The Government Finance Officers Association (GFOA) takes note of the fact that state and local governments have been affected greatly by the massive extension of federal controls and standards and that regulatory review and analysis has insufficiently recognized and considered the intergovernmental effects of regulations.

The Regulatory Flexibility Act of 1980 provides guidelines to federal agencies to tailor regulatory and information requirements to the scale of governmental jurisdictions subject to regulation. The purpose of the Act is to encourage agencies to utilize innovative administrative procedures in dealing with small governmental bodies that otherwise would be adversely affected by federal regulations. In general, the Act provides that if a rule will have a "significant" economic impact on a substantial number of small entities, "then, in effect, an agency must explain the rationale for the rule and solicit comments from affected parties."

Executive Order No. 12291 was issued in 1981 to reduce the burden of regulations and to increase agency accountability by providing Presidential oversight of the regulatory process. In general, the Order requires "agencies" to consider the potential costs and consequences of proposed government action, and to contemplate several alternative approaches to accomplish regulatory objectives.

The Government Finance Officers Association recommends that the full costs to states and local governments of implementing all federal legislation be considered by Congress and the Administration because federal regulations have placed significant fiscal burdens on state and local governments. The GFOA urges the adoption of measures to reduce the cost burdens of complying with federal regulations by:

• reimbursing state and local governments for the direct costs they incur in complying with new regulations,
• requiring a reduction in existing costs either by reimbursement of the costs and/or a reduction of the regulatory requirement, and
• requiring the President to prepare an annual report estimating total costs incurred by state and local governments in complying with federal regulations.

Further, the GFOA recommends that Congress and the Administration study the degree and methods of compliance with present requirements to limit excessive regulation of state and local governments and that the results of such study be made publicly available.

The GFOA also supports the adoption of appropriate procedures to authorize federal officials to meet with representatives of states and local governments during the preparation of regulations and prior to their initial publication.

• Publication date: April 1984