FSRC Federalism Report

Parliament of Victoria

FEDERAL-STATE RELATIONS COMMITTEE

Report on

FEDERALISM AND THE ROLE OF THE STATES:
COMPARISONS AND RECOMMENDATIONS

Chapter 2: United States of America

Background
- Population
- History
Political structure
Federal financial relations
Interstate commerce
Intergovernmental relations
- Federal intergovernmental relations mechanisms
Inter-State associations
Developments in the 1990s
- Reinventing federalism
- Unfunded Mandates Reform Act 1995
Welfare devolution
- Temporary Assistance to Needy Families
- Children’s Health Insurance Programme
Summary of observations
Endnotes

2.0 The federal structure of the United States has similarities to that of Australia. The two countries have a similar distribution of legislative power and a directly elected Senate with equal representation for each State. However, the political cultures of the two countries are very different. The system of government in the United States is founded on a strict separation of powers. The population of the United States is also more decentralised, spread over fifty States and a number of territories and associated commonwealths.

Background

Population

2.1 The estimate of the United States population as at January 13th 1999 is 271,709,700.¹ The populations of the States vary enormously, from little over half-a-million in Vermont, to more than thirty million in California. The table over the page indicates the population of each State, of the District of Columbia, and of commonwealths and territories of the United States, as at July 1st 1998 (July 1st 1997 for Puerto Rico).

Alabama	4,351,999	Idaho	1,228,684	Montana	880,453	Puerto Rico	3,827,038
Alaska	614,010	Illinois	12,045,326	Nebraska	1,662,719	Rhode Island	988,480
American Samoa	62,093	Indiana	5,899,195	Nevada	1,746,898	South Carolina	3,835,962
Arizona	4,668,631	Iowa	2,862,447	New Hampshire	1,185,048	South Dakota	738,171
Arkansas	2,538,303	Kansas	2,629,067	New Jersey	8,115,011	Tennessee	5,430,621
California	32,666,550	Kentucky	3,936,499	New Mexico	1,736,931	Texas	19,759,614
Colorado	3,970,971	Louisiana	4,368,967	New York	18,175,301	Utah	2,099,758
Connecticut	3,274,069	Maine	1,244,250	North Carolina	7,546,493	Vermont	590,883
Delaware	743,603	Maryland	5,134,808	North Dakota	638,244	Virginia	6,791,345
District of Columbia	523,124	Massachusetts	6,147,132	Northern Marianas	66,611	Virgin Islands	118,382
Florida	14,915,980	Michigan	9,817,242	Ohio	11,209,493	Washington	5,689,263
Georgia	7,642,207	Minnesota	4,725,419	Oklahoma	3,346,713	West Virginia	1,811,156
Guam	149,101	Mississippi	2,752,092	Oregon	3,281,974	Wisconsin	5,223,500
Hawaii	1,193,001	Missouri	5,438,559	Pennsylvania	12,001,451	Wyoming	480,907

Source: US Census Bureau, available on the World Wide Web at http://www.census.gov/
population/estimates/state/st-98-1.txt, http://www.census.gov/population/estimates/puerto-rico/
prmunnet.txt, http://www.census.gov/ipc/www/idbsum.html.

History

2.2 North America was first settled more than 20 000 years ago. Prior to 1492, the population north of Mexico is estimated to have been between one and two million. English exploration of the North American coast began in 1498, and English settlement began in 1607. The thirteen original colonies were:

Connecticut
Delaware
Georgia
Maryland
Massachusetts
New Hampshire
New Jersey
New York
North Carolina
Pennsylvania
Rhode Island
South Carolina
Virginia

2.3 In response to dissatisfaction with British Imperial government (particularly policies on trade and customs), the First Continental Congress was convened in 1774, and declarations of rights and of grievances were drawn up. In 1775 the Revolutionary War began in Massachusetts. The Second Continental Congress convened, and on July 4th 1776 issued the Declaration of Independence. The fighting ended in 1781. Britain recognised the independence of the United States in the 1783 Treaty of Paris.

2.4 In 1781 the Articles of Confederation were ratified, creating the United States. The Congress, as constituted by the Articles, was an intergovernmental legislature of extremely limited power, in which each State had one vote. The failure of the Articles to establish a federal government and a federal judiciary prevented effective national government.

2.5 In 1787 a Constitutional Convention met in Philadelphia and drafted the United States Constitution. The Constitution came into force in 1788 following ratification by nine States. The first Congress met in 1789.

2.6 The United States expanded steadily westward throughout the nineteenth century. Further territory was added to that which had been won from Britain in the War of Independence as a result of agreements with France (Louisiana purchase, 1803), Spain (Adams-Onis Treaty, 1819), Texas (which ceded territory in 1836 and was annexed to the Union in 1845), Mexico (Treaty of Guadalupe Hidalgo, 1848, following the Mexican War 1846-48), Great Britain (agreements of 1818 and 1846 setting the border with Canada west of the Great Lakes at 49° latitude) and Russia (Alaska purchase, 1867). Treaties and warfare saw Native American peoples pushed further west, and increasingly confined to reservations.

2.7 Following the Spanish-American War (1898) the United States annexed the Philippines, Guam and Puerto Rico. The western Virgin Islands were purchased from Denmark in 1917. Hawaii and American Samoa were annexed in 1898 and 1899 respectively, and a number of other Pacific islands came under United States control following the Second World War. The Philippines became independent in 1946. Relationships of free association exist between the United States (which has responsibilities for economic assistance and defence) and Palau (since 1993), the Federated States of Micronesia (since 1986) and the Republic of the Marshall Islands (since 1986). Puerto Rico (since a 1967 plebiscite rejecting statehood) and the Northern Marianas (since 1986) are self-governing commonwealths within the United States. The Virgin Islands of the United States, American Samoa and Guam remain unincorporated territories with limited self-government.

2.8 The following table indicates the year in which each State was admitted to the Union:

State	Date of admission to the Union	Number	State	Date of admission to the Union	Number
Alabama	1819	22	Montana	1889	41
Alaska	1959	49	Nebraska	1867	37
Arizona	1912	48	Nevada	1864	36
Arkansas	1836	25	New Hampshire	1788	9
California	1850	31	New Jersey	1787	3
Colorado	1876	38	New Mexico	1912	47
Connecticut	1788	5	New York	1788	11
Delaware	1787	1	North Carolina	1789	12
Florida	1845	27	North Dakota	1889	39
Georgia	1788	4	Ohio	1803	17
Hawaii	1959	50	Oklahoma	1907	46
Idaho	1890	43	Oregon	1859	33
Illinois	1818	21	Pennsylvania	1787	2
Indiana	1816	19	Rhode Island	1790	13
Iowa	1846	29	South Carolina	1788	8
Kansas	1861	34	South Dakota	1889	40
Kentucky	1792	15	Tennessee	1796	16
Louisiana	1812	18	Texas	1845	28
Maine	1820	23	Utah	1896	45
Maryland	1788	7	Vermont	1791	14
Massachusetts	1788	6	Virginia	1788	10
Michigan	1837	26	Washington	1889	42
Minnesota	1858	32	West Virginia	1863	35
Mississippi	1817	20	Wisconsin	1848	30
Missouri	1821	24	Wyoming	1890	44

2.9 From the very beginning of the United States there was controversy as to the constitutional relationship between the States and the Union. The Constitution begins with the words

We, the people of the United States, in order to form a more perfect union, . . .

which were taken by some to suggest the indissolubility of the federation. However, the Tenth Amendment (which came into force, as part of the Bill of Rights, in 1791) provides that

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

and this was taken by others to indicate the ultimate sovereignty within the Union of the States. The case of Marbury v Madison (1803)² established the power of the Supreme Court to declare as void and unconstitutional Federal legislation in excess of the powers granted by the Constitution. However, advocates of States’ rights maintained that State legislatures possessed a similar power, and even the power to secede from the Union, which was conceived by them as a voluntary compact between the States.

