.4 percent-the highest-of all mandates enacted from 1981 through 

1989. The three functions with the next highest numbers included general government (19.3 percent), taxation and exemption (19.1 percent), and personnel 

(14.2 percent). In 1989 alone, the percentage of mandates in the public protection and judiciary category 

reached 28.9 percent, and general government, 23.7 

percent (see Figure 2). 

Cost of Mandates 

The most difficult-and most often desiredpart of any examination of mandates is determining 

the fiscal impact. While fiscal notes on local impacts 

generally are available for all legislation,16 most will 

not have an identified dollar amount. Typically, a local 

fiscal impact will be acknowledged with a generic 

indication of magnitude: minimal, insignificant, negligible, or ~ubstantial.~~ Review of 1989 legislation 

indicated that 36 mandates, or 94.7 percent, had unidentified costs for municipalities and counties in fiscal notes available during the legislative session. The 

fiscal impact of the two mandates for which a cost 

could be determined amounted to $4.9 million. Only 

four of the mandate bills had a si@icant fiscal impact. 

Procedures implemented during and following 

the legislative session have elevated, to some extent, 

the importance of conducting a complete analysis of 

the fiscal ramifications of enrolled legislation. Efforts 

to derive better estimates of the fiscal impact of legislation on state revenues and programs have helped 

stimulate attempts to improve the identification of 

state mandates on local governments and the resulting fiscal impacts. Florida ACIR’s development of a 

facsimile network intended to allow immediate com- munication with local officials and a quick turnaround of requests for information also has improved 

the availability of complete and accurate information 

on fiscal impacts. Nevertheless, a complete inventory 

of these costs has not been produced. 

Ouerzn*m of the Past and a Look into the Future 

In retrospect, it appears that Florida’s attempts 

to provide scrutiny of mandates have had some effect. 

In 1985, a review of the role of fiscal notes and legislative scrutiny in the enactment of statutory mandates 

indicated that the number of prefiled mandates had 

decreased. Moreover, when the fiscal note identified 

the costs of a state mandate on local governments, it 

was less likely to be enacted. From the perspective of 

local governments, however, the mandate problem 

has not disappeared. It is possible that increased 

awareness of mandates simply pushed their enactment to the end of the 60-day legislative session. 

More than 75 percent of mandates identified in 1985 

were enrolled during the last three days of the session, while 48 percent of all bills were enrolled during 

that same three days. Whatever the case, the enactment of mandates is likely to continue despite efforts 

Figure 2 

1989 Mandates, by Functional Classification 

General 

Taxatic 

ublic Protection/Judiciary 

Recreation/Culture 2.6% 

Community Service 2.6% 

Environment 5.3% 

Community Development Personnel 7.9% 

32 
to elevate awareness of their negative fiscal impacts 

and pull in the reins on the state legislature. 

One proposal to limit state mandates on local 

governments was advanced successfully during the 

1989 legislative session. A joint resolution, or constitutional amendment, was passed and in accordance 

with the constitutional referendum requirement will 

appear on the November 1990 general electionballot. 

While the wording of the amendment is relatively 

cumbersome (see page 35), with several qualifications 

and a few exceptions specified, it provides that municipalities and counties would not be bound by any 

general law requiring these local entities to spend 

funds or take action necessitating the expenditure of 

funds unless several conditions are present. The conditions include the following: 

The law fulfills an important state interest. 

Funds have been appropriated to cover 

the cost of the necessary expenditure. 

The law is approved by two-thirds of the 

membership of both houses. 

The expenditure covers a requirement 

to comply with a law that applies to all 

persons similarly situated. 

The law is required for compliance with 

a federal requirement or with eligibility 

requirements for a federal entitlement 

for which the participation of municipalities or counties is essential. 

In addition, the amendment exempts laws that require funding for pension benefits, criminal laws, 

election laws, and general and special appropriations 

acts, and laws having an “insignificant” impact. The 

outcome of the general election and the subsequent 

implementation of the constitutional amendment 

will present several challenges to the Florida legislature. At a minimum, the scrutiny of legislation will facilitate a closer look at local impacts. 

DRAWING FROM THE 

FLORIDA EXPERIENCE 

For all of the successes resulting from a review of 

mandates, there have been an equal number of difficulties and some failures. This section highlights several key points and presents some of the approaches 

that are feasible and effective for a monitoring program. 

Limitations of Statutory Provisions 

As mentioned earlier, Florida’s first attempt to 

control and limit state mandates appeared in the stat33 

Utes in 1972. While it was an ambitious attempt to 

guide lawmakers in their deliberations regarding legislation that affected local government, the provisions 

have not been enough. The legislature will be bound 

only by the state constitution. When considering the 

enactment of general law intended to limit unfunded 

state mandates, constitutional provisions are necessary. 

Definition of Mandates - Narrow or Broad 

The mandates definition must be the center of 

the program selected for review. A narrow definition, 

while more manageable in a number of respects, is 

limited. For instance, excluding (1) statutes that implement “constitutional mandates,” such as the duties and responsibilities of constitutional officers, (2) 

conditions-of-aid programs that require matching 

funds from local sources, (3) any mandate that readily 

is deemed a statewide necessity, such as law enforcement functions, or (4) statutes that attempt toachieve 

uniformity or that are applied uniformly in the public 

and private sectors, such as workers’ compensation 

and unemployment compensation, will hias the analysis and make it increasingly difficult to maintain uniform standards over time. Keeping a larger mandate 

universe, including legislation that amends existing 

mandates, reduces costs, increases capacity to generate revenue, or authorizes additional sharing of state 

funds with local governments offers greater opportunity for a more complete treatment of the issue and 

an understanding of the ramifications. 

Measures of Multitude and Magnitude 

While it is not always evident in the initial stages of 

considering ways to prevent mandates without funding, 

developing a method for measuring the number of 

mandates and the extent of the fiscal impact is important. Selecting a unit for enumerating and an appropriate set of labels indicating the extent of the fisml impact 

will help in attempts to monitor the variations in mandates over time. Standardization is critical and, when 

done correctly, will allow an objective evaluation of the 

performance of a review or monitoring program. 

Monitoring Mandates 

This approach typically involves the identification and evaluation of mandates prior to as well as 

after their enrollment. Ideally, all legislative committee staff should be involved, as should an entity similar to Florida ACIR. The involvement of lobbying 

groups for local governments also increases the effectiveness of monitoring efforts. Information must 

come from a variety of sources, including local governments. Nevertheless, methods for evaluating the 

quality of the information and the conclusions drawn 

from any fiscal figures submitted must be in place. 

Several techniques have been useful in Florida, as 

highlighted below. 
Fiscal Notes in Analyses of Legislation. A complete and accurate analysis of each piece of legislation is 

necessary. Adopting a format that includes or requires a 

section related to local governments is one way to enmurage obtaining state mandate information. Often, 

the appropriate format refers to a “fii note,” which 

specifies the anticipated fiscal impact of the legislation 

on all govenunents. While these sections are not always 

completed, they are an important beginning. 

Sunrise Program. Requiring actions by legislative committees or each house of the state legislature 

is another technique for elevating the attention directed to mandates. Requiring extraordinary majorities for the passage of a mandate at one or more steps 

in the legislative process can be a useful exercise. 

Another approach recommended by Florida ACIR in 

1978 was that the legislature specify a policy objective 

in a statement attached to or combined with any mandate legislation. Both chambers then would be required to “update” the information in the fiscal note 

process to reflect changes in the fiscal impact when 

the legislation is amended. In 1982, Florida ACIR 

recommended allowing legislation containing state 

mandates on local governments to be recommitted to 

a substantive committee on a point of order. 

Sunset Program. Not discussed earlier, but still 

important from the perspective of state mandates in 

Florida, is a sunset program for the review of state 

regulatory activities. A sunset law enacted in 1978 

specifies a timetable by which major regulatory laws 

expire unless explicitly reenacted. During the year 

prior to the expiration of such a law, staffs for both 

houses of the legislature review the law. Legislators 

then make the decision to renew or to repeal the law. 

Reimbursement Program. Probably the most difficult to enact is a program that requires the reimbursement of local governments for all state mandates. Implementation of this approach would require a 

constitutional provision and an elaborate system for 

determining costs and reimbursement procedures. 

An extension of current state shared revenue programs could be part of this approach, but the complexities involved could be overwhelming. 

CONCLUDING COMMENTS 

The Florida approaches have proponents and op- ponents. The fate of the proposed constitutional 

amendment that attempts to restrain the legislature 

in its enactment of state mandates on local govern- ments is not known. Even with its passage, there will 

continue to be debates over the issue. 

What is clear among the approaches tried and 

others considered is the lack of complete, reliable 

information on state mandates on local governments. 

Failure to obtain the information needed to conduct 

objective and thorough analyses of the fiscal impacts 

has contributed to the ineffectiveness of monitoring 

efforts in the past. Effective implementation of any of 

the approaches mentioned in this report and others will 

require accessibility to sound financial information. 

Cooperation between both houses of the legisla- ture, legislative committee staff, and other interested 

parties is an objective that, if met, ultimately will 

ensure the success of identifying state mandates on 

local governments and determining their “real” impact. Whether this cooperation will limit or possibly 

eliminate mandates is not a likely scenario. State 

mandates on local government are endemic to federalism. Perhaps, though, there can be procedural redress in a system that provides a forum for competing 

values and philosophies. 

REFERENCES 

Florida Advisory Council on Intergovernmental Relations. 1989 Report on Mandates and Measures 

Affecting Local Government Fiscal Capacity. Tillahassee, January 1990. 

.1988 Catalogue of State Mandates. nllahassee, October 1988. 

. Catalogue of State Mandates. Tillahassee, 

July 1980. 

Lovell, Catherine, et al. Federal and State Mandating 

on Local Governments: An Expanation of Issues 

and Impacts. Riverside: University of California, 

1979. 

U.S. Advisory Commission on Intergovernmental 

Relations. State Mandating of Local Expenditures. 

Washington, DC, 1978. 

34 
APPENDIX A 

House Joint Resolution Nos. 139 and 40 

A joint resolution proposing the creation of Section 18 

of Article W of the State Constitution, relating to 

general laws that require counties or municipalities 

to spend funds or that limit the ability of counties or 

municipalities to raise state tax revenue. 

