Testimony of
THE HONORABLE MICHAEL O. LEAVITT
Governor, The State of Utah
Vice-Chair, National Governors=
Association
Good morning Mr. Chairman and members of the committee. I appreciate the opportunity to appear before you today on behalf of the nation’s governors. Strengthening our federalism partnership is the top priority of the National Governors’ Association. Over the last several years, Congress has accomplished much on behalf of state and local governments. We are here to express our appreciation for your work and urge you to keep moving forward on a number of major issues.
State
and local elected officials have always worked closely with Congress and the
administration on critical issues. In
times of national distress, the states immediately step forward to work with you
in unifying and mobilizing the nation for quick action.
But
in times of crisis or times of calm, we have strong ideas on how we should work
together. The National Governors’
Association’s Washington office was actually founded in 1967 to protect the
appropriate balance of federalism between state and federal governments.
Our first initiative was to work with Congress to convert the Law
Enforcement Assistance categorical grant into a block grant to the states.
We now have more than one dozen block grants.
In
the last decade, we witnessed major advances as Congress entrusted state and
local governments with national goals while using state and local laws, rules,
and procedures for effective implementation.
We have made major progress in moving from the micro-management often
imposed by the federal bureaucracy toward performance goals and results that
foster innovations by states, cities, and counties.
Our
nation’s “laboratories of democracy” are shining brightly all across
America in crime reduction, education reform, employment practices, pollution
prevention, broad-based health coverage, and multi-modal transportation.
Congress gave states our version of the Safe Drinking Water Act, stopped
the wholesale passage of unfunded mandates, reduced agency micro-management, and
gave us new block grants in welfare, transportation, children’s health, child
care, drug prevention, statewide health expansions, and – just last week –
education flexibility.
For
all of these initiatives by Congress, we thank you and pledge our acceptance of
the responsibility to exceed the national goals, as we have done in welfare
reform and are already doing in education.
I
am here today on behalf of the nation’s governors not
only to thank Congress and this committee, in particular, but also to express
our growing concerns about a new trend. While
we appreciate the considerable reduction in the number of unfunded mandates that
force the spending of our own funds, states now often face broad preemptions
that restrict access to our own funds, laws, and procedures for meeting the
people’s needs. We must maintain
a common sense approach to government services that makes sense to the people.
Only a full partnership between elected officials of all levels of
government can make it work.
The
federal government has shifted much power and responsibility to state and local
governments over the past few years. The
Unfunded Mandates Reform Act, welfare block grants, drinking water legislation,
and highway fund transfers are a few examples of legislative initiatives that
have transferred authority from the federal government to state governments.
This
trend, often referred to as “The Devolution Revolution,” has received
considerable attention from the media, academics, and, most of all, legislators
eager to claim responsibility for the complementary accomplishments of shrinking
the size of the federal government and empowering state and local officials.
Despite
all the benefits conferred to states by devolution, the magnitude and
significance of this revolution has at times been exaggerated.
Many of the devolutionary initiatives are better in theory than in
practice, either lacking enforcement to make them effective or imposing new
burdens on states as conditions of funding.
Also, while devolution has occupied center stage during the past few
years, another story has unfolded in the wings with much less fanfare.
The
New Problem – Preemption of State Authority
While
shifting power to the states with one hand, the federal government has been busy
taking power away from the states with the other.
The independence and responsibility that devolution has given states in
certain areas has been offset by preemption elsewhere.
Even as states have benefited enormously from block grants over the past
few years, the federal government has preempted state laws affecting trade,
telecommunications, financial services, electronic commerce, and other issues.
Federal
preemption of state laws has not occurred as the result of a malicious desire to
undermine states’ sovereignty. Rather,
preemption has occurred as the byproduct of other issues.
Unfortunately the outcome is the same for states, regardless of the
motive.
To
varying degrees, the federal government is often ignoring the powerful role and
the constitutional rights of states in the American system of government that
enables elected officials of all levels of government to best serve the people.
The
rise of the new global economy, rapid advances in modern technology, and efforts
toward industrial deregulation have accelerated the pace of preemption. To compete with international competitors, respond quickly to
technological developments, and maximize opportunities created by deregulation,
businesses seek to streamline legal and regulatory requirements.
Efforts to substitute uniform national legislation for disparate state
laws comprise an important part of this process and have led to federal
preemption of state authority in many areas.
Businesses
understandably do not want to be handcuffed by a myriad of state and local
codes, statutes, and rules that prevent them from responding effectively to the
rapidly changing dynamics of the domestic and world marketplaces. If industry has to be regulated at all, a standard set of
federal laws and regulations presents a far more compelling alternative.
However, just as federal laws and oversight serve important purposes that
include preventing monopolies, raising revenues to fund national
defense, and financing social security, state and local laws fulfill a variety
of critical functions as well.
State
and local taxing authority provides funds for education, roads, law enforcement,
health care, and environmental protection.
State banking, insurance, and securities laws impose capital adequacy
requirements, underwriting standards, and licensing procedures that safeguard
consumers’ deposits and investments and protect them from fraud and abuse.
State utility regulations ensure that citizens receive high-quality
water, electric, sewage, and telephone services at reasonable rates.