2.10 In 1832 South Carolina, attempting to put this doctrine into practice, purported to nullify certain federal tariff laws as unconstitutional and unenforceable within South Carolina. The Federal Government responded with a proclamation rejecting the purported nullification, but the dispute was resolved by the passage through Congress of compromise tariff laws in 1833. However, the doctrine of States’ rights continued to be advanced, particularly by the southern States.

2.11 Following the election of Abraham Lincoln as President, eleven southern States purported to secede (1860-61) and establish a new Confederated States of America:

Alabama
Arkansas
Florida
Georgia
Louisiana
Mississippi
North Carolina
South Carolina
Tennessee
Texas
Virginia

2.12 The Union victory in the resulting Civil War (1861-1865) established the indissolubility of the Union, ending any possibility of nullification or secession by State legislatures. However, there continues to be a great deal of emphasis on States’ rights within the American system. The strength of this sentiment was demonstrated in comments made to the Committee by Senator Jim Lack, a member of the New York Senate and of the National Conference of State Legislatures:

No matter how large your state is and no matter what the geographical distribution is . . . there is a common key in through the National Conference of State Legislatures and that is to recognise the right of States in our democracy and how those rights should be protected and preserved . . . No matter what the controversy might be, if you can reduce it to its basics and get rid of the capital P political controversies, the small P politics between the States and the federal government is important.

2.13 The Committee discussed with the Senator the issue of gun control legislation in this context of ‘States’ rights’:

Senator LACK - Forget politics, there is no member of any State legislature in the country that is at all in favour of having guns in a school or anywhere around the school. The question is: who controls it? Who passes the laws that says how far from the school ground to have guns, or who controls what the penalties are if there are guns on a school ground, and we joined in the law suits to throw out the federal statutes to allow States to make the decision which the Supreme Court ultimately upheld I mean it’s not a question of who’s influenced by the lobbies or anything else. There is nobody in favour of having guns on school grounds. The issue was only controlled by which level of government and what belongs with States and what belongs. It was in your type of terms a very dicey issue for us because when you discussed it in the public legislative forums, everybody is opposed to the guns and nobody wants to way I’m part of a law suit which says in effect do away with the law there shouldn’t be guns and make sure the State laws are to protect. But the organisation at National Conference of State Legislatures joined the law suit and helped to throw it out and there are in our opinion adequate State laws and the Federal Government the central government should not have acted.
So it’s a little bit of the same example, it’s not whether the alcohol limit should be .1, .08 or .05 and what the breweries in your case want or don’t want, it’s which level of government should be involved in making that decision and how that decision should be made at the appropriate level of government, regardless of the lobbying in this. Quite frankly, on a lobbying basis, a lot of the breweries . . . would like to argue for national laws for or against them because it gives them one place to go argue, rather than 50 states. But within our federalism within our constitution, in defining the relationships between the States and central government, it’s just too damn bad. It is something that belongs to the states so go hire 50 lobbyists as you have to, but the States should be making those decisions unless, like with transportation and the national highway system, there’s an overriding federal necessity to have an equalness, a sameness throughout the country.
Ms BURKE - But Senator, that’s all very well, to have the principle debating about who does local, who does State, who does federal, but how many children have been killed since that piece of legislation didn’t get through?³

Observation 5:

Role of the States in the federation
A fundamental feature of federalism in the United States is the importance attached by the States to what they regard as their rights. This leads to tension between the federal government and the States, as State Governments resist the exercise of federal powers in areas of traditional State jurisdiction.

Political structure

2.14 The federal legislature of the United States is the Congress. The House of Representatives has 435 Members (223 Republican Party, 211 Democratic Party, and 1 Independent), one for approximately every 620,000 persons, who serve 2 year terms. Reapportionment occurs every 10 years, and is undertaken by the States (subject to scrutiny by Federal Courts acting under the Civil Rights Act). In addition to the Members, there are 4 Delegates (from American Samoa, the District of Columbia, Guam and the Virgin Islands) and a Representative Commissioner from Puerto Rico (all are Democratic Party), who have no voting powers, but who may be members of, and vote in, committees.

2.15 The Senate has 100 members, 2 Senators elected by the voters of each State (55 Republican Party, 45 Democratic Party). They serve six-year terms, with one third of Senators being elected every two years. The legislative power of the two Houses is equal in all respects, except with regard to bills for raising revenue, which must originate in the House of Representatives (but may be amended or rejected in the Senate).

2.16 The executive branch of the Federal Government is headed by the President and Vice-President, elected on a joint ticket every 4 years. Bill Clinton and Al Gore, both Democrats, have been President and Vice President respectively since 1993. The administrative duties of the executive branch are divided among 14 departments: Agriculture; Commerce; Defense; Education; Energy; Health and Human Services; Housing and Urban Development; Interior; Justice; Labor; State; Transportation; Treasury; and Veterans Affairs. Each department is headed by a Secretary (the term used in the United States to describe a Minister); these Secretaries together constitute the Cabinet. They are appointed and dismissed by the President and, like the President, may not be members of Congress. Numerous federal agencies, including those responsible for regulation of various aspects of private sector activity, supplement the activities of these departments.

2.17 The Supreme Court of the United States is the nation’s highest judicial body, with a Chief Justice and eight other members appointed by the President. It has jurisdiction in inter-State and Constitutional disputes, but does not have a general civil or criminal jurisdiction. There are 90 federal district courts, at least one in each State. They consider violations of federal law and certain civil cases involving persons in different States. Decisions may be appealed to the 12 appellate courts.

2.18 Most States have two legislative chambers; only Nebraska has a unicameral legislature. The chief executive of each State, elected independently of the legislature, is the Governor. States typically have a number of other elected officers, with responsibilities in the areas of finance or justice. Each State also has its own system of courts, and it is not uncommon for members of the judiciary to be elected rather than appointed.

2.19 There is a formal separation of the three branches of government - legislature, executive and judiciary - at both the federal and the state level.

2.20 Although there is a separation of executive, legislative and judicial power, there are some interrelations between them. The President has the power to veto legislation within ten days (excluding Sundays) of it having passed both Houses. A two-thirds vote in each House is then required to override the veto.

2.21 A number of Presidential decisions require Senatorial approval. The Constitution provides that the Senate must approve treaties by a two-thirds majority (although a practice has evolved whereby a simple majority of both Houses can give the President the authority to negotiate certain types of treaty, especially in the area of trade and commerce; in some defence matters the President has the authority to act alone, without any Congressional approval being required). Similarly, the Senate must approve all judicial, Ambassadorial, Cabinet and senior bureaucratic appointments made by the President.

2.22 Public office holders (including the President, but not Members of Congress) may be impeached (that is, committed to trial for removal from office, and disqualification from future federal office) by the House of Representatives. Trial on impeachment is by the Senate, and conviction requires a two-thirds majority vote. If the President is tried, the Chief Justice of the Supreme Court presides. Impeachment must be for treason, bribery or some other “high crime or misdemeanour”, but is ultimately a political decision not reviewable in the courts.

2.23 As in Australia, the Constitution assigns a number of powers to the Congress and President and leaves the residuary to the States. Most federal legislative powers, including those concerning taxation (with the exception of duties on imports or exports), are concurrent with those of the States. In the event of any conflict between federal and state laws, federal laws prevail. In addition, the Fourteenth Amendment gives the Congress a wide power to protect citizens’ rights from infringement by State laws and governments. A third level of government is provided at the local level by municipal and county authorities.

2.24 State and local governments have responsibility for such local services as water supply, waste disposal, police and fire protection, hospitals and health, parks and recreation, schools, and libraries, but to a considerable degree each of these activities is shared by all levels of government including the Federal Government. The Federal Government alone has responsibility for national defence, but even this responsibility is shared with the States to the degree that each State has a National Guard or militia.

