State managers must be mindful of the financial impact of their rule-making activities on local units of government, and strive to minimize compliance costs. This is necessary in light of laws enacted as part of Proposition 2 1/2, as well as other state laws and executive orders. The following summarizes the primary requirements, and notes sources available for consultation in gauging the fiscal effect of state regulations on cities and towns.
The Local Mandate Law Auditor's Division of Local Mandates (DLM)
In general terms, the Local Mandate Law provides that new laws and regulations that impose costs on cities and towns will not be effective unless fully funded by the state. Specifically relative to regulations, G. L. c. 29, s. 27C (c) states:
Any administrative rule or regulation taking effect on or after January first, nineteen hundred and eighty-one which shall result in the imposition of additional costs upon any city or town* shall not be effective until the general court has provided by general law and by appropriation for the assumption by the commonwealth of such cost, exclusive of incidental local administration expenses, and unless the general court provides by appropriation in each successive year for such assumption.
G.L.c. 29, s. 27C requires DLM to make the following determinations upon the request of a city, town, regional school district, educational collaborative, or the general court:
Determine whether costs imposed by the commonwealth by any law, rule, or regulation have been paid in full by the commonwealth in the preceding year, and if not, the amount of any deficiency in such payments. G. L. c. 29, s. 27C (d).
Determine the total annual financial effect for a period of not less than three years of any proposed law, rule, or regulation of any administrative agency of the commonwealth. G. L. c. 29, s. 27C (f).
Court rulings over the years have further defined the scope of mandate protection provided to municipalities.DLM staff is available to advise agencies and communities concerning the applicability of the Local Mandate Law to proposed regulatory mandates. Ask for the Division Director at 617-727-0025.
G. L. c. 11, s.6B expanded the Division's mission by authorizing DLM to examine any state law or regulation that has a significant local cost impact, regardless of whether it satisfies the more technical standards for a mandate determination. This law obligates state agencies to provide the information DLM deems necessary to aid in these studies.
The State Administrative Procedures Act
In addition, the State Administrative Procedures Act provides that no proposed rule or regulation may take effect until the relevant agency files a statement of the estimated financial effect of the proposal on both the private and public sectors for the first and second years of compliance, and for the first five-year period.
The Local Government Advisory Commission
State managers should also be aware that the Local Government Advisory Commission (LGAC) is charged with a number of responsibilities pursuant to G. L. c. 3. s. 62. Among these, the LGAC must review proposed legislative and regulatory changes, and apprise lawmakers and regulators of the local government position relative to such proposals.
The Municipal Affairs Coordinating Cabinet
Executive Order No. 480 established the Municipal Affairs Coordinating Cabinet within the Executive Office for Administration and Finance (EOAF) for the overall purpose of strengthening the partnership between state and local governments. Among its duties, this Cabinet must "coordinate the implementation of municipal impact statements on legislative and executive orders." A subsequent directive, Executive Order No. 485, requires agencies to file draft regulations with the EAOF for review prior to public notification.
The Massachusetts Municipal Association
The Massachusetts Municipal Association is an organization of member communities that works to advance the interests of cities and towns, and improve the delivery of public services at the local level.
*A 1993 amendment adds regional school districts and educational collaborative's to the parties protected from unfunded state mandates.