COMPTROLLER'S CORNER Local Government Mandates Relief on the Horizon? By Loleta A. Didrickson, Comptroller, State of Illinois

Unfunded mandates have long been a thorn in the side of many local governments. Regardless of how well meaning the unfunded mandate, it is apparent that local government officials have had difficulty finding available money to pay for new programs. Most often, they are faced with the same difficult choices: levy new taxes, increase existing taxes or cut services in other non-mandated activities.

Generally, the controversy surrounding mandates is not so much the mandated programs themselves, but the inherent unfairness in a process that essentially forces new responsibilities on local governments without providing a means to finance them.

A consensus has formed among state and local officials that there is a need to modify many of the unfunded, inflexible, "one-size-fits-all" forms of regulation, many of which have difficult time schedules for compliance. Binding legislation that requires the use of a particular procedure or facility when less costly alternatives are available creates an environment conducive to waste, cost overruns, duplication of services, and restrictions on creative approaches to problem solving. Local officials would rather concentrate on performance, not procedure, resulting in greatest return on investment for the local tax dollar.

A compelling argument can be made against unfunded mandates when examining the cost to local governments. The Department of Commerce and Community Affairs has estimated that the cost of several state mandates in Illinois to be over $200 million in the year 1992 alone. Of that $200 million, only about $11 million has been reimbursed by the state. Smaller local governments may be more adversely affected than larger ones. A study of 67 Illinois communities conducted by Governors State University, the Illinois Municipal League and the City of Chicago revealed that as a percentage of their budget, small municipalities may be spending more on unfunded mandates than larger communities.

The fact that Illinois has far more local governments — 5,809 — then any other state makes the impact of unfunded mandates that much more discernible. Despite combined revenues exceeding a whopping $11 billion every year, many local governments continue to struggle with the fact that they receive little help from the state for services they are obligated to perform.

Local government opposition has prompted efforts dating as far back as 1981 to reduce the burden of mandates. Unfortunately, none have been successful. In 1981, the State Mandates Act took effect which was designed to slow requirements that increase local government costs by limiting the imposition of certain categories of State-mandated programs or expenses upon local governments. As a result of provisions in the Act not being fully implemented, this measure has not been adequately tested. Since the Act's inception, 237 Public Acts have been established, creating 326 new mandates.¹ In addition to this Act, a number of Constitutional Amendments addressing the unfunded mandates issue have been strongly considered but have fallen short in the end.

¹Department of Commerce and Community Affairs, 1992.

April 1996 / Illinois Municipal Review / Page 9

The most recent endeavor has been initiated by Illinois Municipal League in July of 1995, when the pursuit of a constitutional amendment became a top priority. As a result, the IML Mandates Task Force was born, and several state and local government entities including the Office of the Comptroller have joined together to discuss the idea of finding a way to alleviate the pressure placed on local governments by unfunded mandates. This cooperative strategy also resulted in the formation of the Unfunded Constitutional Amendment Drafting Committee, made up of a bi-partisan group of legislators representing both state and local officials.

If approved, Illinois will become the 11th state to pass an unfunded mandates amendment. As of this writing, the language of the amendment (SJRCA 76) is. being finalized. Once drafted, it will be up to the legislators of Illinois to determine if this is the well-reasoned standard by which to determine the appropriate responsibilities of each level of government.

As the Chief Fiscal Officer of the State, I am concerned with the fiscal health of every level of government, for the economic complexities of state and local government are interwoven in such a way that if the health of local units of government are compromised, the entire state is affected. Though discussion has been dominated by the cost of mandates since the issue emerged, I am just as concerned about incorporating fairness and political accountability into the process to ensure the identification of the resources needed to pay for programs as they are created or extended.

By forging a strong partnership based on understanding and fairness, the State of Illinois may be on the verge of easing the burden mandates place on local government units, illustrated by the cooperative, non-partisan forum in which the drafting of the Amendment is taking place. As a result, local government priorities will not be compromised, and local elected officials will have greater flexibility to make the important choices beneficial to their communities and their citizens.

As the government closest to the people, local government is in the best position to deliver services, but we must remember good ideas come with a price tag. As these regulations are being passed down, there is extra pressure being put on an already overburdened property tax system. We need to limit legislating these good ideas to the local level without providing the funding and that's why I'm supporting SJRCA 76. •

Page 10 / Illinois Municipal Review / April 1996