Environmental protection in thiseount~ is a matter of intergOvem-mental partnership. States and locali-ties have always pIayed a strong role irrimplementing entionmental laws.‘Ibday, they are more crucial than ever.

We at EPA are mmmitted to re-fining our partnership so that it will re-flect technological progress, the in-creasing sophistication of state andlocal governments, and our evolvingnational and world economies. Ourchallenge is to help each governmen-tal partner do what it can do best.

For that reason, when the Presi-dent asked me to serve as one of thethree federal executive branch repre-sentatives on the Advisory Commis-sion on Intergovernmental Relations,I welcomed the opportunity.

Before coming to EPA I headedthe Florida Department of Environ-mental Regulation. My experiencethere taught me that state and local of -ficials often know best how to protecttheir entionment and that theyeanbeespecially effective because they havea personal stake in the results. lrrfact, I

believe an informed local communi~ al-wqs does a better job of enviromnentalprotection than a distant buwaucrq. Ifeel strongly that we cannot achieve our

national environmental goals unlesswe build the capacity of state, tribal,and local governments to participatefully in protecting our environment.

In Florida, we often delegatedregulatory authority to water manage-ment districts and local governments.Tbii allowed us to take advantage ofthe expertise and human resources oflocal governments and to reduce du-plicative pemrittirrg.

Nonetheless, there is also an es-sential role for the federal gover-nment. In many cases, federal action isnecessa~ because it would be too cost-ly and perhaps impossible for statesand localities to act on their own. Thefederal government is better able toprotect against cross-jurisdictional en-vironmental consequences. Federallaws can prevent and protect statesand localities from “competing away”environmental protection. Federal in-volvement also can be of value whenemnomies of scale emr be realiied, foresample, in research and infoma-tion-gathering.

This year, several important envi-ronmental laws are up for reauthorim-tion. We have the opportunity to re-fine and strengthen these laws so thatthey can do a better job of protectingpublic health through a more effectiveintergovernmental partnership. TheClinton administration has proposedreforms of the Clean Water .4cI, theSafe Drinking Water Act, and the Su-perfund law that governs the cleanupof toxic dumps. The administration’sproposals, now being debated in theCongress, are designed to give statesthe authority and the flexibility theyneed to respond to local conditionsand to adopt innovative approaches toenvironmental problems. The propos-als also call for more resources for

states, triies, and l@ities, and pro-pose dramatically reduced eompliincecosts.

We also are pursuing several ad-ministrative changes to strengthen ourpartnership. We are working hard toinvolve our governmental pactnersmore effectively in ndemaking, inplanning, and in our information re.sources management program. Wehave begun to examine the EPA/stateoversight relationship and considerhow it should be redesigned.

We also are e~loring how EPAcan allow more flexibtlty to local gov-ernments without compromtilng envi-ronmental protection or accountabti-ity. For example, under the SafeDrinking Wat& Act, we want to in-crease the use of the waiver programthat allows states to relax local moni-toring requirements when not envi-ronmentally necesw~. And as we im-plement the Clean Water Act, we areqerir’nenting with better ways to pro-vide training and technical support tostate and local governments.

A true working partnership re.qrrires constant effort. At EPA we arecommitted tn making the partnershipwork. We need states, localities, andtnies to make a similar commit-ment—to work tith us to create apartnership that builds on each gov.emment’s strengths to protect publichealth and our environment.

Carol M. BrownerAdministrator

U.S. EnvironmentalProtection Agency

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2 IntergovernmentalParspactive/Spring1994

In-mbl Sprbrg 1994, Vol. 20, No. 2

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17

20

24

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31

Joan A. CaseyEditor

IntergovemmentnJ Pepective(ISSN 036>8507) is publisbedfour times a yew by theU.S. AdvisoryCommi%ionon Intergovernmental RelationsWashington,DC 20575(202)653-SW

Capitol Hill Summit:Federal Capital Budgeting

Governing Drought: Plans and PlayersBruce D, McDowell

The State-Local Fiscal OutlookFrom a Federal PerspectivePhilip M. De&om

Intergovernmental RecordkeeplngIn the Information AgeMm”eB. Allen

State Mandate Relief: AQu[ck LookJoseph E Zimmerman

MPOS and Weiahted VotingSeth B. Benjamin, Jo-ti Kincaid,and Btuce D. McDowell

2

4

37

staffJohn GncaidExecutive Director

A View from the CommissionCorolM. Browner

ACIR News

Intergovernmental Focus:

Spotlight on the TennesseeAdvisory Commissionon Intergovernmental Relations

me Chairman of the Advisoty Commkion on Inter.gvvemmentd Rslations has determined that the publica-tion of thi.rpen”odicd is necway in the tnuuaction of thepublic businw mqui~d by [w of this Commtiion. Useof Jiinds forptinting this document hm bsen approved bythe Dimtor of the Oflce of Management md Budget,

-—.,,- ..”--_— ——- . . . . . . .

C!R News

William E. Davis IllNamed Executive Director

The Commission has named Wil-Iii E. Davis Iff as its new fiecutiveDirector. ACIR Chaimmn Wdtiim F.Wtiter announced the selection at theCommission meeting on Aprit 14,1594. Davis witl begin work officiallyon June 1, 1994.

Davis has more than ~ years’ ex-perience in intergovernmental policyrendmunicipal government as a seniormember of the staff of the NationalL=gneof Cities ~C). He is current-ly Director of NLC’S Center for Edu-cation and Information Resources.From 1975 to 191, he served as Direc-tor of the Office of Policy Analysis andDevelopment.

At NLC, Davis managed an exten-sive array of education program$ re-search and publimtions projects, andnational policy development initiativesfocusing on issues and renditions af-fecting Id government and the inter.govemmenti .%ystem.He establishedNLC’s Leademhip ‘Raining Insdtuteand directed its Election ‘SSpublic infor-mation and education pmgmnr.

Davis is a fomrer staff member ofthe California State Assembly and amnsultant in park pkuming in Califor-nia. He serves on the Councit of Advi-sors of the National Civic League andthe screening mmmittee for theAR.Americx City Awards. From 1990to 1W2, he sewed aa a member of theCommission to Review the Effective.ness of Montgomery County Gover-nment.He also is active in the Academyfor State and Local Government, theAmerican Society of Public Adminis.tration and the Washington Society ofAssociation Executives.

Davis received his Bachelor’s de-gree from Sacramento State Universi-ty and hs Master’s degree in politicalscience from the Maxwell School atSyracuse University.

WilIiamE. Datis 111

On the ACIR Agenda

Due to the many changes takingplace at ACIR during this fiscal year–

aPPo~tment of a new chaimmn and 11new members, the development of anew work progcam, and the selectionof a new executive dir~tor-the Com-mission has met bmonthly instead ofquarterly. Following are highlights ofactions from the meetings of Febcua~14 and Aprit 14, 1994.

February 14, 1994Infrastructure Action Agenda

The Commission endorsed theAction Agenda recommended by theNational Conference on High Per-fomrance Infrastructure (July 1993)and authorized ACIR’S continuedwork with the U.S. Amry Corps of En-gineers on implementing the agenda.The cmrference, which was mnvenedby ACIR, followed two years of workby task forces on various aspects of

infrastructure. The Action Agenda in-cludes remmmendations for

presidential leadership, includingexecutive orders, a new pubtic worksinvestment section in the fedemJ bud.get, and a legislative program;

C-orral leadership, includingaction on the president’s le@tative pre-gmm and ~mstrncture budget, rmrga.tition of tie committee atmcture, andgeater use of ammd investment princi-ples in public works pr~

Goverrrmentwideguidelines to unifyagency approaches to public workaprograms in amrdance with the prin-ciples established by the President andthe Congress; and

Support activities by individualagencies to make the process workeffectively.

Agenda Committee Report

Mayor Edward G. Rendell, whochaired the cemmittee, presented itsfmt re~rt. He out~med four majoraction roles for the Commissiorc con-vening, monitotig, institutional link-age and service, and research. For theresearch agenda, the Commissionagreed to wnsider tbe following items,with a fmaf report to be presented atthe Aprif meedng (1) mandates andthe possible legislative remedies, (2)reduced federal spending and altern-ativerevenue raising measure$ and (3)intergovernmental relationships in se-lected areas (e.g., crime, education) tobe determined by the Commission.The Commission also gave first mn-sideration to a major Intergovernme-ntalpartnership Initiative.

The other members of the Agen.da Committee were Paul Bud Burke,Dave Durenberger, Mary EllenJoyce, Michael O. Leavitt, DonaIdM. Payne, Richard W. Riley, andJohn H. Stroger, Jr.

4 IntergovemmenralFerspaotive/SpringlW

KincaidReturning to Teaching

John Encaid, ACIR’S ExecutiveDirector since 1988, wfll leave theCommission staff in July. He has ac-cepted an endowed & at fafayetteCollege in *ton, Pennsylmnia, wherehe will serve w the fiit Robert B. andHelen S. Meyner Profewr of Govern.ment and Public Serviw and Director ofthe new Meyner Center for the Study ofState and H Government.

Kmcaid joined the ACIR staff asDirector of Research in December198dfrom the Utiver’aity of North ~-as. He was appinted Acting ExativeDirector in January 19W and ~eeutiveDirmor in May of that year.

Appointed in the aftermath of a52 percent reduction in ACIR’S appro-priation, Rincaid sought to restreng-then the Commission’s staff, budget,research, and outreach. Research sec-tions on government finance and onpolicy and structure were restoredproductivity increased to new level>ACIR engaged in new outreach andresearch effofl$ and ACIR’S budgetreached the highest level in its historyin 1993. He then worked during theturbulent transition of 1993 to protectthe future of ACIR and its role in thefederal system against continuing ef-forts stemming from the 1980s to dis-mantle the federal government’sintergovernmental institutions.

During the late 1980s and earlylWOS, ACIR engaged in extensivework on the constitutional and legalposition of state and local gover-nments in the federal system in thewake of the U.S. Supreme Court’sGamia (1985) and Souf/I Carolina(1988) decisions, including pioneeringresearch on federal preemption, man-dates, and regulation as well as optionsfor institutional reform.

ACIR also issued the first 50-statecasebook on state constitutional law,encouraged the rise of the new judicialfederalism, and rolled for more atten.tion to state constitutionalism in pub.

Iic education and law schonls. In lightof pressures to preempt state and localregulation in the nation’s growing ser-vice ecmromy, ACIR also highlightedsuch issues as state regulation of insur-ance and dual federal-state regulationand taxation of banking and telecom-municateions.

ACIR devoted substantial atten-tion as well to needs for 1-1 gover-nmentautonomy and to new modes ofmetropolitan goveman~ able toachieve the benefits of regional mp-eration without losses of citizen em-powerment and loral governmentefficacy. In addition, ACIR examinedthe emergence of residential commu-nity association guvemments in met-ropolitan areas and theti implicationsfor intergovernmental relations, andissued new research on interjrrriadic-tional mmpetition.

ACIR also focused attention onthe importance of forging a better bal-ance between the nation’s needs forenvironmental protection and for pub-lic worky moperated with the U.S.Army Corps of Engineem to develop amore productive federal infrastmc-

ture investment strate~ urged sub-stantial intergovernmental reforms ingovernance of the nation’s water re-source$ worked with federal, state,and local officials to improve the shar-ing of geographic dat~ and helped theU.S. Department of Commerce devel-op a clearinghouse on state and localinitiatives on productivity, technology,and innovation.

ACIR examined issues of federaland state compliance with diaabllityrights mandates three years before en-actment of the fieticam withDisabili-

ties At/; highlighted innovative stateand lucal responses to homelessnesypressed forward on Medieaid reform;issued a major report on the role ofgeneral government elected officialsin criminak justicq focused attentionon the continuing importance of theNational Guard in the face of defensedownsizing; and, most recently, urgedreforms to improve intergovernme-ntalcoordination in child care.

‘fb mmplement its well-knownRepresentative ~ System, ACIR is-sued a new Representative Expendi-ture System measure in lM. ACIRexpanded Sigrri~cwrt Features of FficdFederalism to two vohrmes; issued re-pmts in its Ioml revenue diversifica-tion series on sales, inmme, and traveltaxes, user tiarges, and rural emno-mie$ examined strategies for betterfiaml discipline in the federal ayste~monitored the effects of the fedesalvolume cap on state and Ioml tax ex-empt private-activity bonds; pmrhrcednew research on state aid to publicelementary and semndasy schmlw de-veloped estimates of the revenue po-tential of state and local taxation ofout-of-state maif order sales; and is-sued a report prepared for the Nation-al Performance Review updatingACIR’S 1980 measure of fragmentat-ion in the federal grant-in-aid ayatem.

Resprmding to the changing inter-national situation, eapecirrlly after thefall of the Berlii Wall in 19S9, ACIRalso sought to improve its technicalassistance outreach to muntries seek-ing to decentralize and establiih morefederal democratic ~tems. At thesame time, ACIR highlighted the m-panding roles of state and local gov-ernments in international affaira,particularly in trade, investment, andtourism.

In 1991, Rincaid was elected to theNational Arademy of Public Adminis-tration and received the Donald StoneDiatinguiahed Scholar Award from tbeSection on Intergovernmental Admin-istration and Management of theAnreriran Society for Public Adminis-tration. In his academic capacity, heserves as editor of Publius: The Journalof Federalism and as editor of a seriesof 50 bnoks being publiihed by theUniversity of Nebraska Preaa on theGmemments and Wlitica of the Ameri-mn States. He ti sewes on the Advi-sory Board of tie Srae C-”mtiomdLuw Brdletin publiihed by the National_tion of Attorneys General andon the editorial bnard of the S/@erzrrdtird Go~ ~w.

lntergovemman~ Par6psctiva/Spting1994 5

State and Local Organization’Ideas on ACIR Agenda

Raymond C. Sc@poch, executivedirector of the Nadomd Governors’ AS.-don, represented the state groups.He su~ested that the Co-on (1)avoid devodng estensive time to huesthat witt be r=lved dariag the currenteongressioti scsaion; (2) develop betterinformation smd suggest ways to im-prnve intergnvemmentrd consultationmrd decisiorurraking mrd (3) developnew principlw to guide the iatergovem-mental zystem irdo the nczt century.

Donafd I Borut, mecutive directorof the Nationat League of Citie\ repre-sented the Id government groups.He suggested that ACIR (1) convene afederal-state-lorel mnference on fed-ernlisrn (2) amine trends and im-pacts of federal mandatev (3)recommend an intergovernmentalsystem for envirmrmental protection,health, rmd ssfe~ aad (4) examine ia-tergovemmental aspects of health raredelivery aad reform implementation.Suggestions for -Ic studies includedtax systems metmpalitan fixal d@-tiea, entitlements, telammmrications,reguhtion, welfare reform, regionakm,and cepital investment.

APrl/ 14, 1994Agenda Committee Report

The Comm~lon approved thework agenda, w~ is dlvidcd iatoshort-term and Iong-tem prograrm,and f-sea on mandates, the irrtergov-ernmental fii system, aiminat recordinformation ~tears, metmpnlitan f-disparitia, intergnvemmentat mnpera-tion ia implementation of I~& newtelmmmuticetions technolo~, andhealth care refomr and lncal roles iaprovidirrg health services. (See ACIR’SPlans and Objectives, page 7.)

Partnership Initiative

The Commission approved a ma-jor nationwide initiative of research,consultation, and consensus-buildingamong federal, state, and local offi-cials and private citizens to produceprinciples and reform proposals to re-structure the nation’s intergover-nmental system. The prncess willculminate in a federal-state-lncal

leadership roundtable in the Fall of1s95.

Specifii attention is given to (1) im-pmvisrg intergovemarentat eorrsrdta-tioz (2) rebatanciag intergnvemmentatfinance, (3) kntikiag irrtergnvem-mentat service provision, (4) rwmctar-~g SrXIStS-ti-8id, (5) r’atio*mgfedemt regnhtion, and (6) reticingthe institutional pnrtnemhip.

Drought Planning

The Commission approved publi-cation of an information report ondrought planning, specifically, thepreparation of a political element–the question of governing-to makesure that drought plans are developedas aa iategmt part of the dem-tic.process. Beyond the techairal -ts ofa plan, government officials ptaane~and mmry other stakeholdem must beallies if a ptan is to benefit the public.

ACIR Testifiesat Mandate Hearings

John Kincaid, ACIR ExecutiveDirector, testified before the u.S.Senate Committee on GovernmentalAffairs on ApriI 26, 1994, at hearingson federal mandate relief. Kinmidsaid the Commission has long heldthat

There is a need for additionallegislation to provide equitablemandate relief to state and lmlgovernments. . . ACIR’S concernfor mandate relief reflect$ mostimmediately, its conclusion thatcurrent measures duded at relief,such as the f-l notes pr- andpresidential executive orde~ havenot worked sadsfactorily. ACIR hasalso ~rwed great conwm abarrtthe impact of the U.S. SupremeCourt’s ‘Iknth Amendment ruling irrGmia v. Sari Antarrio M~politanfim”t ,4utharity (1985) on the viabd-ity of our federal ~tem.

