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report
October 31, 2011
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State and Local Governments
The federal government provides financial support for state and local governments, imposes restrictions on the activities of those governments, and offers incentives for those governments to undertake or not undertake certain activities. The Unfunded Mandates Reform Act (UMRA) ensures that, during the legislative process, the Congress receives information about restrictions on state, local, and tribal governments (and on private entities) known as federal mandates. Specifically, CBO produces mandate statements for each committee-approved bill.
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Full Text
- preemptions
Supplemental Material
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Abstract
This supplement to the Congressional Budget Office’s (CBO’s) series of publications reporting on federal mandates, as defined by the Unfunded Mandates Reform Act of 1995, focuses on preemptions, a type of mandate that would limit the authority of state, local, or tribal governments to apply and enforce their own laws. The report discusses the nature of federal preemptions and identifies preemptive language in legislation considered by the 111th Congress; it also outlines the policy areas most affected by those proposed federal requirements and presents data about other preemptions CBO has identified since 2001.
Highlights
The Unfunded Mandates Reform Act of 1995 (UMRA) requires the Congressional Budget Office (CBO) to review bills approved by Congressional committees and identify federal mandates that the legislation would impose on state, local, or tribal governments. UMRA generally defines such intergovernmental mandates as enforceable duties; CBO interprets that definition as encompassing both positive (required) and negative (prohibited) duties. Some of those intergovernmental mandates take the form of preemptions—typically negative duties that prohibit state, local, or tribal governments from taking some action or that otherwise limit the authority of those governments to apply and enforce their own laws.
UMRA authorizes the use of certain legislative procedures that are designed to make it more difficult for the Congress to pass bills containing intergovernmental mandates without also providing funding to cover the mandates’ costs. In most cases, however, such hurdles are not brought into play because many mandates—even those that might significantly affect the ability of state, local, or tribal governments to exercise their authority in particular areas—would not impose duties that result in significant additional spending or loss of revenues. Such is the case with most preemptions.
During the 111th Congress (2009 and 2010), CBO issued 134 formal mandate statements that identified intergovernmental mandates. Of those, 43 percent identified preemptions—a proportion smaller than that identified in other recent Congresses, when half or more of the mandate statements that CBO issued noted preemptions. However, more preemptions were enacted during the 111th Congress than during other Congresses of the past 10 years. None of those preemptions, in CBO’s estimation, will impose costs exceeding the threshold that UMRA establishes for intergovernmental mandates. That inflation-adjusted marker, which when exceeded permits Members of Congress to invoke rules that may keep legislation from advancing, was $69 million in 2009 and $70 million in 2010.
Brief Comparison of Cost Estimates for Mandates as Prepared by CBO and by Federal Agencies for Selected Regulatory Rules
The Underfunding of State and Local Pension Plans
Abstract
The recent financial crisis and economic recession have left many states and localities with extraordinary budgetary difficulties for the next few years, but structural shortfalls in their pension plans pose a problem that is likely to endure for much longer. This issue brief discusses alternative approaches to assessing the size of those shortfalls and their implications for funding decisions.
Highlights
The recent financial crisis and economic recession have left many states and localities with extraordinary budgetary difficulties for the next few years, but structural shortfalls in their pension plans pose a problem that is likely to endure for much longer. This issue brief discusses alternative approaches to assessing the size of those shortfalls and the implications of those approaches for funding decisions:
- By any measure, nearly all state and local pension plans are underfunded, which means that the value of the plans' assets is less than their accrued pension liabilities for current workers and retirees.
- There are two leading approaches for valuing assets and liabilities, and the reported amount of underfunding varies significantly depending on which one is used.
- Decisions about how to address the underfunding can be informed by the choice between those two measurement approaches, but there is no necessary connection between the information provided by the two approaches and decisions about how much a plan's sponsor should contribute each year.