Be It Resolved by the Legislature of the State of 

Florida: 

That the creation of Section 18 of Article VII of 

the State Constitution set forth below is agreed to and 

shall be submitted to the electors of Florida for approval or rejection at the general election to be held 

in November 1990: 

Article VII 

Finance and Taxation 

SECTION 18 Laws requiring counties or municipalities to spend funds or limiting their ability to raise 

revenue or receive state tax revenue. 

(a) No county or municipality shall be bound by 

any general law requiring such county or municipality 

to spend funds or to take an action requiring the 

expenditure of funds unless the legislature has determined that such law fulfills an important state interest and unless: funds have been appropriated that 

have been estimated at the time of enactment to be 

sufficient to fund such expenditure; the legislature 

authorizes or has authorized a county or municipality 

to enact a funding source not available for such 

county or municipality on February 1,1989, that can 

be used to generate the amount of funds estimated to 

be sufficient to fund such expenditure by a simple 

majority vote of the governing body of such county or 

municipality; the law requiring such expenditure is 

approved by two-thirds of the membership in each 

house of the legislature; the expenditure is required 

to comply with a law that applies to all persons similarly situated, including the state and local governments; or the law is either required to comply with a 

federal requirement or required for eligibility for a 

federal entitlement, which federal requirement specifically contemplates actions by counties or municipalities for compliance. 

(b) Except upon approval of each house of the 

legislature by two-thirds of the membership, the legislature may not enact, amend, or repeal any general 

law if the anticipated effect of doing so would be to 

reduce the authority that municipalities or counties 

have to raise revenues in the aggregate, as such authority exists on February 1, 1989. 

(c) Except upon approval of each house of the 

legislature by two-thirds of the membership, the 

legislature may not enact, amend, or repeal any 

general law if the anticipated effect of doing so 

would be to reduce the percentage of a state tax 

shared with counties and municipalities as an aggregate on February 1,1989. The provisions of this 

subsection shall not apply to enhancements enacted after February 1,1989, to state tax sources, or 

during fiscal emergency declared in a written joint 

proclamation issued by the president of the senate 

and the speaker of the house of representatives, or 

where the legislature provides additional stateshared revenues which are anticipated to be sufficient to replace the anticipated aggregate loss of 

state-shared revenues resulting from the reduction 

of the percentage of the state tax shared with coun- ties and municipalities, which source of replacement revenues shall be subject to the same require- ments for repeal or modification as provided herein 

for a state-shared tax source existing on February 1, 

1989. 

(d) Law adopted to require funding of pension 

benefits existing on the effective date of this section, 

criminal laws, election laws, the general appropriations 

act, special appropriations acts, laws reauthorizing but 

not expanding then-existing statutory authority, laws 

having insignificant fiscal impact, and laws creating, 

modifying, or repealing noncriminal infractions, are exempt from the requirements of this section. 

(e) The legislature may enact laws to assist in the 

implementation and enforcement of this section. 

Be lT FURTHER RESOLVED that in accordance 

with the requirements of section 101.161, Florida Statutes, the title and substance of the amendment proposed herein shall appear on the ballot as follows: 

LAWS AFFECTING 

LOCAL GOVERNMENTAL EXPENDITURES 

OR ABILITY TO RAISE REVENUE 

OR RECEIVE STATE TAX REVENUE 

Excuses counties and municipalities from com- plying with general laws requiring them to spend 

funds unless: the law fulfills an important state interest; and it is enacted by two-thirds vote, or funding or 

funding sources are provided, or certain other conditions are met. Prohibitsgeneral laws that have certain 

negative fiscal consequences for counties and municipalities unless enacted by two-thirds vote. Exempts 

certain categories of laws from these requirements. 

Filed in Office Secretary of State June 21,1989. 

35 
Notes 

Florida Statutes, Section 11.076. 

2Florida Statutes, Section 163.705(3), states, As soon as 

practicable after the enactment or adoption of any new 

state program or increase in the level of services rendered 

in an existing program, which action substantially in- creases the expenditures of or reduces the revenue or reve- nue producing ability of counties or municipalities, the 

council shall analyze such action. The council shall send its 

analysis and report thereon to the Governor and presiding 

officers of the Legislature no later than 30 days prior to the 

convening of the next regular legislative session. Each 

analysis shall include the council's recommendation and 

its identification of new sources of revenue required to 

fund the increased COst of, or to offset the revenue loss in- curred because of the action. 

Florida Statutes, Chapter 166, Municipalities; Florida 

Statutes, Chapter 125, Counties. 

Florida Constitution, Article VII, Section 1. 

Florida Constitution, Article VII. Section 9. 

6Florida Constitution, Article VII, Section l(a). 

'norida Statutes, Section 166.231. 

Florida Statutes, Chapter 205. 

Florida Constitution, Article VII, Section 8. 

loFlorida Statutes, Part VI, Chapter 218. 

"Florida Statutes, Part 11, Chapter 218. 

12Florida Statutes, Section 11.076. 

I3The figures are not consistent with the total in Table 1 be- cause of a change in the definition of mandates. The time 

period covered also is different. The catalogue counts 

mandates before 1981. 

14Catherine Lovell, et al., Fedend and State Mandating on 

Local Governments: An Explanation of Issues and Impacts 

(Riverside: University of California, 1979). 

US. Advisory Commission on Intergovernmental Rela- tions, State Mandating of Local ETperlditum (Washington, 

DC, 1978). 

16Economic impact required in Florida Statutes, Section 

11.076, and in rules for the Senate and House. 

"Thresholds used for determining the presence of a "significant"mandatevary. Twoused as references in the wrkof 

Florida ACIR are fiscal impacts that exceed $50,000 annu- ally or those requiring one additional full time staffperson 

or the equivalent. 

36 
MASSACHUSETTS: THE MANDATE STATUTE 

AND ITS APPLICATION* 

This chapter explains how the Massachusetts 

mandate statute came about and how it functions; 

gives a nutshell summary of the law, what it requires, 

major elements of mandate findings, and exceptions 

to the general mandate-funding rule; and briefly descnies other functions of the Division of Local Mandates (DLM). 

The Massachusetts mandate statute came about 

as part of what is called the Citizens Tinpayers Revolt, 

Proposition 2V2, similar to the Proposition 13 initiative in Ca1ifornia.l It was overwhelmingly approved at 

the general election in November 1980. Particularly 

interesting, and very important to the administration 

of the mandate statute, is that the voters adopted this 

initiative after the legislature had had the opportunity first to act on bills that would have accomplished 

similar aims. The house and the senate both rejected 

proposals to implement a version of Proposition 2V2, 

which also included a section to create aDLM and the 

mandate-funding rules that now govern legislation 

and regulations in Massachusetts. 

The local mandate statute is an important element of what some call the Proposition 2'12 success 

story in Massachusetts. Opponents of the tax reform 

measure argued before the fact that it would bankrupt local governments. Vastly increased amounts of 

local aid, general revenue sharing from the state gov- ernment to cities and towns, were probably the major 

reason for the success story. The fact that Massachusetts has a local mandate statute requiring state funding of new programs is almost an equally important 

element of the fact that cities and towns have not 

gone bankrupt-and still continue to provide a reasonable level of public services at the local level in 

Massachusetts. Recent limits on the growth in state 

tax revenues2 and a number of major new state programs, however, are likely to inhibit the legislature's 

*Emily D. Cousens wrote this article, which first appeared 

in Michael Fix and Daphne k Ken on, eds., Coping with 

Mandates: What ate the Alternatives (kashington, DC Ur- ban Institute Press, 1990). Reprinted with permission of 

The Urban Institute. 

ability to continue the trend of large annual local aid 

increases. Predictably, this may result in more munic- ipal court challenges to unfunded state mandates. 

The Bay State local mandate law is prospective. It 

constrains state activities imposing costs on local governments that take effect on or after January 1, 1981. 

The original version of the citizens initiative would have 

had the Commonwealth paying for all mandates, even 

those enacted prior to 1981. That requirement was easily seen as unworkable. Accordingly, the first year after 

the statute was enacted, the legislature made several 

corrective amendments. One was to insert the January 

1, 1981 trigger date. This was reasonable because the 

problem of identwg past mandates and the cost of 

assuming them were prohibitive. Further, by having a 

certain trigger date of January 1, 1981, the legislature 

and state agencies were now on notice that the rules 

were different, and they would have to think carefully 

about the local impact before they would act. 

In summary, this mandate-funding rule provides 

that any law or agency rule or regulation taking effect 

on or after January 1, 1981, that imposes additional 

costs on any city or town is effective only if the Commonwealth assumes the cost. In the absence of state 

funding, the statute allows communities to comply 

voluntarily with a state mandate, but it does not re- quire compliance. It does not, however, allow the 

community to make this decision on its own. The state 

auditor, for that matter, cannot make a decision that a 

law will be ineffective due to lack of state funding. . . because of the separation-of-pwers doctrine. Only 

the judicial branch can declare an act of the legislature to be ineffective. 

Accordingly, the local mandate law allows an aggrieved city or town to petition Superior Court for 

declaratory relief. The court may order that the complaining city or town be exempted from having to 

comply with the law or regulation if, in fact, the court 

agrees with the allegations. In one such case, the state 

Supreme Court exempted municipalities from having 

to carry out more private-school transportation responsibilities than were previously required. This is known as 

the Lexington3 decision, discussed below. 

37 
One section of Proposition 2V2 created DLM. It 

is a new division within the state auditor’s office. The 

law requires that division to review any post-1980 law 

or regulation that a municipality suggests is imposing 

new costs and to determine the amount of that cost. 

In any litigation, the amount of the cost imposed, as 

determined by DLM, would be prima facie evidence 

of the amount of state funding that would be necessary to sustain the mandate. 

By the express terms of the statute, it might appear 

that the work is limited to providing evidence for mandate litigation. But, in practice, more has to be done 

because DLM cannot determine the amount of cost 

imposed before it determines that there is truly a new 

obligation on a city or town that meets the elements of a 

mandate finding. DLM is very strict about this procedure because it is important to the auditor that he not 

be seen necessarily as a municipal advocate or as a state 

advocate. Toward that end, the office goes through a 

rather painstaking process in making decisions. 

Note that the statute only allows a city or town to 

submit written notice to DLM to ask for a mandate 

ruling. This provision does not include regional school 

districts, other regional entities, or counties. The statute 

is so written, and the statute is what governs the work. 