Kinmid noted that ACIR has be-gun to use the term “federally inducedwsts” irr addressing the definitional is-sues underlying mandates, which areone of seven types of federal actionsthat may iacrease state and local rests.He mid

Mandate retief should consid-er, among other things (1) improv-iag the quality of cost estimatesand e~anding their use to thebroad range of Iegistative, admirris-trative, and judicial actions that irl-crease state and lM1 governmentrests, (2) enhancing the impact of~st estimates on legislativedecisionmaking and using cast esti-mates irr subcommittee and com-mittee deliberations . . . , (3)cmrsidering the impacts of multi-ple rmfunded mandates . . . . (4)developing better methods to as-sess the benefits of mandatesagainst their rests, including thedistribution of benefits and costs...> and (5) establishing criteria andintergovernmental mnsultationprocesses to help decide appropri-ate mst reimbursement policies.

Federal Grant Programs

in Fiscal Year 1992:Their Numbers, Sizes,

and Fragmentation Indexesin Historical Perspective

The federal-aid system is morefragmented than ever. Using a“fragmentation index,” based onnumber and size, to mmpare 21groups of federal grants programs,ACIR found that only ener~,transportation, and health reducedthe number of small grants andincreased large grants since 1980.In 1992, about 92percent of federalgrants to state and lncel gover-nments were funded by only 10percent of federal-aid money. De-spite efforts to consolidate grantsduring the 1980s, the system stillhad 506 micro-grants out of a totalof 553. In 1992, the three largestgrant programs–Medireid, High.way Planning and Constmction,and AFDC-got half of all grantmoney. Grant funding in 1992ranged from Medicaid at $69.6billion to Appalachian CommunityDevelopment at $22,000.

SR.14 1993 $10

(see page 39 for order form)

6 lntergovemman~ Perspsctiva/SpringIW4

ACIR’S Plans and Objectivesasic Goals for ACIR roundtabie in 1995.In addition, the Commiaaion plans to mn-

Goals for FY 1P94 are tovene other state and local ofticiafs to addm s~fic facata ofthe ~ues identified above.

■ Strengthen the mnvening role of ACIR as animprtant and tilble intergovernmental fomm forbuilding a more effative and mperative intergov-ernmental partnembip.

9 Focus the Commission’s agenda more sharply oncritical short-term and long-term intergovernmentalissues.

■ Work more closely and mperatively with theCongress and the President to facilitate moreeffwtive federal-state-local m~ration and mnsul-tation, Btablish a federal-state-local partnemhipinitiative to reach those goals and wrk toward afederalism summit.

■ Work more clc.selywith state and hxal governmentsand their national associations to facilitate moreeffective intergovernmental dialogue and servicedelive~.

■ Enhanw the implementation of ACIRS recommen-dations by the appropriate government institutions–federal, state, and/or hxal-with immediate focuson ACIRS recommendations for high performancepublic wrks.

>ritical Intergovernmental Issues

ACIR will focus on four critical isue.s that cut acrms,ntergovemmental relations,

1. Resolving the problems cauaed by federal mandat=on state and local governments and federal preemp.tions of atate and local authority, including makingnece=a~ federal regulations more flexible andeffecti%

2. Achieving more effective and eftitient intergover-nmental service delivery, es~cially in light of today’sfiscal realitia and the -ted raforms in healthcare, wlfare, and infrastmcture investment;

3. Streamlining tbe federal grant-in-aid system andproviding more flexibility for state and local imple-mentation and innovation; and

4. Rebalancing tbe intergovernmental public finanmsystem to produce more rational and efficientoutcomes that will ensure the abilities of allgovemmenk in our federal s~tem to finance publicsetices in the 21st century.

Five Action Roles for ACIR

Convening. ACIR intends to restrengthen its role asregular mnvener of federal, state, and local officials to addressimportant intergovernmental isues. To this end, the Commis-sion will take a lead mle in implementing NPRs remmmenda-tion to mnvene high-level intergovernmental meetings on thefederal-state-local partnership, culminating in a leadership

Monihring. Over the years, ACIR bas played an impor-tant role in monitoring and documenting developments in thefederal sptem, a role for which ACIR has acquired am~tedreputation for amracy and objtiivity. The information pro-dumd by ACIR is widelyused by federal, state, and iocalofti-c.ials, new reporters, tivic organization, and academim andstudents.

Research. ACIR iawII known for its~rt and objwtiverwarcb on substantive intergovernmental policy *u&. TheCommission expects to complete major long-term projects al-ready near completion and to initiate a few new high-priorityprojects. Such indepth -arch is =ntial for providing aninformed basis for Commission rtimmendations and legisla-tive propafa.

The Commission has established the following prioritia

w Comprehensive review of tbe federal-state-localfiscal sptam issues of taxing, spnding, and provi-dingefficient, equitable, and effective public WMW,including education, in the 21st century.

■ Further rewarch on untinded fedeml mandates,including statutory and regulatory mandates, man.date-relief propals, and entitlements.

w Metropolitan fiscal disparities and models of inter.governmental m~ration in redistributing andsharing fiscal resources, as wII as ~ible fedem!incentives for promoting regionalism.

■ Intergovernmental cooperation in the implements.tion of the Interwrodd Suface Trwuportation Emcisncy Act ~STEA).

■ Research on wtting up a better sptem of timinalrecord information and the ~ible establishmentof a national registry.

H Effects of the new technology in tOleCOmmUniW-tions and the information highway on state, iccal,and federal tax rates and regulatory respmibilities.

■ Healthere raform and the rolm of local gover-nmentsin providing health services.

Institutional Linkage and Services. In FY 1994,ACIRwillcontinue wrking with the U.S.Army Corps of Engineerson intergovernmental infrastructure issues. Under a contractwith the U.S. Department of ‘R’ansportation,ACIR will ex-amine the role-sand capaciti= of metrowlitan planning orga-nizations (MPOS)in carrying out their r=ponsibilities underISTEA. ACIR alao plans to wrk vdth other federal depart-ments on imuea of intergovammental mnsultation, waiversand regulatory fltibllity, federalism impact analfies, and in-tergovernmental WM= delive~. In addition, ACIR willrein-stitute its reriewandamment role for key bills in Qngresshaving intergovernmental impacts and for regulations affect-ing state and local governments that are being developed byfederal agencies.

Intergovernmental Pers~tive/Spfing 1S94 7

Capitol Hill Summit:Federal Capital Budgeting

The Advisoty Commission on IntergovernmentalRelations (ACIR) sponsored the “Capitol Hill SummiCFederal Capital Budgeting” on March 11, 1994, at therequest of Rep. Bob Wise of West Virginia and Rep. BillClirrger of Pennsylvania. Wflliam F. Winter, ACIRChairman, opened the conference.

The purposes of the meeting were to

■ Iufor’m Members of Congress and their staffsabout capital budgeting issues

■ Highlight tbe potential for legislative actiow

■ Identify and dwuss the pros and cons of federalcapital budgetirrg;

■ Encourage dialogrre about implementing ACIR’Srecommendation for a public works investmentsection irr the federrd budget; and

■ Enrich the National Academy of PubIic Adminis-tration’s study of budgeting for federal capitalprograms.

The U.S. Army Corps of Engineers, the NationalAcademy of Public Administration, and the RebuildAmerica Coalition moperated in sponsoring the summit,which was attended by more than 100 representatives offederal executive branch agencies, congressional mem-bers and mmmittees, and the private sector partners asso-ciated with public infrastructure.

What follows are excerpts from Governor Winter’sopening remarks, summaries of the congressional presen-tations, and excerpts from the panel discussions.

Those participatirrg irr the program were:

Rep. Bob Wi$e, West Virgirria

Rep. Bi/t C[irrger, Pennsylvania

Rep. Roy Thornton, Arkansas

Jurrr@ Blrurr, Deputy Director, CongcemionaJ Budgetoffice

Mtia C~, President, Cbarrrbem _te& frrc.

David Chu, Director, Washington Research Depart-ment, RAND

Mortimer L, Dowrr~, Deputy Secretary, U.S. Depart-ment of ~ansportation

Thomas Downs, President, AMTRAR

Thomu.s D. Lorsorr, former Administrator, FederalHighway Administration

Paul Morclretti, Executive Director, PennVEST

David Mathimerr, Special Assistant to the AssistantComptroller, U.S. General -untirrg Office

Bruce D, McDowell, Director of Government PolicyRescarcb, ACIR

Paul Posne~ Director of Budget Issues, U.S. GeneralAccuuntirrg Office

Governor William E WinterChairman, ACIR

Tfre Congress and the executive branch need to worktogether to improve the budget process if we are to ensurethat every pubtic works dollar we spend witl bring amtimum return on the investment. We hope that thisCapitol Hill Summit wifl stint a fruitful dialogue that wiflbring improved capital budgeting-or investment budge-ting-to the federal government.

State and local officials krrowabout capital budgeting,but recognize that it ia not as well known in the federalgovernment. Nonetheless, federal capital budgetiog hasbeen debated for many years, and there are several bills onthe subject pendirrg in the Congress, including thoseintroduced by Representatives Wise, Clinger, and Tbom-ton. These bills present a real opportunity to move theissue forward.

In addition, the President’s budget now includesconsiderable capital budgeting information and irrvest-ment analysis. President Bifl Clinton believes strongly inthe need to invest in America’s future. Investment irrpublic works is fundamental. We need to mnsider the nextstep in the federal budget process to help improve thequality of infrastructure irrvestments.

ff we are goirrg to move toward performancebudgetirrg at the same time that we are moving towardcapital budgeting and investment budgeting, we need toask how all of these approaches can work together.

8 Intergovammental Wrsptive/Sprirrg 1694

Representative Bob WiseWest Virginia

This conference is a reflection of rising interest isrcapital budgeting. Considerable progress has been madeon capital budgethg in recent yesm, particularly in the lastyear. There is more capital budgeting legislation being putforward, with more cosponsors, than ever before.

Capital budgedng has been on the agenda of theEconomic Development Subcommittee of the HousePublic Works and Transportation and the House Gover-nment Operations Committee. Vice President Gore’sNational Petiormance Review made recommendations onlimited capital budgeting. The President’s FY 1995budgetrestated capital budgeting as an FY 19% goal. Capitalbudgeting passed the House Public Works Committee thisyear and was included in the budget reconciliation, but wasstruck out at the last minute. Signflcantly, capitalbudgeting was included as one alternative considered inthe debate on the balanced budget amendment and inother legislation.

Diacretiomq spending will oldie over the n- fiveyearn because of the hard frem agreed on with PresidentCliton. But we have to balance esscntiat mnsumptionspending, opemting inmme, ad capitat investment. As wespend les in real dollars, it bemmes crucial to distinguishbetween operating and capital expenditures for progmmstiie defense, education, job tminiig, and infmstructure.

What kind of investments are we going to make forsustaining growth? You can’t raise taxes sufficiently toreduce the deficit or to balance the budget. You can’t cut thebudget enough to reduce it. There baa to be a strong elementof growth over mmryyears. Once agairr, that gets back to howyou encuurage mrd account for investment.

Capitat budgetiog ia emerging as a rational middle wayto budget. States do it; businesses do it just abut everyonedoes it but the federal government. Eve~ pro~sal I haveseen requires that the operating budget he balanced butremgnizes the value of a cspital investment. ‘IIre propnsalswould permit hrrowiug only for investments that increaseeconomic growth. There is a variety of approaches aumeWlted to infrastructure wh~e othem include hummr capital.I betieve very strongly in setdng up a system that pays forinvestments over their useful lie.

The political battle over capital budgeting is going tocontinue. The important thing is that we focus ontechnical issues and on implementation. The Congress isgoing to need help answering several question~

First, what are the objective, rational criteria fordefining capital? There are those who challenge theconcept of capital budgeting for the federal government,and they have some legitimate concerns. For instance,what is the defense versus nondefense role? Do youcapitalize an aircraft carrier? Does it have an economicreturn in the same way as a highway or a bridge or atelecommunications network? Should you be able tocapitalize the guard needed to protect a new plant andequipment in the same way you capitalize the plant?

How far do you go with capital budgeting? Is there away to measure the emnomic revenue stream, to amortizethe investments in education or job trainisrg? How doesth~ interact with other measurements of investment andthe impact on growth?

What ia the best way to structure capital budgeting toimprove multiyear investment planning?

What is the best way to reflect the mst of capitalbudgeting in the operating budget?

Representative Bill ClingerPennsylvania

fnvesting in infmatructure, to me, is what cspitalbudgeting is aU about. A recent article in U S. iVWs dWbr/d ~rr suggested that public works inveatm.ent kstrictly pork all potiticstty driven. ~erc atwsp witf be apnliticat mmpmrent to infmatmcture investio~ but that isnot the pnint. me objective is to have a ~tem that at leastprotides for more rational investment, so that whetherdtilona are being made by the federal government, thestatesi or la gmemment~ there are eritesis that caneliiinate the wteful, gold-ptsted projects that often areaccused of king pork hsmel investments. Suti a system isthe primary objdive of capitat budgeting. It ~ in my view,primmity a planning tool rather than a budgetmy tonl.

In 19S4, we got the concept planted in SpecialAnalysis D of the federal budget that a capital budget wasa good idea. The concept in Special Analysis D needs to be~anded to talk about how we can better invest ourcapital. We need a look fomard.

A look forward is to determine real needs. We aregoing to have that on highways and bridges, but we don’thave it on a whole range of other things, such as ai~cts orwastewater treatment systems. You also need solidinformation and standards. Without them, the pork bamelbarons will make the decisions. A capital budget thatrequires an invento~ of needs and projects the emphasisinto the future makes it much tougher to argue fur aspec~ic project if it doesn’t meet the criteria.

Capital budgeting is a concept that is supportedalmost universally. In a 1989 repofi, GAO said

Mclusive focus on a single cash-based totalleads to unsound deficit reduction strategies un-der tbe present federal budget structure. It is dif-ficult for the President and the Congress to applydeficit reduction efforts in a way that balancesneeds for operating expenses with needs for capi-tal investments. . The current cash based uni-fied budget masks the use of sncisl security andother tnmt fund surpluses to finance deficits andother capital activities.

GAO has issued a series of re~rts, tbe most recent inNovember 1993, in which it mudified the earlier underly-ing assumptions as to what activities qualify as investment.GAO moved away from the notion of a capital budget andproposed establishing investment spendhg goals in thefederal budget. The term “investment” was broadened toinclude human resources.

lnterg~mmentalParsE*/Spring 1W4 9

me mpnrts ssy the most appropriate dcfiition woutdinclude federal spending either direct or tbmugb grsI’I&intended @em the ~te sector’s long-term produc-tivity. Such a detirddon distirrguisbes between federallyovmed capital md investments that promote private sectorgrowth. ~ defiition includes ~nding on snme intigiblesctivitiea (e.g., ~h and development human capitcd,education mrd tminirrg) and ~ndirrg for phyaicat capital tnimprnve infmstmctw including highw-a~ bridg% snd siremffii cmrtrnl systems. hlitically, it is more diffiilt to builda winning mnacnsus if the mncept is too brosd.

me most r-nt strong endo~ment of capitat budget-ing came from Vi -ent Gore’s Nationsl WrfornranceReview. Earlier, the Natiomd Comcif on pub~ WorksIrnpmement, w~ wss eatsblisbed by the law that-ded Se Afrstysis D, elm -mrnended capitslbudgeting, as dd the Competitiveness Po@ Council.

Now, we have the best chance to enact th~ tool forratiomd, sensible plarmbrg for the use of federsl dollars.We need to do abetter job of selwtirrg where we put thosedollars. We can no longer afford to be profligate. A capitalbudget is arr ticellent device to help avoid potentialdamage from deficit reduction.

Representative Ray ThorntonArkansas

l’hii country has failed to have a strate~ forirrvestment in the future. We were not making the choices,

rmd apparently did not have the tmls to mske tbe choims,thst would permit the United States to mntirme to be adomirrsnt ewnomic power. A solution to that is myMarshall Plan for America, wbicb has many components.One of them is that we must have the knowledge and theirrformation on which to make wise choices.

I don’t know of anyone who doesn’t know how tod~inguish between spending money for everyday activi-ties and making an investment in the future. It is difficultto quantify, but we all know intuitively that there is a greatdistinction between the two activities. In my bill, we try toprovide for additional infomration on (1) current operat-ing qenditures, (2) investment irr infrastructure, and (3)developmental investments. We need to know thedifferenm, say, between a National Science Foundationgrant to a university for long-lasting equipment that willadvsnce our knowledge irr snme field of mmpetitivenessand the sslary of the professor who is involved in theresearch.

Capital budgedng offers an opWrtunity for thoseinterested in public works to join with those interested inadvancing the technolo~ of higher education, and indeveloping the skitls and resources through irrvestmentsirr msterial things.

The third category, as distinguished from operatingespenses and infrsstrncture expenses, is irrvestments of adevelopmental charscter. me NSF grant is an emmple. Itmay cause the state or a university to make an irrvestmentin future education. It is very important to remgnize thiscategory of quantifiable investment return that csrr comefrom government activity.

Pane/ One

Benefits of, Barriers toAnd Opportunities for Capital Budgeting

By the Federal Government

Moderator In Inte~ovemrrrenh2f Perspecdw (Fall 1993/Winter

Thomas D. Larson 1W4), ~m Downs said

(former Administrator, Federal Highway Administration, and Protibly more than any other nation, theformw Pennsylvania ~ of Trans~tlon) United Statea has had a dream atmrrt capital. Ear-

ly in its history, the nation put much of its wealth

The questions before this panel are the “why” into harbors, lighthouses, canals, raifroads, air-

questions. The fmt one is, why have a cspital budget?ports, urban and agricultural systems, sanitary

Second, why hasn’t the federel government used a capitalsystems. . . From the beginning, the nation has

budget, like most states and local governments? Finally,been clear on the need to spend money tuday toget a good return tomorrow.

wby is this a gd time for the federal government toseriously consider this cmrcept ? That is the core of much of this debate.

