Senate Bill 2205

AN ACT TO CREATE THE "REFORM HOW FEDERAL GRANTS ARE PROVIDED TO THE STATE ACT"; TO REQUIRE ANY DEPARTMENT, AGENCY OR OFFICIAL OF STATE GOVERNMENT, WHEN APPLYING FOR OR RENEWING A GRANT AGREEMENT, TO PROVIDE TO THE GOVERNOR, THE DEPARTMENT OF FINANCE AND ADMINISTRATION, AND TO THE JOINT LEGISLATIVE BUDGET COMMITTEE A COST-BENEFIT ANALYSIS AND A LIST OF COMPLIANCE MANDATES ASSOCIATED WITH THE GRANT; TO REQUIRE THE GOVERNOR TO APPROVE THE SUBMISSION OF A GRANT APPLICATION; AND FOR RELATED PURPOSES.

WHEREAS, the Framers established, and the states ratified, the Constitution of the United States of America for purposes of protecting our rights and ensuring that citizens direct the course of government; and

WHEREAS, in order to preserve liberty, the constitutional structure rests on a system of dual sovereign governments; and

WHEREAS, under that structure, the federal government is intended to have limited powers, with the broader, residual powers being reserved for the states or the people; and

WHEREAS, in denigration of that structure, federal assistance to a state in the form of federal grants requires the state to surrender such powers to the federal government in exchange for federal funding; and

WHEREAS, many such federal grant programs require the state to provide matching state funds and additional resources and to conform its policies and programs to those preferred by the federal government; and

WHEREAS, contrary to popular opinion, federal grant money is not free money to the state. When such federal grant programs become unfunded once the grant period ends, it falls upon the state to finance the federally imposed programs; and

WHEREAS, such unfunded federal grant programs result in permanently larger state government spending that must be financed by permanently higher levels of state taxation (specifically, the Mercatus Center found that every additional dollar in federal grants stimulates a permanent increase in state and local taxes of 33–42 cents); and

WHEREAS, the federal government often subverts the authority of the state by entering into grant agreements directly with state agencies without the knowledge and/or consent of the state Legislature or Governor; and

WHEREAS, that breakdown in the state constitutional structure negates political accountability and leaves the state in a poor position to negotiate the terms of the grant agreement with the federal government; and

WHEREAS, the authority to control taxation and appropriations and to establish laws governing state programs and policies is vested in the Legislature; and

WHEREAS, such authority is undermined if state agencies are allowed to obligate state resources or adopt federal policies and priorities independent of executive or legislative control; and

WHEREAS, it is prohibited for any state employee, state agency or state agent to apply for any grant or to enter into any agreement, including, but not limited to, cost-sharing agreements and grants, which obligates Mississippi to any explicit or implied maintenance of effort requirements without the express prior consent of the Legislature. Further, the Legislature establishes the following process for state agencies to follow; NOW, THEREFORE,

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. (1) This act shall be known and may be cited as the "Reform How Federal Grants are Provided to the States Act."

(2) As used in this act, "local government" means any unit of government within a state, including a county, municipality, city, town or village.

(3) Any department, agency or official of state government applying for or renewing a grant agreement, either as the recipient or sub-recipient of the grant, shall, at least sixty (60) days before submitting the grant application, provide the following to the Governor, the Department of Finance and Administration, and the Joint Legislative Budget Committee:

(a) Legal basis. State agency must provide the authorizing state statute for the proposed grant;

(b) Cost-benefit analysis. All costs and benefits will be reported by the state agency as either quantified and monetized, quantified but not monetized, or not quantified. In addition to a clear statement of whether the benefits of the proposed grant will exceed its costs, the evaluation must include, but may not be limited to, the following criteria:

(i) Estimated compliance costs. Any direct or indirect costs associated with the implementation of the grant to the state, the grant recipient and local government, with projections covering at least ten (10) years after the expiration of the grant period;

(ii) Estimated benefits: Any direct or indirect benefits associated with the implementation of the grant to the state, the grant recipient and local government, with projections covering at least ten (10) years after the expiration of the grant period;

(iii) Estimated effect on revenue. The state agency must identify any sources of revenue affected by the proposed grant and the estimated increase or decrease in revenues or expenditures of state and local government that would result from the implementation of the proposed grant, including the costs necessary to enforce any rules associated with the grant;

(c) Termination of grant. The state agency shall make a written determination as to whether the programs, policies or practices implemented under the grant will be continued after the grant period expires. If the state agency determines the programs, policies or practices implemented under the grant will continue after the grant period expires, it shall identify the revenue source for any costs identified under subsection (3)(b);

(d) The impact on state and local policy, including any resulting line of accountability or transfer of governing control from state or local officials to any entity inside or outside this state, whether the federal government, a private corporation or association, or any other entity;

(e) The purpose and effect of the grant program, including its effect on and interrelationship with any existing program or policy currently operating within this state;

(f) All compliance mandates, both existing and new, and policy directives associated with satisfying the terms of the grant; and

(g) Any laws that must be passed or rescinded to comply with the terms of the grant, including budgetary considerations.

(4) (a) The Department of Finance and Administration shall provide a report on each grant to the Governor and the Legislature by the end of thirty (30) calendar days after the submission required under subsection (3) of this section.

(b) The report shall include an assessment of the agency's compliance with procedural steps required by subsection (3) of this section and an assessment of whether the grant imposes any new limits or mandates on private sector activity.

(c) The grant applicant shall cooperate with the Department of Finance and Administration by providing information relevant to the report under subsection (3) of this section.

(d) All grant applications and reports required under this section shall be recorded in a public database managed by the Department of Finance and Administration.

(5) No grant shall be submitted to the grant-making entity for application unless the Governor provides written consent. At the Governor's discretion, he or she may allow the grant applicant to revise and resubmit the grant application for the Governor's reconsideration.

(6) All laws and parts of laws in conflict with this act are hereby repealed.

SECTION 2. This act shall take effect and be in force from and after July 1, 2019.