Even though DLM’s decision is not necessarily 

final, it has to come to a fm conclusion that there is, in 

fact, a new cost imposed on a community. Upon proper 

petition from a city or town, it looks for the elements of 

a mandate finding. In doing so, it establishes that the 

regulation or law was, in fact, effective on or after 

January 1,1981. Then it determines that there is a cost 

imposed and that there has been no appropriation by 

the Commonwealth to assume the cost. Determining 

that there is, in fact, a cost imposed on a city or town by 

the law or regulation is often the most difficult part of 

the legal determination to be made. Clearly, as DLM 

sees them, conditional grants-compliance conditions 

that would be prerequisite to receiving a state grantwould not be costs imposed by the Commonwealth. 

They would not becaw a municipality would have a 

way to avoid the expense. If the city or town does not 

wish to perform this service, then it may decline the 

grant. Local option or the ability of a community to 

rescind prior acceptance of a law would defeat a mandate finding. This point can be made even when it is 

difficult for a city or town to decline local acceptance. 

An example is the recent amendments to the state 

Workers Compensation Act that imposed many new 

costs on communities. In the final analysis, even though 

realistically no community is going to rescind its acceptance of the Workers Compensation Act, that option 

was there. Court authority requires this type of hterpretation. DLM calls it the Lexington hard choices 

doctrine.4 It would be a hard choice and sometimes an 

impossible one as far as labor negotiations go to rescind 

acceptance of the Workers Compensation Act or many 

38 

other local option programs. But there is that choice. 

And the State Supreme Court in the Le\ingfon decision 

stated that when there is such choice, there is not a 

mandate within the meaning of the statute. 

Another interesting point from the Laington decision provides that when DLM determines whether 

a state appropriation has been made to assume the 

cost of any given new program, undesignated increases in general local aid will not satisfy. DLM has 

to find a specific appropriation for the specific program within the state budget. 

Like most states, Massachusetts has several exceptions to the mandate-funding rule. By statute, there is 

an explicit exception for costs imposed by a court decision or costs imposed by a law or regulation adopted as a 

direct result of a court decision. With this in mind, 

mandate scrutiny has to include a review of all relevant 

court decisions on a given topic to ensure that the court 

exception/exclusion does not apply in any given case. 

By interpretation, DLM also makes exceptions 

for federal pass-through laws and regulations. An 

example is the federal handicapped Accessibility to 

Polling Places Act and accompanying state regulations. In the final analysis, DLM concluded that state 

regulations implementing the act required no more 

than was required by the federal law. Accordingly, 

there was no new state-mandated cost. Although it is 

sometimes difficult to draw the line, DLM finds in 

favor of a municipality if a state regulation imposes 

costs beyond the federal requirement. 

Also by interpretation, DLM makes exceptions 

for laws that regulate private industry and indirectly 

increase the costs of running municipal government. 

An example is the recent Solid Waste Management Act, 

a major initiative in Massachusetts, whereby private 

owners and operators of certain solid waste facilities 

had to make expensive environmental protection improvements to their equipment. The result is increased tipping fees for municipalities. Nonetheless, 

DLM concluded-again trying to be just as fair to the 

state as it is to the cities and towns-that this tipping-fee 

increase resulted more from the contractual relationship with the facility than from the state statute. LAW or 

regulation must be found to impose the cost on a city or 

town before state funding obligations attach. 

Generally, the Massachusetts mandate statute applies to all types of laws. They include educational, 

environmental, and public-safety laws, but not laws regulating the benefits of municipal employment. At the 

same time Proposition 2Y2 was enacted, the voters also 

adopted an amendment to the Massachusetts constitution; it provides that the types of laws regulating the 

wages, hours, benefits, and conditions of municipal employment can be imposed against municipalities if there 

is a two-thirds vote of each branch of the legislat~re.~ 

The Massachusetts mandate law requires state 

funding for even meritorious programs. This require- 
ment is contra? to Janet Kelly’s observations on 

South Carolina. Some South Carolina officials seem 

not to mind social-policy state mandates-they do not 

complain about costs for new programs they see as 

justifiable. In Massachusetts, local officials seek reimbursement even when they agree with the policy behind 

a new mandate. They have this statutory right. If the 

legislators want to implement a statewide policy and it is 

important enough to them, they will have to find the 

money to fund it. This attitude fits into the economic 

context in which the local-mandate statute was created. 

Massachusetts cities and towns are restrained by Proposition 21/2. They cannot raise additional revenues to 

support even meritorious programs. So the legislature 

has to put its money where its mouth is. 

Generally, if DLM establishes the elements of a 

mandate finding with no exceptions, it begins the 

cost-documentation process, first with the individual 

petitioners. It then makes statewide estimates. 

The effects of a mandate determination under the 

Massachusetts statute are varied. On clear issues when 

the auditor finds a state mandate, the legdative response is generally positive. It is on clear issues in which 

the legal arguments are straightforward and the price 

tag is not too high. DLM communicates its findings to 

legislative leaders, and very often the funds are appropriated. The legislators benefit by saving their constituent communities the expense and time of litigation. 

Other times, particularly on expensive items, legislators are reluctant to fund DLM determinations 

until an issue is decided in court. One landfill-related 

matter has been pending for three years. Throughout 

this period, several legislators whose constituent 

communities are affected by this new landfill regulation have filed bills to fund the costs imposed upon 

their communities as determined by DLM. But, in 

each case, the funding bills were defeated during the 

floor debate pending court determination of the issues. This controversy is currently pending before the 

Massachusetts Supreme Judicial Court. 

When there is a no-mandate finding, a community 

still has the opportunity to go to court and challenge 

DLM’s decision. But that has not happened yet. 

No-mandate determinations are turned over to a DLM 

section known as the Sunset Prog~xn.~ It has authority 

to make recommendations concerning any law, even if 

it was effective before 1981. In this way, DLM can offer 

some further level of review for municipalities. Even if a 

law does not require state funding in the strict sense, 

DLM tries to determine whether the law maybe unreasonable or should be modified in some other way. 

A mandate-reimbursement law like the Massachusetts version provides a reasonable balance between the interest of local and state policymakers. 

There is a general expectation that mandated programs will be state funded. This feeling provides 

more independent decision-making authority for local budgetmakers who must work within the limits of 

Proposition 2V2. On the other hand, strategies are 

available to the legislature for implementing statewide policy initiatives affecting local spending. 

Should the legislature specifically desire, it can 

override the local mandate-funding rule. It can include explicit language in any law providing that a 

new service must be funded by municipalities, notwithstanding the provision of the local mandate law. 

The legislature has not yet exercised this option. 

New programs can be imposed as irresistible conditions to state-aid distributions. This provision is a 

twist on the Lexington private-school transportation 

case. After the court held the communities no longer 

had to provide certain unfunded mandated transportation services, the legislature attached a proviso to 

the local aid item that has traditionally given state aid 

for several kinds of transportation: regular transportation, bilingual, and so forth. Any community that 

did not furnish private-school transportation would 

not receive its general school-transportation aidtruly an irresistible condition, because it involved 

large sums of money for most communities. Nonetheless, the court concluded that imposing such a condition was within the prerogative of the legislature. 

DLM is seeing a growing use of local option legislation, particularly in the property tax exemption areas. Quite often, the Ways and Means Committees 

call the office, and after discussing a matter. they 

amend a bill to include local option language. The 

DLM staff is pleased when that happens because 

some say that this exchange is really what Proposition 

2*/, is all about, giving more decision-making power to 

the local level of government. 

Few laws have passed since 1980 without some 

discussion of the local mandate issue if a matter impacts local government. The auditor’s decisions are 

often quoted during house and senate floor debates. 

And local officials rely heavily upon DLM to continue 

this kind of work. Again, the state auditor’s office is an 

important factor in having made it possible for municipalities to live within the limits of Proposition 21/2. 

The legislature is keenly aware that the local 

mandate-funding rule was a voter initiative. It knows 

now that if it does not stick with its part of this bargain, 

the citizens can go back to the polls and give them an 

even more stringent local mandate statute that they 

would have to live with. 

Several states are doing just that. The Massachusetts mandate law is not a constitutional amendment, 

so the legislature has some leeway. And, states may 

want to consider this point as a defensive measure. Of 

course, no legislature would voluntarily bind itself to 

a mandate-funding rule. But, if states at least take some 

steps up front to ease the burden of costs imposed on 

local governments, they may find themselves in a better 

position to resist what might be a citizens’ initiative to 

require funding of any statewide policy. 

39 
POSTSCRIPT 

Since initial publication of this article in early 

1990, the Massachusetts Supreme Judicial Court reversed an earlier superior court decision regarding 

local versus state funding duties for liner installations 

at municipal landfills. In Town of NoMolk v. Department of Environmental Quality the state’s 

highest court stated that the Massachusetts mandate 

law “. . . applies to regulatory obligations in which the 

municipality has no choice but to comply and to pay the 

costs.” The court reasoned that (1) since there is no 

state requirement that a municipality operate a landfill, 

and (2) since the majority of cities and towns contract 

for this service, the cost of state regulations requiring 

liners could be avoided by contracting trash disposal 

with a commercial enterprise. Accordingly, the court 

ruled that the state could require the Town of Norfolk 

to line its municipally owned landfill at local expense. 

The Massachusetts State Auditor’s Division of 

Local Mandates (DLM) reads the Norfolk decision 

narrowly. DLM analysis indicates that relatively few 

state mandates can meet all criteria cited by the court 

as grounds for exclusion from the local mandate law. 

Notes 

St. 1980, c.580 provides that property taxes assessed in any 

city or town may not exceed 2.5 percent of the total full and 

fair cash value of taxable property within the town. This 

sum is capped at 102.5 percent of the maximum levy limit 

of the municipality in the prior fiscal year. 

’At the November 1986 state election, Massachusetts vot- ers approved a measure limiting the allowable growth in 

state tax revenues to the average growth in wages and sala- ries over the prior three years. Any excess raised over al- lowable revenues must be refunded to income taxpayers. 

See M.G.L. c.62E 

3Town of Lexington v. Commissioner of Education, 393 

Mass. 693 Mass. (1985). 

4T0wn of Lexington v. Commissioner of Education, 397 

Mass. 593 (1986). 