10 lntargovemmen~ PerspacUm/Spring 1S94

James BlumDeputy Director, Congressional Budget Office

The fmt question should be what do we mean by acapital budget? That there is a range of view’s ia amplydemonstrated in the analytiml perspectives seetion of thePresident’s FY 1995 budget. Thii lays out two differentcapital budget presentations. One has a fairly namowdefinition focusing on how federally owned capital assetsare used to provide goods and services, the concept thatthe National Performance Review seems to emphasize.

A broader mncept alau is laid out, luukirrg at nationalinvestments or national cspital. This would include somefederally owned capital assets and capital-type invest-ments that are financed by the federal government —bricks and mortar as well as edrreation and training,research and development. A thud concept is presented insome of the bills in the Congress, which would try to breakout public works infrastructure.

What would we gain by using a cspitalbudget? From abroad perspective, the eoncem is with constraints on thebudget because of the federal deficit, to reduce the deficitand move toward a balanced budget. The economic reasoncited is that this is the best way that the federalgovernment ran increase national savings and irrvestmentto contribute to longer term growth.

It ia commonly pointed out that we would not be soconcerned with the deficits if they represented aneffective increase in public irrvestment-type spending thatcould cmrtribute to growth. However, fedecal spendingstresses wrrsumption rather than investment to thedetriment of longer term ecnrromic growth.

A capital budget, it is argued, could focus moreattention on reducing the deficit and safeguarding thepublic investment crrmponent. In a more narrow sense, afederal capital budget would be useful to get abetter ideaabout performance, an objective that the NationalPerformance Review highlighted. ~ get a handle on costs,the cost of capital needs to be iucluded. Whether that isdone in the budget or in separate agenq financial reportsis an open question.

The federal government haa not used a capital budgetfor several reasons. Fust, the 1967 President’s Commis-sion on Budget Concepts tmk a very strong view on capitalbudgetx “The Commission finds little merit in proposalsto aclude outlays for cspital goods from the total ofbudget expenditures that is used to compute the budgetsurplus or deficit. . . .“ That report serves as the mainreference point for thinking about the stsucture of thefederal budget, and it contains an excellent discussion onthe pros and cons of a capital budget. But the mmmissioncame down strongly against a capital budget.

Another reason why the federal government hasn’tused a capital budget is that capital investments do not

wnstitute a large, uneven portion of federal qenditure.For a city that wants to build anew city hall, for example, itmakes sense to borrow to finance it and charge off ita useover a periud of yearn. Aa you start moving up thegovernmental ladder, the rationale for such budgets tendsto dissipate. The federal government makes capital-meinvestments every year. They become an integral part ofthe budget.

Now is a guod time for the feder’rd government tothink about a capital budget, in the view of aumeobservers, because of the budget constraints and need tothe move toward a balanced budget. It is understandablewhy, in thinking about the pussibilhy of a constitutionalamendment to reqrdre a balanced budget, there would beinterest in making a distinction between operating andcspital budgets. Whether that is the right way to goremains open.

David ChuDirectorWashington Research Department, Rand

I would lie to offer a ms’rower perspective on thecspital budget questions. A capital budget allows you toget some sense of long-term duection from the perspec-tive of a department overall and from individual activities.Annual dec~lons csn distort that perspective.

For example, dur’ing the 19S0s, the Congress requiredthe Department of Defense to repost on the cost of U. S.forces in NATO. The repocts had to include a pro ratashare of all capital costs associated with the forms eitherstationed isr or planned for deployment to WesternEurope in the event of a crisii. Defense ~enditures,especially investment expenditures were rising rapidly,and the required methudolo~ caused a huge apike in theperceived mst of U. S. forces in Europe.

These costs were repeated over and over again as ameasure of the rising burden the United States wasundertaking. What was going on, however, was a majorrearmament, which would benefit all U. S. forces over 20to 30 years. Because we treated cspital expenditures on anannual basis, we seriously distorted public perceptions.

me pcineipal reason why the federal government hasnot adopted a capital budget ia the Muence of the repurtof the Pcesident’s Commission on Budget Concepts. Thenotion of a capital budget is met typically with indifferenceand often with hostitity.

Beyond the budget mncepts report, I think inertiaalso plays a strong role. There is no cumpel~mg, immediateresaun to use a mpital budget. ~ do it welI is a sign~lcanttechnicsl challenge. New data will have to be wllected,and a host of analytical and policy issues will have to becmrfronted-irrchrdiug what is and is not a capitale~enditure. Even supporters of capital budgeting will bedivided by these problems. Many congressional supportersalso have auught to expand the activities to which the

lntafgwammanM ParsPtive/Spfin9 1994 11

capital budget would be applied. No one has even begun todebate how to set constraints on federal capital expendi-tures, and certainly tbe federal borrowing power, which iavirtually urdimhcd, wifl not help.

It is very inrportant to link capital budgeting to thenationaf income account structure, so that you can seewhat is happening acrow the country, not just in areasaffected by federal pofieies. It needs to be part of a broadview of the intervention of the federal government in thenational economy.

Thomas DownsPresident and Chairman, AMTRAK(former timmiasioner, New Jemay Depaflment of Trana~r-tatlerr)

A suggestion as to why ,wedon’t have a capital budgetfor the federal government ia the lingering influence ofJohn Maynard Keynes’ general theory of munterqclicalpublic fmnce. ‘fIre federal government’s investmentstrategy =umes that ita primary mission is to makeCmsnterqclicaf investments; that when the emnomy goesin the tank, the federal government is supposed to borrowmore and spend more. It doesn’t matter how it spends,according to Keynesian emnomics, just spend it into theecnnomy and watch the ecmromy recover. In rich timesthe government’s role is to get out of the way of expansion.

That strategy is at the heart of some of the federalproblems in developing a capital budget because itaamrmes that the federal government has a differentinvestment gnal than cities states, businesses, and othernational governments, that the federal governmentsomehow is unique.

The secmrd reawn ia that political leadership is notstmctumd to thti about investments. ‘Ilre averagetenure of a senior political appointee is about 20 to 22months, which is not long enough to figure out what theoperating budget ia, let alone have a mmmit ment to ampital budget.

The national emnomy and the federal budget pmceware geared to a set of 19WSconsumption economics. Thecountry seems to be shifting away from consumptionecrmomics, but the federal government hasn’t definedanother role for the national emnomic purpose. Federaldecisionmaking is still hwked to a credit card economy,which makes it fiscally impossible to invest rationally inthe nation’s well-being. That seems like a pretty obwletesystem. It goes back to Keynes and having only amacroeconomic function for the federal government. Weneed a capital budget now to help repair the public’sperception that the national budget process has lost itscredibility. In the public’s mirrd, the budget procew issomehow fundamentally disconnected from reality. Acapital budget is needed to counter the perception that the

tisting process is wasteful, shortsighted, and not in thelong-term best interest of the muntry.

State and local referendums on capital irrveatmentahave passed around the muntry in jurisdictions that areeither financially strapped or fiscally mnservative. TheAmerican public is wifliig to make capital investments.This is not an alien cmrcept. It ia a fundamental part ofAmerican optinrism that government can make capitalinvestments with high rates of return if we have a federalcapital budget pmcesa that at least allows anme d~cussionabout investment.

Investment is another word for optimism. Capitalbudgeting is another word for hope. ff the federalgovernment can’t provide that, the long-tern credibtityof the budget process will flounder.

David MathiasenSpecial AssistantU.S. General Accounting Office

At least four mncems have attracted people to acapital budget over the last 30 or 40 yearn (1) properincentives for government Operation (2) long-run poten-tial emnomic growth; (3) proper treatment of financialassets (4) justflcation for debt fmancirrg. GAG’s worksuggests that some of these are vali~ anme, perhaps not.

You don’t hear abmrt financial assets any more, but itused to be one of the major arguments. When the federalgovernment lends money, it gains an asset irr the fornr of aloan a=et. However, credit reform treats the loans andthe problem of contingent Iiabiilty fmm loan guaranteeson a present-value basis irr the budget. That removes atcsditional theme of capital budget advocaq.

The federal government also has not used a capitalbudget because it does not need the same kind of rationalefor borrowing as a state or a Irrcal government. The federalgovernment has a set of national amunts for detemrirringf-l ~licy that provides a much stronger basis on whichto nmke dec~lons abmrt what to borrow, both short andlong term. Although GAO supports various forms ofcapital budgeting, it does not support something thatautomatically would justify borrowing as opposed to notborrowing. At the level of the national emnomy, fiscalpolicy determines borrowing, not investment analysis ofindividual projects.

Nevertheless, the federal government has mncemsfor tbe proper incentives for government operations andfor overall potential national growth. A couple of yearnago, GAO did long-term projections using a variation ofthe long-term growth and irrvestmerrt model developed bythe New York Fed. It uses simple relationships betweensavings, investment, growth, and the federal budgetsector.

That work examined two separable issues in fiscalpolicy. One is how you get from where you are to whereyou want to be in the business cycle, which is as close to the

12 lntergOvemmerrM Fafspactive/Spting MS4

long-term noninflationary growth path as possible. That isa question of short-run fiscal policy.

The other issue is how the national budget affects thesavings, investment, and growth of the emnomy overdecades. GAO discovered that large deficits are detfien-tal to long-term growth and that, if you looked atinvestments in R&D, human resources, and irrfrastruc-ture in any inflation-adjusted, GNP-adjusted terms, theyhave been going down. We are running historically highdeficits and historically low levels of investment in thosethree categories.

It is difficult to mnstruct a single budget and a singleset of numbers that can provide clear guidelines forlong-term growth in the economy and antiafy the needs ofGSA, ~, and the Federal Aviation Administra-tion to operate as efficiently as possible irr the mix ofcapital and labor. In recent years, GAO has focused on theinvestments. We are now turning back to the more

traditional questions of how you best acmunt for federalgovernment operations in terms of mpital. We are tryingto Innk at alternative ways of setting up the budget.

Many people in the budget community view budget-irrg mainly as a broad resource allocation tonl-how muchfor national transpnctation or wetfare? There is remark-ably little irrterest in those who spend this money. I thinkthat is one reason why we have made relatively littleprogress.

A recent discussion about wnverting FAA into a kindof government corporation raised the same concerns.tiewise, it is argued, we are not investing ennugh inAMTRAK, the aimfays, or GSA buifdings; we are leasingtoo much rather than purchasing, etc. The solution is thatyou do the analysis “off-line” to show that it is rational tobuy rather than lease or to invest more in a raitway system.Then, you appropriate more money for those things andless for others. Ultimately, it is a political decision.

Panel Two

Means for Tailoring Capital BudgetingTo the Federal Budget

Moderator

Bruce McDowellDirector of Government Policy ResearchACIR

Assuming that it was decided tn consider a capitalbudget for the federal government, how would we make itwork? SpecK1cally

1)

2)

3)

4)

What kind of a capital budget bill should bepassed? How should the law be set up torestmcture the budget?

How well does the capital budgeting informationin the federal budget help inform the decision-maklng process? Does the Congress read and usethe budget supplements?

How effective will the Executive Order 12893,on agency investment analysis, be in helpingjustify better infrastructure programs and proj-ects? It relies heavily on benefit-cost analysis,and starting with the FY 1996 budget submis-sions, it is a requirement for justifying publicworks expenditures.

How do capital budgeting and investment bud-geting interrelate? How do we tie our invest-ments to performance measures? How shouldthe multi-year dimension be handled? What isthe relationship of capital budgeting to deficitreductiun and countercyclical issues?

Lefitia ChambersFounder and President, Chambera Aasociatea(chief budget advisor to the Clinton-Gore transition team,

former staff membar, U.S. Sanate Committee on Labr and

Human Relations, and aanlor budget and Pllcy analyti,

Ssnate Budget timmittee)

The last time that the federal budget was irr balance

was 1969, the fmt year that we had the unified budget. ‘firepresent budget structure is not an effective decisionmak-irrg tool, and it hides a great deal of irrfocrnation that theCongress should have as it makes decklons on spendingand taxing priorities.

Three major budget categories could include aseparate operating budget, a capital budget, and asepacate categoty for the setf-financtig trust funds (i.e,the federal retirement programs, Sncial Security, andunemployment insumnce). Part of the pu~ose of thoseprograms is to increase savings to prefund retirementbenefits. We now have a significant pool of aavirrgs-about$110 billion in tcrrst fund sutphrses-that we are spendingfor cument consumption irr the opecatingbudget. One wayto invest the su~luses would be to look at irrvestmentsthat are part of the federal budget, which then would be ina apital budget.

The capital budget information in the President’sbudget is not part of the decisionmakingprncess within theadministration. The way the budget is structured, the

lntergovammen~ Parapectiva/Spring1994 13

Congrem etaodoes not utilize the information at the time itmak= ita decisions. Urdw decisions are nrsde utilizing thatinformation, the Congress wilt not use it any other time.

Executive Order 12893 is a positive step irr basinginvestment decisions on a better process, but it is notenough to change the overall relationships of investmentto consumption.

Capital budgeting and investment budgeting areclearly retated. Rste-of-retum criteria should be devel-oped for any prngram included in a capital budget. Wehave a nne-year budget and we have budget documentsthat show five years. Both mecutive and ~ngressionaldecisionmakers utifize just the current budget ycsr. Acapitst budget witl allow us to get awy from that forlong-term investment progrems.

With regard to the impact nn the deficit, some haveargued that a capital budget is an effort to pull things nutof the operating budget in order to cnntinue runningdeficits. That has to be addressed head.on. We need tolook at (1) balancing the nperating budget, (2) setting

aPPrnPriste levels of borrowing, (3) targeting federalinvestment to suppnrt economic growth, and (4) using t=qenditures wisely.

Mortimer Do wneyDeputy SecretaryDepartment of Tranaportetion(former Amlatant Sacrafary ti Bur!g* and Program* fwmrExecutive Dlracfw anrl the Chief Financial Offimr, Metm@ll.

tan Transpnmtlcm Authority, New York)

Regardless of how the budget gets restructured, thepolitical process needs tn focus nn investment. Even theinvestments that federal agencies make in their ownactivities tend to be overlooked, but they are irnpnflant. Afederal agen~ that operates on an annual appropriationsbasis doesn’t plan ahead, doesn’t invest to buifd up itsresources, whether they are systems or buildings.

The other, obviously bigger, issue is how we makenational infrastructure investments and dec~lons.Whether it is financing the cash flow into the trust fundsand comparing it with what we are spending, there needsto be a better way within the budget process to focus on theproductivity of investment decisions.

The ‘ftansportation Department is Ionking atExecutive Order 12893 in two wayx (1) to tune up theprocess of making discretionary decisions about proj-ects, such as new transit starts or major airportinvestments; and (2) to look at programmatic invest-ments. That is where we can perhaps strengthen theargument on consumption versus investment.

The department also has been working with the statesto identify management systems for transpnfiation plan-ning, which are integral to a gond capital budgetingprocess. Some of the states’ systems are ea~, and theywor~ for example, with bridge management, how youpredict the useful life of a bridge and when to improve it,

and at what point you stop maintaining in favor ofrebuifdmg. me same ~stem is used with pavements.Some of the other systems are more mmples, such asmrrgestion management or safety management. ff thestetes are doing a gd job, we an make the case thatmore investment would pay a good rate nf return.

‘fIre capital budget dec~lonmatdng process can beused as leverage in achieving certain Iongterm objectivesand improving opersting outcomes. It forces us to thinkstrate@calty over a longer period of time and to getagreement on performance measures huac the ~icalbricks-and-mortar investments sre measurable. The FederalHighway Administration fma created mrdeta showing hmvtbe ove~ ~em is ~rfomdng. Whb eirporta, we cmr seethe level of performance, maintenanw and phfidrsmdition, and bow these factors wiff eff@ investment.

Some of the things that we do with performancebudgeting are also in the more easily measuredbricks-and-mortsr progrems. With job training or educa.tion, hnwever, tbe payoffs are over a much longer periodnf time, and gti analysis is more difficult.

Whether or not there is a capital budget, and whetheror nnt it is a multiyesr budget, there has to be a multiyearview of tbe investments. It means better projects and itbulds capability. Working on an annual basis, theinstitutions to implement projects effectively are notdeveloped. Both as a planning process and a practicalconcern, there has to be some stability of qectation andsome ability to move things from one year to another.

‘Ilmt is much more true in state and local progm~which are driven in many waysby fedemt sigmls. Signals thatgive them a longer time fmme, such as the sk-yearauthotition bitl, are important. The constraints on stateand lnmt ability to borrow drives those governments to seekthe best projects. Lccat governments, in ~, IMVe the

tiplirre of having to seU an idea to bond munsel.The federal government takes the bond market

signals seriously. The federal government needs to find asubstitute for that kind of discipline to help it sort out thekinds of projects that windup in a capital budget. Do youIiiit them to bricks and mortar, or do you include schOolhooks as an important investment in education?

The cnuntercyclical issue is a good argument for acontinuous capital budgeting process. There arguably iaroom to amelerate or slow the level of investment, butordy if you have an esplicit and continuous process. Muchpast experience at pushing out capital dollars as amunter~clical measure has not been well received oreffective, partly because the processes started from a deadstop. It is easier if you have a regular investment processand a multiyear agenda.

