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Economic Recovery Plan will Cover Less Than Half of Projected State Deficits

Economic Recovery Plan will Cover Less Than Half of Projected State Deficits

Thursday, January 29, 2009

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Growing-Economy

BY Nathan Newman

 

Economic Recovery Plan will Cover Less Than Half of Projected State Deficits

While groups like the American Legislative Exchange Council (ALEC) have condemned federal help for state governments in the recovery package, most analysts recognize that state spending is going to be the most immediate stimulus available for reviving the national economy.

Unfortunately, as a new study by the Center on Budget and Policy Priorities details, while state deficits are projected to be $350 billion over the next 30 months, the House recovery plan just approved includes only about $150 to $155 billion that can be used to address those shortfalls, meaning that 55% to 60% of projected state deficits will remain.  The key parts of the just-passed bill that do address those operating shortfalls include:

  • $88 billion in Medicaid funding
  • $65 billion or more of a new “Fiscal Stabilization Fund" specifically targeted for state and local governments
  • A few billion from other funding streams, such as education and public safety, much of which will go to local governments

This federal support is obviously welcome and it will help many states avoid more drastic cuts and address remaining shortfalls with some combination of the use of rainy day funds, revenue increases, closing tax loopholes, and more modest cuts in some programs than were projected.  On the other hand, any pressure on states to cut spending defeats the purpose of stimulating the economy, since state spending is some of the most immediate money to enter the economy or leave it if states are forced to suspend programs. So state leaders are more than justified in pushing for more aggressive aid to the states, either in the final recovery bill or in other federal spending initiatives.

The Center for American Progress has prepared an interactive map showing state-by-state allocations where money from the House bill is going, including both the direct aid to current operating budgets and funds for additional infrastructure and other projects.

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Growing-Economy

BY Nathan Newman

 

Why Are the Feds Bailing Out the Highway Privatization Industry?

In past Dispatches, we've highlighted the potential and actual taxpayer ripoffs hidden in the industry siren song of selling off public assets like highways.  States gets what looks like an attractive upfront payment, but lose in the long-term from lost toll revenue and lost democratic control of transit decisions.

The credit crisis has undermined the financial players who had been leading the charge on privatization, so they are looking for a bailout under the federal recovery plan.  As reported by Reuters, Morgan Stanley, Merrill Lynch and a number of other firms pushing "public-private partnerships" -- the industry's preferred euphemism for privatization -- wants part of the stimulus package to flow to them.  Their wish list includes federal rules to push privatization of airports and highways, along with a national infrastructure bank to subsidize loans for private sector deals.  

And the privatization industry appears to have already won one item on their wish list in the federal bill -- an obscure but profitable loophole exempting profits from "private activity bonds" issued by local governments used for infrastructure from the federal alternative minimum tax.  

As Tom Frank, the lone progressive on the Wall Street Journal editorial page argued this past week, subsidizing private toll roads is just part of the root ideological problems that got us into the current economic mess in the first place:

One of the reasons our roads and bridges are falling apart is public hostility to tax increases -- gasoline taxes in particular. This attitude, in turn, is largely the product of the generalized distrust of government that conservatives have stoked for decades.  So we've starved the beast for years, and now the utterly predictable consequences have come to pass.

Instead of giving more tax breaks to the financial sector, it would be far better for the feds to increase direct support to the states to fund new transit projects.  And state leaders themselves need to stop looking for political tricks like privatization deals and honestly make the case for the revenue and toll increases in the short-term that can pay for the long-term economic benefits that flow from infrastructure investments.

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Strengthening-Communities


 

Obama Allows California to Adopt Car Emission Standards - New Day for State Regulatory Authority

In a positive step forward for federal respect for state regulatory powers, President Obama directed the Environmental Protection Agency (EPA) to reconsider a previously denied waiver to allow California to implement auto emissions and fuel efficiency requirements that go beyond the current federal standards.  In a statement by the White House, President Obama said "the federal government must work with, not against, states to reduce greenhouse gas emissions."  The directive represents not only greater respect for state authority, but also a sharp break from the previous administrations climate policies. 

If granted a waiver by the EPA, California's proposed regulations would result in an average reduction of greenhouse gas emissions of about 22% by 2012 and about 30% by 2016 for new cars and light trucks in the state. The Federal Clean Air Act gives California a special right to apply for a federal waiver that allows the state to implement vehicle emission standards that are tougher than those of the federal government. Although in the past waivers have been readily granted, California tried for most of the Bush presidency to obtain a federal waiver to no avail.  

If California is granted a waiver to impose higher standards than the federal government does, other states may choose to adopt California's more stringent standards.  According to the New America Foundation, to date, 17 other states (Arizona, ConnecticutMaineMarylandMassachusettsNew MexicoNew JerseyNew YorkOregonPennsylvaniaRhode IslandVermont, and Washington) "have adopted or have announced plans to adopt" California's standards.   Other states such as ColoradoMinnesotaMontanaNorth Carolina, and Utah are currently considering proposals regarding the adoption of California standards.