See Massachusetts Constitution, 115th Article of Amend- ment. 

6See Janet M. Kelly, “Assessing the Extent of the Mandate 

Problem in South Carolina,” in Michael Fix and Daphne 

A. Kenyon, eds., Coping with Mandates: rntat are tlie Alter- natives? (Washington, DC: Urban Institute Press, 1990), 

pp. 63-68. 

407 Mass. 233 (1990) 

’M.G.L cll, s.6B 

40 
MASSACHUSETTS: COST ESTIMATION 

AND REIMBURSEMENT OF MANDATES* 

The Massachusetts Division of Local Mandates 

(DLM) is placed within the Office of the State Auditor, headed by an independent elected official. Its 

genesis is important because it means that DLM’s 

rulings on whether post-1980 state laws, rules, and 

regulations violate Proposition 2*/, and the local mandate statute1 and should therefore be state funded 

are impartial. If the state requirements are based on 

pre-1981 authority, allow for local acceptance, or 

stem from court orders or federal mandates, then the 

local mandate statute does not apply. 

It also means that DLM’s determination of the 

expenses municipalities incur or anticipate due to 

state-mandated programs are calculated accurately 

and fairly. For example, financial cost models are 

used to compute the estimated costs of pending legislation and draft state regulations. In addition, the 

anticipated cost savings a particular proposed or effective law or regulation may generate for cities and 

towns are considered, when appropriate, in arriving 

at the state’s net funding obligation. For unfunded 

state programs already in effect, DLM requires municipalities to submit cost documentation, such as bill 

receipts, payroll data, cost quotes, and so on, as evidence that expenses were incurred or are anticipated. 

In other instances, a cost claim form is forwarded to 

local officials, who are then asked to detail incremental state-mandated expenditures and to sign a verification clause to attest that the costs are genuine. 

In summary, DLM believes that the way to maintain the respect and credibility of both state and local 

officials is to continue issuing sound, impartial legal 

rulings on the applicability of the local mandate law to 

state-mandated programs, to employ the latest in 

computer cost-modeling techniques to estimate potential statewide costs, and to require verification of 

mandated expenses from municipal officials. 

*Anthony V. D’Aiello wrote this article, which first ap peared in Michael Fix and Daphne A. Kenyon, eds., Cop- ing with Mandaies: Whuf are the Alternaiives? (Washington, DC: Urban Institute Press, 1990). 

As DLM strives toward these ends, more and 

more legislative committees and state agencies are 

contacting DLM before the fact-before promulgating costly laws and regulations. Today, DLM frequently works with these state officials to help draft 

new state programs that will be consistent with the 

local mandate law. It also provides them with statewide cost studies that identify the financial impacts 

proposed unfunded laws and regulations would have on 

municipahties. This practice is consistent with the auditor’s proactive stance, seeking consensus to fund 

state-mandated programs in the initial proposal stages. 

UP-FRONT FUNDING VERSUS 

REIMBURSEMENT 

An important interpretation of the local mandate provisions of Proposition 21/2 is found in a 1985 

Massachusetts Supreme Judicial Court decision, 

Town of Lexington v. Commissioner of Educatioc2 The 

state’s highest court ruled that laws are ineffective 

when they are enacted without provisions for state 

assumption of local costs in each year the costs are 

imposed. The decision also stated that this funding 

should come in the form of up-front monies. 

Nevertheless, new state programs continue to 

become effective without this state funding commitment. Although exact numbers are hard to come by, 

DLM has an overall sense that these instances are 

stages of enacting new state programs. Surprisingly, 

more and more legislators and state agency heads are 

complying with this spirit of Proposition 2‘/*, for it can 

result in the smooth local implementation of programs important to them, while avoiding the risk of 

DLM’s determining that the program is subject to the 

local mandate law and the courts’ ruling them ineffective. This latter ruling would essentially exempt 

municipalities from the mandated provisions until 

state funding is provided, and provided up front. 

In short, DLM’s position and, naturally, that of 

local officials, is that state funding should be up front 

so communities do not have to appropriate and expend limited financial resources in anticipation of 

41 
state reimbursements later. For this reason, provisions of the local mandate law were incorporated into 

Proposition 2’/, to balance the fiscal constraints Proposition 2l/, placed on local governments’ property tax 

revenue-raising capabilities. 

Up-Front Funding Process 

In keeping with its proactive stance, DLM follows 

legislation through a computer tracking system tied into 

the legislature’s computer system. More than 6,000 

pieces of legislation are reviewed by staff yearly for 

mandate implications. “Big ticket” unfunded mandate 

bills are pulled out and action is taken. Hundreds of 

proposed regulations are also reviewed yearly. 

DLM legal staff checks that the bills would in fact 

impose new financial impacts on citiesand towns. The 

research unit then attempts to attach a price tag to 

the legislation. It does so by sampling 40 cities and 

towns representative of the entire state in terms of 

population and other demographic variables. The 

survey instruments are concise and not burdensome 

to local officials, so that local cost data can be quickly 

gathered and tabulated. DLM also creates computer 

cost models to calculate the numbers and to translate 

them on a statewide basis for 351 citiesand towns over 

a three-year period. Future-year costs are sometimes 

tabulated using inflation factors. Public and private 

sectors provide other relevant information and cost 

data. For instance, if unit costs for mandated equipment purchases can be obtained from private-sector 

sources, this information can be plugged into the cost 

model and statewide costs computed in a matter of 

seconds, without going the survey route. DLM sometimes works with legislative committees and state 

agency officials in a combined effort to cost out proposed mandated programs. 

DLM’s legislative unit then takes over, contacting legislative committees and state agencies and advising them of DLM’s concerns and cost findings. 

Ideally, a consensus is formed that the new program 

requires a state funding commitment, and either the 

funding is appropriated and provided to communities 

up front so that local finances are not affected, or the 

program is not mandated. 

This system has worked on several issues. The 

1984 suicide prevention law3 required in part that 

local lockups make their jail cells suicide proof. DLM 

advised the legislature-based on information received from local police chiefs and their associationthat this proposition was expensive, that it would 

require more than the $1 million reimbursement appropriated for renovation costs. A total of $10 million 

was soon appropriated and has been provided to cities 

and towns on an up-front basis by the Governor’s 

Office for Administration and Finance. 

In 1983, DLM reviewed an added-polling-hours 

bill that, in effect, mandated cities and towns to keep 

their polling precincts open an additional three hours 

for state election^.^ Through a representative sampling of communities, DLM projected the statewide 

added-personnel and other fixed costs (e.g., rent, 

heating, and lighting) that the bill would impose on 

cities and towns. A funding commitment was soon 

added to the bill, and the legislature authorized DLM 

to certify local costs for each election. As a result, 

since 1984, $3 million has been provided to cities and 

towns in up-front monies for election costs. 

DLM also identified a 1984 right-to-know bill as 

potentially costly mandate legislation. A quick survey 

estimated statewide costs. DLM presented its findings to the legislature, and since then, nearly $1 million in up-front monies has been made available to 

local officials for costs incurred complying with the 

environmental investigative and reporting requirements of the new law? In handling this funding issue, 

the executive branch is using an up-front funding 

vehicle that forwards cities and towns per-capita 

monies that are then drawn down on a quarterly basis, 

providing that local governments give an account to the 

governor’s office on how the money is spent. DLM 

considers this mechanism an ideal way of satlsfylng the 

funding requirements of the locat mandate law. 

In 1986, DLM assisted the legislature and the 

Department of Education in estimating three-year 

costs for the school breakfast bill.6 Through survey 

information and by deducting federal funding for 

school breakfast expenses, DLM estimated costs for 

affected school systems. Today, about $710,000 has 

been targeted in up-front state funding. 

A final example is a 1987 bill7 that would have 

required local police agencies to pay for enrolling 

their part-time police in full-time police officer training courses. Based on information gathered from the 

Executive Office of Public Safety and through surveys, DLM estimated these costs at nearly $25 million. The bill was refiled in 1988, but again it did not 

pass, given the costs involved. 

In short, by getting involved early in the process 

and by establishing positive relationships with state 

officials, DLM can ensure that state funding is provided before, not after, the fact, and can ensure that, 

in any case, it is provided. 

The Reimbursement Process 

In reality, new mandated programs become ef- fective without state funding. The local fiscal impact 

is not considered until local officials begin compliance. These local officials turn to DLM when they 

are faced with mandated costs they have not anticipated and budgeted for. Then DLM’s role is to determine what affected municipalities have spent or expect to spend. As mentioned above, verifiable proof is 

required of incurred or anticipated expenses. DLM’s 

determination of this amount can then be submitted 

42 
in court as prima facie evidence in suits brought by 

cities and towns to seek an exemption from the mandate until state funding is provided. 

During DLM’s cost-documentation process, 

DLM attempts to determine the statewide costs imposed. This process enables DLM to recommend to 

state agencies or to the legislature the amount of 

reimbursement necessary not only for one petitioning 

community but for all 351 cities and towns. The process may require municipal officials to submit cost 

documentation or complete signed cost claim forms. 

DLM’s job then is to make its findings available to the 

legislature and state agencieswith the hope that state 

reimbursement will be appropriated and distributed 

to affected cities and towns. 

An example of how this system works was in 1986, 

when the legislature enacted the Race and Primary 

Language law.8This unfunded statute required a new 

one-time census taken by municipal census officials. 

They were to identify and report to the Secretary of 

State the race and primary language of residents. 

Through cost claim forins and by unit costs gathered 

from private computer service bureaus for new census lists, DLM determined statewide costs that it 

presented to the state agency. The state agency then 

requested and was granted an appropriation of 

$900,000 to reimburse the expenses incurred by cities 

and towns, as certified by DLM. 

A last example is the 1983 State Department of 

Public Health ambulance service regulation^,^ which 

were promulgated without state funding. Today the 

legislature still reimburses affected cities and towns 

for past costs. These costs are first gathered and certified by DLM. 

ROADBLOCKS TO SUCC€SS 

Concerns are raised when the legislature pays for 

the mandates it imposes on cities and towns out of the 

local aid fund. This fund, officials believe, should be 

state revenues shared with local officials without any 

strings attached; they should not be used to fund 

mandates. When the economy of the state is less than 

healthy, legislators and the executive branch may not 

be inclined to agree with DLM to fund new statemandated programs. 