Paul MarchetfiExecutive Director, PennVEST(formerly with tha Pennsylvania Governors Office of Budget,

U.S. General Accounting Officaand U.S. Environmental Prc-tectinn Agemy )

I would separate a capital budget from the operatingbudget. State capital budget items generally are any new

14 IntergovernmentalParswrive/Spffng i 594

capital construction projects that cost over $1~,~ andhave a useful life of at least five years. The federalgovernment should include sirnifar projects in its capitalbudget as a basis for federal borrowing.

Debt service on the capital budget should be includedin the operating budget. Because debt service is paid everyyear out of tax revenues, it acts as a constraint on thecapital budget and the mnount the government should bewitling to borrow. That is the cmcisl link between a capitalbudget and an operating budget.

We also need better information to make productivetrade-offs within the capital budget. Making trade-offsamong various types of public expenditures is difficultenough, but now we also must make trade-offs amongpubIic e~enditures that are supposed to generate oftennonquantifiible benefits and that are competing withprivate expenditures.

As an example of where this might go awry,PennVEST funds water and sewer projects. We have sumepublic resources that we can lend every year. We have tochoose which water projects to fund or how much are wegoirrg to trade off water and sewer projects. We prioritizeand rank the projects. The industry tends to have largeeconomies of scale, so a rest-benefit analysis would lead tofinancing large projects that have relatively largecost-benefit ratios. That is exactly the opposite of theprogram goal, which is to try to help small communitiesthat can’t get into the capital market.

State capital expenditures usually are looked at in afive-year plan. Something along those lines is advisable.Planning ought to include the ~ected impact of thecapital financing plan on the operating budget, where thedebt service will be put. Thus, it is crucial to estimateinterest rates as well as expenditures.

Deficit reduction should be mncemed with theoperating budget, which ought to reflect the inrpact of thecapital budget. The deficit moves resources away from thefuture into the present, and that’s what you want to avoid.It is important that resources get allocated over tiroeeffectively. For deficit purposes, current qendituresshould be funded out of cument revenues. The capitalbudget helps that process.

Countercyclicsl fiscal poticy through capital spendingand infrastructure spending is, at best, an umvieldyinstmment.

Paul PosnerDirector of Budget IssuesU.S. General Accounting Office

Ithas been suggested that a federal capital budgetbe modeled along state and local lines. There are,however, essential differences in the purposes and rolesof federal investments that should be reflected indifferent budget treatments.

State cspital budgets are designed to overcomelumpine~ in the kinds of projects with long-lie benefitsand to encourage greater efficiencies between labor andcapital. This kind of approach is appropriate at the federallevel for onlya snmll share of the “investments’’–fcdecrd-Iyowed cspital, such asbuifdingsand mmputer’s, perhapssome NASA irrvestments, possibly some water projects.OMB estimates that only about a thwd of federalinvestments fall io that cstegory. The National Perform-ance Review talked about roughly $9 bittion.

By far the most important role of federal irrvestmentsis to improve national productivity and ssvirrgs. Theimpact of the deficit on Iong-temr productivity and savingshas been recognized, if not adequately dealt with. Thesurest way to promote national savings is to reduce thedeficit, but the composition of the budget matters alw forlong-term savings and investment.

The federal government doesn’t have programs thatdirectly promote irrrproved productivity in infrastructure,human capital, and R&D. It is the banker, largely, forprojects crmied out by others. A traditional cspital budgetreally doesn’t work in that mntext.

Fmt of all, the federal government does not fundmany discrete projects. It funds a flow of assistance to thestate and Iwl governments, which fund discrete projects.Second, you do not want to run a deficit that reducesprivate savings and investment to enhance public invest-ments that have arguable rates of return. You certainlydon’t want to reduce the deficit at the e~ense ofprograms that have g@ rates of return.

Ttre most practical approach is a tiled budget that

brings the deftit down mrd has an investment decisionmak.ing mmponent built in. Ttrat wodd refocus the debate bychanging tbe terms, by changing the kinds of categories weusc irr budgetirrg to dmw attention to theac kucs.

The cspital budgetirrg information irr the President’s

budget has improved this year. There is a much clearerdifferentiation between what OMB calls national capital,which is what we term investment, and federal capital.There also ix a column on the NPR-related capital.

But we need better information on the effectivenessof investments.

Perhaps fiecutive Order 1X93 will help trigger that.There are some cases in which you make sure that thefunded projects witl have the highest rates of return, andthe model in the executive order is relevant.

There is another tier of budget analysis, however.What really happens with most federal investments islargely a function of state and local decisions, which thefederal government influences only indtiectly. Thus, theprogram design becomex much more tipmtant tkindividual prnjcct analysis. For example, there need to bestrong protections against f~ substitution. In any case, theissues must be broadened w that these kiods of mnsider-ations percotate into the intergovernmental ~tem.

Intargovemmentsl Parapactive/Spring 1594 15

Total costs should be considered at the time thecommitment is made because there are liwrited resourcesthat have to be put into projects that are going to give themost bang for the buck. me way to budget underconstraints is to consider all costs up front, which is donenow to some extent and would be enmuraged more withlife-cycle costing.

Perfomrance budgeting is an important goal, but the

Government Peflormance ond Results Act of 1993 wiselydeferred its full impact until 1999. When GAO surveyedstates that were reputed to have the most advancedperformance budgeting and performance managementsystems, we learned from them, and from some of thefederal agencies that have been experimenting, thatputting these measures into play in the budget is verydifficult. If you don’t get it right and if you don’t haveconsensus, you might be worse off. By prematurelyintroducing performance measurement iato the budgetprocess, reality can be severely distorted.

On the counterqclical issue, one of the concernsabout having a capital budget with a deficit ia whathappens when the economy heats up and you want acontractionaty fiscal policy to counter the cycle. If thecapital investment part of the budget is out of control froma fiscal policy standpoint, a fundamental lever to controlinflation has-been l~st.

Local Government Autonomy:Needs for StateConstitutional, Statutory,and Judicial Clarification

ACIR urges states to clarify local home ruleprovisions and increase discretiona~ powers forlocal governments. The Census Bureau counted86,743 units of Iocal government in 1992. Local homerule is now available in most states either by statuteor constitutional provision. State constitutionalprovisions for local self-government are singled outfor special attention in this report. They are thecornerstones on which any sound theory of localgovernment autonomy can be built. ACIR alsorecommends that state and national associations oflocal governments provide legal support to advocat-ing local initiative powers and immunity from thereach of state government, and that state and federalcourts reconsider local government as entaifingcitizen rights of Iocal self-government, not merely ascreatures of the states.

A.127 ,993 $10

(see page 39 for order fore)

High Performance Public WorkA New Federal

Infrastructure Investment Strate~for America

In this re~rt, ACIR and the U.S. -Y Corps ofSngineers present the strateW developed throughmnaultations with federaI, state, and local govem-nents and the private sector. Whife most public worksire state, local, or private, the federal government hasi pef’vasive influence through financial assistance andregulations. ACIR established sis task forces, whose;tatements of principles and guidelines are included inhe report along with a four-point strate~ for (1) high~uality investments, (2) cost-effective mairstenance,[3) effective, efficient, and equitable regulations, and[4)affordable facilities. me consultations rdw producedin action agenda calling for Pceaidential and mngressio-nal leademhip, guitice on infrastructure and invest-ment, and support for infraatmcturc agencies.

SR.16 1s93 $10

Toward a Federal Infrastructure Strate~Issues and Options

Toward a Federal Infimtructure Strate~ documentsthe progress of an interagency initiative to develop afederal infrastructure strateg through a partnershipincluding the Department of the Army, the Environ-mental Protection Agency, the Department of EnerW,other federal agencies, state and local governments,and the private sector. Emphasis was placed onplanning, design, finance, instruction, operation, andmaintenance.

The Adviso~ Commission on IntergovernmentalRelations cmrvened a series of workshops for repre-sentatives from more than 25 congressional and otherfederal agencies and departments, and more than 70organizations represent ing state and local govern-ments, public works providers, and related research,advocacy, professional, and user groups.

Based on the consultations, a broad consensusemerged around five infrastructure issues that shouldbe addresaedby the federal government (l)rationaIesfor federal investment, (2) regulations, (3) technolo-gy, (4) financing, and (5) management.

A. 120 1992 $8

(see page 39 for order fore)

16 lntergovemmenM Parspactive/SpringIW

GoverningDrought:

Plansand Players

Bruce D. McDowell

T 00 often, drought planning includes onlythe physical aspects of hydrology, water sourcesand facilities, and the technologies used to sup-plement, conserve, and manage the quantityand quality of water. If the planning stops there,the technical solutions to droughts are droppedinto the laps of elected officials, with fingerscrossed, and everyone hopes for the best.

Very often, diaappnintment follows. The plan is neitheradopted nor used. The planners and the politicians mayend up seeing each other as foes rather than as allies work-ing to accomplish mmmon objectives.

This aflicle is based on a repm’t prepared by the U.S.Adtismy Commission on Intergovernmental Relations(ACIR). Drawing on 34 years of qerience with a widevariety of governance issues involving intergovernmentalrelationships—including water reaourcesl —ACIR de-scribes and remmmends the preparation of a politicalelement to make sure that planning is an integral part ofthe democratic prncess. The report and five technical

append~es were prepared fOr the National Drought Studycmrducted by the Institute of Water Resources of the U.S.Army Corps of Engineers.2

In most respects, the technical-political links dis-cussed here are transferable to other public pnlicy fields.

Plan to Govern Drought

Planning for the physical aspects of drought might bethought of, in simple terms, as figutig out what needs tobe done. For example, water supply facilities might beeqanded, water might be transferred from somewhereelse, wnservation might be prescribed, or water rationingmight be called for. These are all technical solutions to thedrought problem.

The political question–the question of govemirtg-ishow to ammplish the technically prescribed actions. Theanswer tu this question lies in the democratic prwess.

The technical prescriptions for solving droughtproblems may call for tax increases, personal aacfllce andinmnvenience, changes in established water rights andpatterns of water use, potential damage to businessprofits, and new forms of cooperation and mordinationamong multiple governments, separate agencies, irrde-pendent private utilities, regulatory bodies, and others.These prescriptions can create difficult political issues,especially if not balanced by clearly perceived benefits.

The reactions of mnsumers, taxpayers, voters, inde-pendent governments, separate agencies, and autono-mous utiIities will be felt in the political process. Theworse those reactions are, the worse will be the chancesfor adopting and implementing the drought plan.

Levels of Oecleionmaking

There are at least three important levels of democrat-ic decisionmaking that need to be considered

Constitutional. This level of decisionmakmg establishesbasic long-term principles that guide the governmentalprocess. It is determined by the U.S. Constitution and theW state institutions. The U.S. and state supreme courtsinterpret institutional issues.

Intemtate mmpacts on water hues–negotiated by thestates enacted by the state legislatures, and cmdiied by theCongress in accordance with Article I, Section 10of the U.S.Constitution—also create rather fundamental, long-lasting,and difficolt-to+hange rules governing water management.

Indian tribal governments operate in accordance withtreaties between the tribes and the United States (~icle

Intargovemmenti ParspacUvelSprinq IW4 17

1, Section 10 and Article II, Section 2 of the U.S.Constitution). These treaties frequently establish rela-tively immutable, although often undefined, wter rights.~ @ relatiom genedy is not aubjeet to state law.

Collective Choice. This level of decisionmakirrg esta-blishes public value judgments by law. These judgments,which can be changed more frequently and more easifythan constitutional principles, reflect the political times,political mmpromkes, mmpetition for fundirrg withinpublic budgets, and other factors. ~ese choices are madeby the Congress, state legislatures, and local governingbodies. They may be subject to judicial challenge.

Operationsd.Tfris level of dec~lonmakirrg involves admirr-istrative ndemaking, granting water permits, and manyother activities designed to caq out laws in accordancewith constitutional principles. There may be less discre-tion at thm level, depending on how specflc the laws are.Nevertheless, the details decided at this level can have im-~rtant corrsequen~ arrd they may be clmllenged irr court.Negotiated ndemaldng prtinres-a relatively rant irr-novation—=ek to build mnsenaus before new rules are es-tablished to reduce the Iikeliid of a murt challenge.

All three levels of decisionmaking are essential tosound drought planning and to plan implementation.

Political Elements of Drought Planning

A ~litically sensitive planning process can improvethe chances for succesafrd implementation. Studies of thegoverning issues are essential. ~ese studies should beginat the earliest stages of planning, should receive equalemphasis with techniml studies, and sbordd be integratedwith the physical studies. Tfrese studies can help developat least five @es of knowledge that are necessary to thesuccess of a drought plan

Water Lew

Water laws are highly wmplex and mnstantly chang.~g. Som,e,of the principal issues are water use permits,site-spectiic programs (critical areas), quant~lcation/adju-dication, the public interest, priorities for water use,instream flows, mnsetvation, transbasirr diversions, andmanagement of smface and underground water re-sources. Up-to-date legal studies for a study area areessential, including any deficiencies that might createimplementation barriers.

Pollticel Culturee end the Histowof Key Weter Ieeuee

It is crucial to get a fum grasp on th~ dimension of thestudy. A new drought plan is likely to gain greater andquicker acceptance if it builds on existing plans andagreements than if it attempts to make a complete breakwith the past.

Organization, Decisionmakere, Stakeholdera

The purpose of a study of stakeholders is to identify allof the players who will be affected by the plan and whohave a role irr helping to implement or blnck it, and to

understand their roles clearly. ‘1’hii inventoty shouldinclude water managers, water users, the general pubtic,the judiciary, and pnlitical officials.

Chengaa in Lewe, Organization,and Political Envimnmenta

Plans made before these studies are available aretiiely to violate essential potitical and social realities,making them irnpssible to implement. The processshould be based solidly on the physical realities, but it alsoneeds to create a ‘%uy-irr”commitment by all (or most) ofthe key stakeholders. ~ the Went that thm buy-in is notachieved, implementation witl be less likely.

Involvement is ths kq to a drought plurvringpracess thatcreates buy-in by the essential players. At least five ~es ofgroups need to be involved: (1) bureaucracies (mcludkgwater managers] (2) public policymakers (legislative, judi-cial, and potitical officials); (3) interest groups (includingadvncaq groups and independent experts or analysts); (4)the press (all media); and (5) the general public (includtigspec~lc sectors). A wide army of involvement and par-ticipatory decisionmaking techniques is available.”

It is a highly mmplex operation to give nontechnimlcitizens and elected officials an understanding of the keyfacts to get diveme interest groups to see each other’svie~int$ to get aepamte govermnents and agenties to acehow their r~tiilities interrelate, arrd tn eatab~mnstmctive interactions among the diverae playera. Yet,these ace the trwks that mmt be performed succesafally.

Computer-assisted systems are hemming available tohelp meet this challenge. Alternative d~pute resolutionand negotiated rrrlemaking ti have mme into greater uaein recent yearn. fn 1990, atl federal agencies were givenauthority and enmurngement to use these twlmique$ andstate rmd ld governments alan are moving in th~ dirdion.

Bam”ers to effective involvement can be overcome by sin-cerity and objectivity in the planning pracess, opmness, andsupport for those who do get involved. Work groups shouldbe convened by an organization having adequate geo-graphic scope and objectivity to gain the cofi,dence of allthe parties. As the process moves along, special opportun-ities should be offered to involve missing players.

Intergovemmerrtul and interagency coordination pro-cesses yield positive results only with great effort. lbo often,protecting turf bemmes paramount. Existing laws andprocedures may be invoked to close off diacusaion of po-tential solutions to problems. These barriers to apera-timr may be lowered by freely sharing the knowledgegained in the planning process with all the parties.

It also helps to take advantage of a drought. During adrought, it is difficult to plan; there ia tm much else to do.Right after a drought, however, while the event–and theresulting public, political, and institutional tumroil-iastill fresh, irrterest in planning will be high. This maybethe best time to involve new players and to reevaluateplans and processes.

Interagency coordination is achieved through contracts,compacts, agreements, and memoranda of understanding.These tools can be used in drought planning to

18 Intergovernmental ParspWva/Spring 1W4

■

■

■

■

■

Gather and share information about waterconditions;

Interconnect irrdependent water supply system$

Establish contingency plans for responding todrought conditions with appropriate facility oper-ations, water pricing, and conservation strategies;

Agree on trigger mechanisms to activate thesecontingency plans; and

Evaluate how well the pmcesa is working.

Effective, Long-Term Implementation

Planning without action has no effect. The prncessneeds to determtie what should be done, and howand frywhom it will be done. The plan should not be consideredcomplete untif the parties responsible for implementisrgeach recommendation are identified and committed totake on their assigned responsibilities.

New O~anizariom and Laws, Jf new organizations ornew laws are needed, the plan should specify how they wiflbe created.

&eements, Contracts, and Compacts. If interagency orintergovernmental agreements and mntracts (or even in-terstate compacts) are needed, the plan should spell themout andprovide for their negotiation. Studies that crossstate lines may beparticrdarly difficult, especially if thewater laws and political traditions dtfer significantly.

Tiigger Mechanism.r. Permanent mechanisms shouldbe set up to trigger coordinated drought response activi-ties by all the appropriate parties.

Wrzdirress.A program should be established to ensurereadiness to respond to emergencies. These emergenciescome along only now and then, and plans get old. Whenthere is a drought, the plan maybe obsolete or unfamifinrif it has not been kept alive with regular “drought drifls.”

Budgets. Adequate budgets are n!,ded to e~and wa-ter supplies, estsbliih water conscwation progmms, inter-cmmect titing suppliesi and maintain plamring anddroughtdfl processes. Often, this wifl rr-itate condit-ion of the budgets of muftiple governments and agencies.