Observation 6:

Role of the legislature
A significant difference between Australia and the United States lies in the relationships between the President, Executive and Congress. Members of the executive branch, the Cabinet, are appointed by the President, and may not be members of Congress. This formal separation of the legislative and executive branches of government means that the Congress and President are independent and there is no executive representation in the legislature. Consequently, the executive does not dominate the votes and procedures of the legislature.

Federal financial relations

2.25 Both the Congress and the States possess tax powers in the major areas, but the federal income tax dominates that area, leaving limited tax room to States.

2.26 There is a low degree of vertical fiscal imbalance. Intergovernmental grants are highly conditional (95%) and represent about 18% of States’ revenue. There is no systematic method for equalising State fiscal capacity, but some equalisation occurs indirectly through a variety of grant-in-aid programmes.

Interstate commerce

2.27 The Constitutional provisions ensuring free interstate commerce are strongly enforced.

Intergovernmental relations

2.28 The United States has very active intergovernmental relations. However, while intergovernmental relations are very important, there are no joint federal-state decision-making mechanisms.

2.29 The separation of powers between the legislative and executive branches means that intergovernmental relations in the United States are not dominated by the executive. The weak party system leaves Members of Congress more dependent on, and hence more responsive to, local political considerations. State action at the federal level is typified by the lobbying of Senators, Members of the House of Representatives, members of the Cabinet, and federal agencies. This lobbying is undertaken both by State Governors and by members of State legislatures.

2.30 This was not always so; prior to the Seventeenth Amendment, which entered into force in 1913, Senators were appointed by the legislatures of their States, rather than directly elected. Mr Bob Silvanik, of the Council of State Governments, commented that

Up until 1913 Senators were elected by our State legislators and were in the Senate to represent the State legislators. In 1930 Congress passed a constitutional amendment to change that and so the States are . . . just another special interest that has to go to [Capitol] Hill, testify and lobby just like the Retired Persons Association does, just like the National Rifle Association does and it has really taken away from the State influence on the Hill. I think that is how we have got so out of balance.⁴

Federal intergovernmental relations mechanisms

2.31 The Senate Governmental Affairs Committee has responsibility in the area of intergovernmental relations, and studies the effects of legislation on federal-state relations. The House of Representatives Committee on Government Reform (formerly the Government Oversight and Reform Committee) also has responsibility in this area, and on March 3rd 1999 launched a series of hearings called ‘National Problems, Local Solutions: Federalism at Work’.

2.32 The Federal Government established the Advisory Commission on Intergovernmental Relations in 1959 as a permanent, independent, bipartisan intergovernmental agency, with the intention of strengthening the American federal system, and improving the ability of federal, state and local governments to work together.⁵ Membership of the Commission consisted of six Members of Congress appointed by the House and Senate leadership, and of four Governors, three State legislators, four mayors, three county officials, three private citizens and three representatives of the federal executive branch, all appointed by the President.

2.33 The Commission has played a prominent role in monitoring the development of American federalism. It has particularly focussed on assessing the outcomes of the “New Federalism” programmes of the Nixon and Reagan governments, and other presidential moves to shape the federal system. It has published many reports, and its last report was into federal unfunded mandates and their impact on the federation.

2.34 Mr Charles Griffiths, Executive Director of the Advisory Commission on Intergovernmental Relations, described the Commission’s work to the Committee:

Our Commission was created really to monitor American federalism and to make recommendations about the balance of relationships between federal and state and local, and to conduct research and to generate information. If we are famous or known for anything it is mostly the information that we generate. Our publications really have an international readership. We sell a number of publications all over the world to people who want to know more about American federalism, particularly our books that deal with financial, intergovernmental assistance, tax structure and whatever - those books are probably the most in demand as far as foreign readership goes. But they are read widely by our Governors and budget officers and policy officers and so forth. So if we have an influence it is basically through our information.⁶

Observation 7:

Intergovernmental institutions
The American spirit of federalism does not seem to encourage formal mechanisms for intergovernmental relations because of a reluctance by the States to have the Federal Government attempting to interfere in their policy making. Subsequently, the system focuses on intense lobbying. However, some people have emphasised the view that this has brought about a situation where the States are just one of many lobby groups in Washington DC.

Inter-State associations

2.35 In the United States, the States have developed a sophisticated web of associations to support them in their actions at all levels of the federal system: relations with the Federal Government; inter-State relations; and policy development within their own States. These associations provide a forum for discussion of policy developments at the federal and state levels, and information on policy and administrative ‘best practice’.

2.36 In addition, States also maintain their own staff in Washington. However, inter-State associations are able to provide extensive policy and research resources which would be too expensive to maintain within one State. Ms Jennifer Lakins-Mello, an officer of the National Governors’ Association, observed to the Committee that

The Governors from the larger States and this is my personal opinion here, this is not official National Governors, Association policy, tend to be somewhat less involved because they have the resources to have 20 people here in Washington that work for them and they don’t need us as much as some of the smaller and medium-sized States.⁷

2.37 The National Governors’ Association focuses on the presentation of a common State’s view to the Federal Government on issues of importance to State governments. In the absence of formal intergovernmental mechanisms, the Association provides an informal, but highly effective, means of communication between State and Federal Governments.

2.38 Regional associations of Governors have a different purpose, concentrating on inter-State relations rather than federal-state relations. They facilitate inter-State co-operation centred on trans-border policy issues arising from issues such as economic development, waste management, pollution, transport and energy. They vary in size, from the Western Governors’ Association which has twenty-one members, to the New England Governors’ Conference which has only six members.

2.39 Two State associations - the Council of State Governments and the National Conference of State Legislatures - are aimed at assisting the states in internal policy and administrative development. As their names imply, each of these associations has a different membership. The Council of State Governments targets State executive, judicial and legislative leaders. The National Conference of State Legislatures is focused on the information needs of legislators. States are not compelled to join these organisations, but they do attract a large membership.

National Governors’ Association ⁸

2.40 The National Governors’ Association is a bipartisan national organisation of State Governors. Its members are the Governors of the fifty States, the commonwealths of the Northern Mariana Islands and Puerto Rico, and the territories of American Samoa, Guam, and the Virgin Islands. It was founded in 1908 to provide a forum for governments to discuss the mutual concerns of States and to facilitate collective action. In 1967 the Governors established an Office of Federal State Relations in Washington DC, and it continues to provide lobbying and policy support for the priorities which are set annually by the Governors.

2.41 Through the National Governors’ Association, the Governors meet with the purpose of identifying priority issues and dealing collectively with issues of public policy and governance at both the national and State levels. The Association meets at least annually with the President and has regular meetings with members of Cabinet. The Association’s stated purposes are:

to provide a forum for Governors to exchange views and experiences among themselves;
to assist in solving State focused problems;
to provide information on State innovations and practices; and
to provide a bipartisan forum for Governors to establish, influence, and implement policy on national issues.

2.42 The Association operates so as to maintain bipartisanship. The positions of Chair and Vice Chair of the Executive Committee rotate annually between the two major parities, the Republicans and Democrats. The Committee itself has a one year term, and consists of four members of the Chair’s party and five members of the Vice-Chair’s party.

2.43 There are four standing committees: Legal Affairs; Economic Development; Human Resources; and Natural Resources. The Legal Affairs Committee reviews cases before the Supreme Court and, in cases with implications for the States, it may file an amicus brief presenting the States’ view on the case to the Court. The task of the remaining committees is to examine and develop policy, to provide a forum for the Governors’ to address key issues and to develop the information and services which will be provided to the States. The Executive Committee may establish special taskforces to deal with policy issues of national or State importance. Such taskforces are usually established for the term of the Executive Committee.