Massachusetts experienced tremendous revenue 

growth during the 1980s. However, a recent trend of 

spending growth in excess of revenue growth, along 

with severe revenue shortfalls, has created a structural revenue-spending gap, which has existed for at 

least three years. Consequently, the governor and 

legislative leaders are considering both temporary and 

permanent new taxes, among other measures, to assist 

in balancing the FY 1989 and FY 1990 budgets. Given 

the state’s new fiscal reality, FY 1990 budget proposals 

call for a reduction in direct local aid. ntal local aid 

(comprised of direct and indirect aid, lotteq aid, and 

resolution aid) almost doubled from FY 1983 to FY 

1989 ($2.1 billion to $3.9 billion). But proposed FY 1990 

total local aid will increase only 2 percent or $83 million 

from FY 1989, in contrast to average yearly increases of 

11 percent (an average of $297 million yearly). 

This anticipated downturn in infusions of state 

financial assistance, along with an overall decline 

since 1981 of property tax revenues brought about by 

Proposition 2V2, has led the legislature to propose 

further modification of Proposition 2V2. One proposal would allow city councils and town meetings by a 

two-thirds vote to assess property taxes for debt service outside the limits of Proposition 21/2 without ob- taining voter approval. Also in 1987. Chapter 229 of 

the Acts of 1987 allowed communities to pass an 

override of Proposition 21/2 to increase general revenues with a simple majority vote, instead of the previously required two-thirds voter approval. However, 

less than half the Proposition 2’/,-override attempts 

in the state’s 351 cities and towns have been successful, even with this less-restrictive override provision, 

Sometimes legislators and state officials label 

DLM as a roadblock to successful local implementation of important state programs because it raises the 

mandate issue. Although the merits of a new law or 

regulation are commendable, cities and towns must 

be assisted in paying for them, especially today, given 

state and municipal financial problems. DLM has 

thus increased its efforts to provide state 

policymakers with timely local cost impacts of proposed state programs. As a result, these officials are 

far more reluctant to pass costly local mandates. 

Another roadblock can be gathering cost data 

from part-time officials of small communities. Of the 

351 cities and towns in Massachusetts, 123 towns have 

less than 5,000 residents. However, because input 

from these local officials is needed, for it is these 

small towns that most often feel the biggest negative 

impact from state mandates, DLM keeps in constant 

contact with them through its field services staff, and 

designs surveys and cost claim forms that are quick 

and easy to complete. 

FACTORS AFFECTING 

DLM’S SUCCESS 

DLM staff has varied and experienced backgrounds. Some are also part-time town clerks, selectmen, city councilors, and assessing officers. One wasa 

three-term mayor. Some have worked in other municipal and state agencies. Many have, or are working 

toward, law and master’s degrees. They also participate in courses and seminars intended to further educational and professional careers. 

Another factor contributing to DLM success is its 

field services and legislative liaison units. DLM has 

43 
established positive working relationships with local 

officials and their various municipal associations, legislators, and state agency staff. As a result, DLM 

receives about 500 written inquiries a year concerning 

state-mandated programs from local and state officials. 

It also responds to about 600 phone calls annually, 

providing information and assistance to municipal and 

state officials, and reviews and certifies hundreds of cost 

claim forms and surveys yearly for state funding. 

Another factor contributing to DLM’s effectiveness is the continuing refinement of its computer cost 

model. The data bank and cost-modeling techniques 

are more advanced than those of most state agencies. 

Costing out mandates is as much an art as a sciencethere are relatively few rules to follow. DLM staff is 

given considerable leeway for judgment and for coming up with innovative methods of cost analysis and 

estimation. All activities are accomplished on an annual budget of $860,000. 

DLM work is easier when the legislature completes 

its own estimates on the local costs of legislation. It is 

also easier when the executive branch fulfills the intent 

of the Governor’s Executive Order 145, which requires 

state agency heads to estimate the municipal fd impacts of the regulations they propose. Given the author’s personal experience, there continues to be a need 

for DLM. It will not become extinct for lack of unfunded state mandates proposed or enacted. 

CONCLUSION 

Since DLM’s beginning in 1983, nearly $20 million in state funding has been provided to cities and 

towns for mandated requirements, either up front or 

in reimbursements. More important, millions of other dollars in potential state-imposed costs were not 

imposed because of concerns DLM raised. DLM intends to continue meeting its objectives. 

POSTSCRIPT 

Since initial publication of this article in early 

1990, concerns expressed about the status of the Massachusetts fiscal picture have grown. A $1.2 billion tax 

package was passed in mid-July, raising income taxes 

by about 20 percent, nearly doubling the state gasoline tax, and expanding the sales tax to a wide variety 

of business and personal services. Nonetheless, some 

analysts project that the $13.6 billion state budget 

proposal for fiscal 1991 will be $300 million to $400 

million out of balance. This shortfall does not include 

approximately $240 million needed to finance bonding to pay off the fiscal 1990 spending deficit. 

Moreover, a citizens’ taxpayer group anticipated 

the tax increase measure and has obtained signatures to 

place an initiative petition on the November 1990ballot. 

This petition would repeal the tax increases and roll 

back state fees, fines, and taxes to 1988 levels. Analysts 

project that the citizens’ initiative would require state 

spending cuts of $5 billion over the next three years. 

In such a climate, it is reasonable to expect that 

the legislature might look more to local resources for 

funding necessary services. At the same time, Massachusetts cities and towns no longer will enjoy the 

significant annual local aid increases to which they 

had become accustomed. The Massachusetts State 

Auditor’s Division of Local Mandates (DLM) foresees a growing importance of its cost estimation work 

for the legislature. Many of the same factors impairing state finances are at work on local finances. With 

all of this, DLM expects more aggressive resistance 

from municipalities to state mandated spending, and 

more intense debate on legislative proposals containing such mandates. 

Notes 

M.G.L. c. 29, s. 27C. 

2Town of Lexington v. Commissioner of Education, 393 

Mass. 693 (1985). 

3M.G.L. c. 40,s. 36B. 

Chapter 503 of the Acts of 1983. 

’Chapter 470 of the Acts of 1983. 

Chapter 356 of the Acts of 1986. 

House No. 84. 

*Chapter 165 of the Acts of 1985. 

105 CMR 170 et seq. 

44 
CONNECTICUT: CONSIDERATION AND REJECTION 

OF A MANDATE REIMBURSEMENT PROGRAM* 

Connecticut has exhibited great caution with regard to the mandatory reimbursement concept. A 

phrase that perhaps summarizes Connecticut’s experience with this concept is the rise and fall of the 

reimbursement issue in the land of steady habits. 

About eight years ago, the state began to consider seriously the adoption of a mandatory reimbursement program, but, after a year and a half of careful 

consideration, decided against it. 

Some background information outlining the responsibilities of the Office of Fiscal Analysis and the 

emergence of the state mandates issue in Connecticut is important as a background for understanding 

Connecticut’s reluctance. 

The Office of Fiscal Analysis (OFA), the legislature’s budget office, consists of 20 professionals who 

handle the following three major responsibilities: 

Assisting the two fiscal committees (Appropriations and Finance) in the formulation of their budgetary recommendations to the full legislature. 

Researching fiscal issues for any of the 

187 legislators who might ask for assistance (although OFA works primarily 

for the fiscal committees). 

Preparing state and municipal fiscal impact statements (fiscal notes) on legislation. OFA analysts append a fiscal note 

to each bill favorably reported by nonfiscal committees. The bill, along with the 

fiscal note, is then distributed to all 

members of the house and senate. In addition, analysts provide preliminary fiscal notes on bills being seriously considered by the fiscal committees before 

these bills are favorably reported. OFA 

* Geary Maher wrote this article, which first appeared in 

Michael Fix and Daphne Kenyon, eds., Coping with Man- dates: Wid are the Alternatives? (Washington, DC Urban 

Institute Press, 1990). 

analysts complete approximately 2,000- 

3,000 fiscal notes per year on bills, 

amendments, and amended bills. It began preparing state fiscal notes in the 

mid-1970s and started providing municipal fiscal notes in 1979. The work on municipal fiscal notes exposes OFA to the 

state mandates issue. 

Interest in the possibility of adopting state mandates legislation in Connecticut was spurred by passage of legislation around 1978 regarding hypertension benefits for local police and firefighters. The 

legislation passed before OFA started preparing municipal fiscal impact statements; it had serious cost 

implications for municipalities that became apparent 

once the legislation was implemented. 

Several organizations that represent municipalities were sensitive to the legislation and pushed for a 

legislative remedy to avoid this type of development 

in the future. Some form of reimbursement was suggested for state mandates. These organizations 

joined forces with a legislator from a rural community 

who believed philosophically that the state- should 

bear at least part of the costs associated with imposing 

mandates on municipalities. 

As a result of this concern, the State Mandates 

Interim Study Committee, composed of five members of the Appropriations Committee, was established pursuant to 1983 1egislation.l The committee is 

required to report on the feasibility of a pilot program 

for reimbursing municipalities for the cost of new or 

expanded state mandates. 

Connecticut’s cautious approach is evident in this 

1983 legislation. A mandatory reimbursement program would be considered, but any implementation 

would occur on a limited pilot basis within one specific program area of government. Implementing the 

pilot program in the environment/economic development area of government subsequently was considered. The 1983 legislation also: 

Defined state mandate as “any state initiated constitutional, statutory or execu45 
tive action that requires a local government to establish, expand or modify its 

activities in such a way as to necessitate 

additional expenditures from local revenues, excluding any order issued by a 

state court and any legislation necessary 

to comply with a federal mandate.” 

Required OFA to prepare fiscal notes on 

state mandates. Because OFA had already been providing them since 1979, 

for practical purposes, analysts began indicating state mandate in capital letters 

on the fiscal note to alert legislators to 

the existence of legislation that would 

Required OFA to review state mandates 

and the cost of such mandates passed 

during the 1983 legislative session. Approximately 40 out of the 800 bills passed 

were identified as state mandates. 

impose a state mandate. f 

rn Defined various types of mandates and 

other conditions related to the mandates 

(eg., disCEahners that were conditions un- der w@ch the stde-would not provide reimbursement if 8 reimbursement procedure had been subsequently enacted) and 

required that the types of mandates and 

related conditions be indicated on fiscal 

notes. This requirement subsequently was 

repealed through 1984 legislation. 