These key implementation activities cannot be left tochance. If they are not in the plan, and if the planning pro-cew does not create commitment to them by the respntilepmties ~ virtue of theis having ken involved), there is astrong Iiketih@ that the plan wiff not be implemented.

Conclusion

Water mamgem and drought planners need the pnliticatprocess and tbe pubtic sup~rt it cmrbcirrg.They should workas hard (or harder) to btig ~titical partners and the otherstakeholdem into the prass as they do to perfect thetechnical elements of the plan. Developing the ~liticalelements of drought plans often may be more demandmgthan developing the physical elements.

Emphasis has been put on the need to

■ Prepare thorough studies of the legal issues, thepolitical cultures, and all of the institutional,

pofiticel, and other stakeholders’ interests iodrought planning and management.Develop the drought management plan throughan open and visible involvement process that (1)embraces all the players; (2) informs them abutthe physical, social, potiticel, and economicfactors relevant to the pla~ (3) facilitatesinteraction among thew and (4) resolves con-Klcts fairly and equitably. This prncew shouldinclude the mass media and the general public.

Include irr tbe plan all of the necessary imple-mentation elements and get the key decKlon-makers to buy-irr sufficient~ to take refinsibiiltyfor following through tith needed actions.

Speciatiits will be needed to help the drought plan-ners with the following task

■ f.a~ers for the legal studie%

■ Political and sociaf scientists for the studies ofpoliticel cultores and stakeholde~ and

■ Citizen participation qertq meeting facilita-tors, contlict resolution ~erts, and expertsskifled irr computer modetiig and decision-support systems to help run the planning prwess.

Droughts are not eesity predicted, and the demandsfor water (including instream uses) have been growingmore rapidly than supplies irr recent yeacs. Tlrrrs, droughtplanning needs to be flexible and reviewed mnstantly.

Note~1Sce U.S. Adtismy Commimion on Intergovernmental Rela-tions (ACIR), C~rdinating Wafer tium- in the FedendSystem: me Gmundwater-Suface Water Connection (Washing-ton, DC, 1991) Ann Klinger, “AView fmm the Commission,”and “Intergowmmental Cooperation in Water Go%mance—Commision Rwmmendatimrs,” Intergvvemmsntaf &w-tive 18(Summer 19P2] 2, U; and William Blomquist, “TakingFederalism Underground Managing Water Resources,”lnte~~vemmentol Pe-tive 17 (Summer 1991) d-7, 24.

2The appendix papers w Wlltiam R Lord, “Decision Making inDmugbt w- Stud&” (a fmmak fnr undmstsmdingthe different ~ of &ions that am made in governing wrerati managing droughts] Hanna J. co-r, “Reconciling Citizen,Anatwt, ad Manager Robin Democratic Gmemam. PubticImulwment Chstknger in the 1- (tmcea the ewtutin ofcidren innlwment through fw ems-clceed p*atiOn,mtimum kadik pactiri~tion, rmvimnmentsl *m, amlmltsborstiw -n brdtding-snd hi hmv goals can&rcmtikd] Cbsrk.s L _tcr, “_ment of Mter Law andDmugbt Maoagcment” (exsmi~ tirrds and @ isrues inwter Imvsrrd draw impticatim fm water msnagcm] Vivian S.Watts, “SnsetingaV@nia Water Management Ptsn” (part of theJames Rtir Basin drought planting case study, Sk how wtermanagem can identify tk & for k~tative change & hetp towmiti the state Plitical climate to this need] and David S.Hhn, Heten Bm, and D&n Ruir, “Water @mance in theCedar and Green Rxr Basins” (a detailed stskehotder anal@ ofpublic and private intemts and a sm- t~ pta~m can rely on& they wfi to impm drought prepsred-]

3see Lard.4See Coctneq see also ACIR, Cidzen Purficipution in theAmetim Fedsmf System @ashington, DC, 19S1]

Bruce D. McDowell is Director of Gover-nmentPolicy Research at ACIR.

lnt6fRmmti Persp.3cdve/Spting 1S94 19

TheState-Local

FiscalOutlookFrom aFederal

Perspective

Philip M. Dearborn

T he fiscal outlook for state and local govern-ments for the balance of this century —from thefederal perspective–will depend on four fac-tors: the federal budge~ health care reform, in-cluding Medlcai@ welfare reform; and federalmandates and regulations.

The Federal Budgat

A severely unstrained federal budget will dominatethe financial relationships between the federal gover-nment and state and local governments, at least through1999. Aa the result of an agreement reached betweenPresident Clinton and the Congress in 1993, total federaldiscretionary spending is projected to decrease by $1.8billion between 1994 and 1999 (see ~ble 1).

Table 1U.S. Budget Pro]ected Dlscretlonety Outlsys,

1994-1999(millions)

Upe of Outlay 1994 1999 Change

Total Disuetionaiy $550,109 $54S,2$6 ($1,S23)hss Defense ~,423 246,2S6 (22,137)

All Nondefense Discretionary $2E1,686 $302,~ ($~,314)

SOUIW Budget of (/]e U/!ited Stata Government, Fisc~ yew1995.

Even after adjusting for planned decreases of $22billion in defense spending, only $~ billion will beavailable for all other discretionary pm’poses. State andInral governments will be competing with NASA, foreignaid, the National Institutes of Health, national parks, andother federal civilian agencies for a share of this amount.Even with the planned dec~me in discretionary spending,the federal deficit is stifl projected to exceed $200 billion in19S9, and there are demands from some on Capitol Hillfor even deeper budget cuts. ~erefore, although budgetagreements are subject to change, and projections will berevised, there is little expectation of any dramaticimprovement in federal budget prospects.

Nevertheless, total federal aid to state and localgovernments is projected to increase $48 bitlion from 1S94to lW because of a massive increase in nondkcretionacyfederal entitlement spending for Medicaid and Aid toFamilies with Dependent Children (AFDC) (see Wble 2).

Table 2Fedsral Grants to State end Local Governmsnte,

Current Projections, 1994-1999(millions)

Program 1994 1999 Change

Medicaid S417,156 $152,235 S65,079AFDC 16,413 19,6s3 3,270All Other 113,696 93,664 (20,032)

Total $217,265 $265,582 $4s,317

Source: Budget of tlte United Slates Government, Fucd Em199s.

20 Intergovemmentsl Parswv.3/Spring 1W4

These entitlement estimates are based on current serviceprojections that assume no changes in the laws resultingfrom health care and welfare reform proposals. ff theseentitlement projections actually do occur, all other feder-al aid would have to decrease $20 biBion to meet the 1999federal budget target for total state and local aid.

For fiscal 1995, President Clinton has proposed somechanges in emphasis for federal aid to state and localgovernments. The most signfilmnt difference is the shiftfrom a Medicaid increase of $9.2 billion that dominatesoutlays to increases in budget authority for transportationinfrastructure, education, crime, health initiatives, and noincrease in Medicaid (see Wble 3).

Table 3Federel Grants to State and Local Govarnmenta,1994-1995 Budget Authority and Outlay Changea

(millions)

Authority outlayProgram Change . Change

MedicaidAFDC and RelatedTranspmtationSwial ServicesHousingNutritionEducationCommunity Development

Bluck GrantCrimeHealth InitiativeEmploymentAll Other

Total

$146w

1,560(2ss;

3441,772

8001,7741,855

9U4

$9,?2

$9,217(700)1,085

8641,300

887(331)

390180744361

(634)$13,363

Souw Budget of the United Stater Government, Fircal Year1995.

Stabilizing Medicaid costs wiB be important fnr thefederal budget and for state budgets. Because Medicaidrequires state matching payments of up to 50 percent,current projections would mean an increase in statespending from own-suurce revenues of over $50 billion.The overall result maybe an ironic situation in which stateand local governments wiB appear to receive a largeincrease in federal aid, but will actually be required tospend billions more in own-source funds while receivingless federal discretionary aid. Will this happen? Theanswer may well rest with tbe success of the heallb careand welfare reform.

Health Care Raform

It is difficult at this time to assess in any detail howstate and local health care costs will be affected bynational reforms. However, state and Incal governmentshave a major stake in tbe outcome. Fnr states, this is

particularly tme for Medicaid. Medicaid equaled 11.4percent of state direct spending in 1991. State Medicaidcnsts in 192 (icludirsg a small amount of Iml payments)were $50.3 bfltion, up over $40 billion from $11.2 bfllion in19W. The current service projection is for anotherincrease of over $50 bfllion by 1999. In addition toMedicaid, states spent over $38 bittion isr1991 (8.6 percentof state direct spending) to operate public hospital$ manyof them associated with state universities, and $14 bdlionfor non-Medicaid public health services.

Estimates of effects of the President’s health carereform pro~aal on states have varied widely. TheDepartment of Health and Human Services estimatesthat states will save at least $45.8 bdlion by ~ ($31.9billion on Mediaid, $7.6 biBion through a new long-termare program, and $6.3 bitlion in purchases of health carefor employees and retirees). The National Aasnciation ofState Mentat Health Program Directors, using the samedata, estimated the savings at $53.4 bfllion. The UrbanInstitute estimate of state Medicaid savings is $38.8bfllion, while a study by Lewirr-VHI estimates the savingsat $25.4 biBion in 2fs30.

WhiIe the effects of health care reform on lncalgovernments have not been estimated, a look at healthcare spending suggests that the fiscal implications for localgovernments may be as substantial as for states. Forexample, local governments own and operate 1,408 publichospitals, which spent over $30 billion in 1991, much nf itfor uninsured indigents. Lncal governments also providehealth irrsurance for mnst of their 11 million employees ata total cnst of perhaps $25 bdlion, and public healthservices cnst another $12.5 bfllion. Thus, direct lwIhealth care custs alone total over $67.5 biftion, or about 12percent of all local spending.

A key element of health care reform is mst shifting toremove inequities among those foutirrg the bitls. Becausestate and lmal governments incur large hmtth rare costs forthe uninsured, SUA shiiting sbotid ultimately be beneficialto them. However, as the legiatation progr=s and effortsare made to prnvide relief for the federal budget, there areno guarantees that mats wiBnot be shifted to state and Idgovernments rather than away from them.

Welfare Raform

Current welfare reform proposals are the latest in acontinuing evolution of national inmme support policies.Questions abnut which governments will pay the costs ofwelfare and through what ~es of programs have beenasked since the tempnrary Federal Eme~errcy Relief Act of1933. Prior to 1933, respnnsibitity for welfare was borne bythe states.

In 1935, the Social Security Act created national oldage insurance and unemployment insurance, and pro-vided a permanent program of federal aid to states for theprnvision of old age assistance, aid to the blind, and aid todependent children. me three progmms were open-endedentitlements of the federal government, but their pu~sewas seen as helping states meet their basic responsibtiities

lntergOvommanW Pem~tivalSMng 1694 21

for welfare. In 1936, states still paid 88 percent of all publicassistance. Even by 1960, the federal rests for publicassistance were just over $2 bdlion.

From 1960 to 1967, federal assistance expendituresdoubled from $2.1 billion to $4.1 billion, and the numberof recipients increased from 5.8 million to 8.1 million. In1974,3 million recipients were transferred from state tofederal welfare rolls following enactment of theSupplemental Security Income (SS1) program for theaged, blind, and disabled. While this shift was occurring,the federal food stamps program emerged. By 1975,there were more than 19 million food stamp recipientsreceiving aid at a cost of $4.4 billion. The addition of theEarned Income ~ Credit (EITC) and WIC (Women,Infants, and Children Nutrition) in the 1980s added tothe federal income support role.

By 1992, the federal cost fortheseprogmms was $69.7billion, up from $23.8 bfllion spent in 1980. However, theincreases were ve~ uneven, with the lowest increaseinAFDC. Because AFDC is the principal welfare programfor which thestates share the custs, the states~ overallshare of the five federal-state public assistance programshas been in decline, and was only 22 percent of the totalaid in 1992 (see ~ble 4). Thus, there has beena shift irrfederal inwme support financing from zero irr 1932 to 78percent in 1992. Tldashift to federal programs hasalsukept state AFDC mst increases close to inflation, exceptfor the recent effects of the national recession.

It is in this historical context that a new federalwelfare reform proposal is being designed. Details are notyet available, but it wifl apparently reqrrire all AFDCrecipients able to work to do so within two years or losetheir eligibility. It will also provide aid to those needingtraining, child care, and other help to make thememployable. There is no indication of any ~ressedfederal intention to shift any of these costs to state andlocal governments.

However, states and Iucalitics still have a baaic

r~nsibiiy for pub~ a=ktmce. There is the pss~itythat as eligibility for federal programs ia reduced or hlted,

thuae no longer eligible wifl time the total reapumfiityof state or lucat govemnrenta. It is rdso ~asible that atateamay be -ed to share irr the * of job tmining, child-, md pruviding public employment. Some estinratcshave ptaeed these rests as high as $10 btion annually.

Federal Mandateaon state end Local Government

Federal mandates mntinue to be a major concern forstate and local governments, but the actual fucal effectson future budgets are unclear. Several recent Iiiitedstudies suggest that existing mandates are not havingmuch direct effect on state finances, although they involvethe federal government deeply in the management ofstate governments.

For example, Tennessee and Ohio have estimatedtheir mandate costs and projected these custs ahead.Mandates in Tknnexee in 1993 were estimated at $153.7million, or abut 2.7 percent of state own-wurcerevenues. By 1995, the cust is projected to rise to $194.5million, or about 3.5 percent. Ohio identified costs of$~.1 million in 1992, or 1.7 percent of ow-surrrcerevenues, increasing to $389.2 mitlion, or 2.5 percent, in1995. In each case, Medicaid requirements imposed since1987 constitute two-thirds of the mandate rests.

Virginia, in cuntrast, using a ve~ broad definition ofmandates, attributes abut 20 percent of its budget tofederal actions.

Wo cities—Columbus, Ohio, and Lewiaton, Maine–alau estimated mandate wsts. Columbus found that its1991 costs were $62.1 million, or 10.6 percent of tbebudget, and projected $107.4 million, or 18.3 percent, by1985. While Lewiston estimated current mandate costsat less than 1percent of the budget, it projected that thecost of proposed requirements facing the city couldequal over 18 percent of its budget in some future year.In both of these studies, the principal mandate costswere related to water and sewer services that arecustomarily paid for by users.

Table 4State Share of Major Income Support Programs

(millions)

Program 1992Total Federal State Percent State

AFDC $24,922SSI

$13,569 $11,353 45.6%22,238 18,247 3,991 17.9

Food Stamps 24,918WIC

23,540 1,378 5.55,411

EITC2,567 2,844 52.6

11,783Total

11,783$89,272

0.0$69,706 $19,56: 21.9%

Souti U.S. House of Representatives, Committee on Ways and Means, ~e Green- 1993 Washington, DC, July 1993),Tables 1,4,19,21, and 34.

22 lntargovemme~ Para@ve/Spring 1S94

These studies evaluate diswt fi~l effects and do notconsider the costs that may result from loss of state andlocal discretion and fltibitity caused by the maze offederal regulations and requirements. Regardless of thebudget effects of existing mandates, the key question iswhether the federal government will continue to add newmandates and regulations. ‘flrere is no assurance it willnot, but President Clinton has issued executive ordersspec~lcally limiting the imposition or e~ansion ofmandates by tbe executive branch. The Congress also isconsidering a variety of bifls that would restrict futureunfunded federal mandates.

Putting It All Together

Overall, state and local governments can probablyespect no real financial heIp, in terms of d~retionary aidfrom the federal government, for the balance of thiscentmy. me overriding concern of state and 10M1governments has to be the federal budget crunch. Theresimply is no federal funding on the horizon for state andlocal governments.

While health reform may provide some relief, it is notclear at this time how such savings, if any, witl be rcatiicd.However, even a slowing of the rapid increases inMedicaid and employee health insurance costs has thepotential to reduce pressure on future budgets.

Wetfare reform, while likely to be presented asneutral to state and local budgets, has potential custburdens for state and local governments.

While mandates remain a potential fmncial threat,especially in view of the tack of federal funds to carry outfederal initiatives, it appears that this threat may bediminishing.

PhiliDM. Dearborn is Director of GovernmentFinance-Research at ACIR. “

The National Guard:Defending the Nation and the States

Tfsis study fmrrses on intergovernmental issuesconcerning the mntrol and operation of the NationalGuard. The role of the Guard in the 1991 Persian GuMoperations highlighted its place in the nation’s defensesystem. Equally important is the Guard’s role indomestic affairs (i.e., emergency preparedness andcivit disturbances) under the control of the governors.The report contains rewmmendations on dual controlof the Guard by the federal and state governments, thefuture of the Guard in the context of national securityand stat e needs, and opportunist ies for improvedintergovernmental cooperation.

I A.124 1993 $1s

(see page 39 for order form)

Federal Re@lationof State and Leeal Governments:The Mixed Record of the 1980s

A decade ago, ACIR issued a report on regulatory[ederalism-the use of federal regulations aimed at orhplemented by state and local governments. Thisre~rr examines the results of tilttitives to reformintergovernmental regulation during the 1980s, espe-cially fiecutive Order 1M12 on Federalism and theState and Local Goverrrrrrent Cost Estimate Act. Thereport also inventories a number of new mandates andtraces the U.S. Supreme Court’sevolving doctrinesaffecting intergovernmental regulation.