2.44 Ms Lakins-Mello outlined to the Committee the size and function of the Association’s staff:

We have about 100 staff people. We have 12 lobbyists. I think our lobby staff is disproportionately small but that is because I am on the lobbying side and I wish we had more people. Our centre staff is probably about 60 people doing research and the rest is administrative, accounting etc. We do have an area that is called management services that works with Governors to help them be better Governors. They have seminars for chiefs of staff about how to manage an office, they do seminars for schedulers about how to manage a Governor’s schedule. That has actually been one of our most popular types of services that we have been able to provide for Governors in recent years and they have beefed up their staff somewhat, there is about five people who do that.⁹

2.45 The Association is funded from a variety of sources. States’ dues fund the lobbying, public information, management services activities and the general administration of the Association. Grants, contracts, fee-for-service programmes and corporate contributions fund the Association’s Centre for Best Practices. This Centre provides research, information and technical assistance in the areas of economic development and commerce, education, employment and social services, health and natural resources.

2.46 Contact between the Association and Governors is maintained through staffing secondment and liaison staff. Each of the Association’s committees and taskforces has a staff advisory council composed of seconded gubernatorial staff selected by the Governor attached to that committee or taskforce. The Association provides a staff member designated as a liaison for each State and to whom inquiries can be directed. In addition, each Governor nominates a State contact for the Association, and this contact will receive all papers and communication from the Association.

2.47 In recent years, the Association has concerned itself with what it describes as ‘key State issues’: education reforms; clean-up of the nuclear weapons complex; rural health; emergency management; welfare reform; and the State Children’s Health Insurance Programme.

National Conference of State Legislatures ¹⁰

2.48 The National Conference of State Legislatures was founded in 1975 as a bipartisan organisation supporting State legislatures through research, information exchange and representations to Congress, the Administration and federal agencies. Each State, commonwealth or territory is allocated at least one staff member from the Conference to act as their lead contact.

2.49 Senator Lack described the role of the Conference to the Committee:

No matter how small or how large what is going on in the States is there’s a mechanism for people to talk to each other. Particularly at the legislative level, to know what is happening from one State to another, what has worked in States and, quite frankly, what hasn’t.¹¹

2.50 The core services provided by the Conference are:

information requests across all policy areas;
consulting assistance (drafting legislation, seeking witnesses to testify before committees);
online information services;
meetings and seminars (an annual meeting in addition to policy specific meetings);
publications;
Leaders’ Centre (skills and development);
legislative Staff Structure studies (reviews the organisation of legislative staff);
professional developments for legislative staff; and the
Foundation for State Legislatures (sponsors research and innovative projects).

2.51 The Conference also has a Washington DC office devoted entirely to federal-state relations. The focus of its activities is on the Assembly of Federal Issues, which is comprised of nine standing committees. The members of these committees are legislators and it is they who determine the Conference’s official opinion on federal matters. The standing committees are:

Agriculture and International Trade;
Commerce and Communications;
Education, Labor and Job Training;
Energy and Transportation;
Environment;
Federal Budget and Taxation;
Health;
Human Services; and
Law and Justice.

2.52 The other components of the Washington DC office are: the Intergovernmental Health Policy Project; the Immigrant Policy Project; the Employment and Job Training Program; the Health Policy Tracking Service; and the International Programme.

Council of State Governments ¹²

2.53 The Council of State Governments was established in 1933 on the premise that States could be a vital source of innovation, particularly if they shared resources. It acts as a network, sharing information on national and international issues, developing leadership skills, and putting States in contact with each other and with business and civic leaders. The Council’s resources are available to assist States in policy development and implementation and in devising multi-State and regional solutions to shared problems.

2.54 The Council of State Governments is a non-partisan organisation which manages a wide range of national programmes such as research and reference publications, a State Information Centre, inter-State loan library, proposed legislation on current policy issues, secretariat services, marketing, data processing, leadership development and peer review of management and policy problems. As Mr Silvanik explained to the Committee, the Council is not a lobby organisation, and therefore plays a somewhat different role to the National Governors’ Association and the National Conference of State Legislatures:

We have a lot of associations over here that deal with State and local government officials and there is a lot of overlap. The Council of State Governments was the first national umbrella organisation for the States. In fact the National Governors’ Association and the National Conference of State Legislatures, they used to be part of the Council of State Governments and about the seventies when the Federal Government became much more involved in distributing money down to the States and that early devolution almost, giving the States a lot more responsibility and passing laws that were putting more restrictions and mandates on States, the Governors and the legislatures both felt they needed a large lobbying influence in Washington, a daily contact on the hill, to influence that legislation so those organisations actually broke off and set up offices in Washington to lobby on the hill. The Council of State Governments doesn’t lobby, we are a 501C3 (that is an Internal Revenue Service code) which means we are a totally non-profit organisation that doesn’t lobby. That is why we can be headquartered in Lexington, Kentucky and we don’t have to have a large office in Washington because we are more active inside the states in providing technical assistance to State Governments. That is why we have offices in Atlanta, New York, Chicago, Denver and San Francisco because we are trying to reach out in the States and help them day to day in the implementation of their programs and develop the best policies they can. That is one very important difference. . .
Politics really doesn’t enter into our organisation. If you came to a Council of State Governments meeting - and most state officials who do find it refreshing - politics doesn’t even come up. We are talking about problems that are going on in the States and how to solve them and what is the best way to do that. Also we are a unique forum because we have all branches of State Government. We have the Governors and we have the agency heads in the executive branch, we have the legislative leadership and their staff in the legislative branch and we have the judges and their staff from the judicial branch - all part of one organisation. So when we meet we are talking about the people who pass the laws, the people who implement the laws, and the people who rule on them all at one meeting. . .
The National Governors’ Association lobbies day to day on the hill. They are lobbying about specific pieces of legislation, specific regulations that are part of legislation. We protect more the institutions of State Government.¹³

2.55 The Council’s current policy priorities are corrections and criminal justice, environment policy, State health capacity and related issues, trends and innovations in state government and ethics, elections and campaign finance. It has recently released an Eleven-Point Plan to Strengthen the Federal-State Partnership, which aims to bring better balance and greater accountability to the state-federal partnership and addresses the ways Congress writes and passes legislation that affect the States. The proposals call for greater input from the States and could be combined into an omnibus State-Federal Partnership Act or introduced separately.

2.56 The Council has a large staff, and its activities are funded through State appropriations, grants and entrepreneurial efforts, as Mr Silvanik explained to the Committee:

We have approximately 150 staff about 100 of which are in Lexington and the rest are out among our smaller offices in the country that I talked about.
We are also funded in two different ways. We have State dues – all of the States belong to the Council of State Governments and just as in the National Governors’ Association there is a formula. Just to give you an idea what those dues are, the smallest dues-paying State is Wyoming and they pay around $45 000 a year to the Council. California is the largest and they pay around $325 000 a year to the Council, so you can see the range, from $40 000 to $325 000 a year in appropriation dues, and it is actually the State that is the member of the Council of State Governments and therefore every member of State Government in that State belongs to CSG because their State pays dues so we serve anybody inside State Government. Obviously we focus on the leaders and decision makers.¹⁴

New England Governors’ Conference ¹⁵

2.57 The New England Governors’ Conference covers the six States of Maine, Rhode Island, Massachusetts, Connecticut, New Hampshire and Vermont. Based on informal co-operation dating back to the colonial past, the Conference was formally established in 1937.

2.58 The Conference co-ordinates regional policy programmes in the areas of economic development, transportation, environment, energy, and education. A committee of State officials implements the policies adopted by the Conference. The aim of every policy programme is effective co-ordination and cost-effective regional policies.

2.59 The Conference is currently working in conjunction with the federal Department of Energy on a programme to assess the regional implications of long-term energy policies. It is also working with the federal Environmental Protection Agency to assess the possible impacts of electric industry restructuring on environmentally sustainable technologies.

2.60 All members of the Conference meet during the annual meeting of the National Governors’ Association. Meetings are held at other times of the year and usually attended by community and business representatives.

2.61 The New England Governors’ Conference is also involved in international co-operation. The Conference serves as the New England secretariat for the Conference of New England Governors and Eastern Canadian Premiers, a bi-national organisation to promote inter-regional co-operation across national borders.