According to the Public Fund Survey of 126 state and local pension plans, which account for about 85 percent of pension assets and participants in state and local pension plans in the United States, those plans held roughly $2.6 trillion in financial assets in 2009 but had about $3.3 trillion in liabilities for future pension payments. Thus, those assets covered less than 80 percent of liabilities, and unfunded liabilities (the amount by which liabilities exceed assets) amounted to roughly $0.7 trillion. That share of liabilities covered by assets in 2009 was the lowest percentage in the past 20 years. By comparison, the amount of state and local governments' debt that was outstanding at the end of 2009 was $2.4 trillion.
That estimate of unfunded liabilities is calculated on the basis of actuarial guidelines currently followed by state and local governments. Another approach for measuring pension assets and liabilities, which more fully accounts for the costs that pension obligations pose for taxpayers, yields a much larger estimate of unfunded liabilities for those plans in 2009—between $2 trillion and $3 trillion.
In any event, most state and local pension plans probably will have sufficient assets, earnings, and contributions to pay scheduled benefits for a number of years and thus will not need to address their funding shortfalls immediately. But they will probably have to do so eventually, and the longer they wait, the larger those shortfalls could become. Most of the additional funding needed to cover pension liabilities is likely to take the form of higher government contributions and therefore will require higher taxes or reduced government services for residents. Additional funding for pension benefits already accrued is unlikely to come from current workers; state laws and court opinions indicate that efforts toward that end could be successfully challenged in court in the majority of states.
Decisions about the amount and timing of the additional funding for underfunded plans will depend on many factors, including competing budgetary priorities, views on intergenerational fairness, and the amount of risk that plans' sponsors are prepared to take. If the financial condition of state and local pension plans worsened, the federal government might be asked to assist in the funding of such plans. If granted, such assistance would raise the federal deficit and debt, unless offset by higher taxes or lower spending in other areas.
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- May 2013 (2)
- April 2013 (14)
- March 2013 (22)
- February 2013 (10)
- January 2013 (11)
- December 2012 (4)
- November 2012 (10)
- October 2012 (4)
- September 2012 (6)
- August 2012 (5)
- July 2012 (11)
- June 2012 (8)
A Review of CBO's Activities in 2010 Under the Unfunded Mandates Reform Act
Abstract
In this report, which is part of an annual series that began in 1997, the Congressional Budget Office (CBO) reviews its activities under the Unfunded Mandates Reform Act of 1995. The report covers public laws enacted and legislation considered by the Congress in calendar year 2010 that would impose federal mandates on state, local, or tribal governments or on the private sector.
Highlights
The federal government—through laws and regulations—sometimes imposes requirements on state, local, and tribal governments and entities in the private sector to achieve national goals. In 1995, the Congress passed and the President signed the Unfunded Mandates Reform Act (UMRA) to ensure that, during the legislative process, the Congress receives information about such proposed requirements, known as federal mandates, and their costs before enacting a piece of legislation.
UMRA defines a legislative provision as a mandate if that provision, when enacted, would
- Impose an enforceable duty on state, local, or tribal governments or on private-sector entities;
- Reduce or eliminate funding authorized to cover the costs of complying with existing mandates; or
- Increase the stringency of conditions that apply to the distribution of funds through certain mandatory programs or make cuts in federal funding for those programs, if public recipients of those funds lack flexibility to alter the programs.
Duties imposed as conditions of federal assistance or requirements tied to participating in voluntary federal programs, such as programs that require entities to have licenses for grazing livestock on federal land, generally are not considered mandates as defined in UMRA.
UMRA established procedures for providing information to the Congress about proposed federal mandates. The law requires the Congressional Budget Office (CBO) to prepare mandate statements for bills that are approved by authorizing committees. In those statements, CBO must state whether the bill contains any mandates, address whether the direct costs of such mandates would be greater than the statutory thresholds established in UMRA, and identify any funding that the bill would provide to cover those costs. In 2010, the thresholds, which are adjusted annually for inflation, were $70 million for intergovernmental mandates and $141 million for private-sector mandates. If the total direct costs of all mandates in the bill would exceed the statutory threshold in any of the first five fiscal years in which the mandates would be in effect, CBO must provide an estimate of those costs (if feasible) and the basis of its estimate. In some cases, CBO cannot estimate the cost of a mandate—particularly when much of its impact would depend on the nature of the implementing regulations that would be promulgated by federal agencies. If CBO cannot estimate the cost of a mandate, its statement must indicate that such an estimate is not feasible and explain why.