A.126 1993 $15

Federal Statutory Preemptionof State and heal Authori@History, Inventory, and Issues

Federal preemptions of state and local authorityhave increased significantly since the late 1960s. Of 439significant preemption statutes enacted by the Con-gress since 1789, more than S3percent (233) have beenenacted only since 1%9. ~ assess the impact of federalpreemption and perceptions regarding various ap-proaches, ACIR surveyed state elected officials,agency heads, and the 26 state ACIRS. There was aconsensus that there is too much federal preemptionand that the Congress delegates ton much authority tofederal administrators. Nevertheless, many respon-dents acknowledge the need for federal preemptionunder certain circumstances.

fn genemJ, state ofticials mtcd highly (1) standardpmtird preemption, (2) a federal statuto~ provisionstipulating that a state law is vatid rmfeas there is a directand psitive mnflict with a fedemt law, and (3)mngressiorral permission for states to act where nofedemt standard is in effeet.

With this report, the Co*ton rtiis itsearlier rcmmmendation that federal preemption, whilen~ in a federal ~tem, ought to be ~ andused only as nece~ to secure the effective isrrplemen.tation of natiorrat policy adopted pursuant to theConstitution.”

A-121 1992 $10

(see page 39 for order focm)

Intergovemmeti Pars~tive/Spring 1994 23

Intergovernmental

InRecordkeepingthe Information

Age

Marie B. Allen

Changes in the information universe in thelast half-century have been revolutionary. Withthe pervasive presence and importance of com-puter technology, information has become a vi-tal resource. Now, more than ever, governmentmanagers cannot afford to neglect the effectiveand efficient administration of information re-sources. Government information has becomethe focus of numerous lawsuits on everythingfrom Presidential records to electronic mail toaccess and privacy issues. According to Mitch-ell Kapor, President of the Electronic FrontierFoundation, information rights in this age willhave an importance similar to that of waterrights in the frontier of a century ago.’

Information Management

Information management has become a vital functionlargely because of (1) the growing significance of gover-nment information to citizens, (2) new technologies fororgarriziig and delivering information more efficiently,and (3) the changing American work place. A centmy ago,most jobs were agrictdtrrra~ W years later, employment in

the manufacturing sector tended to predominate; nowmittions of Americans work in some fonrr of informationmanagement or semice detivery. In the public sectoralone, more than 20 percent of all state executive branchemployees, approximately 420,~ nationwide, hold irrfor-mation-related pnsitions.2

Thus, it should be no sur’prise that government, theprimary mllector and disseminator of information, isunder enormous and contradictory pressures to

■

■

■

■

Make government infomration available to thepublic and protect the public’s privacy rights;

Facilitate public dissemination of governmentinformation and refrain from interferirrs withprivate sector efforts to do the same

Destroy noncument records for economy ofgovernment operations (when no longer neededfor administrative, fiscal, or other prr~oses) andpresewe every piece of paper or e-mait messagewith information of value to anyonq and

Exnand the availablltv of free information anddo;nstie government ‘personnel and budsets.

The Intergovernmental Context

As if these tasks were not challenging enough,government officials must manage information in anintergovernmental wntext. Federal programs are deliv-ered through intergovernmental partnerships for every-thing from food stamps to harardous waste cleanups.Even programs funded primarily by one type of gover-nment, such as education, are replete with regulationsimposed by other governments. Nowhere is the increas-ingly intergovernmental nature of programs more visiblethan in information management, and the most vitalinformation resource–because it is unique and irrepla-ceable—cmrsists of government records.

There are many connections between federal, state,and local remrds, whether in the form of paper, electronicdata, photographs, maps, microfilm, or other media.Somewhere between 50 and 70 percent of state remrds,for instance, are created and maintained because offederal mandates and recordkeeping requirements?Federal requirements have grown e~onentially over thelast 30 year’s, with few standards or guidelines. There islittle oversight of these remrdkeeping requirements byinformation management professionals or by those onwhom the requirements are imposed. The number andcomplexity of federal recordkeeping requirements make itdifficult for managers to locate all of them and assurecompliance with legal obligations.

24 IntergovernmanlalParspacUva/Spring1994

Many of the proposed solutions to these informationproblems echo themes sounded by the “reinventinggovernment” advc.cates and the 1993 National Perform-ance Review. For example

1)

2)

3)

on-l~e access muld reduce much of the difficul.ty and confusion in identifying federal record-keeping requirements.

participation by intergovernmental committeesin creating and revisiig regulations could reduceunnecessary duplication of remrdkeeping.

Oversight and review committees mrrld eliminateWme problems that result primarily from careless-ness. Some fderal requirements for instance,specify that certain rardsbe kept without statirrg atime liiit, thus leading to unnecessary and ~n-sive permanent maintenance.

In order to make a difference, federal, state, and localgovernment officials must work together to identify prob-lems, propose solutions, and implement recommenda-tions for revising federal remrdkeeping requirements.The National Archives and Records Administration has astatuto~ basis for supporting and participating in suchcooperative projects. The Archivist of the United Stateshas a statutoty responsibility for assisting the Office ofManagement and Budget (OMB) in “conducting studiesand developing standards relating to remrd retention re-quirements imposed on the public and on state and localgovernments by federal agencies.”~ In the last severalyears, the Archives has begun to implement this responsi-bility through a number of cooperative projects.

Intergovernmental Cooperative

Appraisal Project

In a pifot program that may have significant policyimplications, the Intergovernmental Records Program ofthe National Archives and the National Association ofGovernment Archives and Records Administrators (NA-GARA) have joined in the Intergovernmental Conpera.tive Appraisal Project (fCAP) to identify ways to reduceunnecessary duplication and participate more actively inestablishing and implementing federal remrdkeepingacquirements. Begun in lWZ ICAP is committed tomanaging government information in an intergovemmen.tal context and serving as an information clearinghouse.

With tbe participation of nine state archives (Alaba-ma, Florida, Georgia, Kentucky, Massachusetts, NewYork, North Carolina, Utah, and Virginia) and the

National Archives, ICAP has worked to (1) establish acommon vocabulary among federal, state, and localrecords managers, ~.) utilize defined terms in sharedrecords mamgernent forms, (3) exchange informationabout specific national program requirements, and (4)streamline or reduce federal recordkeeping requirementsimposed on state and Iocal government.

ICAP is focusing on streamlining or reducing federalremrdkeeping requirements in spec~lc federal programs,in woperation with agency officials. ICAP will also irrviteother related professional assmiations to participate, suchas the National Association of State Information Re-snurce fiecutives, Councit of State Governments, Infor-mation Policy Conaofiium, Natioml League of Cities,National Governors’ Asuciation, and others.

The proposed focus areas include the Department ofAgriculture’s food stamp program, the EnvironmentalProtection Agency’s Resource Comervation ond RecoveryAct program, and the Department of Health and HumanServices’ Medicaid programs. The food stamp recordsproject will be discussed here.

Food Stamp Recorde Project

Managers at the Fond and Nutrition Service (FNS)

~PPrOached the National Archives in 1993 to discuss theuIdeas for reducing the federal reardkeeptig burden onstate and 1-1 governments. The FNS initiative ceme justas ICAP was beginning to idendfy which nationalprogmms should be project f~us areas. The NationalArchIves and NAGARA exchanged letters of mmmit-ment with FNS, namirrg three federal and state recordsmanagers as m-directors of the Fond Stamp Remrdsproject: The purpose of the project is to determinewhether the three-year retention requirement for foodstamp paper applimtions can be reduced in light of theretention of parallel information in electronic form. Keyissues will be the review of records management controlsfor the electronic systems and the sufficiency of thecontrols for legal admissibility purposes.

The food stamp program is a federal-state partnershipirr which the states administer the program. Householdsapply fOr food stamps at the state welfare offices, Stateworkers use uniform nationwide rules promulgated byFNS to determine and certify eligibility, to calculate eachhousehold’s allotment, and to monitor and recertifyrecipient eligibility.

Food stamps or coupons are used to purchase fuod atcertain stores. Participating stores redeem the foodstamps at banks. The banks, in turn, redeem the foodstamps at their regional Federal Reserve Bank, and theFederal Reserve Bank seeks reimbursement from theTreasury. The federal government pays the costs of fwdstamps (approximately $26 biflion in FY 1993). The directand indirect administrative costs of the program areshared 50/50 by the federal and state governments.

Although food couponslstamps are the most commonmethod of distributing food assistance, several states aretesting alternative methods such as electronic benefittransfer (distribution through credit-like cards) andcash-out welfare reform projects (checks to familiesconsolidating assistance from several federal incomesupplement programs).

States manage focal stamp program data throughautomated systems, developed in accordance with a

Intergovemmenti PeraWtive/Spring 1994 25

Legal Admissibility of

The American legal ~stem grew out of themedieval English ~tem, irrwhich only vetial testimo-ny, not documenta~ evidence (defined as a form Of“hearsay”), was admi~ible irr couct. The Federal Rulesof Evidence (duplicated in similar laws ia most states)provide for exceptions to the hcarwy rule for mostpublic records created in the course of routinegovernment activity, provided they can be shown tobe accurate, reliable, and trustworthy.

The rules of evidence are the same for electronicremrds as for paper records, but, in a paper preparedfor OMB, the Department of Justice noted that‘%erause electronically fded f~es are particularlysusceptible to purposeful or accidental alteration, orincorrect processing, Iayiug a foundation for theiradmission must be done with ~ care. Properwntrol over creation and maintenance of these files canbe cmcial in overcoming inevitable objections that W beraised in the murtrnom.”b

The establishment of management mntmls foraccurate, reliible, and tmstwor’thy electronic records istherefore a vital concern of government program mana-

federal model, that have worked in other states. The mostcommon families of systems in use are

CRIS-E (Ohio, Tennessee, Florida, Michigan, WIs-cnnsin, Indiana, West Virginia);

Alaska (Alaska, Nofih Dakota, Wyoming, Mississippi,Arizona, Kansas, Utah, Hawaii, Sonth Caroliia,Montana, District of CoIumbia);

Georgia~ew Mexico (Georgia, New Mexico, Alaba-ma, Connecticut, North Carolina, Colorado,Maryland, Michigan, Washington);

Vermont (Vemont, Rhode Island, South Dakota,Nevada, Minnesota)

Masmchusetts (Massachusetts, Iowa] and

NAPA County California (California, Virginia).

Electronic Records

gem and information management and records profes-sionals. Guidelines and studies are being producedby a number of different groups. In addition to theJustice Department paper, the National ArchIvesand Remrds Administration is testing a set of archi-val functional requirements for electronic systemswith the cooperation of a unit of the U. S. Agency forInternational Development.’

The National Historical Publication and Re-cords Commission has funded a three-year study ledby the University of Pittsburgh’s School of Libraryand Information Science on archival functionalrequirements for business Systems.$ The Associ-ation for Information and Image Management(AIIM) in 1992 published Performance Guide[irresforthe Legal Acceptance of Records Produced by Informa-tion Technology Systems? Produced by a task forceincluding attorneys, information professionals,managers, and consultants, the AIIM guidelinesstress the importance of appropriate documenta-tion, audit trails, and other management controls atall stages of the life cycle of electronic records.

For the Food Stamp Recurds Project, state and Ioralarchivists and rards managers ia six states will reviewthe management mntrols for food stamp electronic sys-tems, idendfy areas of needed inrprovement, and workwith state and federal agencies administering the pro-grams to identify appropriate wlutions.

By working closely with remrds professionals, gov-ernment officials in the fond stamp program and othernational programs are taking actions to reduce unneces-sary duplicate documentation, protect the legal rights ofthe government and citizens, deal with new issues posedby electronic media, and break new ground in intergover-nmental information cooperation.

Federal and State Information Policy

Despite the prevalence of automated systems in theCoordination and cooperation for efficient modem

food stamp program, paper files falling thousands of ffleinformation management is a theme that is being sounded

cabinets and record boxes are maintained at each certifira-by managers throughout government. In March 1992,

lion location. Duplirate recordkeeping exists for a varietyNAGARA issued a call for such ordination irr Stare

of reasonsGovernment Information Policy: Guidelines and Principles.10Noting that 47 states have a single offii re~nsible for

1)

2)

3)

Reliance on paper records is traditional andfamiliar.

Program managers do not have complete confi-dence in the reliability of electronic recordssystems.

There are issues regarding legal admkibiity ofelectronic records. ‘llre legat issues are particu~lytipmtant bemuse of the key role remrds play inprotecting sights in court.

centra-W state informatim ~urce mgement, NA-GARA emphaaii the importance of (1) @liahirrg a stateinformation w~, (2) identifying necesamy chaages in staterecords laws, and (3) eatabtiabing lines of communicationwith all government records and information ~agem.

In July 1993, OMB stressed simiiar themes in federalinformation policy through Circular A-130 (Revised}

Government information is a valuable na-tional resource. It provides the public with

26 lntargovemmenM Pempacrive/Spring 1994

knowledge of the government, society, andemnomy— past, present, and future. It is a meansto ensure the amuntabflity of government, tomanage the government’s operations to rnain-tairr the healthy performance of the economy,and is itself a commodity irr the marketplace. . . .The free flow of infornration between thegovernment and the pubtic is essential to ademocratic society. . ..11

In a departure from earlier information policy is-suances, Circular A-130 also stressed tbe intergover-nmental nature of information management

State and local governments, and tribalgovernments, cooperate as major partners withthe Federal Government irr the collection,processtig, and dissemination of information.. . .When planning, designing, and carrying outinformation collections, agencies should system-atically consider what affect their activities willhave on cities, counties, and States, and takesteps to involve these governments as appropri-ate. Agencies should ensure that their informa-tion corrections impose the minirrrum burden anddo not duplicate or conftict with local efforts orother Federal agency requirements or mandates.The goal is that Federal agencies routinelyintegrate State and 1-1 government concernsirrto Federal information resources managementpractices. . ..’2

Conclusion

In an era of “reinventirrg” and “reengineerirrg”government, the National Archives and Records Adminis-tration and the National Association of Gove~mentArchives and Records Administrators are working togeth.er to facilitate effective and efficient intergovernmentalinformation management. Given the enormous chal-lenges that information technology and disseminationpose to government managers, and the disastrous resultsof failing to manage record ayst ems successfully, this typeof assistance and coordinat ion is a prerequisite for survivalin the Information Age.

Note~‘ Mitchell Kaprrr, “A Vision of the Future,” in Pmeedings of theFederal Libra~ and tnfomation Center Committees Fomm onFcdein/ Infonna(ion Po/icia (Washington, DC Library ofCongress, 1992),

2National Association of Government Archives and RecordsMministrators, Stale Government Inforrnalio” ~licy: Guide./ines and Principla (Albany, New York, 1992).

$This estimate cam. o“t nf a dismssion among National

Archives pemonnci ? c1 representatives from several dnzenstate archives participating in the Advan~d Archives Institutesponsored by the National Astiation of GovernmentArchives and Records Administrators, University of PhLsburghSchml of Library and Information Scienm, and the NationalHistorical Publi~tions and Records Commission, June 1993,

444 U.s.c. 2905(b),s Deborah Skaggs,,Assistant Director, Alabama Depmtment ofArchives and Hmtory;Thomw MiOs,Assistant Dimtor, NewYork State Archives and Rmrds Administration; and MarieAllen, Deputy Director, Intergovsmmental Records Prngrams,National Archives. Participa”ta i“cl”de the state fihi~ ofAlabama, Mmacbusettr, New York, South Carolina, Utah,and Virginia,

bU. S. Department of Jusdw, “MmMibility of ElectronicallyFiled Federal Records A Eviden&,” unpublished papr, circa,1991.

7For mnrc information, contact Marilyn McLennan, Offlcc ofRecords Administration (NI), National Archiw and RemrdsAdministration, Washington, DC W; (~2) 501~, FM(202) 501-7452.

8Contact for tbe project is Prof. Richard J. Cox, School ofLibrary and Information Scienw, University of Pittaburgb,Pittsburgh, PA 15260; (412) 624-9438, FAX (412) 624-5231,e-mail rfc@icarus.lis. pitt.edu,

9National Association for Information and Image Management,Performance Gltideline for the Lsgat Acceptance of RscordrProduced by Infonrration Technolo~ Systems PRIII:Fk@nnanceGuideline forAdmissibili~ of Record.rproduced by Inf~~~tionTechno/o~ SyfterrrrasEvidence (Silver Spring, Maryland, 1992),

‘“National Asrcciation of Government Archives and RecordsAdministrators, State Govemmerrr Infomtio” policy.

ii u, S, Offiw of Management and Budget, “Management Of

Federal Information Resoums, Revisinn of OMB Circular No.A-130,” Fedeti Rrgi.rter58 (July 2, 1993) 360~-360s6.

121bid.,pp. 3~0-81.

Marie B. Allen is Deputy Directog Inte~ov-emmental Records Programs, National Archivesand Records Administration.

Significant Featuresof Fiscal Federalism

1994 EditionVolti I—BudgetProcesses and Tax Systems

Significant Featuras of Fiscal Federalism, Vol. I,ncludes federal and state budget processes; federalndividual income tas rates; state and local individualncome tas rates updated through November 1993 tax

ate and base information on social securi~ andunemployment insurance; general sales tax rates and

Xemptions; state severance tases; property tas relief

lrogram$ federal and state excise w rates; estate,nheritance, and gift taxes; state and local property.mnsfer taxey and automobile fees and t~es.

<olume I M.190 June 1994 $20

(seepage 39 for order form)

Intargovemmantal Parswtiva/Spring 1994 27

StateMandate

Relief:A Quick Look

A state mandate is a legal requirement-institutional,statuto~, or administrative-on lncal governments thatcommands a specific local activity or setice meetingstate-determined standards. Such a mandate can be en-forced by the wucts.