Coalition of Northeastern Governors ¹⁶

2.62 The Coalition of Northeastern Governors was created in 1976 and comprises the States of Connecticut, Maine, Massachusetts New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont. Its focus is to provide a forum for discussion and information exchange in the policy areas of transport, economic development, energy and the environment. The Coalition tracks selected national and regional issues, assesses them for their implications for the Northeast, conducts policy studies and seminars and serves to co-ordinate the region’s response.

2.63 A Chair and Vice Chair are elected annually from the nine Governors and the Coalition is assisted in its work by a standing Advisory Committee. Programme committees may be created to deal with specific issues and report to the Advisory Committee. The work of programme committees is assessed on an annual basis and a decision is made by the Advisory Committee as to whether they are retained, modified or abolished. Members of all committees are appointed by the Governors.

2.64 The Coalition’s Policy Research Centre provides the administrative support and research services required by the Coalition. Funding is provided by assessments from each State, and from grants and contracts.

2.65 The Coalition seeks to achieve policy harmonisation in the areas of transportation (including rail), energy and the environment, so that a co-ordinated response may be made to policy and infrastructure changes initiated at the federal level.

Southern Governors’ Association ¹⁷

2.66 The Southern Governors’ Association was founded in 1934 to support the work of the Governors by providing a bipartisan, regional forum to help shape and implement national policy and to act as a forum to expedite cooperation among the southern States in solving regional problems. The Governors of Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, Missouri, North Carolina, Oklahoma, Puerto Rico, South Carolina, Tennessee, Texas, the US Virgin Islands, Virginia and West Virginia are all members of the Association.

2.67 The Association convenes meetings for Governors and their staffs, and co-ordinates regionally collaborative initiatives. It also tracks and analyses federal legislation and regulations of interest to the southern States, and advocates the southern Governors’ policy agenda, as expressed through approved policy resolutions, before Congress and the executive branch. It provides comparative policy information to its members on pressing issues and, through reports and conference calls, facilitates the exchange of information on individual State responses to pressing regional concerns or Federal Government actions.

Western Governors’ Association ¹⁸

2.68 The Western Governors’ Association covers almost half the States of the Union. Its members are the States of Alaska, Arizona, Wyoming, California, Colorado, Hawaii, Idaho, Kansas, Nebraska, New Mexico, Oregon, South Dakota, North Dakota, Nevada, Texas, Utah, Washington and Montana; the territories of Guam and American Samoa; and the commonwealth of the North Mariana Islands.

2.69 The Association was established in 1984 in response to profound changes in the economy and demography of the West. The aim of the Association is to identify and address key policy and governance issues in economic development, human services, natural resources, the environment, public management and international relations. These issues are decided on the basis of regional interest and impact.

2.70 The Association has a dual focus, working to assist Governors in developing strategies both for immediate issues and the long-term and complex issues which face the whole region. These regional views are then presented at debates at the national level.

2.71 The Western Governors’ Foundation is a creation of the Association and provides ‘seed capital’ for research projects conducted by the Association and other organisations and individuals. This foundation is funded by grants and gifts from corporations, foundations and individuals.

2.72 Some of the Regional Initiatives pursued by the Association include an international trade policy, a United States-Mexico Border Environment Dialogue, air quality initiatives, flood risk reduction, drought initiatives and a regional water policy. It has adopted resolutions on a number of matters such as agriculture, coastal management, infrastructure, State tribal issues, transport, energy and governance. These resolutions are policy positions which are adopted for a period of three years.

The role of regional Governors’ associations

2.73 Each of the regional Governors’ associations discussed has a different goals according to the interests and aims of its members.

2.74 A small regional grouping such as the New England Governors’ Conference is able to undertake programmes which implement regional policy goals. Its focus is inter-State relations rather than federal-state relations.

2.75 A more economically and demographically diverse group of States, such as the Coalition of Northeastern Governors, seeks a broader consensus on policy issues and has adopted an advocacy role which emphasises federal-state relations.

2.76 The Western Governors’ Association has been able to define a common view of the problems facing the western States and, in addition to promoting a common voice on policy issues at the federal level, it has been able to develop inter-State programmes. It thus combines a federal-state relations role similar to that seen in the Coalition of Northeastern Governors with the policy implementation approach favoured by the New England Governors’ Conference.

Observation 8:

Intergovernmental institutions
In the United States, the formal mechanisms of intergovernmental relations are to be found at the level of inter-State relations.
In the United States, the States have established many associations to facilitate relations between the States. These associations are able to assist the co-ordination of activities between States, and are also able to represent the States in relations with the Federal Government. All are established on a bipartisan basis, with a secretariat to provide administrative, policy and research support. Both the National Governors’ Association and the National Conference of State Legislatures have an office in Washington DC to deal with federal-state relations. Both of these organisations also ensure that each State has a designated officer with responsibility for contact between the organisation and the State.

Developments in the 1990s

2.77 Developments in federal-state relations during the 1990s have their roots in the effects of the Reagan Administration’s “New Federalism” and changing attitudes to the role of the States in American politics. The New Federalism agenda adopted by Reagan was intended to redress a perceived imbalance in the federal system, through a budget driven reduction and reallocation of roles. Federally funded programmes in education, health, community services, energy assistance, public transport and the labour market were consolidated into block grants, with the intention of loosening federal restrictions and conditions to give the States greater freedom to decide how money should be spent.

2.78 According to critics, New Federalism undermined the independence of the States in some areas: a lack of consultation on changes undermined intergovernmental relations; the imposition of federal regulation and unfunded mandates actually increased; and block grants did not always grant States the freedom of movement they had wished. The total amount of funding for the consolidated programmes was also reduced.

2.79 However, others have argued that the difficulties created for the States in managing these changes led the States to involve themselves more dynamically in the federal system.

Reinventing federalism

2.80 Bill Clinton’s success in gaining the Presidency from his position as Governor of Arkansas is considered an indication of the strength of the States in the 1990s.¹⁹ The approach of the Clinton Presidency to the federal-state relationship was launched in March 1993 with the “Reinventing Government” initiative, which was intended to make federal government less expensive and more efficient. Under the leadership of Vice-President Al Gore a programme was launched in September 1993. Entitled the National Performance Review it outlined action to be taken by presidential direction, by Cabinet Secretaries and by agency heads, and also put forward recommendations for congressional action. The programme focused on improving the partnership in intergovernmental service delivery.²⁰

2.81 The first item on the programme was the issue of unfunded mandates and regulatory relief. Federal unfunded mandates impose a legislative and policy burden on the States, without any transfer of federal funds for implementation of those requirements. In 1993 alone, 172 pieces of federal legislation imposed mandates on State, local or tribal government with the majority partially or wholly unfunded. To redress this situation the Clinton Administration supported a revised version of a Federal Mandate Relief Bill which had the support of the National Association of Counties, the United States Conference of Mayors and the National Governors’ Association. This bill was eventually passed as the Unfunded Mandates Reform Act 1995 and is discussed in more detail below.

2.82 The “Regulatory Planning and Review” Executive Order (signed September 30th 1993) requires federal agencies to promulgate regulations only where necessary by law or compelling public need. When designing regulations, four guidelines are to be followed: to determine whether modifying existing regulations will correct the problem under consideration; to assess the viability of alternatives to direct regulation (such as economic incentives); to make a reasonable consideration of the degree and nature of the risks posed by various substances or activities within its jurisdiction; and, wherever feasible, to seek the views of the relevant State, local and tribal officials.

