An Early Look at the 2012 Legislative Session

By Joshua Veverka, Vice President

Over the course of the past month Stateside Associates professionals interviewed contacts in all 50 states to get a sense of the top issues that will face lawmakers in the coming year.

With state budget debates looming and a busy election cycle serving as the backdrop for the 2012 legislative session, we provide you this list as a preview of some of the issues expected to dominate agendas and headlines in 2012.

Please note that next year is the second year of the biennium for most state legislatures—only New Jersey and Virginia start their biennium in even years. Twenty-seven states and Puerto Rico allow for at least some legislation to carry over from the 2011 session into 2012. Four states (Montana, Nevada, North Dakota and Texas) will not hold regularly scheduled sessions.

While the issues described herein will dominate the dockets of state legislatures next year, this list is far from exhaustive. The wrangling for early primaries and the focus on the presidential election will likely lead to electoral reforms cropping up in statehouses. Issues surrounding labor and public employee unions, such as pension reform and collective bargaining, will certainly be discussed in the wake of the vocal debates in Wisconsin, Ohio and New Jersey.  Public safety and the environment issues are always prevalent, and technological advances spur new legislative initiatives every few months.

Legislative Elections

In the 50 states 86 of the 99 total legislative chambers will be holding elections, in which 81% of all state legislative seats will be considered. The partisan splits in chambers in more than half of states, ten or fewer seats separate the majority from the minority. Even though party control is not expected to change in the majority of states, a presidential election and redrawn legislative districts provide little reassurance when it comes to the balance of power within and across states. When it comes to campaign issues, expect legislators to focus pull out issues popular with both Democratic and Republican constituencies meant to excite each party’s base.

Budgets

After several years of deep cuts, state budget situations are showing signs of recovery, but remain significant effects from the recession remain. According to the National Conference of State Legislatures (NCSL), FY 2012 marks the fourth consecutive period that states have faced significant mismatches between revenues and spending. After lengthy budget debates in the 2011 session only New Hampshire and Washington project deficits at the end of FY 2012.

But state budget experts are still very worried about the situation. The budget projections used by states are based on tax collection rates that continue to lag behind expected tax revenues. Stimulus money is gone. Clever accounting can only push off costs for so many years. More than 20 states are anticipating a budget gap for FY 2013 and FY 2014 and all projections show this number growing in the coming years. Therefore, the 2012 legislative sessions will be marked by sharp budgetary battles in which legislators will be forced to reform state government, continue cost cutting and/or increase revenue.

Economic Development and Job Growth

Numerous states have seen jobless rates continue to climb, including states that have traditionally outperformed the rest of the country in the South and the West. Legislators in at least 15 states, including Arizona, Florida, Georgia, Louisiana, Mississippi and Utah have indicated that job growth and economic development will be the centerpiece of the next session. Legislators are expected to advocate several priority proposals in this regard including manufacturing facility development and modernization incentives, small business financing programs and financial incentives for job creation. Tax credits and incentives for hiring unemployed residents were approved in states like Alabama, Florida and Maryland in the 2011 session and many of the states mentioned above will consider similar legislation in 2012.

Education

Education funding and reform is a priority for lawmakers every year. One trend on the education front is the effort by states to pull away from federal education mandates. Eight states have indicated an intention to pursue waivers from the federal “No Child Left Behind” law. The new policy announced by the President last month is that in order to receive these waivers states will need to develop and implement certain standards for math and reading, create systems to measure school performance and develop teacher and principal evaluation programs. All this will take place during the 2012 session—lawmakers will approach public education with even less funding while trying to perform at a higher level.

Energy

The hot energy issues next year will be the plans that propose increased development of energy resources while aiming to develop future energy transmission corridors and other infrastructure. In the 2011 session three in every five states considered energy transmission language. The number of states tackling energy will likely increase in next year’s session—legislators in more than 25 states have noted energy issues as a major priority for 2012.

No energy proposal will be one-size fits all. The focus of any energy legislation will depend on the specific energy issues at play in each state. Transmission line deployment is a big issue in Western states like Wyoming and Montana. Pipeline development and hydro-fracking regulations will dominate the oil and natural gas discussions in states throughout the Marcellus Shale region and in Southern and Western States. Alternative and renewable energy sources will be discussed in states throughout the country, including in Maryland where Governor O’Malley (D) is in favor of an off-shore wind energy project.

Immigration Reform

Although state legislatures considered more than 240 immigration-related measures in 2011, only 10 states enacted legislation. Despite the plethora of bills considered, lawmakers have been hesitant to expend political capital on immigration reform until federal challenges to state immigration reform attempts are finalized. Until that happens the discord between the federal government and states on immigration policy will continue to set the tone for immigration efforts throughout the 2012 session.