The next year, the State Mandates Interim Study 

Committee thoroughly researched the issue, with a 

thrust toward establishing a pilot-reimbursement 

program in 1984 in the environment/economic development area of government. In the process of its 

deliberations, there was an effort to: 

Collect comparative information from 

other states, especially California and 11- 

linois, regarding their reimbursement 

programs; 

Identify costs that would be reimbursed 

and the timetable for reimbursement; 

Improve OFAs ability to get more complete information from municipalities 

on a timely basis (e.g., developing a contact list of up to 10 small, medium, and 

large municipalities out of the total 169 

cities and towns in Connecticut); and 

Assess the administrative costs associated with instituting a reimbursement 

procedure in Connecticut. 

Although most of the study committee’s efforts 

centered on devising an elaborate scheme of reimbursement that would have been implemented on a 

pilot basis, the ultimate legislation that passed did not 

go that far, and only relatively modest legislation was 

enacted in 1984. Connecticut’s reluctance can be attributed to the following types of issues that were not 

completely resolved: 

rn 

rn 

How to define reimbursable costs (e.g., 

should reimbursements include indirect 

as well as direct costs?); 

Which timetable for reimbursement 

should be chosen (e.g., provide reimbursement in the first year or wait two or 

three years until the overall impact becomes more evident), what amount of 

reimbursement should be provided 

(e.g., institute a percentage share arrangement with municipalities), and 

whether the reimbursement should be 

phased in (e.g., 25 percent for the first 

year, 50 percent for the second year, etc.); 

Whether the state should provide reimbursement for mandates requested by 

municipalities or for those mandates already in place; 

How to ensure that quality data could be 

obtained quickly from cities and towns 

and how to obtain reasonable fiscal estimates given that municipalities do not 

often know initially how a proposed 

mandate will be implemented; 

How much money should be spent by the 

state reviewing, processing, and auditing 

claims and establishing an appeals board 

to resolve complaints (annually, Illinois 

and California were spending approximately $500,000 and $750,000, respectively, to support the administrative 

components of their state mandatesprograms, and Connecticut was not only 

hesitant about incurring these additional costs but also was unwilling to establish this layer of bureaucracy); and 

Reluctance on the part of the Appropriations Committee chairs and other legislative leaders to give up some control 

over expenditures by instituting a mandatory reimbursement procedure due to 

the state’s uncertain fiscal condition at 

the time. 

The following two reactions to some extent typify 

Connecticut’s cautiousness with regard to adopting a 

46 
mandatory reimbursement procedure. The Appropriations Committee chair had serious concerns 

about relinquishing some control over state appropriso, which costs are eligible for reimbursement and the level of, timetable 

for, and duration of reimbursement. 

ations to an automatic reimbursement mechanism; 

she often questioned whether the mandatory reimbursement approach made sense and whether the 

state’s best interests would be served by moving in 

that direction. 

In addition, one highly respected Connecticut state 

auditor who has held several important positions in 

state government expressed his concerns as follows: 

The Appropriations Committee provided these determinations in the first year but has not done so subsequently because interest in the state mandates issue has 

declined. No direct reimbursement ever has been provided through this legislation. Bills that would impose 

state mandates are still referred to the Appropriations 

Committee; however, the general issue and the potential for reimbursing municipalities for new or ewanded 

As you know, I don’t think this concept makes 

any sense. Further, assuming acceptance of 

the concept, the method of dealing with it as 

proposed in the working draft is crazy. 

The draft (legislation) raps so many questions that it is unproductive to go through 

them in this memo. . . . 

mandates imposedby the state have received rilativcly 

little attention in the last four to five years. 

It is somewhat difficult to measure the effectiveness of Connecticut’s state mandates law. Perhaps 

the law has reduced the number of additional mandates being imposed by making legislators more 

aware of the consequences of their actions on municipalities. Fewer such bills seem to be introduced, and 

The process of computing the casts consistently among all the local government entities and setting up the procedures, staff and 

timetable for OPM (the Governor’s budget 

office) to approve requests and hear appeals 

would be a nightmare. . . . 

If there is a compulsion to proceed with this 

concept, I think that each bill establishing or 

expanding a mandate should include an appropriation and a formula for distributing 

the appropriations. The Assembly (state legislature) would have the choice of adopting 

or removing the appropriation. . . .2 

As a result of the technical implementation problems that were identified but not completely resolved 

and the concerns expressed by some legislative officials, Connecticut began to consider more seriously a 

voluntary rather than mandatory reimbursement 

scheme. In lieu of a mandatory reimbursement procedure being enacted in 1984 on a pilot basis with regard 

to the state’s environment/development programs, a 

voluntary reimbursement procedure was adopted. 

After a year and a half of careful consideration, 

legislation was enacted in 1984. It requires that any 

bills creating or enlarging state mandates be referred 

to the Appropriations C~mmittee.~ The statute requires that any such bill that is favorably reported by 

the Appropriations Committee contain a determination concerning: 

Whether such bill creates or enlarges a 

state mandate, and if so, which type of 

mandate is created or enlarged; and 

Whether the state shall reimburse local 

governments for costs resulting from 

such new or enlarged mandates, and if 

w 

even fewer are given serious consideration and eventually passed. Most bills affecting municipalities that 

pass do not impose significant burdens and often 

create relatively simple administrative changes that 

usually result in either no cost or in minimal municipal costs that can be absorbed. 

In addition, immediate attention was diverted 

from the mandates issue because the fiscal pressures 

on Connecticut’s state and local governments that 

existed prior to passage of the state mandates legislation were temporarily alleviated. The state enjoyed 

sizable general fund surpluses totaling $1.146 billion 

over four consecutive fiscal years as follows: $165.2 

million for 1983-84, $365.5 million for 1984-85, $250.1 

million for 1985-86, and $365.2 million for 1986-87. In 

lieu of funding any new state mandates or directly 

funding existing ones, Connecticut was in a better 

financial position to provide more indirect assistance 

to municipalities through general state aid, including 

property tax relief grants. As a result of the improved 

fiscal condition of the state, legislative and municipal 

officials became less concerned about direct reimbursement for specific state mandates. 

This attitude could change, however, if the 

state’s fiscal picture continues to worsen in future 

years. Connecticut ended FY 1987-88 with a $115.6 

million deficit, and FY 1988-89 with a $28.0 million 

deficit, and is likely to end FY 1989-90 with a $160.8 

million deficit. Connecticut has attempted to enhance revenues and slow the rate of growth in expenditures to avert a deficit in 1990-91. Although the 

1989-90 and 1990-91 budgets either reduce or slow the 

rate of growth in some grants to municipalities, overall state aid continues to increase. Table 2 indicates 

the appropriated level of state aid to municipalities 

from FY 1982-83 through FY 1990-91. 

As a result of continued increases in state aid to 

municipalities despite the more recent worsening in 

47 
Table 2 

Connecticut's Aid to Municipalities: 

All Approptiated finds, 

M 1982-83 to FY 1989-90 

Fiscal Percent 

Year Amount Increase Increase 

1982-83 

1983-84 

1984-85 

1985-86 

1986-87 

1987-88 

1988-89 

1989-90 

1990-9 l1 

$667,333,259 

747,036,140 

836,353,011 

905,527,991 

1,058,987,397 

1,155,538,857. 

1,297,171,601 

1,397,944,189 

1,510,430,913 

$52,258,120 

79,702,88 1 

89,3 16,871 

69,174,980 

153,459,406 

96,55 1,460 

14 1,632,744 

101,472,588 

11 1,786,724 

8.50% 

11.94 

11.96 

8.27 

16.95 

9.12 

12.26 

7.82 

7.99 

'To provide a consistent basis of comparison with prior 

years, $146.5 million shifted from appropriated to nonap 

propriated funding sources for various grants to towns has 

been included in the 1990-91 figures. 

the overall fiscal condition, the sensitivity associated 

with the state mandates-reimbursement issue has not 

reemerged. However, if state and municipal re- sources become strained by more intense fiscal pres- sure, a renewed interest in terms of reconsidering a 

mandatory reimbursement mechanism could result. 

It is ironic, however, that although Connecticut 

was in a good financial position from 1983-84 to 

1986-87 to reimburse specific mandates, it chose not 

to do so. Instead, the state opted to provide more 

indirect assistance to cities and towns by increasing 

state aid to municipalities. Now that the state is in a 

more difficult fiscal situation, resources may be too 

limited to provide reimbursement for specific mandates. If the fiscal situation deteriorates further, it 

might become increasingly difficult to enact a manda- tory reimbursement procedure in Connecticut. 

Notes 

IPA. 83 12 (June Special Session), An Act Concerning 

State Mandates to Local Governments. 

2State Auditor Leo V Donohue's memorandum to Repre- sentative Janet Polinsky, Chair of the Appropriations 

Committee, January 1984. 

PA. 84 124, An Act Establishing Procedures with Respect 

to Bills Creating or Enlarging State Mandates Which May 

Result in Costs in Local Governments. 

48 
~ 

NEW YORK THE ”NON-ISSUE” OF MANDATES* 

Mandates, particularly the “unfunded” kind, are 

an issue that all local officials can rally around with 

shared distaste. After all, who would want to be required (mandated) to doCsomething for somebody 

else, using his own money, and not be compensated 

(reimbursed)? Worse, local officials must pay the political price for raising taxes to fund services while state 

or federal governments take credit for providing them. 

So it is no wonder that unfunded mandates are 

local governments’ “battle cry” of the 1980s. They are 

the most persistent source of friction in intergovern- mental relations. New York City Mayor Edward I. 

Koch, talking about the “mandate millstone,” out- lined the fiscal consequences of unfunded mandates. 

The City of New York, as an example, is driven by 47 federal and state mandates. The total cost to the city of meeting these requirements over the next four years will be $711 

million in capital expenditures, $6.25 billion 

in expense-budget dollars, and $1.66 billion 

in lost revenue.1 

For the most part, however, state government imposition of mandates on local governments is a “nonissue.” Once funding questions are separated from the 

home rule issue, the level of criticism drops off rapidly. 