2.83 Another Executive Order, “Enhancing the Intergovernmental Partnership”, was signed on October 26th 1993. It acknowledged that unfunded federal mandates had strained State, local and tribal budgets. Waivers which were designed to allow exemptions from statutory or regulatory requirements imposed by those mandates were difficult to obtain due to complex application processes. These waivers provided State, local and tribal governments the opportunity to implement federal mandates in an experimental or innovative manner or in conditions more suited to the local situation. The Executive Order required federal agencies to impose mandates through regulation only in particular circumstances, to speed up decision making on waivers and to be more flexible when considering waiver applications. This flexibility has been seen particularly in the United States Department of Health and Human Services, Medicaid, the Environmental Protection Agency, the Food Stamp Programme and the Department of Education.²¹

2.84 Action was also taken to redress the complexities of federal grant administration. A number of departments and agencies took action to streamline internal processes, in order to eliminate duplication which was a result of multiple federal programmes with similar audit and information demands. The Local Empowerment and Flexibility Act 1994 established a pilot programme which allows communities to integrate federal grants across federal assistance categories such as employment training, health, housing, economic development, nutrition, rural development etc. Localities wishing to take up this opportunity are required to develop comprehensive plans outlining goals and measurable performances and an evaluation system to measure the impact of the plan on participants, the community and programme costs. Federal grants will then be consolidated into one of a number of block grants: a Community Development Block Grant (a flexible community building tool); an Empowerment Zone Initiative (funding for a range of activities at local discretion); a Neighbourhood Leveraged Investment for Tomorrow (to promote and leverage private investment in retail, commercial or mixed-use development projects); or a Community Viability Fund (support design and development of public amenities).²²

2.85 Another component of the Reinventing Government programme was the involvement of State, local and tribal governments in ongoing reviews of the National Performance Review.

Unfunded Mandates Reform Act 1995

2.86 Concern over the growth in unfunded federal mandates had increased during the 1980s. By the 1990s the States were prepared to take action to stem the flow of mandates. Attempts to resolve the issue through the courts had failed. The case of Garcia v San Antonio Metropolitan Transit Authority,²³ had determined the authority of Congress to legislate for State and local government employees under the Fair Labour Standards Act. The action had been brought to clarify the Supreme Court’s interpretation of States’ powers under the Tenth Amendment. In its decision, the Supreme Court asserted that the provisions of the Act did apply to State and local government and stated that it could not referee Tenth Amendment decisions because State and local government had adequate redress to Congress through the political process.

2.87 In order to exert more pressure over Congress, State and local governments began to more thoroughly record the real cost of unfunded mandates and to publicise the issue. To this end, National Unfunded Mandates Day was held on October 27th 1993 which attracted widespread media attention. The Ohio Governor estimated that unfunded mandates cost his State $1.7 billion dollars over a four-year period.²⁴ Price Waterhouse had estimated the cost of unfunded mandates (to all States) to be $11.3 billion in the fiscal year 1993.²⁵ State and local restiveness on the issue coincided with federal action. President Clinton was supporting the passage of the Federal Mandates Reform Bill and the Republicans supported reform as part of their “Contract with America”. The Unfunded Mandates Reform Act was passed with bipartisan support.

2.88 Mr Griffiths explained this development to the Committee:

Then in the late 1970s when people became concerned about deficits and the growing debt of the United States there started to be cutbacks and of course the big slide started about the time that Reagan’s Presidency started . . . The absolute, the gross amount of money has never actually gone down, it has always continued to rise in the health area, Medicaid, Medicare and the social securities area - the overall assistance to State and local governments has continued to rise at a slower rate, but as a percent of State/local funds and if you take out Medicaid, Medicare, the drop is precipitous, they get far less money now in infrastructure, they get far less money in community development and housing and so forth, the educational field has gone down, not as much, the highways have levelled off, although in this latest bill it has started to go back up.
What happens of course when you stop giving people money they start becoming more sensitive to the other things like regulations and mandates and the things that you pile on which - I remember one County Commissioner calling it credit card federalism, the Federal Government passing laws and saying you pay for it, the states can pay for it and local governments can pay for it, but you will obey what we say. That became more and more of an issue until the early 1990s when there was almost like a mini revolt. They had Mayors and County Commissioners and Governors and others who were coming together and saying, ‘Enough is enough, if you are going to pass laws you are going to pay for them or you are not going to pass these costs down to us’, and so we had the great mandate revolt that occurred in 1993/94 or 1992/93, they came to Washington, they marched, they wrote letters, if the Web sites had been fully developed at that point they would have been full of Internet messages, and so finally the thing that culminated was the 104th Congress which became Republican, going from Democrats to Republican regime, they had a contract with America and one of its major principles was they were going to attack mandates, they were going to do something about mandates. The very first law, I think it was the very first law, Senate 1 that was passed by the 104th Congress was the Unfunded Mandate Reform Act of 1995. That Act essentially set out parameters and guidelines, thresholds that said that Congress if they imposed a mandate, that mandate exceeded a certain dollar threshold in the case of intergovernmental mandates $50 million, there had to be an assessment and report given to the Congress and if the Congress did not fund it, then the law could not go into effect.²⁶

2.89 Under Title I of the Unfunded Mandates Reform Act, “Legislative Accountability and Reform”, Congressional committees authorising bills are required to identify legislation which will impose a mandate. The Act defines a mandate as

any provision in legislation, statute, or regulation that would impose an enforceable duty upon State, local or tribal governments, except a condition of federal assistance; or a duty arising from participation in a voluntary federal programme.

2.90 Bills dealing with the following subjects are excluded from this definition:

enforcement of the constitutional rights of individuals;
establishment or enforcement of statutory rights prohibiting discrimination;
compliance with accounting and auditing procedures for other federal grants;
provision for emergency assistance;
national security or international treaty obligations;
emergency legislation; or
any matter relating to Social Security.

2.91 The Unfunded Mandates Reform Act applies to two types of mandates: federal-intergovernmental mandates affecting State, local and tribal governments and federal private sector mandates. With some qualifications, the Act applies to specified entitlement programmes: Medicaid, Aid to Families with Dependent Children, Child Nutrition, Food Stamps, Social Services Block Grants, Vocational Rehabilitation Block Grants, Foster Care, Adoption Assistance, Child Support Enforcement, and Independent Living Family Support Welfare Services.

2.92 Once the Congressional committees have identified bills containing a mandate, it is forwarded to the Congressional Budget Office, which must prepare a mandate statement estimating the cost to State and local governments. Mandate costs in excess of $50 million for federal-intergovernmental mandates and $100 million for federal-private sector mandates mean that a point of order is laid against the bill. A point of order also lies against bills which are reported to the House of Representatives or the Senate without a mandate statement from the Commonwealth Budget Office. A point of order is a procedural restraint which forces debate on that particular section of the bill. It must be raised by a Member on the floor of the House or Senate and can be overridden by a simple majority. Either body can effectively waive the point of order which may allow a bill with a point of order attached to it to escape a vote on the mandate issue.

2.93 In its first full year of operation (1996), the Commonwealth Budget Office prepared mandate statements for more than 700 bills, joint resolutions, amendments, conference reports and draft proposals. Of 91 bills with private sector mandates, 38 would have imposed costs above the $100 million threshold. Of 69 bills imposing a mandate on State, local or tribal governments, 11 would have exceeded the $50 million threshold. Those 11 bills covered five mandates: increasing the minimum wage, the application of Occupational Health and Safety standards to State and local workplaces, pre-emption of some State securities laws, reforming health insurance requirements and requirements that driver’s licences contain Social Security numbers. The minimum wage bill was the only one which was enacted without lowering the mandate costs below the $50 million threshold, while the Occupational Health and Safety bill did not pass the committee stage. The Securities Regulatory Reform bill was amended so that its scope of federal pre-emption was narrowed, thereby significantly reducing its mandate cost. The driver’s licence bill was also amended to bring down the mandate costs.²⁷

2.94 Ms Kristine Simmons, a member of the staff of the Senate Governmental Affairs Committee, described to the Committee the operation of the Unfunded Mandates Reform Act:

