The Unfunded Mandates Reform Act of 1995 (UMRA) was adopted in an effort "...to curb the practice of imposing unfunded Federal mandates on States and local governments." According to the Congressional Budget Office (CBO), UMRA defines a mandate as any provision in legislation, statute, or regulation that would impose an enforceable duty on state, local, or tribal governments or the private sector, or that would reduce or eliminate the amount of funding authorized to cover the costs of existing mandates. Since 1995, CBO has identified eleven laws that contain intergovernmental mandates which exceed the UMRA threshold ($50 million in 1996 dollars; adjusted annually for inflation, $69 million in 2009).
Intergovernmental Mandates under UMRA that Exceed the Threshold (listed by date of enactment)
- an increase in the minimum wage (P.L. 104-188, 1996)
- a reduction in the federal funding to administer the Food Stamps program (P.L. 105-185, 1998);
- a provision preempting state taxes on premiums for prescription drug coverage contained in the Medicare Prescription Drug and Modernization Act of 2003 (P.L. 108-173, 2003);
- a preemption of state authority to tax certain Internet services and transactions (P.L. 108-435, 2004);
- a requirement that state and local governments meet certain standards for issuing vital-statistic documents (P.L. 108-458, 2004). Driver’s license requirements were repealed and replaced with the REAL ID Act (P.L. 109-13), which under UMRA is not considered a mandate that exceeds the threshold.
- a provision that eliminates federal matching funds for administrative expenses funded by incentive payments to states as it relates to the child support enforcement program (P.L. 109-171, 2006);
- a requirement that all government entities, including state and local governments, withhold 3 percent on certain, non-essential government payments for property or services (P.L. 109-222, 2006);
- an increase in the minimum wage (P.L. 110-28, 2007)
- a preemption of state authority to tax certain Internet services and transactions (P.L. 110-108, 2007);
- a requirement that public transportation agencies and rail carriers implement various security measures and vulnerability assessments, and institute training programs and background checks for certain employees (P.L. 110-53, 2007);and
- requires commuter railroads to install train control technology (P.L. 110-432, 2008).
The Unfunded Mandates Reform Act (UMRA) is now in its second decade. Although fewer than a dozen mandates have been enacted that exceed the threshold established in UMRA (see below). Congress shifted at least $131 billion in costs to states over the five year period of 2004 to 2008, according to NCSL's Mandate Monitor. The Mandate Monitor uses a definition of "unfunded mandate" that is broader than the one included in UMRA, because state and local officials view unfunded mandates more expansively. They interpret almost any federal decision that requires them to spend state or local funds as a cost shift. This includes legislation that:
- Establishes a condition of grant in aid.
- Reduces current funds available (including a reduction in the federal match rate or a reduction in available administrative or programmatic funds) to state and local governments for existing programs without a similar reduction in requirements.
- Extends or expands existing or expiring mandates.
- Establishes durational goals to comply with federal statutes or regulations with the caveat that if a state fails to comply they face a loss of federal funds--a condition of grant aid.
- Creates a loss in state/local funds.
- Compels coverage of a certain population/age group/other factor under a current program without providing full or adequate funding for this coverage.
- Creates underfunded national expectations, i.e., homeland security.