SF4954

Purpose

• The bill proposes a constitutional amendment to Minnesota’s Article XII to restrict the state from imposing requirements on local government units unless the state funds the full expected cost of compliance.

Main Provisions

• Unfunded mandates ban (Sec. 6):

  • The legislature may not pass laws or state agencies may not adopt rules that force a local government unit to start, expand, modify, or run a program or service if doing so would increase local expenditures unless funding is provided to cover the entire expected cost, based on objective evidence and forecasting.
  • If a law or rule imposes unfunded costs, it is unenforceable against the local government to the extent of those costs.
  • Local governments can seek declaratory or injunctive relief if a mandate is violated.
  • The section is intended to be interpreted broadly to stop shifting costs from the state to local governments and to protect taxpayers from higher property taxes caused by unfunded mandates.

• Exceptions to the funding rule (Sec. 7):

  • Some requirements must be followed by local governments regardless of funding:
  • Laws defining criminal offenses or procedures or enforcing criminal laws or procedures.
  • Laws enacted during a declared emergency and passed with a two-thirds vote of both houses of the legislature.
  • Laws or rules required by the federal government to comply with federal law or to receive federal funds.
  • Laws, ordinances, or regulations adopted by a local government unit and approved by voters.
  • Laws or rules that have an anticipated fiscal impact on a local government unit that does not exceed 1% of the unit’s annual operating budget.

Submission to Voters (Ballot Measure)

• The amendment would be put to voters in the 2026 general election.
• Ballot questions outline:
  • Question: Whether the Minnesota Constitution should be amended to prohibit the state from imposing requirements on local government units without funding to cover the cost of compliance, with specified exceptions (criminal laws, emergencies with a two-thirds vote, federal requirements, voter-approved local actions, and negligible cost as of 2027).
  • Yes/No options.
  • Title: State Unfunded Mandates Prohibited.

Significance and Potential Changes to Law

• Creates a constitutional limit on state-imposed mandates that require local spending without accompanying funding.
• Shifts some cost considerations to the state, potentially limiting or delaying new state requirements on local governments unless funded.
• Introduces a process and criteria for exceptions (criminal law, emergencies, federal requirements, locally approved actions, or negligible cost thresholds).
• Requires voter approval for the constitutional change, making it a higher barrier to passage than ordinary legislation.
• Provides local governments with new tools (declaratory or injunctive relief) to challenge unfunded mandates.

Practical Implications

• Local governments would have stronger protection against new state mandates that would raise local costs without funding.
• The state would need to weigh funding for new requirements against the constraint that most mandates must be funded upfront.
• Some state actions could still proceed without funding if they meet the listed exceptions or have costs deemed negligible relative to operating budgets.

Potential Ambiguities or Considerations

• How “objective evidence and forecasting” will be applied to determine costs.
• How the 1% of annual operating budget threshold is calculated and monitored.
• How conflicts between federal requirements and state/local controls are resolved.

Relevant Terms - unfunded mandates - local government unit - expenditures - appropriation / funding - objective evidence - forecasting - declaratory relief - injunctive relief - liberally construed - property taxes - criminal offense - criminal procedure - emergency - two-thirds vote - federal requirements / federal money - local actions - voters / ballot - constitutional amendment - negligible cost - annual operating budget - 1 percent - submission to voters