Direct costs are defined in UMRA as amounts that the private sector or state, local, and tribal governments would be required to spend to comply with the enforceable duty, including amounts that states, localities, or tribes "would be prohibited from raising in revenues." Direct costs exclude amounts that those entities would spend to comply with applicable laws, regulations, or professional standards in effect when the federal mandate is adopted. In addition, such costs are limited to spending that would result directly from the enforceable duty imposed by the legislation rather than from the legislation's broad effects on the economy.
Not all legislation is subject to UMRA's requirements. In enacting that law, the Congress recognized that instances might arise in which budgetary considerations—such as who would bear the costs that a law might impose—should not be a key part of the debate about a legislative proposal. Thus, UMRA excludes from its procedures bills and other legislation that, for example, deal with constitutional or statutory rights, implement international treaty obligations, are necessary for national security, or alter provisions of the Social Security Act related to oldage, survivors', or disability benefits. (For further details, see Appendix A, which outlines UMRA's key provisions as they apply to CBO.)
In addition to the procedures UMRA established for providing information to the Congress, the law also lays out procedural rules for the House of Representatives and the Senate to encourage Members to take information about mandates into account when they consider legislation. Those rules are enforced through the use of points of order. A point of order can be raised in the House or Senate against the consideration of legislation if the committee reporting a bill has not published a statement by CBO on intergovernmental and private-sector mandates. In addition, Members of Congress may raise a point of order against legislation that seeks to impose an intergovernmental mandate whose costs exceed the threshold, unless the legislation authorizes or provides funding to cover those costs. If a point of order is raised under UMRA, each chamber resolves the issue according to its established rules and procedures.
CBO prepares a mandate statement for most of the legislation considered by the Congress. In most cases, that statement is prepared after a committee has approved legislation but before the legislation has been considered on the floor of the House or the Senate. Upon request, the agency also provides mandate statements for proposed floor amendments and some conference reports. In some instances, though, as noted in the tables in this report, CBO does not review a mandate before its enactment. That situation may occur when legislation is passed without being considered by a committee; when, after CBO's review, a bill is amended on the floor or in conference to include a provision that contains a mandate; or, in some cases, when a mandate is included in one of the appropriation bills, which CBO does not routinely review for mandates because UMRA does not apply to such bills.
The number of bills or other legislative proposals that contain mandates and the number of individual mandates that appear in proposed legislation generally differ. Because the House and the Senate may consider the same or similar mandates in more than one piece of legislation, the number of bills that contain mandates can exceed the number of individual mandates considered by the Congress in any given year. Conversely, because one bill may contain several mandates, the number of mandates can exceed the number of bills.
The tables in this report identify mandates in public laws enacted during calendar year 2010 and in other legislation considered by the Congress in 2010:
- Table 1 is a tally of mandates in public laws enacted between 2006 and 2010.
- Table 2 is a tally of the mandate statements CBO transmitted between 2006 and 2010.
- Tables 3 and 4 list laws enacted in 2010 that contain intergovernmental and privatesector mandates, respectively.
- Tables 5 and 6 list intergovernmental and private-sector mandates, respectively, that CBO reviewed in 2010 whose costs would exceed UMRA's thresholds or could not be determined.
- Tables 7 and 8 list the bills and proposals CBO reviewed in 2010 that contained intergovernmental and private-sector mandates, respectively.
All of the data in this report are for calendar years. (Although data for spending and receipts in the budget are presented for fiscal years, which run from October 1 through September 30, Congressional legislative sessions generally follow the calendar year; thus, data on CBO's cost estimates and mandate statements are presented as calendar year totals.)
