NCSL issues ‘Top 11 Issues in 2011’ report

The 2010 mid-term elections saw just over 1600 new state legislators elected to office. The turnover rate reached 30 percent, which represents a 5 percent increase over the 1250 new legislators who took office in 2009. This massive shift adds to the complexities of state policymaking at a time when “new ideas” will have to tackle old problems.

Atop those old problems will be continued tight budgets, says William Pound, executive director of the National Conference of State Legislatures (NCSL) in their 2011 outlook.

“Money is the starting and stopping point for virtually every state program and service. Based on our latest ‘State Budget Report,’ we are expecting that budget cuts will again be deep, controversial and painful,” Pound said in a statement.

NCSL’s Top 11 of 2011 is an annual list that outlines popular and prescient topics across the states’ legislative agendas. State budgets will top the list for a fourth year in a row, as 15 states have reported new FY 2011 budget gaps totaling at least $26.7 billion.

Other looming challenges include pensions, implementing and interpreting health reform, and finding ways to enhance higher education while looking for alternative ways to fund it. Below is a partial list of the top 2011 items. For a full listing, click here.

Issue #1 – Balancing Budgets
Although the Great Recession officially ended in June 2009, state budgets are far from reaching sound fiscal footing. NCSL’s report, “State Budget Update: November 2010,” shows some states are still facing ongoing shortfalls because of weak revenue performance, less than anticipated federal funding for Medicaid, and expenditure overruns. Through Nov. 15 states have reported new FY 2011 budget gaps totaling at least $26.7 billion. This is on top of the $83.9 billion gap already resolved this fiscal year. More gaps loom as state policymakers prepare to craft their FY 2012 budgets.

Issue #2 – Reforming State Pensions
Many states fall short of having adequate funding for the future benefits promised for pensions and retiree health care. How they address those issues has implications for state personnel management and delivery of state services, as well as for the budget. Many states addressed these issues, at least in part, in 2010; many more are studying them in preparation for legislation in 2011.

Issue #3 – Jobs for American Workers
The economic downturn has compromised the financial security of millions of working families. Economists agree job creation is the key component to a sustained economic recovery. Lawmakers are looking for more efficient and innovative ways to create jobs and encourage business development, by offering incentives, providing tax credits, training workers and encouraging small business growth through public-private partnerships.

Issue #4 – Interpreting and Implementing Health Reform
The federal Affordable Care Act changes how large segments of the American health system will work. States pioneered most of the provisions included in the 900+ page law that aims to expand coverage to 32 million more Americans. State budget shortfalls, changes in leadership, worries about affordable coverage, and a lengthy list of policy options and decisions facing states guarantee a busy legislative health agenda in 2011. Eight states, so far, are using state law to avoid enforcing mandatory features of the law while others are considering a retreat from costly Medicaid features.

Issue #5 – Redesigning Higher Education
A major shift in political philosophy toward higher education may be on the horizon. After several years of cutbacks to help balance the budget, the state contribution to higher education is at such a low point that a new relationship between the state and public higher education is on the horizon. Institutions want more flexibility; states want to link funding to results such as graduation rates. There will be some discussions over “privatizing” public higher education, given diminished state support, but raising tuition and cutting support for low-income and minority students are other possible policy options. State institutions are looking for alternative revenue sources, including tax increases, to prevent drastic cuts.

Issue #6 – Redrawing Districts
At the start of each decade, districts are redrawn for state legislatures and Congress. Redistricting is very complex, and can take a lot of energy from state legislators already focused on traditional policy areas. Once states receive census data in February and March, all but two states will draw new district boundaries before holding legislative and congressional elections in 2011 and 2012. The success in 2010 November elections by Republicans at the state level now gives them a decided advantage in this redistricting cycle.

Issue #7 – Lowering Unemployment and Funding Benefits
While the national unemployment rate has remained around 9 percent all year, a dozen states have been battling double-digit rates. States are dealing with unprecedented claims for unemployment benefits. Thirty-one states have had to borrow from the Federal Unemployment Trust Fund, and now must deal with paying back their loans, along with steep interest payments. States have responded to the crisis by increasing their payroll taxes and the upping the taxable wage base. Finding a solution to unemployment and shoring up the state-federal partnership in funding benefits is a key issue for 2011.

Issue #10 – Addressing Immigration
While the federal government remains gridlocked over immigration reform, state legislatures continue to address this complex and challenging issue. State legislatures enacted a record number of laws and resolutions addressing both legal and illegal immigration issues in 2010, with every state in regular session enacting legislation. Arizona’s two immigration enforcement laws on worksite enforcement (2007) and law enforcement (2010) have been challenged, and are under review by the U.S. Supreme Court and the 9th Circuit Court of Appeals, respectively. In light of budget constraints and the potential for litigation, states may delay enacting new immigration enforcement laws until the fate of Arizona’s worksite and law enforcement laws are decided by the courts.

Issue #11 – Maintaining Transportation and Infrastructure
State are now seeing the end of federal stimulus money for state transportation projects. This could spell trouble for road projects, coupled with the fact that a continuing decline in income from the gas tax leaves a widening gap between available revenue and actual money needed for infrastructure maintenance and new transportation projects. With little appetite for raising transportation fees and taxes, lawmakers will be forced to cut their transportation budgets or consider legislation to establish public-private partnerships and other innovative funding approaches. States continue to await a sweeping new federal transportation reauthorization that could supply new money and potentially change the way federal funds are distributed.

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