The Thicket at State Legislatures

The Buzz: What the First 100 Hours Means to States

By Bill Wyatt

The buzz in Washington this month has been all about the first 100 hours - the Democrats' first 100 hours in control of the U.S. House of Representatives.  The new speaker and her leadership team set an ambitious agenda which included ethics reform, homeland security, the minimum wage, higher education costs and much more.

Perhaps to no one's surprise, they used their 'honeymoon period' effectively and enacted all they set out to accomplish (within 100 legislative hours NOT real hours).  Bills on the minimum wage, student loans, energy alternatives and prescription drug pricing among now await the Senate's action.  But what should states expect from this 100 hour flurry of activity?

NCSL's chief congressional lobbyist Michael Bird says Congress' ambitious agenda may have broad implications for states.  Some implications may be a bit tough for state legislators to swallow.  Listen to Michael's insight on the latest episode of the Buzz.

The Buzz: Podcast on Real ID

by Gene Rose

States will only have to overcome two obstacles to meet a federal deadline to standardize the drivers' licenses of all residents by May 2008: the lack of adequate funding and the absence of specific regulations. This situation comes as the result of federal approval of the Real ID Act. We like to credit states for being innovative and, in this case, they will have to be particularly so.

Today's podcast on standardized licenses (6 minutes, 36 seconds) continues our special series of the top 10 issues facing state legislatures in 2007. The straight story comes from NCSL's Molly Ramsdell, who represents state legislatures' budget and revenue interests -- as well as its policy on Real ID -- on Capitol Hill. She explains what's at stake for states and whether there is any movement in Washington, D.C. to meet states' concerns.

Tomorrow, our special 10-part series continues with a look at obesity issues. In case you missed them, listen to our previous podcasts on budget pressures (6:25), immigration (6:35), universal health care (7:04), energy and environment (6:59) and sex offenders (6:49).

The Buzz: Special Podcasts on Top 10 Issues Begins

by Gene Rose

Today, NCSL launches a new podcast called "The Buzz @ State Legislatures." We begin with a 10-part series on what we see as the top public policy issues state legislatures will debate this year. (Read our press release for the entire list.) Each weekday over the next two weeks, we'll provide a podcast featuring an interview with NCSL experts that track those issues.

Since nearly every issue depends on funding, our series begins with an interview with NCSL's Fiscal Affairs Program Director Corina Eckl. In this podcast on budget pressures, listen to find out what the "stealth" issue is for state legislative fiscal directors and why there is less reliance on fees, gaming and creative financing as states produce their budgets for the 2008 fiscal year. Eckl also sees some moves for tax relief with a focus on property taxes.

Tomorrow, we'll take a look at our number one issue, immigration.

Follow the Money

by Gene Rose

State budgets are stable for the near term, but federal actions and looming issues with costly price tags will present state legislatures with long-term fiscal challenges and “tremendous pressure” on discretionary programs. NCSL Executive Director William Pound and Fiscal Affairs Program Director Corina Eckl offered this assessment of state budgets at NCSL’s StateVote meeting today.

Data collected by NCSL’s fiscal program shows that appropriations will increase 7.5 percent in the current fiscal year, but revenues will only increase 3.1 percent, with Medicaid and overall health costs continuing to be the biggest driver in state budgets. The problem, Eckl says, is the options for states to deal with fiscal pressures are shrinking.

Issues presenting fiscal pressures on states include funding for K-12 education, Medicaid, and infrastructure programs. Eckl says pension funds are the “stealth issue” of state budgets, with many states concerned they do not have the funds to pay state employee retiree benefits. Some states, she says, are appropriating one-time payments to shore up these funds.

Pound says states are concerned about future revenue growth. Generally, states have antiquated tax systems based on goods, rather than services. They also tend to be heavily reliant on one major tax source and are facing declining consumer confidence, the effects of high energy prices and moderating home equity values.

NCSL will be releasing an update to its state budget analysis at NCSL’s Fall Forum in San Antonio next month.

The Inconvenient Truth About State Budgets

by Corina Eckl

Much has been made about the current state fiscal situation and robust revenue performance of late.  But is this much ado about nothing?

It's absolutely accurate to say that state fiscal conditions have improved since the latest fiscal crisis.  According to the Rockefeller Institute of Government in Albany, state revenue shows broad strength, and NCSL's latest fiscal report shows that state year-end balances are rising.  But today's situation needs to be put into a broader context:  where states have been and where they're headed.  If the past is the best predictor of the future, states have a lot to be worried about. 