Most of the legislation considered by the Congress in 2010 contained no mandates as defined in UMRA. Of the 474 bills and other legislative proposals reviewed by CBO, 14 percent (64 bills) contained intergovernmental mandates and 18 percent (85 bills) contained privatesector mandates. Moreover, most of the mandates that CBO examined in 2010 would not have imposed costs that exceeded the annual thresholds set by UMRA. Less than 1 percent (3 bills) had intergovernmental mandates with costs higher than the $70 million annual threshold, and 1 percent (7 bills) had mandates whose costs could not be determined. Similarly, CBO estimated that only about 3 percent (14) of the bills reviewed by CBO in 2010 contained private-sector mandates that would have imposed costs greater than the $141 million annual threshold. For 5 percent (23 bills), CBO could not determine whether the costs of their mandates would have exceeded the private-sector threshold.
Similarly, in the 15 years since the enactment of UMRA, most of the legislation considered by the Congress contained no mandates. Of the roughly 8,500 bills and other legislative proposals that CBO reviewed between 1996 and 2010, about 13 percent contained intergovernmental mandates, and about 16 percent contained private-sector mandates (see Figure 1). Also during that period, about 1 percent of the bills contained intergovernmental mandates whose aggregate costs exceeded the annual threshold established in UMRA, and less than 1 percent had aggregate costs that could not be estimated. For private-sector mandates, about 4 percent of the bills contained mandates with aggregate costs above the annual threshold, and 2 percent contained mandates whose aggregate costs to the private sector could not be estimated.
Two public laws enacted in 2010 contained intergovernmental mandates—a total of 7 mandates—with costs that CBO estimates will exceed the statutory threshold: the Patient Protection and Affordable Care Act (Public Law 111-148) and the Healthy, Hunger-Free Kids Act of 2010 (Public Law 111-296). In the 15 years since the enactment of UMRA, only 13 new laws have contained intergovernmental mandates with costs estimated to exceed the threshold.
Over the 15-year period, legislation enacted by the Congress generally contained more private-sector mandates than intergovernmental mandates. Eleven public laws enacted in 2010 contained private-sector mandates—a total of 25 mandates—with costs estimated to exceed the statutory threshold. Those laws included changes to the health care system and regulation of financial institutions, among others. Since 1996, CBO has identified private-sector mandates with costs estimated to exceed the threshold in 75 public laws.
Fiscal Stress Faced by Local Governments
Abstract
This Congressional Budget Office issue brief describes the economic conditions and budgeting practices that can lead to significant budgetary challenges--often termed fiscal stress--at the local level. The brief also reviews the options available to local governments, state governments, and the federal government for addressing such financial difficulty. Last, the brief examines two options that local governments very rarely use: defaulting on their debt or filing for bankruptcy.
Highlights
Local governments--including counties, cities, towns, school districts, and special districts--play a significant role in people's lives and in the nation's economy. In 2009, the expenditures of local governments equaled 8.7 percent of gross domestic product, and those governments employed just over 9 percent of the labor force. That year, local governments as a group cut their spending in real (inflation-adjusted) terms. This year and in upcoming years, they expect to constrain spending and services--primarily because of reductions in state aid and falling revenues. In particular, revenues from property taxes are poised to decline to reflect lower property values. To the extent that local governments address budget gaps by reducing spending or raising taxes, such changes will partially counteract the federal government's fiscal support for the economy.
monthly archive
- May 2013 (2)
- April 2013 (14)
- March 2013 (22)
- February 2013 (10)
- January 2013 (11)
- December 2012 (4)
- November 2012 (10)
- October 2012 (4)
- September 2012 (6)
- August 2012 (5)
- July 2012 (11)
- June 2012 (8)
Supplemental Material
- Blog Post
- Chart Book
Immigration Policy in the United States: An Update
Abstract
This document updates the Congressional Budget Office's February 2006 paper Immigration Policy in the United States. It presents data through 2009 on permanent and temporary admissions of foreign nationals to the United States, the number and types of visas issued, the naturalization of residents, and enforcement of immigration laws—and makes comparisons with 2004, which was the most recent year for which most data were reported in the earlier paper.
