A Tale of Two Counties: Energy Development Helps Counties Go from Bust to Boom

By Jake Hegeman, Vice President

What are the biggest issues facing local governments in the Western United States? That was my question when I attended the National Association of Counties (NACo) Western Interstate Region conference in Santa Fe, New Mexico. This annual meeting brings together county officials from Midwestern and Western states to discuss common issues and identify key policy priorities—with a particular focus on agriculture, rural affairs and public lands issues. Attended by approximately 200 officials, this year’s meeting covered these issues, as well as local health care and economic development, but it was energy production (or a lack thereof) that really struck me as the hot topic for local governments throughout the West today.

A look out of a plane window over Western states shows signs of this new energy frontier—drill sites and wind turbines are becoming standard scenery in many areas. In particular, technology advances in oil and gas production have brought new energy projects online and helped drive significant economic growth in many western communities. Highlighting this trend was the news that North Dakota has become the nation’s #2 oil producer, surpassing Alaska nearly a year earlier than anticipated. North Dakota also features the lowest unemployment rate in the country.

Finding the right policies to promote energy development and reap its economic benefits are key issues at the county level. In particular, having both the right zoning and tax policies is critical. Zoning requirements that allow for development but preserve aesthetic and other quality of life factors can be instrumental in creating communities that will be successful in the long-term.  Similarly, local sales and real estate transfer taxes that balance revenue generation and economic development can be the difference between energy creating a boom or bringing with it a bust. Adding to this equation are state and federal regulatory issues—in particular an emerging patchwork of environmental requirements—that could slow the development of future projects.

Officials at the meeting also warned of logistical challenges for counties with developing energy industries. Most discussed was the need for infrastructure improvements to support the massive influx of energy sector workers. Citing years of population decline in many rural areas coupled with scarce state and federal funds, county officials noted that roads, schools and sewer systems frequently are inadequate to handle the hundreds of workers that arrive to develop new energy projects. And, many of these individuals are only in the county temporarily—meaning that the infrastructure improvements may not be needed down the road. These difficult governance challenges aside, most that commented saw the benefits of energy development as outweighing the negatives.

Overall, the meeting highlighted the reality that counties are where the “rubber hits the road”—literally in the case of energy development—and that local officials faced with a potential energy rush in their counties can learn from their counterparts across the West about what works and what doesn’t, to ensure their communities maximize the benefit of this economy-driving energy boom.

For those interested in this issue, NACo’s annual meeting July 13-17 in Pittsburgh will take a closer look, with a session dedicated to where the natural gas jobs are today.  If you plan to attend, drop me a line. I would love to hear from you about these and other issues you will be closely monitoring.

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Jake Hegeman is Vice President at Stateside Associates managing the Regulatory Services Division. He works with clients on a wide range of state and local regulatory advocacy efforts, with specific expertise in the issue-areas of energy, environment, agriculture and natural resources.

Do You ‘Recall’ When…

By, Perri Gardner, Legislative Associate

This summer the state of Wisconsin held nine general state legislative elections in an unprecedented attempt to recall Senators from both political parties. Prior to Wisconsin’s summer of recalls, only 20 legislative recall elections had ever been held in the United States.

The recall effort in Wisconsin was a historical first, overwhelmingly negative ¹, nationally covered, costly to taxpayers, and funded in large part by out-of-state interests. Wisconsin’s recalls raise many questions about the recall process itself. How many states have the ability to employ the recall and how do the rules vary? Is this historically rare check on elected officials going to become commonplace and if so, how do we as state government practitioners participate in the process—or avoid it all together? What effects would an increase in recall attempts have on effective governing and our ability to engage lawmakers?

The background of the recalls in Wisconsin stems from a spring and summer fraught with discord in the state house. As the Republican-controlled legislature and Governor Scott Walker (R) moved to approve a budget before the end of the fiscal year, daily protests and a tent city of opposition sprung up at the Capitol. At the same time, campaigns were mobilizing concerning the upcoming recalls that were in response to the Governor’s proposal that changed the collective bargaining rights for state employees and went into effect June 29, 2011.

Initially, eight Republican members faced potential recalls for supporting the legislation to limit bargaining rights while eight Democratic members were targeted for fleeing the state for several weeks. In the end, petitions to launch recall elections against six Republican members and three Democratic members were successful. In August, all nine general elections were held and Republicans held onto a slim 17-16 majority in the Senate with four of the six Republican Senators retaining their seats and all three Democrats retaining their seats.

The recalls in Wisconsin highlighted a process that is rare and limited in state legislatures. Currently, only 18 states have a process by which citizens can recall legislators. In seven of these states there must be specific grounds for a recall petition (e.g. misconduct). Wisconsin is one of 11 states that have no stipulations about grounds on which the recall is based, thus allowing for its use as a political weapon. Furthermore, each recall petition begins with a signature collection requirement. The majority of the states require a percentage of the vote from the last election for the office being recalled and three states require a specific percentage of the votes cast for governor in the targeted district. Required signature thresholds range anywhere from 15 to 40 percent; Wisconsin’s requirement sits at 25 percent.

Wisconsin voters thus brought nine Senators up for recall elections. Is this simply an isolated event due to internal strife in the state or might there be a trend toward greater use of the recall as a political bludgeon? Before 2011, there had not been a recall election in the states since 2008; this year has seen nine, with more on the horizon.

Arizona will hold a recall election on its Senate President Russell Pearce (R) in November and recall petitions are pending in Alaska and Michigan where two members are being targeted. (Interestingly, in all of these states Republicans control the Houses, Senates and Governors seats). It seems clear that at least for the moment recall elections are gaining momentum. Is the cause of the recall surge a sign of the discontent caused by financial struggles in the states, a backlash against the Republican swing of 2010, or simply a fluke?

Fluke or not, there are indications that lawmakers in Wisconsin may attempt to restrict the recall. Citing the cost to taxpayers and the influence of outside special interests, Wisconsin Representative Robin Vos (R) released a statement declaring an intention to introduce a constitutional amendment concerning the recall procedure in the fall.² And while lawmakers may mostly be concerned over the recall’s political and financial effect, those working to influence the process may be more concerned for the consequences to good governance.

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States with recall provisions include (bold has a grounds requirement): Alaska, Arizona, California, Colorado, Georgia, Idaho, Kansas, Louisiana, Michigan, Minnesota, Montana, Nevada, New Jersey, North Dakota, Oregon, Rhode Island, Washington, Wisconsin

Footnotes:

(1)    http://www.jsonline.com/blogs/news/128618163.html

(2)   http://www.wispolitics.com/1006/081011_Vos.pdf