=======================Electronic Edition========================
RACHEL’S HAZARDOUS WASTE NEWS #396
—June 30, 1994—
News and resources for environmental justice.
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Issue===
UNFUNDED MANDATES
An environmental war is being waged quietly in Congress, obscured
within a larger issue called “unfunded mandates.” An unfunded
mandate is a federal program enacted by Congress, but which must
be financed by state or local governments without federal
assistance. Examples include requirements that public buildings
be made accessible to the handicapped, and requirements for
testing drinking water for pesticides. According to the WALL
STREET JOURNAL (8/18/93, pg. A10), citing the Advisory Commission
on Intergovernmental Relations (a federal agency), more than 100
new mandates were passed down from Washington to the states
during the 1980s (compared to just 16 during the 1940s).
The JOURNAL said in an editorial last month (5/18/94, pg. A14)
that, “Public anger about unfunded mandates has been building for
years and is now reaching fever pitch. This year, all seven
organizations representing the key nonfederal players in
government –the mayors, counties, governors, state governments,
cities, school boards and state legislatures –passed identical
resolutions supporting ‘no money, no mandate’ bills in Congress.”
There are now some 20 pieces of legislation floating around
Capitol Hill, all aimed in one way or another at outlawing the
practice of passing legislation that imposes unfunded mandates.
Most often the target is ENVIRONMENTAL unfunded mandates.
The “unfunded mandates” argument does have merit, from the
standpoint of local government. Over the past 40 years, Congress
has cut federal taxes on the wealthy and on corporations, thus
pushing a larger and larger tax burden onto state and local
governments. In 1950 all state and local tax collections
amounted to 45 percent of federal tax collections. Eleven years
later, in 1961, the figure had edged up to 50 percent. In 1980
all state and local tax collections reached 64 percent of federal
tax collections; 11 years later, in 1991, that figure has surged
to 82 percent. [1]
A new book by two investigative reporters at the PHILADELPHIA
INQUIRER, Donald L. Barlett and James B. Steele, has documented
how Congress has shifted the tax burden from the wealthy and
corporations onto the middle class and the working poor. They
document, for example, that Chase Manhattan Corporation, the
parent corporation of Chase Manhattan Bank, in the 2-year period
1991 and 1992 had net income (after expenses but before taxes) of
$1.5 billion. Chase paid $25 million in U.S. taxes, for a tax
rate of 1.7 percent, even though the official corporate tax rate
at the time was 34%. Texaco, the oil company, with before-tax
net income of $2.7 billion in 1991 and 1992, paid $237 million in
U.S. taxes, a tax rate of 8.8 percent. Ogden Corporation, which
sells incinerators for solid waste (among other things), reported
net income before taxes of $217 million in 1991 and 1992 but
Ogden paid less than $200,000 in U.S. taxes, for a tax rate below
1 percent. Meanwhile, the average family making $30,000 to
$40,000 per year paid federal taxes at an average rate of 10.6
percent in 1991 and 1992. [2] In 1954, corporations paid 75 cents
in taxes for every dollar paid by individuals and families; in
1994 they will pay about 20 cents in taxes for every dollar paid
by individuals and families. [3] As Barlett and Steele document
thoroughly, Congress has created two tax laws –the privileged
person’s tax law, and the common person’s tax law.
As we have seen, Congress’s welfare-for-the-wealthy tax program,
combined with unfunded mandates, has had the effect of increasing
the tax burden on state and local governments.
Unfortunately, state and local governments have mimicked
Washington and have provided their own tax breaks for the wealthy
and for corporations –thus saddling the middle class and the
working poor with an increasing share of the costs of government.
At the state level, corporate taxes have dropped during the last
30 years. The difference has to be made up from property taxes,
sales taxes, wage taxes, and other levies that strike hardest at
the middle class and the working poor. For example, in New York
in 1961, corporate income taxes accounted for 13 percent of all
tax revenues; by 1991, it had fallen to 7 percent. In Wisconsin
in 1961, corporate income taxes accounted for 13 percent of the
state’s total tax revenues; in 1991 it was only 6 percent. In
1961, South Carolina derived 9 percent of its total tax
collection from corporate income tax; by 1991, it derived less
that 4 percent. [4]
The only real winners in this picture are the wealthy and
corporations who have found their tax burden lifted. Cynically,
the wealthy and corporations are the most vocal proponents of
federal legislation to end “unfunded mandates.” Do they really
want federal funding for federally-mandated government programs?
No. THEY SEEK AN END TO GOVERNMENT PROGRAMS. [5]
They are
betting that, if a law were passed requiring the feds to ante up
the full cost of every federally-mandated program, the feds
would cut programs rather than raise taxes on those who can best
afford higher taxes, namely wealthy individuals and
corporations. Congress is unlikely to raise taxes on the
wealthy because it costs millions to get re-elected and the only