The most frequent local complaint about 

mandates, however, is that they are rarely 

funded at adequate levels. . . . Mandates appear to be more a lightning rod of discontent 

for local officials than a significant substantive problem.* 

With respect to funding, there are more politically positive and cost-effective ways than using current 

strategies. “Politically positive” means that benefits 

accrue to both the mandator and mandatee, and “cost 

effective” means the use of methods requiring less 

time, cost, and effort per dollar of benefit flowing 

back to local governments. 

True home rule provides that local governments 

are masters of their own destinies, free from unwanted 

Paul Moore wrote this chapter. 

and unnecessary intrusion from the state or federal government. Local autonomy must be balanced by state 

government’s responsibilities to ensure the provision of 

services that are in the broader public interest, and by 

the constitutional and historical fact that municipalities 

are creations of the state government. 

The right or desirability of the state to mandate 

and the appropriateness of compensating local governments for the cost of compliance are not in question. Both parts of this state-local dynamic can and 

will be pursued. 

Instead, this article summarizes what appears to be 

the current strategy of lawmakers in many states for 

relieving the friction causedby state-imposed mandates, 

and argues that this strategy is flawed. Alternative strategies will be discussed, and a more comprehensive 

state-local cooperative approach will be outlined within 

the context of political benefit and cost effectiveness. 

CURRENT STRATEGIES 

Most good faith efforts to resolve (or at least 

understand) the mandate funding issue now involve a 

three-step strategy: 

1) Cataloging existing mandates to provide 

some sense of the nature and extent of 

the problem; 

2) Strengthening controls over the enact- ment of new mandates to minimize additional costs imposed on local governments, usually through a “fiscal note” 

procedure; and 

3) Shifting the cost for the mandate from 

the level of government performing the 

function to the level of government 

mandating the function. 

Political perception of this strategy is negative, 

however, and its overall cost effectiveness is questionable. Furthermore, each of these steps is fraught 

with difficulty and ignores a prerequisite “first step” 

that has to be resolved-defining what constitutes a 

mandate . 

49 
Step 1: The Catalog 

For the catalog strategy to be successful, it must 

include a definition and process of identification that 

can be understood and accepted by both state and 

local officials, and it must lead to a result that is quantifnble enough to facilitate a fiscal note or reimburse- ment scheme. The U.S. Advisory Commission on Intergovernmental Relations (ACIR) incorporated the 

following definition of a state mandate in its 1981 publication MeanUing kal D~k~etiomzy Authority: 

A legal requirement-constitutional, statutory, or administrative-that local governments provide a specific service, meet minimum state standards, engage in an activity 

(such as collective bargaining with employee 

organizations), o? establish certain terms and 

conditions of local public employment. 

In New York State, the only inventory of man- dates on local governments was compiled by the Legislative Commission on Expenditure Review (LCER). 

Although it focused only on mandates affecting counties, the LCER study used ACIR’s definition and ex- panded the taxonomy to differentiate between three 

types of mandates: those that commanded action, those 

that authorized discretionary action, and those that required action only after a discretionary decision had 

been made. A further important distinction was made 

between mandates that affected programs and those 

that related more to the administration of county government. LCER noted, however, that: 

. . . the 2,632 mandates identified are less 

than the 5,u10 originally estimated by LCER’s 

research staff in the early stages of this survey. 

This difference can be explained largely as resulting from changes made in classifying mandates once the survey was under way.3 

The extreme sensitivity of the number of mandates identified to the definition being used has significant implications. A recent survey conducted for 

New York’s Legislative Commission on State-Local 

Relations revealed a substantial amount of confusion 

at the local level over which services are mandated 

and which ones are not-confusion caused in large 

part by definitional problems and by a lack of current, 

comprehensive information. This kind of confusion 

also intensifies the level of state-local friction, often 

resulting in the state (and its mandates) becoming the 

scapegoat for local fiscal problems. 

Development of a catalog listing all mandates is 

usually the first response state and local policymakers 

can agree to when the friction builds. At best, such a 

catalog will give some indication of the nature and 

magnitude of past decisions mandating local actions. 

It even might provide some incentive to clean up 

those that now might seem ill considered. 

The staff time and effort to compile such a catalog, however, and then to maintain it, is not insignificant. In Florida, for example, the Advisory Council on 

Intergovernmental Relations has compiled an initial 

directory and is required to update it annually. The 

maintenance function requires 15 percent of the 

council’s available staff time and costs between 

$50,000 and $100,000. That effort identified 44 new 

mandates enacted last year and two existing mandates 

that were repealed. Still, this step is not enough to 

relieve the friction, and Florida local governments are 

pressing hard for a mandate reimbursement program. 

Step 2: The Fiscal Note 

No matter what definition ultimately is used, 

such catalog compilations will result in the identifica- tion of “a large number” of mandates and local government assertions that the system is “out of con- trol.” The most called-for “solution” to bringing the 

system back into control, at least initially, is to slow or 

stop the escalation in enactment of unfunded man- dates. The standard such control device is a “fiscal 

note,” which essentially is a statement accompanying 

each piece of proposed legislation that evaluates its 

potential fiscal impact on local governments. The 

idea is that state legislators will be less inclined to 

enact an unfunded mandate if they are more con- scious of its impact back home. This solution has at 

least three deficiencies: 

1. The fiscal note does not help correct aisting mandate burdens. 

2. Proper analysis requires a high level of 

skills, resources, and independence, and 

often produces results that are not of sufficient detail to show the impact back 

home. 

State and local government information 

systems are not sophisticated enough to 

support the analysis required to compute 

such marginal impacts, especially prospectively, with any degree of precision. 

Although ACIR counts more than 40 states having a fiscal note procedure, none have reported success in being able to ascertain the incremental cost 

associated with every piece of proposed legislation 

and its affect on each unit of local government. This 

conclusion is only common sense. The sheer volume 

of legislation and the estimating difficulties involved 

are formidable obstacles. In fact, most fiscal notes 

simply state that (1) either there areor are not costs to 

local government and (2) that the costs are “insignificant” or “cannot be determined.” If an estimate is 

provided, it is most often an aggregate for all local 

governments within the state or a class of local government, such as counties. It is little wonder that 

most local officials are disappointed with this result. 

3. 

50 
Local officials generally believe that fiscal 

notes accord political subdivisions little protection against mandated costs. The Association County Commissioners of Georgia recently commented on the Fiscal Note Act by 

observing that “in practice the Act has been 

ignored more often than ~bserved.”~ 

The time and cost of administering a fiscal note 

process is even greater than compiling and maintaining a catalog. As part of the real property tax limitations imposed on Massachusetts local governments 

by Proposition 2V2, the state has established a sophisticated program, built around fiscal notes, to limit the 

imposition of new mandates. The Division of Local 

Mandates, located within the Office of the State Auditor, administers the ‘program. The division has a 

staff of 36 and an annual budget of $860,000.5 Yet, 

even with this staff commitment, probably the largest 

of any state, not all bills receive the same intensity of 

analysis. To do so would require a level of resources 

no state yet has been willing to commit. 

The New York State legislature considers about 

20,000 bills during each two-year term, with over 85 

percent having some fiscal implications for the state 

or its local governments.6 It is doubtful that apolitical 

consensus could be forged to devote the kind of resources necessary to strengthen a fiscal note process 

dealing with that level of work load. 

The Congressional Budget Office (CBO) has 

been preparing “fiscal notes” since November 1982 

on all bills whose estimated state and local cost impacts exceed $200 million. Their experience, summarized below, shows that a great deal of time and money 

must be expended to review all bills, and that a smaller 

than expected number exceeded that threshold. 

In general, the number of bills having state 

and local cost impacts has been smaller than 

we anticipated. On average, about 11 percent of all bills reviewed were determined to 

have some state and local cost impact. When 

CBO was preparing to do state and local estimates in 1981, we projected that about 20 

percent of the bills reviewed would have 

such impact. We also thought that we would 

be doing about 100 - 150 estimates per year 

with some state and local impact, when in 

fact that figure has averaged around 60 over 

the past five years. Despite these lower numbers, CBO has devoted considerable resources 

and time to the state and local eff~rt.~ 

Step 3: The Mandate Reimbursement 

This strategy is what all local governments want, 

what some state governments hope to avoid, and what 

is not cost effective. Once a catalog has been compiled and a fiscal note process put in place, the “ideal” 

mandate reimbursement process would hold local 

governments harmless from any additional costs 

identified by the fiscal note. Yet, a major flaw, pointed 

out above, is that such costs cannot be determined 

prospectively with any exactitude. Consistent with 

the best aggregate estimates that can be made, some 

reimbursement methods may evolve into a block 

grant, allocated to individual communities on some 

basis other than the cost to comply with the mandate. 

Other reimbursements may be calculated from claims 

based on actual after-the-fact expenditure data. 

California is usually cited as having the most 

elaborate mandate reimbursement program. Like 

Massachusetts, California voters passed a constitutional referendum severely limiting local governments’ability to levy taxes. Additional costs to comply 

with state mandates would have posed exceptional 

hardships on local governments. As a result, California provides the largest amount of monetary aid of 

any state. Its mandate reimbursement program is established constitutionally and is based on claims supported by audited expenditure data. The program 

distributed about $271 million to local governments 

during the state’s 1987-88 fiscal year. 

The California operating statutes make an important distinction between a mandate and a “reimbursable” mandate. For a local government to be 

reimbursed, the mandate must require a new service 

or a higher level of an existing service. As might be 

expected, a large number of newly enacted bills are 

challenged by local governments as being reimbursable mandates. These challenges have resulted in a 

substantial amount of pending litigation that could 

increase state costs dramatically. 

The distinction between an ordinary mandate 

and one that requires a new or higher level of service 

emphasizes the importance of definitions. In California, New York, and virtually every other state, the 

imposition of unfunded service mandates is the root 

of the problem. This is a problem of a much smaller 

dimension. The previously mentioned LCER study in 

New York, for instance, identified 2,632 mandates. 

Yet, of these, only 608-just 23 percent-required 

new or expanded levels of service. Even in California, 

only 80 mandates currently are subject to reimbursement, and several have been repealed. 

A major factor to be considered is the relatively 

large administrative cost compared to the level of 

reimbursement provided. California spends far more 

per dollar distributed to administer its mandate reimbursement program, for example, than New York 

does in providing unrestricted, general purpose aid. 