Highlights
The Immigration and Nationality Act sets immigration policy in the United States on the basis of four general objectives:
- To facilitate the reunification of families by admitting people who already have a family member living in the United States,
- To attract workers to fill positions in certain occupations for which there are shortages,
- To increase diversity by admitting people from countries with historically low rates of immigration to the United States, and
- To provide a refuge for people who face the risk of racial, religious, or political persecution in their home country.
Immigration Policy in the United States: An Update
View more presentations from Congressional Budget Office.
The law allows foreign nationals to enter the United States to become legal permanent residents (LPRs) or to be in the United States for a specific purpose during a limited stay as temporary residents or visitors. To enter the country as a legal permanent resident, a national of a foreign country must obtain a visa. To enter the country as a temporary resident or visitor, a foreign national must obtain a visa, be a qualifying citizen of Canada or Mexico, or be a qualifying citizen of a country that participates in the Visa Waiver Program. (That program allows citizens of certain countries to travel to the United States for business or tourism for up to 90 days without having to obtain a visa.)
The law also outlines a process by which foreign nationals who have been granted legal permanent residence may apply to become naturalized U.S. citizens. In addition, the law establishes mechanisms to control the flow of legal entry into the United States, prevent the entry of individuals without authorization, and remove individuals who are in the United States without authorization.
Legal Permanent Residents
People granted permanent admission to the United States are formally classified as legal permanent residents and receive a document, commonly known as a green card, that certifies that status. LPRs are eligible to live and work in the United States, own property, and join the armed forces; eventually, they may apply for U.S. citizenship. In 2009, the United States granted LPR status to roughly 1.1 million people.
Foreign nationals who are eligible for permanent admission fall into one of five broad categories. Two of those categories--immediate relatives of U.S. citizens and family-sponsored preferences--are based on family relationships. Under a third category, employment-based preferences, workers with specific job skills are eligible for permanent admission. The fourth category is known as the Diversity Program, which allows individuals from countries with low rates of immigration to the United States to enter under a lottery-based system that provides a pathway for legal permanent residency. Finally, for humanitarian reasons, some foreign nationals are admitted to the United States as refugees or asylum-seekers; one year after obtaining asylum or refugee status, they may apply for LPR status.
People granted permanent admission include foreign nationals who entered the United States as legal permanent residents and those already present in the country who were granted LPR status. Of the people granted LPR status in 2009, about 463,000 (or 41 percent) were first-time entrants to the United States, and about 668,000 (or 59 percent) were already inside the United States. In 2009, foreign nationals who were born in Asia accounted for 413,000 (or 37 percent) of the people granted LPR status, and people who were born in North America (which includes Central America) accounted for 375,000 (or 33 percent).
The total number of permanent admissions in 2009 was about the average for the previous four years but 18 percent more than were granted such status in 2004. (Over the period from 2005 through 2009, the number of people granted LPR status averaged about 23 percent more than the number during the 20002004 period.) The number of immediate relatives of U.S. citizens who were granted LPR status increased by 28 percent from 2004 to 2009, accounting for nearly half of total permanent admissions in 2009. In contrast, the number of people admitted in the familysponsored preference category remained roughly constant from 2004 to 2009 and accounted for 19 percent of admissions in 2009. The number of individuals admitted on the basis of employment preferences decreased slightly between 2004 and 2009 and accounted for 13 percent of admissions in 2009. Admissions under the Diversity Program accounted for only 4 percent of the 2009 total and declined slightly from 2004 to 2009. The number of people admitted for humanitarian reasons, which constituted 17 percent of the permanent admissions in 2009, grew by almost 60 percent from its level five years earlier.
