Congress has a knack for starting new programs and dumping the costs on to the states. It's a bad habit that is imposing a staggering burden upon Michigan taxpayers.
These unfunded "federal mandates" have grown dramatically in number, from only 27 in all of the 1950s to more than 100 in the 1980s. Currently there are more than 400 mandates that tie up resources and dictate policy to the states. They all require states to provide services without helping them meet the expense.
If a state resists a mandate, Washington often threatens to cut off funds in other areas. For example, if states fail to meet federal standards in licensing and testing school bus drivers, they could lose five to ten percent of major federal highway grants.
One year ago, Representative Michael Nye (R-Litchfield) and legislators from 24 other states launched a drive to amend the U.S. Constitution to stop Congress from creating these obligations for state governments. The threat to cut off funding to states that do not comply, he says, "is nothing short of blackmail" and forcing the states "to sacrifice certain services just to satisfy the whims of Washington is ridiculous." He says that Washington needs a "Headlee Amendment," referring to that portion of the 1978 initiative that bars the state of Michigan from imposing unfunded mandates on local units of government.
Rep. Nye's effort to amend the federal constitution languished in a busy and highly-charged election year, as the problem itself showed no signs of easing. Since the beginning of 1991, members of Congress have proposed more than 200 new mandates. In one three-month period in 1992, 15 were proposed in health care alone. Mandates relating to the environment ran a close second.
Consider as one example a list of nursing home mandates Congress passed in 1987. They included pre-admission screening, nurse aide training and competency programs, a nurse aide registry, resident assessment, review of mentally ill and mentally retarded residents, alternatives for persons requiring active treatment, etc. Regardless of their value (or whether they duplicated existing programs), the State of Michigan spent an estimated $40 million to comply with these requirements in 1990. By 1995, their cost is expected to rise to $137 million.
Congress especially loves to load the Medicaid program with obligations on the states. The Michigan Department of Management and Budget (DMB) estimates that between 1990 and 1993, the share of state Medicaid expenditures that goes just to pay federally-required expenditures rose from 3.2 percent to 6.4 percent. Federal Medicaid mandate costs are expected to grow at an annual rate of 69.1 percent in Michigan through fiscal year 1995, compared to the historical growth rate of the entire state general fund budget of only 5.5 percent.
The actual cost to Michigan of federal Medicaid mandates, according to fiscal year 1993 figures from the DMB, is a whopping $95.3 million--larger than the General Fund budgets of 11 of the 18 state departments. That's equivalent to 30 percent of state government's revenue growth this year!
The problem with federal mandates goes beyond their burdensome expense to strike at the very heart of the state-federal relationship. The concept of federalism, a pillar of the U.S. Constitution, left to the states the lion's share of government powers and responsibilities. The gradual shift in recent years toward greater involvement by Washington in nearly all areas of public policy flouts the federalist spirit and threatens to make vassals of the 50 states. In one area after another, it has produced inferior policy results as well.
In another sense, the states have only themselves to blame. They have come to depend upon Washington for billions in subsidies for a wide array of programs. About one-quarter of Michigan's gross state budget is paid by the federal government, for instance. Mandates can be seen as the "strings" attached to the goodies, proof of the old adage that "He who pays the piper will call the tune."
Though constitutional amendments and other legislative band-aids may help, the only long-term solution to this problem is for all units of government to stick to the tasks their respective constitutions prescribe. The states must tell Washington to mind its own business and be equally prepared to do the same.
Michael D. LaFaive is an adjunct scholar with the Mackinac Center for Public Policy Policy. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.