The most common fonrrs of constitutional andstatuto~ relief from state mandates are requirements fortbe states to (1) fund any new mandate or (2) reimburseany local expenditures that result from the mandate. Thenext most popular prOvNlOn is a constitutional option toallow the pasmge of mandates but to let Incrd gover-nments approve or reject the mandate before it bemmeslegally binding. Finally, there is statutosy mandate reliefthat provides a new funding source for lueal governmentsbefore allowing the state to require local action orservices. This option places an additional burden on luca.1governments because they will be seen as raising taxeslocally. The various provisions are shown by state in Figure1 (page 29), followed by the specific state constitutionaland/or statutoV citations.

If the constitution or statute requires reimbursementof mandated rests, a state body must be charged withresponsibility for determining whether a mandate claim iseligible and tbe amount. The state or a local governmentshould be able to appeal a decision of the review body tothe mm’ts.

State mandate retief activity over the past 40 years isshown in Dble 1. The movement by local governments forrelief from state mandates strengthened from the 1970sonwards. The institutional push began in the 1970s andhas remained relatively stable. Statutory relief picked upin the 1980s and continues in the 1~.

Joseph F. Zimmerman

In 1994, half of the states have some constitu-tional and/or statutory limitation on their abil-ity to impose mandates on Iocal governments(see Table 1). Fifteen states have constitutionalprovisions, 14 states have statutory limitations,and four states have both.

Table 1State Action on Srata Mandate Relief

Decade Constitutional Statutom

1950-1959 1 01960-1969 01970-1979 : 11980-19S9 4 4lM-1993 4 9

Soume: 1994 survey data collected by Joseph E Zimmerman,State Univemity of New York, Albany.

State Mandate Relief OptionsIn addition to constitutional and statuto~ provisions,

state have additional options for mandate relief.

1) The legislature could establish a joint legislativecommittee to receive and detenrrine the merits ofcomplaints about mandates and present recom-mendations for amendme?t or repeal of specificmandates.

28 Intergovarnmentsl Parspectiva/Spring 1994

2) AOnew mandates cmdd mntain a sunset pmviaion. 4) The legislature cnuld authorize the govemnr or

3) All new mandates mrrld be pilot tested in an independent review commission to su3pend a

selected local governments, with the state assum- mandate and refer it to the legislature with a

ing the costs during the test period. remmmendation for modification or repeal.

State

Figure 1State Mandate Relief Provialona

Constitutional Relief Statutory Relief

AlabamaiAlaskalCaliforniaColoradoConnecticut

FloridaHaviaiiIllinnisLouisianaMaine

MmachusettsMichiganMinnesotaMissouriMontana

NevadaNew HampshireNew MexicoNew YorkPenmylvania

Rhode IslandSouth CarolinaSouth DakotaTennesee3Virginia

Totals

xx

xx

xx

xxx

x xxx

xx

x xx

x

x

776

xx

x

x x

x x

x

xx

x

x

x

2 3 17

xx

xx

4

x

x

x

x

x

5

x

x

x

x

x

xxxxx

x

xx

xxxx

xxx

xx

xx

xxx

xx

xx x

xx

x1121 1 15 14

LAlabama prohibits en fomment of a state law increasing ~nditures m decreasing revenues in the cmrent risml year, which ends onSeptember 30, unle= the law is approved by a govsming body.

2Alaska provides that s~cial ach necessitating appropriations by Incal govemmens do not become effective unl~s ratified by thermrcerned vnters in a referendum.

3The Tennessee General Assembly is authoriti to imlmse mandat~ on citiar and munties nnly if the state shar~ the cost.

Sour@ 1994 smvey data collected by Joseph E Zimmerman, State Universityof New York,Albany.

IntergnvammentaiPers~vs/3@ng 1S94 29

5)

6)

7)

The governor muld issue an executive order Penn~lvania-Art. 8, Sec. 2, 1968directing depmtments and agencies to confer %nnessee–ti. 2, Sec. 24, 1978with local government as-iations and obtainthe armmval of the governor or a designsted Statutorv Citations. .representative before- promulgating a rule orregulation imposing a significant cost on Iml Colorado-chap. Iti Colo. Laws of 199U SW. @-1-304.5,governments. CoIO.Rev.stat.

The legislature muld establiah a default systemComecticut-Pnblic Act 93434, W. 15, 1993

for the performance of a function.lllissoia-Chsp. 30, SW MS1, B1. Comp. Stat. Ann., 1981

(1981 Mmois State Marrdates Act)

The Iegialature can transfer responsibility for aIncal government function to the state.

Constitutional Citations

Alabama-Amendment 474 (counties); Amendment 491(municipalities), 1988

Alaska-Act. 2, Sec. 19, 1959Cal~:J9—Art. 13B, Sec. & amendment by Proposition

Colorado-Art. IK Sec. 20(9), amendment by initiative/referendum, 1992

Florida-Art. 7, Sec. 18, amendment, 1990Hawaii-Art. 8, Sec. 5, amendment, 1978Louisiana-Art. 6, Sec. 14(a), amendment, 1991Maine-Art. 4, Pact 3, Sec. 21, amendment, 1592Massachusetts-Art. 115 of amendments, 19S0Michigan-Art. 9, Sec. 29, amendment, 1979Missoufi-Art. 10, Sec. 21, amendment, 1980New Hampshire-Part 1, Art. 27a, amendment, 1984New Mexico-Art. 10, Sec. 8, amendment, 1984

Mairre-Chap. 351, Sm. 3 arrd 4, Maine Law 1993-chuaetta-~pnsition 2 1% 19m Chap. ~, 19W.Miruresuta-Chap. 604, Mirur. hws of 1~, Chap. M5,

1991;chap. 375, M. 15, 1993Montana-Chap. 275, Mont. hm of 1974; Sec. 1-2-112,

Mont. Cude Ann. (effective 1979)Nevada-Chap. 419, Nev. Laws of 1993 Sec. 354.599, Nev.

Rev. Stat.New Hartrpstie-Chap. 3S4 N.H. Laws of 199b Chap. 161

of 1992. . . . . .

New York–Chap. 737,N.Y. Laws of 19n Chap. 78 mrd377,1989;ChaP. 305 and 413, 1991

Rhode Island– Chap. 213, R.I. Pub. Law 1987

South Carolirra-Scc. 4-9-55 (counties) and S-7-31O(mufiei-palitiw), S.C. Code of Law 1993

Suuth Dakota-ChaP. 61, S.D. Laws of 1993; Sec. &15-1S.D.cod.Iam Anrl.

Viiginia-Sec. 2.1-51.51, Code of Vs., 1991;HB 233A 1993

Joseph F Zimmerman isprofessor ofpoliticalscience at the State Univemi~ of New York,Albany.

State ACIRS Focus on Mandates

State ACIRS have been active dates and the atate ACIR k begin- Utah Advisnry Council nn In.in the debate and research sur- ning to monitor them. tergovernmental Relations. Sur-rounding mandates. The focus has Maryland Joint Committee on ing the last legislative session, thevaried between federal and state Federal Relatinns. The committee state ACIR published a biweeklymandates; some include both. has been studyirrg federal mandates newsletter called the Mandates

Connecticut Advisnry Commis. since 1993. Followiog a survey of Watch, which was distributed tosiorr on Intergovernmental Rela- state agencies, the committee iden- legislators, local government assO-tions. The mmmission has com- tfled the 13 most burdensome man- ciations, and other interested par-pleted A Compendium of Statutory dates cited by the agencies. The sur- ties. UACIR also supported billsMandates on Municipalititi in Con- vey results and suggested actions intended to lessen the impact ofrrecticut (February 1994). The com- were sent to the Maryland corrgres- state mandates. Four of these weremission plans to address regulatory sional delegation. enacted.mandates and assess economic man- Oktahnma Advisury Cummittes Other ACIRa. Mandate studiesdates in future reprts. nrr Intergovernmental Ralatinns. A are an ongoing function for the

CnloradoAdvianry Cnmrrrittea nrr bdl was introduced amending the stat- Flnrida Advisory Council on Inter-Intergovernrrrental Rslations. Colom- ute dag with lewtive re~ew Of governmental Relations and Ten.do baa a statute that Mlts tax levets pro~ed agen~ regtitions. Tlie rsessee Advisnry Commission onfor Id grrverrrnren~ with a provi- amendment pe* to “emergen@ In*=Ove~en~ Re~tiO~. ~n-sion to the effect that ld govern- regulation that could be Promutsat~ date studies are under way in thements may turn back mandated re- without review when the Iegiatature is Inwa Advisnry Cummissims on In.sponsibiities if they would cmsae the outof **on. ~e state ACfR,wO~d tergnvernmental Relations andjusiadiiions to =ceed tax Onritatiom. rwew reguhtlons, tht the =umg Louisiana Advisory Commissionmere are several bflls in the state leg- agency has dete~m~ ~ hve ~ on Intergovernmental Relations.

ialature dealing with fedeml man- impact on lo~l governments.

30 intergovernmentalPsrspsotve/Spring1994

MPOSand Weighted

Voting

Seth B. BenjaminJohn Kincaid

andBruce D. McDowell

T he Interrnodol Surface Transportation Efi-ciencyAct of Z99Z(ISTEA) authorizes Metropoli-tan Planning Organizations (MPOS) to allocateabout 20 percent of ISTEA funds to be spent intheir areas. This new role for MPOS makes itimportant to assure fair representation ofarea local governments on their policymakingboards.

In 1993, the Federal Highway Administration @HWA)surveyed the 137MPOS that are designated as ~an3porta-tion Management Areas. These include all MPOS servinga poprdation of 2(s),000 or more, plus a few others withmngestion and/or sir quality problems. The informationwas wllectedby FHWAS district offices.They received re-sponses from 86 MPOS.

ACIR analyzed the 86 responses and found thefollowing

■ Central city residents are underrepresented on68 MPO poli~aking boards (79 percent) andoverrepresented on 6 boards (data for the other12 MPOS were incmnplete).

■ Population-weighted voting can be used in 18MPOS in ten ststes and the District of Colrrm-bia. The states are Arizona, California, Colors.do, Delaware, Michigan, Missouri, NorthCarolina, Ohio, Tennessee, and Washington.Only in the Metropolitan Washington Councilof Governments is the central city representa-tion almost equivalent to its percentage of theregion’s population. The central cities areunderrepresented on the boards of 11 MPOSthat can use weighted voting (data for the other6 MPOS were incomplete).

~ble 1 is a summaty, by state, of the number ofMPOS in which central cities are underrepresented andthat are authorized to use weighted voting.

Weighted voting on MPO bnards can be establishedby the MPO bylaws or by the state legislature. ~ble 2shows which MPOS have weighted voting available tothem.

‘Ikble 3 ranks central city representation on MPOS byan index of voting ~wer and also shows the percentagedifference between a city’s board representation and itsproportion of tbe region’s population.

~ble 4 qands the detaif, showing central cityppulation as a percentage of the MPO area pnpcdation,and central city representation as a percentage of the totalnumber nf votes nn the board.

Index of Central City Voting Power

ACIR created an inda of central city voting power,which is the proportion of central city membership on theMPO board divided by its proportion of the population ofthe MPO area. The inda allows a mmpariaon of differentsize cities and MPOS in relation to each other.

ArI index of 1.00 means that a city has the same votingstrength on the MPO as its proportion of ppulation in theMPO area would warrant if one assumes one pemon-onevote. An index abnve l.Ml indicates overrepresentation ofthe city on the MPO board, and an indw below 1.Mindicates underrepresentation.

Table 1Central City Repreaentetlon on MPO Boerde

Number Numberof MPOS with of MPOSCentral City Having

Number Urrder- Weightedof MPOS representation Votingin Survey on Boardl Available

AlabamaAlaskaArizonaCaliforniaColorado

ConnecticutDelawareDtirict

of ColrrmbmFloridaGeorgia

IllirloiaIndianaKentuckyLouisianaMaryland

MassachusettsMichiganMirrneaotaMEaOrrriNevada

New JerseyNew MexicoNew YorkNorth CarolinaOhio

OregonPennsylvaniaPuerto RicoRhude IslandTennessee

TexasUtahVigirriaWashmgtOnWticonsin

Total

11

:2

41

;221

34122

11A

38

32231

S6

11

:2

31

031

11211

34112

11414

30231

68

mna122

na1

1nana

namnanana

na1

na1

na

nanana34

nananana1

nanana1

na

18

na—not available in state

1Underrepresentation is defined as voting strength on the MPOhard that is lowr than tbe wntral city’spcrrcntage of theMPO area population.

Source: US. Department of Transportation, Federal HighwyAdministration, 1993 Survey of MPOS.

Difference betweenMembership

and Population Percentage

The percentagedifference between the central citymembership on the board and its proportion of thepopulation of the MPO area shows, for instance, thatPhdadelphia has 48 percent of the population of the MPOarea but only 6 percent of tbe board membership. Thedifference between these figures indicates that Phfladel-phm has 42 percent less votirrg strength on its MPO boardthan its poprdation would warrant if voting were based onequal representation.

Table 2MPOe with Weighted

Voting Provlelone

Index ofCentral City

State MPO Voting Power

Arizona

California

Colorado

District

of Columbia

Delaware

Michigan

Missouri

North Carolina

Ohio

~rrnessee

Washington

Phoenix

FresnoSan Diego

DenverColorado Springs

Washington, DC

Wilmington

Grand Rapids

Karraas City

CharlotteDurhamRaleigh

ClevelandDayton~ledoYorrngstowrr

Nashvitle

Seattle

0.08

0.080.11

0.160.41

1.06

0.61

0.23

na

nanana

0.53nana

0.54

0.13

0.67

Total States = 11 Total MPOS = 18

Source; ACIR calculations b=d on U.S. Department of Tran.r-prtation, Federal Highway Administration, 1W3 Sur-vey of MPGa.

32 Intergovammenlal ParspscUve/Spring lee.1

Table 3Central City Represerrtatlon on MPO Boarde

Onorderof Index of Voting Power]

DifferenceIndex of betweenCentral Membership

City and WeightedVoting Population Voting

State MPO POwerl Percentage Available

~ MiddletownUT Salt Lake~ Tampa~ Saint Petemburg~ Fort LauderdaleDC WashingtonNJ Newark

Equal Representation

PA HatiburgA BirminghamKY GxingtonCA M AngelesNV Ias Vegm

OH CantonFL West Palm BeachWA SeatOeNV RenoDE Wilmington

PA PittsburghTX Dallas~ HartfordOH YoungstownOH Cleveland

~ JacksonvilleWA VancouverVA RichmondTN KnoxvilleCA Sacramento

PA ScrantonCO Colorado Sprin&MO Saint huis~ MiamiWA Spokane

GA AtlantaMD BaltimoreMN MinneapolisRI ProvidenceCA San Francisco

VA NorfolkTX El PasnNM AlbuquerqueCA StmktonMI Detroit

TX Houston~ New HavenMI Grand RapidsCT BridgeportOH Columbus

2.252201.861.291.0s1.061.00

1.00

0.830.790.760.6so.6a

0.6E0.670.670.630.61

0.590.5s0.540.540.53

0.520s00.47O.M0.44

0.430.410.400.370.34

0.330.330.330,330.30

0.300.290.260.250.25

0.250.240.230.210.21

10%24144110

0

-3-9

-24-lo-12

-11-3

-lo-23-7

-9-13-12-12-14

41-14-18-29-19

-12-47-15-12-42

-12-%-12-14-14

-14-65-57-6u-21

-42-22-33-27-53

NoNoNoNoNoYesNo

NoNoNoNoNo

NoNoYesNoYes

NoNoNoYesYes

NoNoNoNoNo

NoYesNoNoNo

NoNoNoNoNo

NoNoNoNoNo

NoNoYesNoNo

DiNerenceIndex nf betweenCentral Membership

City and WeightedVoting Population

StateVoting

MPO Powerl Percentage AvailabIe

TN MemphisAK AnchorageNY SyracuseCO DenverNY New York

CA BakemfieldPA PhiladelphiaTN NashvilleKY buisvilleCA San Diego

IL ChicagofN IndianapolisMI LansingWJ MilwukeeMI Flint

AZ PhoenixCA FresnoOH AkronLA New OrleansMA Wton

MA SpringfieldMA WorcesterCA ModestofN GaryfN South Bend

LA Baton RougeMO Kansas CityNC CharlotteNC DurhamNC Raleigh

NY AlbanyNY BuffaloOH CincinnatiOH DaytonOH Toledo

OR PortlandPA AllentowPR San JuanUT ~OVO

0.21O.zn0.190.160.16

0.140.130,130.120.11

0.110.110.100.100.09

0.080.080.07O.mO.fm

O.m0.00nanana

nanananana

nanananana

nanaMna

440-34-26-56

-50-42-73-36-42

-39-71-43-46-39

-45-72-39-4s-21

-34-54nanana

nanananarra

nanananana

nananana

NoNoNoYesNo

NoNoYesNoYes

NoNoNoNoNo

YesY=NoNoNo

NoNoNoNoNo

NoYesYesY=Yes

NoNoNoYesYes

NoNoNoNo

na—not available‘ Voting Index—Percentage representation of central city onMPO board divided by percentage of central city ~p”lation i“MPO area.

Source: ACIR calculations based on US. Department of Trans-~rtation, Federal Highway Administration, 1993 Sur-vey of MPos.

