Federal dollars are a persuasive lobby

Most of the laws adopted by legislatures in the various states are based on political or special-interest needs that arise in those states. But there's another batch of laws that states are compelled to adopt: laws the federal government says you have to pass.

These federally mandated laws are, of course, tied to money -- usually a lot of money. The Missouri Legislature has wrestled with tougher laws on seat belts and blood-alcohol content in an effort to preserve precious highway funding, for example.

During this year's regular session, the legislature passed another law whose only purpose is to comply with a federal mandate and to protect the state's employers from having to pay nearly $1 billion in additional federal taxes. Not a single Missourian is affected by the new law -- which may be part of the reason the state had put off official action, requiring two extensions of a federal deadline.

Here's what happened:

Employers are required to make quarterly payments into the state's unemployment-insurance fund. When workers successfully file claims for unemployment compensation, their checks are drawn from this fund.

But the federal government says American Indian tribes don't have to make the quarterly payments. Instead, tribes that operate businesses and have employees only pay into the fund when a successful claim is made.

Here's the catch for Missouri: There are no federally recognized American Indian tribes in the state.

Nonetheless, the U.S. Department of Labor is requiring states to change their laws to provided for the tribal exemption. It doesn't matter to the feds whether or not there are tribal employers in a state.

Had the Missouri Legislature not acted this year, the federal government -- which isn't granting any more deadline extensions -- would have canceled $990 million in unemployment insurance tax credits to Missouri businesses. This would have increased the cost of providing unemployment insurance to $7,000 for each employment, up from about $56 a year.

So it obviously made sense to legislators to pass the law to satisfy the federal government, even though the protection of the new law doesn't apply to anyone in the state.

States are beleaguered by federal mandates. The worst kind is the unfunded mandate in which the federal government requires states to provide services or benefits but provides no funding to accomplish those goals.

In this case, there were other perils involved if the state didn't pass the federally required law. Missouri would have lost its ability to borrow money to cover cash-flow problems when unemployment-compensation claims exceed the revenue available in the state fund to pay those claims. And without the bill, the state might have lost millions of grant dollars the state receives for implementing its unemployment-insurance program.

Financial calamity has been avoided. Federal dollars have once again proven to be a persuasive force in our state legislature. And if any American Indian tribes decide to do business in Missouri, the state is ready to exempt them from unemployment-compensation requirements that must be met by every other employer.