Temporary Residents and Visitors
Temporary admission to the United States is granted to foreign nationals who seek entry for a limited time and for a specific purpose, such as tourism, diplomacy, or study. In addition, foreign nationals who meet certain criteria may be permitted to work in the United States for a limited time that depends on the type of visa they receive. However, foreign nationals with temporary visas are not eligible for citizenship, and to remain in the United States on a permanent basis they would be required to apply for permanent admission.
The federal government reports two types of data on foreign nationals who enter the United States as temporary residents or visitorsthe number of temporary visas issued and the number of temporary admissions. The number of visas issued indicates the potential number of foreign nationals who may seek admission to the United States (excluding a large number who do not require a visa). The number of temporary admissions indicates the number of times that foreign nationals enter the United States, thus counting frequent travelers multiple times.
About 5.8 million visas for temporary admission to the United States were issued in 2009. Twenty-four percent were for temporary residents and 76 percent were for visitors. Although the number of visas issued in 2009 was 755,000 (or 15 percent) higher than the number in 2004, it was down by almost 800,000 (or 12 percent) from the 6.6 million visas issued in 2008. The decrease was most likely a result of the global recession: Fewer visas were issued for business, for tourism, and for employment.
The number of legal temporary admissions was much greater than the number of visas issued. The Department of Homeland Security (DHS) estimates that there were 163 million legal temporary admissions to the United States in 2009. That estimate includes 126 million admissions not requiring visas by Canadians traveling for business or tourism and certain Mexicans with Border Crossing Cards. It also includes about 36 million admissions of foreign nationals who were required to complete an Arrival/Departure Record (known as an I-94 form); about 16 million of those admissions were individuals who entered under the Visa Waiver Program, and the rest had visas. Many individuals had multiple admissions because they departed and reentered the United States during the same year.
The number of legal temporary admissions in 2009 was the lowest since DHS began reporting those data in 2003 and was about 10 percent less than the number admitted in 2004. The numbers presented throughout this document represent the flow of foreign nationals into the United States in accordance with U.S. immigration law. Information on the departures of temporary residents and visitors after their authorized stay is currently not recorded. Official estimates are available only on departures of LPRs.
Naturalization
Legal permanent residents may become citizens of the United States through a process known as naturalization. To become a naturalized citizen, an applicant must fulfill certain requirements set forth in the Immigration and Nationality Act. In general, any legal permanent resident who is at least 18 years old and who has maintained the specified period of continuous residence and presence in the United States can apply for naturalization. In 2009, about 744,000 people became naturalized U.S. citizens, well below the number naturalized in 2008 but close to the average for the past five years. Of the 2009 total, the largest percentages of people were born in Mexico (15 percent) and India (7 percent).
Enforcement of Immigration Policy
In addition to regulating the legal admission of permanent residents and temporary residents and visitors, U.S. law specifies policies for individuals in the United States without legal authorization. People found to be in the United States in violation of immigration law may be allowed to depart voluntarily or may be removed from the country through a formal process of adjudication, which can include the imposition of penalties (such as fines), a prohibition against future entry, or both.
In addition, individuals convicted of certain crimes can be imprisoned before they are removed from the United States.
The Department of Homeland Security is responsible for enforcing immigration law and acts to arrest, detain, return, and remove foreign nationals who violate U.S. laws. In 2009, about 580,000 people who were arrested or detained returned voluntarily under the supervision of a DHS official to their home country or to another country, a figure that is well below the number in recent years. Also in 2009, about 393,000 people were ordered removed, which is 63 percent more than were ordered removed in 2004. Of those 393,000 removals, 107,000 were carried out using an expedited process designed to speed up the removal of people attempting to enter the country illegally. In 2009, about two-thirds of total removals were for noncriminal violations, such as a lack of proper documentation, and the other one-third were for criminal violations of U.S. laws. (Although various estimates exist, there is no way to count the total number of individuals who enter the country illegally or how many of them leave voluntarily.)