The intent of [the Act] - and it has worked quite well we think so far - is to put a procedural hurdle on the floor of Congress before passing any legislation that’s going to cost States or local governments over $50 million in a year.
It’s not to say there are not going to be any mandates but more a question of if . . . this is important enough to impose those kind of costs then there’s going to be enough of it to force a separate vote on it. We know it is going to cost the Governors X amount of money but we think it is important so we’re going to do it.
Knowing that there’s a point of order out there against mandates has encouraged committees to go back before they ever come to the floor with the bill with those kind of costs. They will go back and talk with the Governors and try to work something out or work something out with the Mayors depending on what is involved in the bill.
So we haven’t had very many cases where we have actually had to deal with this on the floor and that is the way we intended the Act lot to work. One example of that and how it is working right now is the Internet Taxation bill. I don’t how long you’ve been here and what meetings you have had as yet, but there’s an interesting issue that has been going on into this Congress. An internet taxation bill would impose a moratorium on new State and local internet taxes and that was a great concern for the Governors and new Mayors . . . It is a big issue for them and they have been strongly opposing that. One of the grounds on which they were able to have a better negotiating position [is that] there could be a point of order raised against that bill when it gets to the floor and it takes a majority vote to override the point of order.
So it’s not an insurmountable hurdle since it is a simple majority vote. Yet, it is embarrassing and the committees would rather not have to deal with that when they get to the floor.
So as a result the sponsor of the bill sat down with some of the Governors and they were able to work out an agreement that the Governors have signed off on now. And that is the way it is intended to work, it is to get the Governors and the Mayors and county executives a place at the negotiating table and give them a chance to be heard and to have an impact in the legislative process while it is still going on, rather than just having things imposed on them at the end of the process.²⁸

2.95 There have been a number of criticisms of the limited scope of the Unfunded Mandates Reform Act: the narrow definition of mandate which served to exclude a number of other bills with an impact on State, local and tribal governments; the fact that it does not provide for consideration of cumulative impacts; the enforcement mechanism (point of order) is too low a procedural hurdle; expensive mandates (those exceeding the thresholds) can be carved into smaller bills; and Congress can attach requirements to existing grants programmes in order to avoid the mandate definition.²⁹

Welfare devolution

2.96 Rebalancing federal-state relations in the United States requires action from three institutions: the President, Congress and the Supreme Court.

2.97 The Nixon, Reagan and Bush Administrations have all supported devolution of policy responsibility to the States. The Clinton Administration has been enthusiastic and willing to implement programmes such as the “Reinventing Government” initiative and its consequences.

2.98 The 1990s saw Congress enact two major pieces of devolutionary legislation: the Temporary Assistance to Needy Families programme (1995) and the Children’s Health Insurance programme (1997). Both schemes operate as block grants that allow States a significant degree of discretion in implementing these federal programmes.

2.99 These changes have lead some commentators to make claims of a ‘devolution revolution’ in the United States. However, these claims are not universally accepted. For example Professor John Kincaid, a former Director of the Advisory Commission on Intergovernmental Relations, says that:

If ‘welfare reform’ is a vivid illustration of ‘devolution’, then the States may find themselves in the proverbial predicament of the dog who finally catches the speeding car. The States won new discretion and flexibility to design, fund, and operate welfare programs, but they also inherited onerous and prescriptive requirements.³⁰

2.100 This view was reinforced by Mr Griffiths:

What is happening and I will get into devolution in a second, is that all this ‘lessening the federal power and pushing it down to the other levels’ a lot of that is not being accompanied by money, it is responsibility that is being sent down but the money is not coming with it. The pre-emptive issue [ie the federal government taking responsibility in an area traditionally the purview of the States] is a problem and of course if you followed our political system you know the Supreme Court several years ago when there was a famous case on this, simply said that the issue of federal/state sovereignty and powers and pre-emptions is a political issue, it is not to be resolved by the courts, it is to be resolved politically. Well that pretty much means that the federal government can continue to do what it wants, so I think pre-emption is an issue for the future and I am kind of surprised that there has not been so much talk about that as there was mandates, as pre-emption is really the opposite side of mandates. . .
If you take the strict definition of devolution it is shedding of responsibility and sending it back as well as the money and having no further say in the matter, well if you look at what has happened since the 104th Congress, none of that has ever happened. The Government has not given up anything entirely, has not given back all the money entirely, as again in fact the two areas where they talk about devolution as being successful and most famous for is our welfare reform law. Well, in some ways that is true, a number of things were consolidated, a great deal of planning and authority and flexibility was given to State and locals, but if you look at that law, particularly in that area [of] information technology, there are enormous mandates in that bill dealing with information technology. The amount of information that state and locals are now required to gather and pass back to the Federal Government is enormously expanded over anything that they had in the past, and in some views irrationally so because where they never collected such data in the past, they now have to collect it and it was bad enough collecting what they had to collect. Then of course the issue of, a lot of this data now has to be shared State to State to State in order to make some of these national data bases work like the child data base or the national registries of some sort, the only problem is States haven’t really learnt how to share data as well as they should in some cases so it is an issue of what data to share, the technology by which to share it and so forth, all imposed by this wonderful example of devolution which was welfare reform. . .
There is no devolution in truth, the word has caught on and is going to stick around so devolution now means anything from greater flexibility to passing some money down or lessening costs . . . devolution has just become sort of a catch word for the new type of federalism we are looking at which is basically trying to give more flexibility to State and local [government]. The feds have not given up the responsibility. They still write the regulations, they still pre-empt and they still do some of these very obnoxious things, but as long as we are in this euphoric period, people are not going to say that the Emperor is not wearing any clothes at this point, they are just going to be very happy to see the Emperor walking down the street I guess, but at some point we are all going to realise that the Emperor is still not wearing any clothes and somebody should say something.³¹

2.101 Mr Carl Tubbesing, Assistant Director of the National Conference for State Legislatures, was more equivocal in his assessment:

I think the tensions between devolution and pre-emption . . . are sort of always with us, they actually go back to the debates surrounding the adoption of our original Constitution between Madison and Hamilton and Thomas Jefferson. . . I think a lot of what we have been doing in the last decade is still sorting out really what the responsibilities of the State Government should be and what the responsibilities of the Federal Government should be, and some of it goes all the way back to the New Deal . . . we’re still trying to figure out what actually makes the most sense between the two.³²

Temporary Assistance to Needy Families

2.102 The Personal Responsibility and Work Opportunity Act 1995 replaced the Aid to Families with Dependent Children Programme with the Temporary Assistance to Needy Families block grant. The Aid to Families with Dependent Children Programme was a federal programme created in 1935, the first federal move in this area of social policy where States had full responsibility. The Aid to Families with Dependent Children Programme had expanded until Congressional influence over State welfare programmes drastically reduced State discretion in programme design and delivery.³³ By transforming the Aid to Families with Dependent Children Programme into a block grant, the Federal Government was giving back to States much of the autonomy lost through the previous arrangements.

2.103 Aid to Families with Dependent Children was a federal matching grant without a statutory limit on funds with a complex specification of federal laws and regulations. In contrast, Temporary Assistance to Need Families gives States a fixed amount of funds for needy families and replaces the cash payment made to families eligible under Aid to Families with Dependent Children and the employment programme which accompanied it. It is targeted at out-of-wedlock childbearing, single parent childrearing and rising welfare dependency. Federal funding received under Temporary Assistance to Need Families is capped, limited by statute and, under the block grant conditions, the States have considerable discretion in adapting features of Temporary Assistance to Need Families to their social and political situations.

2.104 For the period 1997-2002, the total Temporary Assistance to Need Families grant is fixed at US$16.38 billion per year. The amount of funding received by each State from this fund is determined by federal grants paid during the period 1992-95. States have the authority to carry over the block grant from one year to the next (enabling provision for future expenditure) and for States experiencing high unemployment (6.5 per cent and rising) there is a contingency fund of US$2.5 billion for a five year period.³⁴

2.105 In return, the States must have a least 25 per cent of welfare recipients involved in work activities in 1997. That required rate increases by 5 per cent per year until 2002 when 50 per cent of the welfare population must be in work activities. Failure to reach these rates will incur a reduction in the state’s block grant. During the first year, States falling short of target will lose 5 per cent of funding and face further reductions of 2 per cent for each violation until the reduction in funding reaches a cap of 21 per cent.

