Albany’s Addiction to Unfunded Mandates
By: Dan Smith
If Albany has rules for us to follow, why shouldn’t they have to raise the tax revenue to pay for them, too?
Unfunded mandates, what are they?
It’s tough to come up with a good analogy. It’s kind of like your landlord showing up at your apartment every couple of weeks with a new set of things for you to do and rules for you to follow. He might say you need new handles on your kitchen cabinets, or a more expensive soap you have to use, and then also loads of new paperwork for you to complete. You have no say in the matter.
Oh, and your landlord makes you pay for all of it, too. It’s in that lease you signed.
Wouldn’t you move out of that apartment . . . fast?
Mandators At All Levels of Government
At various levels of government, unfunded mandates are costly rules and requirements created in one jurisdiction, which must be followed and paid for by another jurisdiction. The U.S. federal government does this to states in dozens of areas: education, healthcare, the environment, transportation, energy, law enforcement, commerce and many others. Typically, these federal rules cost the federal government nothing (or they may share the cost), but they cost the states and local governments quite a bit. In aggregate, one estimate puts the cost of these at $63 billion per year.
In New York, Albany plays the same game. They have created a myriad of rules which local municipalities and school districts must follow—at the localities’ expense. And the expense has gotten quite high.
These mandates cut across almost all areas of local government—healthcare, childcare, law enforcement, transportation . . . the list goes on and on. In 2010, the Samuels New York Policy Center estimated that the cost of compliance with Albany mandates is $10 billion per year to New Yorkers.
In a Syracuse.com op-ed piece, the EVP of the National Taxpayers Union calls out Andrew Cuomo for this, saying “the system of unfunded mandates has Albany sending huge costs down to localities for policies they don’t control. No other state does this.”
They go on to say that those rules put pressure on localities to raise property taxes to pay for those mandates—leading New York to have one of the nation’s highest property tax rates.
And just like you’d want to move out of that apartment with the tyrannical landlord, the piece says unfunded mandates play a part in why so many people are fleeing New York.
Taking just education as an example, one school district took the time to list out the many dozens of unfunded mandates handed down to them from Albany and Washington D.C. While some of them may be good ideas, many are outdated and they’re rarely reviewed or revoked, such as mandatory tolerance and diversity education at public schools, fingerprinting of all potential employees, and Wick’s Law, which mandates that for large projects, multiple contractors must be used. And there is no meaningful way for school districts across the state to opt-out or find creative ways of solving the underlying problems. Rules are rules. Further, fulfilling the requirement is never enough. Each rule comes with compliance documentation which adds to the already bloated administrative burden faced by schools. While many of the unfunded mandates are positive and reasonable, the issue is not that they are mandates, it’s that they are unfunded. No cuts are made to old, outdated programs to fund the new ones, the burden of cost is just piled on to the citizens. The state cannot arbitrarily force localities to come up with new money to meet their demands of what sounds nice. It can either fund them on its own, or cut programs to keep costs reasonable. But having the state government function as a feudal lord and makes rules that keep localities from deciding what suits their needs best is not the answer.
Something Was Done, But The Situation Worsened Anyway
Recognizing the problem, Governor Andrew Cuomo appointed The Mandate Relief Redesign Team in 2011 to propose solutions to this problem. This sounds like a positive step, which coincided with a welcome cap put on property taxes.
But, as usual under Governor Cuomo, things got worse, not better.
For you see, the mandates did not decline—they kept growing, according to school board superintendents and those in healthcare and other areas. Some have called Cuomo’s efforts nothing more than paying “lip service to the critical issue.” And since there was no money to pay for the constant stream of new rules and requirements, as well as the built-in cost increases on many of the old ones, school districts and local governments have been caught in a terrible bind—more requirements and no realistic way to raise money to pay for them.
It’s all made for an ugly situation.
Let the Mandators Find the Money
We can do something about this $10 billion per year scourge.
Just taking a look at the perverted incentives in this situation, one can see the body making the rules never has to face paying for those rules. Therefore, Albany should have to pay for any mandate they put upon the localities: let the Albany legislators and Governor Andrew Cuomo explain why taxes must go up for the rules they feel are so important.
A transition from local taxes to statewide taxes could be made over a number of years, to ease the move. In the meantime, we could look to get rid of many of these rules—in particular, the most egregious ones. A law could be passed that every mandate which is not already a requirement in a majority of the other states in the U.S. be set for automatic expiration in two years. Then, if a unique mandate is still worthy, perhaps because it’s New York-specific, a replacement mandate could be written. But let that be argued in Albany—with Albany to raise the funds to pay for it.
These aren’t crazy solutions—just common sense: take a hard look at the rules against what other states are doing and make Albany find the money for the rules they want.
But common sense is crazy talk in our state’s capital.
Dear Larry,
I have just come across your website and I find it very interesting because of your concern over unfunded mandates here in New York State.
You may be aware that last October Governor Cuomo signed into law the “New York State Gap Coverage Cancer Legislation,” an insurance benefit to volunteer firefighters who believe they have contracted cancer as a result of their firefighting activities (no demonstration of actual cause-and-effect is needed). The law was overwhelmingly approved by both houses of the state legislature. The idea apparently originated with and was heavily promoted by the Firefighters Association of the State of New York (FASNY), a lobbying organization. It takes effect January 1, 2019.
Two questions I have, as a retired volunteer department treasurer, are: 1) how much will this cost? and 2) who pays for it? Simply put, here are the answers: 1) Nobody knows. 2) The volunteer fire departments of New York State.
Although many volunteer departments in the state are corporations rather than municipal entities, they generally rely heavily on funding from municipalities and therefore I believe this legislation clearly falls under the the general definition of an unfunded mandate.
Interestingly, FASNY has published a Q&A on its website in which they say that in the initial development of this law they went to existing insurers who already provide statutorily required workers compensation coverage to volunteer departments, many of which are self-insured counties. FASNY admits that the counties rejected the proposal, stating that the excessive cost of the proposed program would force them to drop workers compensation altogether. FASNY goes on to say “Thus, the New York State Assembly and Senate worked with the fire service and the localities to craft a bill which would provide extensive coverage but meet the threshold cost needs of the localities.” One may wonder what “worked with the fire service” means — we didn’t hear anything about it. And one may wonder what localities they worked with — they did not include ours. And finally, one may wonder what those “threshold cost needs” are, especially when all FASNY could say about the cost of the program is this: “A similar bill was passed in Georgia and the cost estimates of that bill are $300 per firefighter for the required benefits.” Note, there are no facts here, just someone’s estimate from a very different state. And remember, the self-insured counties in New York, when presented with the idea, rejected it out of hand because they perceived it to be prohibitively expensive.
It is hard for me to believe that FASNY, our legislature, and our governor could be so irresponsible to endorse this Gap Coverage Act without knowing what the cost would be, and worse, dumping that cost, whatever it turns out to be, on volunteer fire departments. This is an unfunded mandate, to be sure, and it will probably be a duesy.
Larry, I am writing to you to ask your advice — how can we deal with this?