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Unfunded federal mandates are much discussed these days, but what's the fuss all about? From a citizen's perspective, consider the following fictional character: Judy is a special- education teacher who receives a speeding ticket for exceeding 55 mph on the way to visit a relative in a nursing home financed largely by Medicaid. On returning home, she receives notice of an increase in her property tax bill to pay for a new wastewater treatment plant, the replacement of leaded drinking water pipes, and new buses required by the Americans with Disabilities Act.

These occurrences are the results of just a few of the many federal mandates that require state and localities to take specific actions or comply with strict conditions. Mandates are growing rapidly in numbers and importance, altering the activities of state and local government and affecting the lives of ordinary citizens. Almost all pursue worthy goals, and some address indispensable federal responsibilities. But mandates increasingly cause problems that may outweigh their benefits.Most of the current controversy involves costs. The nation's biggest cities estimated recently that they spent over $6.5 billion on just 10 federal mandates in 1993. Nationally, it is estimated that the annual bill for just environmental mandates will rise to $37 billion by the year 2000.

Mandates encourage Washington to overextend itself. By separating lawmaking from the responsibility to pay, mandates perpetuate the notion that we can do everything we'd like, all at once, at little cost. That's a powerful temptation for conservatives as well as liberals. It's one reason why mandates grew even faster in the 1980s, under Presidents Bush and Reagan, than in the 1960s and 1970s.

Solving the problems caused by federal mandates without preventing their legitimate use is difficult. Legislation sponsored in Congress by Sens. Kemp-thorne and Glenn marks a good beginning, although it may not be enough. Will Congress be deterred from regulatory excesses if it knows the full costs of mandates in advance? We can hope so, but experience to date with similar reforms has not been very promising. The political temptation to "do something" (while letting others pay) is often too strong to resist.

One stronger alternative - requiring federal reimbursement for all mandate costs - sounds appealing but requires further study. Such laws are ineffective in most states that have enacted them, and designing such a program to pay only for legitimate expenses is beyond our current capability. Such a program also might deter some appropriate mandates (such as preventing interstate pollution or protecting civil rights) while disregarding intrusive but inexpensive regulations.

A more promising option in the long run is a "regulatory budget," which would apply the priority-setting discipline of financial budgeting to the regulatory process. Federal agencies would be constrained from issuing rules that exceed their budgeted amount. Although the costs of rules are difficult to measure in advance, such limits would encourage more efficient reg-u-la-tions.

Congress has begun to tackle a serious problem in a responsible way. If it encourages further research and testing of these additional reforms, it could make a good proposal even better.