While a federally-driven comprehensive immigration reform package is possible, it’s more likely we’ll see one or more bills narrowly targeting employment and the electronic verification of workers.

One development that will make states more willing to tackle immigration measures was a recent ruling from U.S. District Judge Sharon Blackburn to allow much of Alabama’s H.B. 56 to take effect. This ruling, along with previous rulings in Arizona and Georgia, may start to provide a roadmap for other states to follow.

Medicaid

Health care reform and funding for state Medicaid programs are always a priority issue in the states. Add to that the fact that revenue growth is not expected to keep pace with anticipated increases in Medicaid costs mandated by federal health care changes. To defray these costs, states will look to increase utilization of Medicaid managed care in place of traditional fee for service plans. At least 19 states decided to expand Medicaid managed care in 2011 and nearly all states will continue to consider additional proposals as they prepare for the projected addition of 16 million adults to the Medicaid rolls by 2014.

Redistricting

Only the four states with elections this calendar year (Louisiana, Mississippi, New Jersey and Virginia) were required to have redistricting completed this year. All four were approved in time for elections to take place on-time, but not without legal challenges. The deadlines for the other 46 states to finalize their maps are before state primary and general elections are held next year. While a number of other states have already redrawn districts, the threat of legal challenge have been ubiquitous in almost every case. Several legislatures have scheduled special sessions through the remainder o the year to tackle redistricting, but expect the debate to carry-over well into next year. The closer to a regularly scheduled election a given state redistricting battle gets, the more noteworthy an issue redistricting will become.

Tax Expansion and “Reform”

Legislators are wary of tax increases in good times—broadening revenues by raising taxes during an economic slump becomes a very hot-button issue. According to NCSL, 2011 marked the first year in the last ten that states reported lowering taxes more than they increased them. While the numbers may have been skewed by some large cuts or by the expiration of few temporary tax hikes, it demonstrates the pressure legislators feel when it comes to raising taxes.

Corporate tax rates have been cut in 20 states since the year began and 12 states lowered general sales tax rates. To make up for lost revenue from these and future tax cuts, states will get creative in identifying revenue streams by reforming business taxes, reducing or eliminating certain credits and exemptions and expanding the sales tax base.

One of the visible efforts taking hold is the move by many states to collect sales taxes from online retailers. Internet sales taxes have been a target for states for a number of years and its lean economic times that increase pressure to pursue it as a possible new revenue stream. Lawmakers in 15 states considered “Amazon Tax” style language this year. Numerous other states examined different approaches to capture this revenue. The legislation that passed in California, coupled with the recent agreement between the state and Amazon to begin collecting online sales taxes in 2013, may serve as a striking model for action elsewhere.

Despite only passing in five states, bills to the increase the taxes levied on alcohol and tobacco products were considered in 43 states this year. In addition, policymakers in nearly half of all states attempted to tax foods and beverages that are deemed to lack nutritional value.  Ostensibly designed to promote health, the taxes are earmarked to fund the healthy lifestyle and obesity prevention programs that have become a priority across the country.

Riding Out the Storm

By Naomi Amaha, Legislative Associate

State government affairs professionals rejoice and dread the time of year known as ‘end of session.’ The final days of a legislative session are full of lavish political fundraisers, staff potlucks and an overwhelming sense of camaraderie among staff, lobbyists and elected officials. Many celebrate legislative victories as bills reach the Governor’s desk and await that coveted signature prior to becoming law.

It is also a time where policy negotiations taper off, conflict ensues and legislation is often times held captive in opposing chambers for political reasons. In addition, last minute amendments completely alter the scope of a bill and legislation is expedited through the political process within a moment’s notice. Political parties are pitted against each other and members are pitted against their fellow caucus members.

Typically, it all begins with chatter. Rumblings during respective caucus’ meetings to announce leadership’s desire to address a specific issue that was not resolved previously. With that, amendments are drafted and seemingly non-controversial measures evolve into eleventh-hour policy shifts that are then presented to legislators without proper vetting. All the while, the halls are buzzing with lobbyists frenetically trying to obtain amendments and lobby staff as reporters furiously write articles and post commentary on social media sites while everyone awaits guidance from the House Speaker or Senate President. 

Such scenarios are perceived by constituents and political theorists as dysfunction at its finest:  an insult to the institution and legislative process that ignites calls for the days when transparency existed.  This, however, is nothing new to me. Prior to working at Stateside Associates, I spent three remarkable years working as an aide in the California State Legislature. The experiences of working in a fast paced and unpredictable environment provided me the know-how and instinct that is necessary to succeed in the realm of public affairs. This first-hand experience opened my eyes to this trend that is fast becoming a common practice within state legislatures.

