States show how
Get a bunch of political leaders together - in this case governors - and sure enough, the talk is going to gravitate to such bread-and-butter issues as taxes, schools, finances. But amid all the political horse-trading and maneuvering that marked the National Governors' Association meeting at Nashville, Tenn., what clearly stands out is that the ''state of the states'' is looking better than perhaps at any time in recent years.
What is important is that the states take clear advantage of their improved position. That essentially means two steps:
* The states should intensify lobbying efforts to urge the US government to reduce soaring federal deficits through tax increases and budget cuts. Washington needs to get the nation's fiscal house in order.
The states, after all, have done just that. The states are expected to finish the current fiscal year with a cumulative surplus of almost $3 billion - $1 billion from this year, another $1.9 billion carried over from the prior fiscal year. Granted, most states are constitutionally required to balance their budgets. But that's the point: They have proved that it is possible to fund essential services through available tax sources.
* The states must intensify efforts to shore up their existing industrial base, while encouraging - through tax incentives and a cooperative effort with the business community - new industries and enterprises.
For some states with a large academic or professional-engineering community, that may mean stressing high technology. For states with a significant agricultural base, that may mean promoting farm-related products. As the local economy in a state flourishes, so too does its tax base expand - a vital element for funding public services. A case in point: Michigan, where the local economy is now growing and the state debt has been trimmed, in part through a tax hike. The state has invested $50 million in 16 new mainly high-technology-linked firms. And industry has raised some $100 million in private capital for new enterprises.
There was a time, not so far back, when the states were the truly innovative political institutions in the overall governmental structure of the US republic. Working through legislatures, progressives enacted a spate of reforms at the state level that championed the rights of consumers and laborers and extended the very concept of democracy. Among such innovations: the voter initiative and referendum; direct primary elections; women's suffrage; workers compensation; and the eight-hour day.
In recent years, however, hit by economic recession and an increasing flow of political power to Washington, the states fell upon hard times. Thus, the turnaround that has taken place the past year or so must be considered remarkable and, in fact, warrants close attention by Congress and the White House as they go about their task of trying to bring efficiency to the federal establishment.
What should be especially interesting to Washington is the way the states have been able to absorb additional powers turned over to them by Congress and the White House in the early 1980s while at the same time maintaining essential services in the wake of federal budget cuts. In 1981, it may be recalled, Congress, as part of the original Reagan administration budget-reduction tax-cut program, turned over to the states authority for over 50 federal programs. At the same time, lawmakers cut funding for a number of existing federal social and welfare-related programs.
A recent major study on the impact of the cuts and program transfers - by the Woodrow Wilson School of Princeton University - found that most of the federal domestic programs of the past years have survived and in some states even been expanded, despite the congressional/White House actions. How? The states absorbed and continued most programs through tax hikes, government reorganization, and shifting the tax burden from property taxes to sales taxes and user fees. At the same time, through lobbying campaigns, Congress restored most of the 1981 budget cuts in 1983 and 1984.
In other words, Washington - which used to enjoy telling states how to manage their affairs - should be taking a cue from the states these days as to how government can most efficiently function.