While the most recent economic downturn wasn't especially prolonged or deep by historic standards, it took a harsh toll on states. The astounding revenue collections that marked the late 1990s took a nosedive in 2001, leaving many states with year over year revenue losses.  Many state officials reported the worst revenue situation since the Korean War or World War II.  States with high reliance on personal income taxes were particularly hard hit.  And because states operate under balanced budget requirements, lawmakers had to make difficult decisions.  They cut spending nearly across the board, delayed or canceled infrastructure projects, postponed maintenance, delayed payments to schools, tapped reserves and, to a lesser extent than in previous recessions, raised taxes and fees. 

Arizona Legislature Prevails

by Jan Goehring

It's a win for the Arizona Legislature and an interesting look at the interactions of the three branches of government.  "Common sense and the Constitution won in this case," said House Speaker Jim Weiers. "The Legislature is not going to tolerate power grabs by any governor, Democrat or Republican," he added according to an Arizona Republic story.

In the Forty-Seventh Legislature v. Napolitano, the Arizona Supreme Court found that the Governor exceeded her line item veto power when she vetoed a portion of a bill that related to state employee compensation. The opinion, issued September 12, 2006, states that the section in question "does not set aside a defined amount of public revenue from any specific funding source" and is not subject to line item veto power.

The Legislature, by separate vote in each chamber, authorized its presiding officers to file a suit on behalf of the Legislature to challenge the validity of the veto. The court first considered if the case posed a legal or political issue and found that the question of whether the constitution permitted the Governor to use her veto power presented a purely legal question. It then determined the Legislature had standing to bring the action based upon the vote authorizing the challenge to the veto. Also, if the line-item veto was invalid, the "Legislature's right to have the votes of a majority given effect has been overridden and the Legislature, as an institution, has sustained a direct injury to its authority to make and amend laws by a majority vote."

The Governor had argued that the Legislature's failure to try to override the veto precluded court action because they failed to exercise that remedy. The argument didn't persuade the Court. "[T]he Legislature should not be put to the task of attempting to override an invalid veto," according to the ruling.

NCSL filed an amicus brief in support of the Legislature.

As FY '06 Ends, N.J. Government Shuts Down

by Nicole Moore

With Independence Day on a Tuesday this year, lots of Americans are currently enjoying Day #3 of a four-day weekend. Not so for many state workers in New Jersey. They're off work, but they're not on vacation. They're on furlough because Governor Jon Corzine on Saturday shut down the government after no deal could be reached on the state budget and the fiscal year came to an end.

New Jersey faces a $4.5 billion budget gap and legislators and the governor are at odds over a sales tax increase. Go to the Star Ledger's blog for the latest information on the closure.

Down to the Wire on State Budgets

by Karl Kurtz

This Saturday marks the beginning of Fiscal Year 2007 for most states.  Will all of them have enacted budgets for the new year by then? Here's a rundown and links to stories on the states that are coming down to the wire.

In the last 10 days, budgets were passed, or at least deals reached, by legislatures in Arizona, New York, Oklahoma, Rhode Island, and Virginia.  Oklahoma and Virginia acted in special sessions that had to be called because of budget impasses in regular sessions earlier in the year.

Democrats and Republicans in the California Legislature announced just today that they have reached an agreement.  If the deal holds, they plan to vote by July 1.  Delaware and Pennsylvania are on track to complete their budgets this week.  In North Carolina, which has sometimes missed the July 1 deadline in recent years, lawmakers are hammering out a final deal and hope to be finshed by Friday. 

We couldn't find any newspaper stories to link to in Massachusetts, but the budget is in conference committee and is expected to be completed this week.  In Michigan, where the new fiscal year doesn't begin until Oct. 1, our contacts are optimistic about finishing the budget by the fourth of July.

New Jersey is another story. Facing a budget gap of $4.5 billion--the worst budget crisis of any state--legislators are at odds over a sales tax increase.  According to insiders, the governor is threatening a budget shutdown if the budget isn't passed by July 1.  Stay tuned on this one.

Thanks to my colleague Corina Eckl for help in compiling this information.  Have we missed any other states where budgets have not yet been enacted?  Let us know.