Government affairs professionals face a significant challenge as they prepare for adverse language cropping up in legislation during the concluding days of session. The lackluster economy has inspired elected officials to attempt to incite prosperity by any means necessary.

For example, on September 8, 2011 the California Senate amended a bill dealing with recycling and composting bins by inserting a comprehensive exemption in one of California’s oldest statutes requiring state and local agencies to identify the significant environmental impacts of their actions and to avoid or mitigate those impacts (footnote). This measure was marketed by Senate President Darrell Steinberg as a necessary measure to spark job creation.  The legislation was amended on the Senate floor, debated in an off the floor hearing, taken up without reference to the daily file, subsequently passed in both chambers and now awaits consideration by the Governor.  All within a time frame of two days.

This is not an uncommon event and state government affairs professionals must have practices that anticipate this legislative shuffling when it happens behind closed doors. Understanding loopholes in rules and processes is a must, but learning the institutional machinations cannot happen overnight. Knowing a legislative body inside and out comes with time. As you work within a given state legislature, make it a point to understand the rules and how they can be bent or broken altogether. I saw firsthand as an Assembly staffer how the knowledgeable players protected themselves and their legislative agendas in the last-minute fray.

Be present if at all possible. The need to have a lobbyist on the ground in key states for your organization—especially where a legislature’s rules are flexible—is critical.

State government affairs professionals thrive because we love the pursuit. We love the feeling of accomplishment after successfully passing or defeating a piece of legislation that would dramatically impact our organization or clients. Knowing the nuts and bolts of the legislative process is not a glamorous part of the job, but in our business they are the keys to being successful when riding out the end of session wave of activity.

Footnotes:

(1)     http://ceres.ca.gov/ceqa/more/faq.html

Will A Republican Wave Wash Over State Legislatures and Your State Government Relations Program?

While much of the national press has been debating whether or not Republicans will take control of the U.S. House and possibly the Senate, much less press attention has been paid to the potential for a wave at the state legislative level.  Part of the reason is likely that there is simply less polling data available on individual races, so it is harder to make specific predictions.  But rest assured, the national parties are very interested in these races because they will impact control of the U.S. House for the next decade because of reapportionment and redistricting.

Both the RSLC and the DLCC have created special websites focused on electing state legislators in states that will have a big impact on redistricting (http://www.redistrictingmajorityproject.com/ and www.RedistrictingFacts.com).  While the press doesn’t focus on the issue, it is one of the key issues for political insiders.

These campaign organizations have targeted states that appear to have the greatest likelihood of switching and then they focus their efforts on districts within those states that appear to be swing districts.  But could those efforts just be carried along with the national tide?  Professor Alan Abramowitz of Emory University published an article on Larry Sabato’s Crystal Ball in July which showed that state legislative races tend to follow closely the generic ballot trends for congressional races.  In that article (http://www.centerforpolitics.org/crystalball/articles/aia2010072902/) he argues that those races and control of legislative chambers can usually be predicted by the “early September” Gallup generic ballot poll. 

Well it’s early September, so what do we know?  This week Gallup showed the generic ballot to be tied between Democrats and Republicans.  However, just last week, Republicans were shown to be up by ten points. Which number is the more accurate?  Or do we take the average of the two plus next week’s poll?  We will know for sure in less than 60 days.

Even if this week’s “even” poll is the most accurate, Democrats will have a hard time being heartened by it.  Professor Abramowitz’ predictions show Republicans with a gain of over 300 seats and nine chambers under the “even” scenario.  With a Republican six point advantage, his analysis shows a pick-up of 500 seats and 13 chambers.  When he wrote the July column, he didn’t even include predictions for a generic ballot advantage for Republicans of more than six points, so if the Republican number rebounds to the high single digits, it could be a very long night in November for Democrats.

So what does this mean for state government relations professionals?  Nine to thirteen new chambers means new Senate Presidents or Speakers and many new committee chairs.  With so many seats changing hands, it is also likely that some key legislators in state houses that don’t switch hands will still lose their seats (or they already have in a primary).  In states where one party has been in control for years, have you cultivated or ignored relationships with the minority party?  If they take control, will fence-mending be necessary?

Combined with term limits in other states, it means you have your work cut out for you in rebuilding your relationship network.  So, request an increase in your travel budget now for next year so you can make some additional visits to your key states and attend more Groups meetings to quickly develop those relationships for 2011.

Steve Arthur, sca@stateside.com