Unfunded state mandates cost local governments

By Chelsea Stevenson

In Virginia, if a police officer, firefighter or other public safety official is killed or becomes disabled in the line of duty, the spouse is covered by insurance benefits for life and the children are covered until they finish college.

The legislation, called the Line of Duty Act, mandates that municipalities pay the premiums to provide this insurance. Before this year, the state funded the total premium, but legislators decided they did not have the funds to do so and the full responsibility is being passed to localities. Local jurisdictions have had to carry this insurance since 1972.

“We have no choice as to whether we want to implement the program,” said Lexington City Manager Jon Ellestad. “It is a mandated benefit.”

City officials have long complained about unfunded mandates in general. But this year, the mandates are hitting local budgets harder. Cuts in state aid have created new expenses in programs that can’t be abandoned because they fall under state regulation, programs such as Line of Duty insurance for public safety workers or safe disposal of solid waste.

The burden of unfunded mandates dominated the discussion at a semi-annual intergovernmental meeting of regional leaders earlier this month.

On Nov. 9, 19 officials of the county, Lexington and Buena Vista joined state Sen. Creigh Deeds (D-25th District) and Del. Ben Cline (R-24th District) at Virginia Military Institute’s Moody Hall.

Lexington officials expressed the most concern at the meeting. This year, for example, the city paid $13,000 in insurance premiums under the Line of Duty law, but the cost did not cover premiums for Lexington officers or their survivors. According to Connie Jones, the Coordinator of the Line of Duty Act, the insurance premium that the state paid this year is for officers employed by the Commonwealth only.

Another mandate presented at the meeting was the 1993 Comprehensive Services Act. This requires that localities provide services to at-risk youth who suffer from emotional and developmental problems.

The number of children, who benefit from the act, varies year to year, so there is no set formula, said Lexington Mayor Mimi Elrod.

City Manager John Ellestad says city must pay for state-required programs. (Photo by Chelsea Stevenson)

Local government officials who call this a “costly program” said that in the past, the cost was shared by localities and the state. Recently, the state sent a letter to localities indicating that it was not going to pay its portion, which according to Ellestad, is usually $60,000 to $70,000 for Lexington.

But with the state cutting its portion of funds, this mandate, like the Line of Duty Act, is causing an increase in revenue.

Ellestad said the reason this burden is being shifted to localities is because the state is unwilling to raise taxes.

“Localities have limited ways to raise revenue,” Elrod said. “That means we have to raise taxes and in Lexington that means property taxes.”

The area’s representatives in Richmond were glum about solving this problem. Mandates that force local funding for public goods are always a “gimmick” used to balance the state budget, Deeds said at meeting. But he didn’t offer much hope that the state would back down.

“I wish I could be more optimistic about the budget,” said Deeds, one day after his re-election. “But at this point, it is just very difficult to do that.”

Cline identified other “gimmicks” of past state budgets, such as giving aid and then taking it back, or shifting money from retirement funds. But he said the state legislature is renouncing those tricks. He agreed that the state budget will remain tight, thanks in part to the reduction in federal stimulus money.

“We’re going to see recognition of limited revenues,” Cline said. “We can’t do the niceties any more. We have to do the necessities. So we’re going to have to cut back.”