More broadly, the clean cars decision by President Obama indicates a commitment to a far more collaborative federalism between the federal governments and states than in the past, opening the door for a system where the federal government may impose minimum regulatory requirements but will allow states to seek to establish higher standards within their own jurisdictions

 

 

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Increasing-Democracy

BY Christian Smith-Socaris

 

Voter ID: The Landscape for 2009

As we noted in the Dispatch a couple weeks ago, despite a dearth of recent successes and mounting fiscal crises in most states, rightwing voter ID legislation designed to suppress voter turnout continues to be pressed around the country.  So far this year at least 17 states have seen bills introduced to institute or enhance ID requirements for voting or registration (AL, CO, GA, IN, MD, MN, MS, MO, NY, OK, RI, SC, TN, TX, UT, VA, WY).  It appears we now know enough to predict the landscape of the voter ID battles in this legislative session.

Old Battlegrounds Endure: For the most part the same states where this issue was out front last year will continue to be the focus of voter ID proponents.  It is already clear that Texas and Oklahoma will retain their positions near the top of states that make this a priority issue.  Oklahoma now has very conservative majorities controlling both chambers, giving confidence to proponents that this will be their year in that state.  Oklahoma just barely failed to pass legislation last session when opponents attached pro-voter amendments that killed the bill and is the closest to a "sure thing" that ID proponents have in 2009. 

In Tennessee, while there is a strong push for the legislation, there are still concerns over the cost of the proposed photo ID requirement given the state's fiscal problems. One state that may see the issue hit a new roadblock is Missouri, which just elected a Democratic governor.  Much of the frantic push for a proof-of-citizenship law in that state last session was generated by the expectation that the GOP would lose the governorship, putting a voter ID bill out of reach.  Filling out the ranks of states where the issue will be front and center are Alabama, Georgia, Mississippi, and South Carolina.

Opening Moves and Prospects:  In Texas, having been frustrated in attempts over the past two years to enact photo-ID legislation, GOP Senators chose the Texas version of the "nuclear option" and have exempted the voter ID bill from the two-thirds majority requirement observed in the Texas Senate, which has caused great acrimony and could backfire among moderate legislators.  A strong coalition of progressive advocates and legislators are working furiously against the measure.  As Sen. Rodney Ellis, a leader in those efforts, argues, "supporters of [voter ID bills] continue to throw charges, anecdotal evidence and rhetoric around, but cannot point to one single case of voter impersonation.  Those of us opposed, however can cite case after case of voter intimidation and suppression."

Mississippi is replaying the dance it did last year with the Senate quickly moving forward to pass a bill, while House Democrats are willing to pass a more modest, non-photo-ID requirement, but have also added early voting to their bill.  The GOP, led on this issue by Sec. of State Hoseman, has rejected this compromise. Further complicating matters for voter ID proponents, Senators amended their bill to exempt people born before 1945, causing the sponsor to recommit the bill for consideration after it had been passed.  In Alabama, the Attorney General included voter ID in his criminal justice program package, but an Associated Press whip count found just less than majority support in both houses of the legislature with a substantial minority opposed.

Legal Challenge to Georgia Law Fails:  A three judge panel for the 11th Circuit US Court of Appeals rejected the challenge against Georgia's government-issued photo ID law.  There are two proof-of-citizenship bills and one to require a birth certificate for voter registration introduced in Georgia so far this session.

Measures Defeated: Two states have quickly defeated voter ID bills in committee - Colorado and, surprisingly, Wyoming where opponents gave the sponsor of the legislation what he called "a beating."  The pugilists included the Wyoming County Clerks Association and the Sec. of State's top elections official, who warned that the state's high turnout would go "down the tubes" if the bill passed.  

Additionally, the Chair of the Government Operations Committee in Minnesota has announced that a bill will be considered there, but passage is not likely.  The bills are also "DOA" in heavily Democratic New York, Maryland, and Rhode Island, though rare support from a Democratic Sec. of State combined with that of the Republican governor in Rhode Island perhaps adds a question mark to that state.

Trend on Proof-of Citizenship Bills:  While progressives had some fears that proof-of-citizenship bills would constitute a second wave of voter ID legislation this session, so far that does not appear to be the case.  We are aware of only four states that have proof-of-citizenship legislation introduced - CO, GA, MO, and TN. Troublingly, passage can't be ruled out in three of the four states.

No Big Shifts Appear Likely: While a handful of states are in danger of passing voter ID enhancements this session, only one state - Mississippi - seems likely to institute an ID requirement for the first time.  This suggests that growth of voter ID laws has stabilized, with over 20 states rejecting the idea that voter ID serves the public interest.