reliable source for that kind of money is the wealthy and
corporations: you don’t bite the hand that feeds you, at least
not if you hope to get fed again.
This is a point worth emphasizing, because it is the chief means
by which the wealthy control politics in the U.S. In 1992, the
average U.S. senator spent $3.9 million campaigning for
re-election. [6] This means that each senator had to raise an
average of $12,600 each week for 312 straight weeks (6 years) to
pay for his or her re-election bid. Where do you get that kind
of money without becoming beholden to wealthy individuals and
corporations? You don’t.
Unfortunately, the “unfunded mandates” argument has now been
seized by the anti-environmental movement in the U.S., a movement
funded by global corporations who convince embattled and
befuddled grass-roots citizens to become advocates for their
corporate views. You first read about it in the NEW YORK TIMES
March 24, 1993: “After the city [of Columbus, Ohio] issued a
report on its problems, all of a sudden Columbus’s leaders were
joined by hundreds of city officials, state leaders, and many
private homeowners across the country as they advocate a cause
that until now big business has been arguing most forcefully:
that many of the nation’s environmental regulations bring
enormous expense for little real benefit.” The TIMES went on:
“Now nearly 1000 other cities have asked to see the report. And
prompted by the Columbus study, the National League of Cities has
made updating the nation’s environmental laws –and through that
reducing costs –one of its top five political priorities in
Washington…” [pg. A16].
The Columbus Report was written by Michael J. Pompili, an
official with the Columbus health department, and published in
May 1991. The Ohio League of Cities promptly put Mr. Pompili in
charge of a larger project to study the costs of unfunded
environmental mandates in eight Ohio cities. In September 1992
this project produced The Ohio Report, as it has come to be
known. [7] The Ohio Report has become famous, at least among
anti-environmental activists and politicians.
The Ohio Report says that unfunded environmental mandates were
killing local governments in Ohio, or that’s what people THINK
the Ohio Report says. The report estimated that unfunded
environmental mandates would cost 8 Ohio cities a whopping $2.85
billion during the decade 1991-2001. This enormous
cost-projection was picked up enthusiastically by the “sagebrush
rebellion” (followers of James Watt, who was Ronald Reagan’s
first secretary of interior) and its descendants, the so-called
“wise use” movement (the anti-environmental movement that
cynically uses grass-roots people as shills for corporate
mining, ranching and logging interests in the western states).
The Ohio Report has been widely quoted because it is chock full
of numbers, charts, and graphs. It appears to be factual.
Unfortunately, until recently almost no one seems to have
actually read the Ohio Report.
Now a well-known researcher has looked carefully at the Ohio
Report and has found that it badly misrepresents the costs of
environmental unfunded mandates. “The ‘Ohio Report’ is more
fiction than fact,” says David Sarokin of the Public Data Project
in Washington, D.C. [8] The Public Data Project is an advocacy
organization promoting citizen access to information about social
and environmental impacts of corporations. “The conventional
wisdom on unfunded mandates is all wrong,” says Sarokin. In his
analysis of the Ohio Report, Sarokin reveals that report really
shows that environmental unfunded mandates are costing people at
the local level anywhere from $8 per person per year to a maximum
of $103 per person per year –not thousands of dollars per person
per year.
The Ohio report presented its data in terms of “costs per
household per decade.” In most Ohio cities, a household was
taken to mean 3 people. This way of presenting the data
multiplied the annual per capita costs by 30, making them appear
huge. Aggregating the cost data has been used effectively by
others promoting an anti-environmental message: “The tab for
unfunded mandates is staggering,” NEW YORK NEWSDAY’S Glenn
Kessler said recently. [9] For instance, Kessler says, in 1993
New York City spent about $475 million to comply with seven
federal laws including the Clean Water and Clean Air Acts. What
Kessler fails to point out is that New York has 13 million
residents, so $475 million represents only $37 per person per
year –not a huge price to pay for 7 major laws protecting the
environment, if imperfectly, from uncontrolled dumping by
corporate polluters.
                
                
                
                
    
–Peter Montague, Ph.D.
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[1] Donald L. Barlett and James B. Steele, AMERICA: WHO REALLY
PAYS THE TAXES? (New York: Simon and Schuster, 1994), pg. 293.
[2] Barlett and Steele, cited above, pgs. 144-146.
[3] Barlett and Steele, cited above, pg. 23.
[4] Barlett and Steele, cited above, pgs. 299-302.
Descriptor terms: unfunded mandates; laws; regulations;
congress; legislation; taxation; taxes; tax rates; donald l.
barlett; james b. steele; chase manhattan; texaco; ogden;
columbus, oh; keith schneider; ny times; philadelphia inquirer;
national league of cities; ohio report; anti-environmental
movement; wise use; sagebrush rebellion; james watt; ronald
reagan; david sarokin; public data project;