Careful examination of the California experience 

shows that 23 people are needed to administer the 

mandate reimbursement program at an annual cost 

to the state of about $6.6 million. Interestingly, about 

$15 million of the $271 million total (5.5 percent) 

51 
going to local governments is to compensate them 

solely for the costs to comply with the reimbursement 

program itself. Also, reimbursement for 11 of the less 

significant mandates is based on prior years’ amounts 

adjusted to reflect inflation. Shifting to this “block 

grant” form of reimbursement helps to ease the time 

and cost of administration, and begins to resemble an 

unrestricted general purpose aid grant. 

New York annually distributes over $1.0 billion in 

unrestricted general purpose aid to local governments, in part to reimburse for the cost of state mandates. Although there is no specific information, fewer than two full-time employees administer the 

program, and the total annual costs do not exceed 

$100,000. Even if aid payments were tripled to $3.0 

billion, New York’s lezel of administrative overhead 

would not increase. On the other hand, California’s 

administrative overhead certainly will increase substantially as the number of reimbursable mandates 

and related claims for payment increase. 

Both California and Massachusetts, the trendsetters in addressing friction caused by the costs of 

complying with state imposed mandates, operate in 

an environment of strict, voter imposed, constitutional limits on the amount of revenues their local governments can raise. These states have devoted substantially more resources to various parts of the 

three-step process discussed earlier than does any 

other state. Yet, for states not under the gun of a 

voter-initiated proposition limiting tax revenues, this 

mandate strategy is not an attractive policy alternative. It is built on the precarious assumption that an 

acceptable definition of reimbursable mandates can 

be developed. It also operates in a negative atmosphere that implies that mandates are wrong and 

costs of reimbursement are “penalty payments.” Further, the cost to administer such a program-versus 

the amount of aid being provided-is just too high. 

ALTERNATrVE STRATEGIES 

Joseph Zimmerman presented eight alternative 

strategies for trying to reimburse the marginal costs 

of mandates.8 Five deal with preventing the mandate, 

such as some form of prohibition or tighter controls 

for enacting, or by allowing local governments to “opt 

out.” The other three relate to forms of money aid 

and do not require complicated and costlyadministrative mechanisms. In that respect, they are a more 

cost-effective way to compensate local governments. 

Most such programs are related directly to the provision of local services and, as such, would serve to 

eliminate (or reduce substantially) the root cause of 

the friction. Just as important, aid programs usually 

are perceived as a “positive response.” 

Two of these money strategies, categorical 

grant-in-aid programs and unrestricted general purpose aid, should be relatively more attractive to state 

policymakers than current reimbursement strategies. 

In addition to building on existing administrative machinery, these strategies are a direct, and positive, 

linkage between the state and local governments. 

To understand this proposition, consider that 

New York distributed from its general fund more 

than $17.5 billion in aid to local governments through 

231 separately identifiable programs during its 

1987-88 fiscal year (ending March 31,1988). The bulk 

of this total was distributed through 216 grant-in-aid 

programs. The largest amcrunts went to education 

($8.2 billion) and social services ($5.1 billion). The 

remaining 15 programs provided unrestricted aid, the 

largest distributing just over $1 billion ar~nually.~ 

Each of these programs has attained political 

acceptability by providing state lawmakers with a 

clear and positive linkage between the state revenues 

they take the political heat to raise and the benefit of 

new or enhanced local services bought with those aid 

distributions. Diverting a portion of that money through 

some new, additional, administrative machinery, simply 

to reimburse for mandated expenses, has the negative 

connotation that legislators should not mandate, and if 

they do, they should pay a penalty. 

Some might argue that the California approach is 

more cost-effective, since only the precise amount necessary to reimburse for a narrowly defined set of mandates is required. More traditional state aid programs, 

at least for the purpose of mandate reimbursement, are 

less targeted and necessarily more expensive. This argument is reasonable, yet states not saddled by a constitutional requirement to reimburse for mandated costs 

have been slow to move to the California model. They 

have found simpler solutions in selective enrichment of 

existing aid programs or in the assumption of a larger 

portion of the state-local program cost. 

That last option, state assumption of a larger 

portion of the total state-local program cost, is Zimmerman’s third money strategy and the one that 

points the way to a potentially better approach to 

removing the friction caused by mandates. 

A BETTER APPROACH? 

State assumption of the cost of locally provided 

services might result from a careful study of the service: who should provide it, how should it be produced 

(i.e., public, private, or nonprofit), and what is the 

most efficient and equitable way to finance it. This 

kind of “sorting out process” can and should be the 

foundation of a strategy for achieving a better system 

of service delivery. In doing so, the root cause of 

52 
state-local mandate friction, compensating those who 

are forced to comply, will be removed. 

Sorting out is based on the premise that government services can be provided more efficiently and 

effectively if there are clear and logical linkages between the service, the layer of government providing 

the service, the clientele receiving the service, and 

the funding mechanism that supports the service. If 

this premise is reasonably accurate, then the goals of 

the sorting out process might be summarized as: (1) 

defining the scope of the existing service delivery 

system; (2) identifying areas of duplication or unclear 

service responsibility; (3) identifying areas of service 

delivery inconsistent with generally accepted theorems of good government; (4) realigning the service 

delivery system to remove duplication, fill gaps, and 

clarify as many roles as pocssible; and (5) adjusting the 

flow of intergovernmental aid to support, reflect, or 

encourage these changes.1° 

Sorting out the proper division of service responsibilities is neither quick nor easy. It must start with a 

genuine commitment from state and local leaders to 

make changes, and culminate with a service delivery 

system that is responsive to all. Such change most often 

occurs incrementally, with a small part of a service 

transferred. Systemwide changes, such as state assumption of the entire cost of local courts, also has occurred. 

Commitment begins with providing a policymaking framework that will allow all affected parties to 

participate. A state level advisory commission on intergovernmental relations can serve that purpose. 

More than half the states have such an intergovernmental agency, and both the U.S. Advisory Commission 

on Intergovernmental Relations and the National Conference of State Legislatures’ State-Local %k Force 

have recommended that the other states follow suit. 

An understanding of how tax revenues, aid payments, and borrowed moneys are translated into local 

services is vital to this sorting out process. If the New 

York aid system is any guide, then states have a complex web of fiscal supports that also should be reviewed as part of the sorting out process. At the least, 

this ought to show that there are few, if any, programs 

being mandated by states without some level of fiscal 

support. Research in New York, for instance, has 

shown a surprising diversity of service delivery, a relative lack of mandates below the county level, and 

hundreds of separate aid programs. 

Leadership also is needed from U.S. ACIR. 

Thorough examination of a complete state-local service delivery system requires comparison to accepted 

“benchmarks” or “theorems” of good government. 

Although universally applicable standards may not be 

feasible or desirable, ACIR has the research skill and 

credibility to begin the task and the obligation to 

facilitate the efforts of individual states. 

CONCLUSION 

Friction from unfunded mandates is the symptom of a much larger problem. Evolution of each of 

the 50 state-local service delivery systems has resulted in a complex and interrelated maze of responsibilities and fiscal supports that few people, if any, 

understand completely. Gaining that understanding 

is now imperative as the federal government’s fiscal 

retrenchment enters its second decade with no turnaround in sight. 

Local officials also have to be conscious of a potential “backlash” from constant criticism of their 

state service delivery partners. In New York. Governor Mario Cuomo has launched what might beviewed 

as a “counterattack” by questioning how accountable 

local governments have been with the hundreds of 

millions of dollars in unrestricted aid they currently 

are receiving. Strictly interpreted, of course, the question is rhetorical. Unrestricted aid payments are com- pletely fungible with revenues raised by the local government. Consequently, they can never be traced with 

accountant’s precision to specific senices and programs. 

States following the three-step approach of catalog, fiscal note, and reimbursement to remove the 

friction caused by mandates will spend a lot of time 

and resources in the effort and probably not be completely satisfied with the result. 

Mandates themselves are not the issue, and a 

new level of leadership and commitment is needed to 

address the bigger problem of properly sorting out 

state-local service responsibilities. The twin irritants 

of less federal aid and intense mandate friction have 

stimulated a major examination of programs, funding, 

and service delivery that, if done correctly, will result in 

more cost-effective government. That result is too important to be obscured by the non-issue of mandates. 

Notes 

Edward I. Koch, “The Mandate Millstone,” 77ie Public In- terest, Fall 1980, p. 42. 

Virginia Joint Legislative Audit and Review Commission, 

State Mandates on Local Governments and Local Finwicial 

Resources, House Document No. 15, 1984, pp. I1 and 111. 

New York State Legislative Commission on Expenditure 

Review, State Mandates to Counties (Albany: New York 

State Legislative Commission on Expenditure Review, 

August 1981), p. 4. 

As reported in Joseph E Zimmerman, 7he Mandate Pmblem, a paper prepared for a conference entitled “State 

Mandates: Room for Reform?” Albany, New York, September 9, 1986, p. 14. 

’Anthony V. D’Aiello, Comments, presented at an Urban 

Institute conference on “Coping with Mandates: What are 

the Alternatives?” Washington, DC, May 20, 1988. 

6Many bills are duplicates, either introduced separately in 

the Assembly and in the Senate as companion bills, or sim53 
ply duplicates introduced independently. Numerous bills 

are reintroduced every two years (bills carry over one year 

unless there is an election) and have been in the legislature 

for years. Many are “press release” bills; i.e., the sponsor 

introduces a bill, issues a press release, and forgets the bill. 

Only slightly more than 1,100 bills receive serious consid- eration in both houses each year. 

’Theresa A. Gullo, Estimatingthe Impact of Federal Legisla- tion on State and Local Governments, presented at an Ur- ban Institute conference on “Coping with Mandates What 

are the Alternatives?” Washington, Dc, May 20, 1988. 

bid., pp. 27-28. 

‘New York State Legislature, Report of the Fiscal Commit- tees on the Executive Budget: Fiscal Year April 1, 1987 to 

March 31, I988 (Albany, 1989, p. 267; and New York State 

Legislative Commission on State Local Relations, Cata- logue of State and Federal Progmms Aiding New Yolk’s Lo- cal Governments: A Legidator’s Guide (Albany, December 

“Paul D. Moore, “The Sorting Out Process: Who Is Sup 

posed To Plow Route 999?” New Yo& State Town and 

County Government, June 1983, p. 26. 

19861 pp. 7-36. 

54