2.106 From July 1st 1997 States have been required to collect monthly data and provide quarterly reports and to submit annual reports on the use of funds to cover overheads and administrative costs, on State expenditures on programmes for needy families and on participation by non-custodial parents in work activities and transitional services.

2.107 States have the authority to reduce their welfare spending. Up to 30 per cent of the Temporary Assistance to Need Families block grant may be transferred to the Social Services block grant and to the Child Care and Development block grant. Any reduction on spending is subject to a “maintenance of effort” limit which establishes that at least 75-80 per cent of the States’ own spending during the fiscal year 1994 must be maintained. If a State’s spending falls below this limit that State will automatically suffer a dollar-for-dollar reduction in its Temporary Assistance to Need Families block grant. Furthermore, qualification for the contingency fund (in case of high unemployment) is dependent on a State maintaining its spending at 100 per cent of 1994 levels. Since Temporary Assistance to Need Families funding is capped and linked to quantifiable goals, it is expected that States will move to restrict their welfare policies in the longer term.³⁵

2.108 State discretion is allowed in the design of the programme. States now have the discretion to:

define the family for purposes of eligibility;
set how benefits are related to income;
design the organisational structure for administering their programmes; and
determine eligibility of Temporary Assistance to Need Families recipients for Medicaid.

States can decide to maintain more liberal welfare policies by using their maintenance of effort funds; alternatively, they can adopt stricter welfare policies through programme and funding curtailment. A feature of Temporary Assistance to Needy Families which helps to ensure this State autonomy is the Section 417 of the legislation which reads

No officer or employee of the Federal Government may regulate the conduct of the States under this part or enforce any provisions of this part, except to the extent expressly provided in this part.

Children’s Health Insurance Programme

2.109 The Children’s Health Insurance Programme was contained in the Balanced Budget Act 1995 and is a federal block grant to enable States to deal with the significant problem of uninsured children. Under the terms of the Children’s Health Insurance Programme, States have been granted the flexibility to design their own benefit packages for uninsured children (19 and under) who are not covered by Medicaid and whose family income is below 200 per cent of the poverty line (calculated at US$16,276 in 1997).

2.110 The federal government has committed US$24 billion for the first five years, and funds will be allocated to the States on a matching grant basis, with matching rates varying according to State (eg. 65 per cent in Connecticut and 84 per cent in Mississippi). The actual operation of the grant will be in the form of a block grant.³⁶

2.111 The Federal Government has determined minimum standards over health care benefits and scope of coverage, and has placed limits on premiums and use of deductibles and co-payments. These rules are designed to prevent the States from substituting Children’s Health Insurance Programme funds for current children’s health coverage programmes. As with Temporary Assistance for Needy Families, maintenance of effort provisions apply. Within these guidelines, States have the discretion to:

decide whether to administer their own programmes through State agencies, contract out or subsidise programme provision through private markets;
determine which children can be covered through the application of age limits, confinement of the programme it to certain geographical areas, cap enrolment and have waiting lists etc.; and
determine which providers will participate in the programme, how care will be delivered and what quality standards will apply to providers.³⁷

State plans for the Children’s Health Insurance Programme must be submitted to the Health Care Financing Administration which must include information on how the State will adhere to the grant’s guidelines. By March 1998, eighteen States had submitted plans. Half of these were expanding Medicaid, four were adopting a private plan and five had adopted a private plan-Medicaid combination. Two States, Washington State and Wyoming, have refused federal funds.³⁸

Observation 9:

Role of the States in the federation
As in Australia, changes in programme funding and programme administration in the United States took place in the 1990s, as a result both of budgetary pressures, and pressures from the States for greater involvement in policy decision-making.
It seems that devolution in the United States has had a limited, though practical, effect in reducing the administrative burden on State and local governments. This increased flexibility for the States in programme implementation and administration has not amounted to a large scale reallocation of roles between Federal and State Governments.

Summary of observations

The separation of legislative and executive powers in the United States political system leads to a complex network of intergovernmental relations. These involve both federal and state legislatures and executives.
A number of elements of intergovernmental relations in the United States stand out:
in their activity, States are highly focussed on what they describe as their ‘States’ rights’;
inter-State organisation is a strong focus for states and a number of professional groups exist to facilitate this;
lobbying Washington DC is a major focus of State activity.

As in Australia, the 1990s in the United States saw an emphasis on reform of intergovernmental transfers. However, large scale reform of roles and responsibilities has proved difficult to achieve.

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Endnotes

1United States Census Bureau Internet site: http://www.census.gov/cgi-bin/popclock.

2Marbury v Madison (1803) 5 US 137.

3Meeting Transcript, FSRC, June 24th 1998, Washington DC, (per Senator J Lack and Ms L Burke).

4Meeting Transcript, FSRC, June 26th 1998, Washington DC, (per Mr R Silvanik).

5It seems that the Commission ceased to receive funding from the Federal Government in April of 1996.

6Meeting Transcripts, FSRC, June 26th 1998, Washington DC (per Mr C Griffiths).

7Meeting Transcripts, FSRC, June 26th 1998, Washington DC (per Ms J Lakins-Mello).

8National Governors’ Association Internet site: http://www.nga.org.

9Meeting Transcripts, FSRC, June 26th 1998, Washington DC (per Ms J Lakins-Mello).

10National Conference of State Legislatures Internet site: http://www.ncsl.org.

11Meeting Transcripts, FSRC, June 24th 1998, Washington DC, (per Senator J Lack).

12Council of State Governments Internet site: http://www.statesnews.org.

13Meeting Transcript, FSRC, June 26th 1998, Washington DC, (per Mr R Silvanik).

14Meeting Transcript, FSRC, June 26th 1998, Washington DC, (per Mr R Silvanik).

15New England Governors’ Conference Internet site: http://www.tiac.net/users/negc.

16Coalition of Northeastern Governors Internet site: http://www.coneg.org.

17Southern Governors’ Association Internet site: http://www.southerngovernors.org/

18Western Governors’ Association Internet site: http://www.westgov.org.

19M Laffin, “The heartlands of American government: recent developments in the US states”, Australian Journal of Public Administration, 1995, p 113.

20W Galston and G Tibbetts, “Reinventing federalism: the Clinton/Gore program for a new partnership among the federal, state, local and tribal governments”, Publius, 24 (3) 1994, p 23.

21Ibid, pp 24-26.

22Ibid, pp 26-27.

23Garcia v San Antonio Metropolitan Transit Authority (1985) 469 US 528.

24A Bowman and M A Pagano, “The state of American federalism, 1993–1994”, Publius, 24 (3) 1994, p 1.

25T Gullo and J Kelly, “Federal unfunded mandate reform: a first-year retrospective”, Public Administration Review, 58 (5) Sept-Oct 1998, p 379.

26Meeting Transcripts, FSRC, June 26th 1998, Washington DC (per Mr C Griffiths).

27Gullo and Kelly, above n 25, pp 381-83.

28Meeting Transcripts, FSRC, June 24th 1998, Washington DC (per Ms K Simmons).

29Gullo and Kelly, above n 25, p 386.

30J Kincaid, “The Devolution Tortoise and the Centralization Hare”, New England Economic Review, May/June 1998, p 23.

31Meeting Transcripts, FSRC, June 26th 1998, Washington DC (per Mr C Griffiths).

32Meeting Transcripts, FSRC, June 24th 1998, Washington DC (per Mr C Tubbesing).

33I Lurie, “Temporary assistance for need families: a green light for the states”, Publius, 27 (2) 1997, p 73.

34Ibid, p 75.

35Ibid, p 75.

36Ibid, p 3.

37R Tannenwald, “Implications of the Balanced Budget Act of 1997 for the ‘Devolution Revolution’”, Publius, 28 (1) 1998, p 26.

38 C S Weissert and S F Schram, “The State of American Federalism 1997–1998”, Publius, 28 (1) 1998, p 4.

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