Discuss how federal monies influence local policy and decision-making.

If you were able to sit down and talk with the governor of your state about the challenges he or she faces as a governor, it wouldn’t be long before the subject of federalism came up. Governors will almost uniformly say that the national government's programs and policies put too many constraints on their ability to lead their states. On the other hand, if you talk to a member of Congress or a federal bureaucrat, you’re likely to hear complaints about how difficult it is to administer programs that treat people equally and fairly across all fifty states and about the problems the national government sometimes faces in getting states to effectively implement the programs it establishes.

In a nation with literally thousands of state and local governments, there are numerous opportunities for conflict between levels of government. Not surprisingly, most of these conflicts have as much to do with money as they do with power.

Unfunded Mandates

Some of the most heated conflicts between the national government and the states center on the way the national government funds and administers federal programs. In many instances, the national government will create programs which it then requires states to implement. While these national mandates tend to aggravate those in state government, the aggravation is compounded by the fact that the national government often fails to give the states any resources to pay for the implementation of the programs in question. National government policies that require states to implement programs or provide benefits without the financial support of the national government are called “unfunded mandates.”

In 1995, the United States Congress passed the Unfunded Mandate Reform Act (UMRA), which required the Congress to explicitly consider the costs imposed by new legislation on state and local governments and on the private sector. Under the provisions of the act, each bill considered by the Congress must be reviewed by the Congressional Budget Office to determine whether or not it includes an unfunded mandate, and, if it does, the costs that will be passed on to state and local governments by the mandate. When a bill including an unfunded mandate comes before the Congress, any member can raise a “point of order,” forcing twenty minutes of debate on whether or not the Congress should consider the bill in spite of the unfunded mandate. If a majority votes against consideration, the bill is rejected and no further action is taken on it.

While many state and local government officials still believe there are too many unfunded mandates, UMRA has forced the Congress to more carefully consider the “hidden” costs of the legislation it passes. Now, when bills including unfunded mandates are passed by the Congress, it is only after an explicit recognition of the mandate and a judgment by the Congress that the merits of the bill outweigh those concerns.