IntergovernmentalParsp9cfive/Spring1994 33

Table 4Central CN Memberahlp of MPO Board

(inOrderof IndexorVotingPower)

DifferenceCentral Central City Percentage between

city ‘Rltal Percentage of MPO MembershipVoting

Index ofvoting of TOmlVoting Population and Population

MembershipCentral City

Membership Membenhip in Centil City Percentage Voting Power

~ MiddletownDT Salt LakeFL TampaFL Saint.PetemburgFL Fort buderdale

DC WashingtonNJ NewarkPA HarrisburgAL BirminghamKY Lexington

CA h AngelesNv Las VegasOH CantonFL W-t Palm ReachWA Seattle

NV RenoDE WilmingtonPA PittsburghTX Dallas~ Hartford

OH YoungstowOH ClevelandFL Jack50ntiOeWA VanmuverVA Richmond

TN KnoxvilleCA SacramentoPA SaantonCO Colorado SpringsMO Saint huis

FL MiamiWA SpokaneGA AtlantaMD BaltimoreMN Minnea~lis

RI providenceCA San FranctiVA NorfolkTX El PasoNM Albuquerque

CA StccktonMI DetroitTX HoustonCT New HavenMI Grand Rapids

37322

512

1515

152313

21564

56424

22132

12211

1114

5

23312

1716101116

26m1344m

708

131715

59

403429

36379

1425

813119

21

159

368

17

B16181525

10462115m

18%44301813

195

153475

2125236

m

4011131814

1416441416

25159

3310

7226

136

766

27

m

m7

147

10

8%m161412

185

184399

3137349

30

6318223126

x30852834

5434218025

1964183918

21mm92n

802s562943

1070241441

10

-3-9

-24

-lo-12-11

-3-lo

-23-1-9

-13-12

-12-14-41-14-18

-29-19-12-47-15

-12-42-12-z-12

-14-14-14-65-57

-60-21-42-22-33

2252.m1.881.291.08

1.06I.m0.830.790.76

O.a0.68O.a0.670.67

0.630.610.590.580.54

0.540.530.520.500.47

0.460.440.430.410.40

0.370.340.330.330.33

0.330.300.300.290.26

0.250.250.250.240.23

34 lniergovemmen~ Per5@ctive/Spring 1S94

Table 4 (cont.)Central Cify Membership of MPO Board

(inOrderof Index of Voting Poweo

DifferenceCentral Central City Percentage between

City Total Percentage of MPO Membership Index ofVoting Voting of Total Voting Population and Population Central City

Membership Membership Membership in Central City Percentage Voting Power

CT BridgeprtOH ColumbusTN MemphisAK AnchorageNY Syracuse

CO DenverNY New YorkCA BakemfieldPA PhiladelphiaTN NaahviOe

KY huisvilleCA San DiegoIL ChicagoIN IndianapolisMI Lansing

WI MihvaukeeMI FlintAZ PhoanixCA FresnoOH Akron

LA New OrleansMA BmtonMA SpringfieldMA WorcesterCA Modesto

IN GaTIN South &ndLA Baton RougeMO Kansas ChyNC Charlotte

NC DurhamNC RaleighNY AlbanvNY BuffatiOH Cincinnati

OH DaytonOH ToledoOR PortlandPA AllentownPR San JuanUT Provo

19111

21112

11121

12111

0000

na

nananana

9

2nananana

6nanananana

146665

13

429

131819

1919192219

214s2s1638

21644

16

nanana12na

nana228

na

na3713nanana

71417m8

51186

11

55595

54463

0000

na

nana

nanana

nanananana

nananananana

346780

10042

3167584s84

414744804s

5143497842

a21345471

2449605587

67

i3437

30714427na39

-27-53-63-m-34

-x-56-5042-73

-36-42-39-71-43

-46-39-45-72-39

4-21-34-54na

nanananana

nanananana

nananananana

0.210.210.21o.m0.19

0.160.160.140.130.13

0.120.110.110.110.10

0.100.090.080.0s0.07

O.m0.000.000.00na

nanananana

nanananana

nananananana

na—not available

1The 1990 Census urbanized area population w used as the MPO ~pulation in this calculation.

2Voting Index—Percentage representation of central city on MPO hard divided by prcentage of &ntral city ~pulation in MPO.

SolIme: ACIR calculations baaed on US, Department of Tmnsportation, Federal Highmy Administration, 1993 Survey of MPOS,

lntergOvemmonWPara~tive/Spring 1994 35

Child Care:The Need for Federal-State-Local Coordination

This report provides abroad overview of problems and opportuni-ties in private and public child care, which has bemme an essentialsncial semice. Significant child rare legislation was passed in 1966 andlM. Child care issues have bemme more intergovernmental, withresponsibilities shared by federal, state, and lw1 officials. Intergover-nmental coordination is irrrportant to promote quality and insistencyamong programs. While other muntries have developed coherentnational child are systems, the United States has made ad hocdecisions that do not add up to a consistent and effective stratea. Sucha strate~ needs to reflect the unique U.S. governmental institutions.

A.12t4 1994 $10

State and Local Travel Taxes [

This ia the fifth report in ACIR’S Local Revenue Diversificationseries. State and Iml revenues from travel and tourism taxes aregrowing rapidly. These taxes include levies on hotel room sales; food,beverages, and entertainment and transportation, particularly carrentals and airport passenger facilities. The repurt tiamines the theoryand practice of travel taxation, and e~lairrs why state and localgovernments often impose higher taxes on goods that are purchaseddisproportionately by travelers. The emphasis is on the role of traveltaxes irr state and local finance rather than their impact on the travelindustry.

hl.189 1994 $8

A.. —

R0v9nueDlv@,slflmtlOn

fameand b-lWavel me%

$

(see page 39 for order form)

36 Intergovemmanti Parapsctive/Spring1w4

~ntergovernmentalFocus

Spotlight on the TennesseeAdvisory Commission on Intergovernmental RelationsHaI?Y A Green, Executtve Director

MissIon

The Wnnessee General Assembly created tbe~nnes-see Advisory Commission on Intergovernmental Relations(TACIR) in 1978 in recognition of the need for a rrerma-nent agenq to monitor f~deral-state-local relation; and tomake recommendations for their inrprovement. The statu-tory mission of TACIR is to

L Serve as a forum for the discussion, deliberation,and resolution of critical and sensitive publicpolicy iasuey

2. Provide policymakers with awurate and tirrrely in-formation and data analysis to facilitate rationaldecisionmakmg; and

3. Serve as a vehicle to complement discussion andnegotiations stemming from mmpeting but equal-ly legitimate values, goals, and perspectives whichoccur at every level of decisionmakirrg.

Legislative Studies: FY 1993 and 1994

Following is a summary of three studies being con-ducted by TACIR at the direction of the Geneml hembly.

Accountability for Muration Spending. House JointResolution No. 191 tiects the commkion to document thatfunds earmarked for tbe state’s eduratiun treat fund acedepsited and apent srdely for education prrqrow. TACfR’spreliminary analysk of state and local irrfonrmtion indimtesthat old and new tax revenue being genemted to fund theBasic Wucation program is being apent for that purpnse.

Municipal Annexation Study. The FY 1993 state Ap-propriations Act included funds for TACIR to conduct astudy of municipal annexation issues. For the study, thecommission (1) reviewed Tennessee’s present annexationstatute, (2) researched relevant state court cases, (3)studied other states’ annexation statutes, and (4) cnn-ducted public hearings.

Emergency Communications Districts (E-911). HouseJoint Resolution No. 499 directs the commission to conducta study on the creation, funding, and management of emer-genq communications districts. The resolution also directsTACIR to look at the creation of multiple districts within alarger district.

Legislation Enacted ae Part of Modernizationof Government Study

Strengthened standards for municipal incorporationrequirement

S~nsored legislation to quickly identify and intervenein financially distressed local entities;

Amended state law to negate tbe necessity of countyofficisls having to petition (sue) their coufi whenall parties are in agreement concerning the num-ber and compensation of deputies and assktants;and

Sponsored legislation to enact the Local Option Bud-getirrg Law of 1993.

Ongoing Resaarch Activities

bcal Fisral Capacity for Funding Eduration. Measur-ing fiwl capacity, or measuring the abflity of a governmentto provide services to citizens, is extremely important topublic policymakers. In the Education Improvement Act of1991 (Public Chapter 535) the Generel Assembly stated itsintent to provide edueation fundirrg “on a fair and equitablebasis by recognizing the differences in the ability of localjmisdictions to raise local revenues.” The f~l capacityfomrula developed by TACIR is being used to deteminethe Ioral share of the Basic Eduration Progrsm. Fiscal year1995 is the third period for which local fiscal rapacity hasbeen detenrrined by TACIR.

State and FederaI Mandates/Preemptions. Aa part ofits Mndemtition of Government Study, the mmmissionhas been Iookmg at stste and federal mandates on localgovernments. A review of the Literature—ticludirrg man-date studies and legislation adopted by other states–hasbeen conducted. Rnnessee crmstitutional provisions havebeen studied to detenrrine their adequacy io our rapidlychanging public finance and policy environment.

TACIR has been cnmmunirating with its congressionaldelegation and other interested parties about the burden ofunfunded mandates and unwarmnted federal preemp-tions. Sirrce 1992, the commission bas mllected hundredsof signatures from state and Ioral officials and private citi-zens on petitions asking the Congress to address mandate/preemption issues.

Recent Publications

Accountability for FurrdingEducotion in Zrrncssee (April 194)

Tourism, Travel and To.res in Termessee (Febmary 1994)

Family Tm Burderrs in Tennessee: A Comparative Analysis(June 1993)

Fiscal Capocity for Education (December 1992)

Properly Tu Equivrrlenry to One-Half Cent Increase in StateSales Tm for Education Funding (September IW2)

lntargOvemmenMPara~tive/Spring1e94 37

—

UtilityPwsonalty Taration: Parity or Privilege? &view onEvaluation of MethodoloW and Data Sources Used bRailroads and Other Centrally Asessed Companim tDispute Personaf Property ..l.s.cessment (June 1992)

MOW Magazins Compores State and Local Tas Burdens oTypical Fmily: Tennessss and the Southeastern Statt(March 1992)

Members of the

Tennessee Advisory Commissionon Intergovernmental Relations

3ty Members

MuiyJo Dozien Cormcitwoman, C1arkavilleIohn Johnson, Mayor,MocriatownCharles Salva@”o, Mayor, GermantownKunter Wright, Mayor, tigapufi

County Membere

Pew Bevels, Commissioner, Lincoln CountyTmman Clark, County fiecutive, Carter CountyJe~Hufim, County =eeutive, Tipton CountyWilliam Morris, Mayor, Shelby County

Other Local Government Members

Judy Medeori.r,County Officials Aaauciition of Wnneasee

Maynard Pate,Rnnesaee Development District Aaaociition

Executive Branch Members

JosHud&orh co~ ner, Department uf RevenueVwmcyLegislative MembersSen.Bud GihrtSem ha Bslle O ‘BrimSerr. Carol RiceSen. m RachelleRep. HE. Bitt/eRep. Matthew KisberRep. Bill PurcellRep. Larry Tumsr

Private Citizen MembersFronk Crosslin, SmycnaWayne Hin.son, LexingtonLinda Hoopcr, WhltwellThomas I&sterson, ParisCramer Smotherrrum, f.awrenceburg

Statuto~ Members

Rep. John T Bru~, Cb.ban,House Finance, Ways & Mmns

Sen. Douglas Hw, Chairman,Senate Finance, Ways & Means

David Manning, Commissioner,Department of Finance and Administration

Willium R. Snodgmss, Comptroller of the ‘IteasuI’Y

RTS 1991State Revenue Capacity and Effort

With RTS 1991: State Revenue Capacity and Effort,

.CIR continues its tcadition of providing informationI the relative ecunomic well-being and f-l per-mnance of the states. ACIR developed the Repre-;ntative ‘Rix System ~S) and the Representative.evenue System @RS) to improve on available~essures of state revenue capacity and effod. TheseIeasures show state and IwI government capacity to211ecttas as well as nontax revenue.

my measucs state fiscal capacity?

● ‘fb facilitate comparative jiscal analysis by stateand revenue base.

● lb provide perspective on economic trends.

● lb aid in designing federal grant formula.r.

%y use RTS end RRS?

● They measure gmernments’pormtid abtitim to* ma relative to a mtiunaf average.

● ~ey are comprehemivc, mcasucingall majortax suur~s and nontas auurces that contributeto a government’s abdity to raise revenue.

● They are the on/y indicators that measure fiscalcapacity on a revenue-by-revenue ba.cis.

● They are readily understandable ~stems that areused by many state and federal pulicymakersand analysts.

t~ 1991: Slats Rsvenue Capaci@ and wOrl—

● Contains tables and graphs on ~ and RRSaccanged by revenue base and state.

● Discusses recent changes in states’ revenuecspacity and effect.

● Compares ~S and RRS with other capacitymessures.

● Includes historical data.

(see page 39 for order form)

38 Intargovemmantal PanXe/Spfing lee.t

Publications of theAdvisory Commission on Intergovernmental Relations

(not advertised elsewhere in this publication)

Chamcteristics of Federal Grants-in-Aid to State and heal Government% Grants Funded FY 1993,M.l RX. lWA. . ..-, . . .

Directory of Intergovernmental Contacts, SR-17, 1993The Role of General Government Elected OfflciaIs in Criminal Justice, A-125, 1993Guide to the Criminal Justics System for Csneral Government Elected OfRcials, M-184, 1993Metropolitan Organizstiom Comparison of the Allegheny and St. Leuis Case Studies, SR-15, 1993Changing Public Attitudes on Covemments and Taxes, 1993, S-2Z 1993State Solvency Regulation of Property. CasrraRy and Life Insumnce Companies, A-123, 1992Intergovernmental Decisionmaking for Environmental Protection and Public Works, A-12Z 1992Medicaid Intergovernmental Ttendsand Options, A-119, 1992Inte~urisdidionalT mandPolicyC ompetitiomG oodorBadf ortbeFederalS ystem?M-l77, 1S91Intergovernmental Regulation of Telecommunications, A-115, 1990Mandates Cases in State. Locsd Relations, M-173, 1990State Constitutions in tbe Fedemt System: Selected Issues and Opportunities for Stats Initiative% A-113, 1989Residential Community Assnciationx Questions and Answers for Pubtic ORicia~ M-lb 1989Residential Community Assnciationx Private @vemments in the Inte~ovemmentat System? A-112, 1989Disability Rights Mandates: Federal and Stife Compliarrrs tith Employment Pmteetions

and Architectural Barrier Removal. A.ll L 198g

$lo.cil$10.00$m.cm

$8.OU$8.00

$10.00$m.oo$10.00$10.CSI$lo.cm$1OSHJ$10.W$15.00$5.00

$10.00

.,. Y -“.. -

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AL1. ORDERS NIUST BII PREPAIL)

Report Quantity Price Amount Report Qusntity Price AmountM-190 $m A-lmM-189 A-119 $;:M-188 $!: — A-115M-187 $20

$10 —A-113 $15

M-186 $10 A-112M-185 $20

$10A-ill $10

M-185-II $y SR-17M-184*

$10 —SR-16

M-183$10

SR-15M-177 $!: SR-14M-173 $10 —

$!:S-22 $10

M-1% State. Local Finsncs DiskettesA-128 $!; — Set FY83-90 $345A-127 $10 90-5.25” $115 DA-126 $15 9Q-3.5° $125A-125* $20 — 89A-124 $15

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A-123 $20 — 83-87A-122 $10

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A-121 $10 — FY 1983-91*Set $23

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Total Enclosed

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Address

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lntsrgOvsmnrsntslPsrcpscUve/SpdngiW4 39

Members of theU.S. Advisory Commission on Intergovernmental Relations

(May 1994)

Private Citizens

Daniel J. Elazar, Philadelphia,PennsylvaniaMary Ellen Joyce, Arlington, Virginia

William F. Winter, Chairman, Jackson, Mississippi

Members of the U.S. Senate

Daniel K. Akaka, HawaiiByron L. Dorgan, North DakotaDave Durenberger, Minnesota

Members of the U.S. House of Representatives

James R Moran, VirginiaDonald M. Payne, New JerseySteven H. Schiff, New Mexico

Officers of the Executive Branch, U.S. Government

Carol M. Browner, Administrator,U.S. Environmental Protection Agency

Marcia L. Hale, Assistant to the Presidentand Director of Intergovernmental Affairs

Richard W. Rlle~ U.S. Secreta~ of Education

Governors

Arne H. Carlson, MinnesotaHoward Dean, Vermont

Michael O. bavitt, UtahRobert J. Miller, Nevada

Mayors

Victor H. Ashe, Knoxville, TennesseeRobert M. Isaac, Colorado Springs, Colorado

Edward G. Rendell, Philadelphia, PennsylvaniaBruce Todd, Austin, Texas

Members of State Legislatures

Paul Bud Burke, Presidentj Kansas SenateArt Hamilton, Minority Leader,

Arizona House of RepresentativesSamuel B. Nunez, Jr., President, Louisiana Senate

Elected County Off]cials

Gloria Molina, Los Angeles County, California,Board of Supervisors

John H. Stroger, Jr., Cook County, Illinois, CommissionBarbara Sheen Todd,Pinellas County, Florida,

Board of Commissioners

ADVISORY COMMISSION ON INTERGOVERNMENTAL RELATIONSWASHINGTON, DC 20575 I BULK RATE

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