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Increasing-Democracy


 

State Pension Funds Can Help Protect Online Privacy and Freedom of Speech

New York City pension funds have joined forces with a coalition of investors, organized by Open Media and Information Companies Initiative, to file shareholder resolutions with 10 publicly-held US Internet services providers (ISPs). The resolutions urge "corporate boards to report on the impact of the companies' Internet network management practices on public expectations of freedom of expression and privacy."

ISPs, including major telephone and cable companies, provide Internet to a majority of the US population. The resolutions highlight that these providers have the ability to manage traffic and play a central role in crafting policies that greatly impact the public's Internet use. 

 "With greater numbers of people using the Internet for everything from shopping to health care, Internet network management and its effect on the user have become significant public policy concerns," said New York City Comptroller William C. Thompson Jr., when announcing resolutions filed on behalf of the New York City Pension Funds.  In order to get the resolutions passed the Coalition will be seeking support from other shareholders; state pension funds, which hold a large amount of assets in many of these companies, could play a key role in the campaign. State leaders can take action to review whether their pension funds are supporting these resolutions through their proxies.

 

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Research Roundup

2009 Report Card for America's Infrastructure - The American Society of Civil Engineers gives the nation a D average grade for its poorly maintained, often crumbling infrastructure, estimating that $2.2 trillion in investments are needed to repair and upgrade it.  They emphasize the threat to the long-term economic health from the problem and the need for long-term planning to make the investments needed.

Taking the Pulse of Main Street: Small Businesses, Health Insurance and Priorities for Reform - The loudest business voices in D.C. and state capitols are often conservative opponents of needed reforms, but this survey of 1200 small business owners by the Main Street Alliance, a network of small business health care coalitions, found that actual small business owners are deeply concerned about the affordability of health insurance.  They also support government health care plans as an alternative to private coverage and even support funding proposals where those businesses pay a share towards financing such public health care alternatives. 

Stimulating Broadband: If Obama Builds It, Will They Log On? - This survey by the Pew Internet & American Life Project highlights that lack of access and the high cost of broadband are key barriers to those currently not using high-speed Internet, barriers that both federal and state leaders need to address to bridge the digital divide.  However, what is also clear from the survey is that many non-users also need training and support in using the technology to benefit from making technology more available and affordable.  

Jump in Public Sector Unionization Raises Overall Rate Again in 2008 - Union membership increased significantly in 2008, according to the Bureau of Labor Statistics (BLS) annual union membership report released this week.  The unionized share of the U.S. workforce climbed to 12.4 percent last year from 12.1 percent in 2007, an addition to union rolls of more than 420,000 members.  The Center for Economic and Policy Research has additional key facts, including the fact that unions seem to be weathering the beginnings of the economic downturn, which bodes well for the future.

 


Please email us leads on good research at research@progressivestates.org

Resources

Funding in Economic Recovery Plan Will Cover Less Than Half of Projected State Deficits

Progressive States Network -  Why States Need to be a Focus for Any Economic Recovery Plan

Center on Budget and Policy Priorities - Funding For States In House Economic Recovery Package Would Close Less Than Half Of Projected State Deficits

Center for American Progress - Interactive Map: Recovery Beyond the Beltway

Why Are the Feds Bailing Out the Highway Privatization Industry?

Tom Frank, Wall Street Journal - Toll Roads Are Paved With Bad Intentions
Progressive States Network - Public Opinion and Public Interest Groups Show Strong Opposition to Road Privatization
U.S. PIRG - Road Privatization Report: Explaining the Trend, Assessing the Facts, and Protecting the Public

Obama Allows California to Adopt Car Emission Standards - New Day for State Regulatory Authority

California Clean Cars Campaign
Constitutional Accountability Center - At Long Last: President Obama Orders the EPA to Revisit the Denial of the California Waiver
New America Foundation - Climate Policy Program
Remarks by the President on Jobs, Energy Independence, and Climate Change  

Voter ID: The Landscape for 2009

Progressive States Network - Oppose Restrictive ID Laws
Demos - Voter ID Issue Brief
Brennan Center for Justice - Alternatives to Voter ID Policy Brief
Model Voter Protection Legislation

State Pension Funds Can Help Protect Online Privacy and Freedom of Speech

Investor Coalition Seeks Reports From Internet Service Providers Regarding Impact of Network Practices on Freedom of Expression and Privacy

Open Media and Information Companies Initiatives

Masthead

The Stateside Dispatch is written and edited by:

Nathan Newman, Interim Executive Director
Caroline Fan, Immigration and Workers' Rights Policy Specialist
Julie Schwartz, Broadband and Economic Development Policy Specialist
Christian Smith-Socaris, Election Reform Policy Specialist
Adam Thompson, Health Care Policy Specialist
Austin Guest, Communications Specialist
Marisol Thomer, Outreach Coordinator

Please shoot us an email at dispatch@progressivestates.org if you have feedback, tips, suggestions, criticisms, or nominations for any of our sidebar features.

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