The
important role of state laws and regulatory responsibilities should not be
forgotten in the midst of the scramble to accommodate businesses and the forces
of globalization, technology, and deregulation.
States and their citizens stand to benefit as much as businesses from
these changes, but not at the cost of continuing federal preemption of state
laws.
In
the aftermath of the recent elections, congressional leaders and the President
have repeatedly articulated the importance of working with the nation’s
governors. Allowing states to
continue governing in the areas that states have traditionally governed would be
a good way to demonstrate commitment to a true state-federal partnership and
would also provide a refreshing change.
In
this new era of globalization of the marketplace, we must preserve the
peoples’ participation in government decisions, especially at the local level
through elections. Together we
recently enacted laws and regulations to improve our dialogue with Congress to
stop the unilateral imposition of unfunded mandates, to focus more on the
citizens’ total tax burden from all governments.
We have instituted prior consultation, fiscal impact statements,
deference to our own laws and procedures through block grants, and limited
enforcement procedures.
To
preserve and enhance our federal system of representative democracy through
elected officials, we must recognize the long-term negative impacts of
preemption.
We
urge you to consider some approaches to ensure that Congress considers these
negative impacts (both intended and unintended) prior to voting on bills that
preempt state authority. Once state
authority is taken away, it is very seldom returned.
We are simultaneously asking the President to include these principles in
any revision of his Executive Order on Federalism. We believe the following principles of federalism are
essential to the major issues facing states today.
Principles
of Federalism
·
The
bipartisan partnership between elected officials at all levels of government is
the unique and most powerful force in our form of federalism.
·
This
partnership is based on early consultations over issues that affect the states.
·
A
legislative proposal’s impact on federalism should be transparent and fully
disclosed before decisions are made.
·
This
partnership is based on the interdependent nature of our governments that
demands an attitude of the highest respect and a deference toward state and
local laws and procedures that are closest to the people.
·
These
elements of our partnership should have some means of enforcement.
Federalism Legislation
Mr. Chairman, we know that this committee, in
particular, understands and appreciates these fundamental features of
federalism. You have proven it
through many years of working with us – from the Intergovernmental Cooperation
Act, the Intergovernmental Personnel Act, General Revenue Sharing, the Paperwork
Reduction Act, the Unfunded Mandates Reform Act, the Federal Financial
Assistance Improvement Act, the Regulatory Right-to-Know Act, and the Regulatory
Improvement Act. Our thanks to
every member who stands with us for enactment of each of these vital measures.
Because federalism legislation can never be
perfect or finished, we are here today to encourage each of you to continue your
efforts and expand your good work to this new threat to federalism.
We will support your efforts to apply these principles of enforceable
federalism to legislative and regulatory preemptions of state revenues, laws,
and administrative procedures.
When we fail to use these federalism principles
– consultation, disclosure, impact statements, deference, and enforcement –
we spend even more effort to correct the problems created in areas such as
telecommunications, the Internet, environmental laws, local zoning, regulatory
preemption, and long-term tax policy.
Mr. Chairman, we urge you to move forward on
the following bills and issue areas that are high priorities for NGA.
The Mandate Information Act (H.R. 350, S. 427). This bill would clarify that the point of order provision of
the Unfunded Mandate Reform Act also applies to any cut or cap in entitlement
programs (Medicaid, food stamps, child nutrition) unless the states are given
“new or expanded” flexibility to manage the cut or cap. It would also be
extended to mandates on the private sector of more than $100 million.
The Federal Financial Assistance Improvement Act (H.R. 409, S. 468). Both bills would require the Office of Management and Budget
(OMB) to develop uniform common rules for its seventy-five crosscutting
regulations. OMB must also develop electronic filing and management of grants to
reduce paperwork and uniform base data for grant applicants that could used for
multiple information purposes.
Preemption Assessments. Bipartisan
House and Senate staff are meeting to clarify state and local government
concerns over excessive preemptions. Issues include prior notification, annual
and cumulative reports, point of order, rules of construction, and possible
judicial review of the process but not content. These discussions also cover
federalism impact statements for executive branch preemptions and changes in the
Government Performance and Results Act to require mutual agreement among
federal, state, and local governments on what data are necessary to meet agency
goals without federal micromanagement of state and local information needs.
The Regulatory Improvement Act (S.746). This bill would provide better prior consultation for state
and local officials with federal agencies on new regulations and would require
federal agencies to conduct risk assessments and benefit-cost estimates for new
regulations. This is now an option.
The Regulatory Right-to-Know Act (H.R. 1074, S. 59). This bill would require an annual accounting statement of the
costs and benefits of federal regulations notice and comment procedure and
public disclosure of actions taken on state and local concerns.
Mr. Chairman and members of the committee, we are
working with the President to formalize these same federalism principles for a
revised Executive Order on Federalism.
Our message to you and to the President is the
same. We need to move toward an
“enforceable” federalism partnership between the elected officials of all
levels of government.
We urge you to join us in a revived working
partnership involving all of America in our system of government through all of
its elected officials. We can best
meet the single and special needs of some of the people, while also meeting the
collective needs of most of the people.
Thank you very much.
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