While serving in the leadership of the Georgia Legislature, election years and money often drove policy or the lack thereof in state legislatures across America.
2012 will likely be no different.
Election year state legislative sessions can typically result in “policy paralysis.” Translation, fewer major initiatives are undertaken from fear of losing elections and majorities.
Is it right? Probably not. Is it all bad? Not necessarily, particularly given that “less can actually be more.” In other words, with Americans, now more than ever, wanting less government regulation and intrusion into their lives or businesses, this paralysis, often resulting in fewer new laws, can be good for America and for business. Throw a presidential election on top with Americans uncertainties about spending and investing and you can have a healthy dose of state legislatures simply passing their budgets, hopefully with some meaningful “back to work” initiatives, and then adjourning to go home seeking political survival (Read: re-election).
It’s not just elections that drive, or suppress, bold initiatives in state government – it’s money. When we gained the majority in the Georgia Legislature, most of our best ideas involved money in some way. When revenue collections were up, we could invest in our state’s infrastructure and education system or pass tax cuts and incentives for individuals and business. When revenues were down, creativity or deferred actions coupled with tough budget cutting decisions drove our legislative session. Remember that the beauty and difficulty of most state governments is that they actually have to balance their budgets by Constitutional requirement.
There have been two noticeable revenue trends in most state governments and regions over the past few years. First, the 2009-2010 cycle saw noticeable decreases in state expenditures, even with federal stimulus funds helping state’s back-fill their deficits. 2010-2011 expenditures actually increased in 24 state governments. However, after years of declining revenues, states with upticks always have a tendency to restore funding to the many state programs, such as education, which were previously subjected to substantial austerity cuts. The National Association of State Budget Officers recently looked closely at spending by all states and regions. Click here for the report.
In summary, with stimulus funds evaporated, look for states with increased revenue collections to first restore critical state functions like education and health care, which constantly consume the majority of state spending. With what’s left, responsible state legislatures will begin to refill their reserve funds and then first spend to support policy initiatives focusing on creating jobs.
Still, expect age-old issues to be addressed. The state-by-state debate as to what the appropriate size and scope of government should be will continue. Out of necessity, state governments have cut some 80,000 government jobs since the recession. The less politically-sexy issues of funding and restructuring rich-state employee retirement funds must also be addressed.
In closing, after years of networking with my counterparts at state legislative conferences and through the national speakers organizations, I’ve learned that while state governments have common denominator challenges, each state is different in its own way with its own agendas. Whatever your political leaning and regardless of “elections and money,” most will agree that state government can be a refreshing alternative to solving problems and providing opportunities compared to our broke federal system with single digit approval rating.
