At the summer meeting of the National Governors Association in Boston this past weekend, Republicans and Democrats alike implored Congress to pass stalled jobs legislation that includes billions of dollars in aid to the states.
It’s understandable, this looking to Washington to tide over state budgets until the economy picks up more steam.
Because of state constitutions that require balanced budgets, governors and legislatures across the country have had to make brutal cuts and raise taxes. The states want all the help they can get. In November, 37 states will elect governors, and there’s really only one issue that will sway voters’ choices: the economy.
And yet, it is the states themselves that so often lead the way, from job creation to investments and reforms that will eventually lead to new jobs.
Some states have been blessed with natural resources to weather the Great Recession and now sluggish growth. Earlier this month Newsweek reported on “The Great Great Plains” – states such as North Dakota (which has the lowest unemployment in the country, 3.6 percent in May), Kansas, and Texas. Basic industries such as agriculture and oil have helped them. Fargo and Omaha are boom towns attracting workers from around the country.
But these places have also expanded beyond the basics to more sophisticated agricultural products and renewable-energy technology by making use of local university research and graduates. In other words, they recognize the value of an educated workforce.
Education is one area where states are now starting to make great strides. The National Governors Association has moved mountains to come up with a common set of reading and math standards for K-12. States are working to improve teaching by linking pay to performance. A new law in Colorado, for instance, requires teacher evaluations that tie at least half of their rating to student performance. The trend toward measurable performance improvements has been reinforced by the Obama administration’s Race to the Top education initiative.
While Congress wrangles over climate legislation that will encourage new “green” jobs, states have been blazing the way. About 30 states have mandates for renewable energy, with California a leader. Interestingly, voters are leaning against a ballot measure that would suspend the state’s lower carbon emissions targets until unemployment comes down, according to a new Field poll. They recognize that while reducing greenhouse gases may have a short-term cost, it’s beneficial in the future.
Several states, meanwhile, have taken more traditional (and local) measures to create jobs: tailoring programs to specific industries and hard-hit regions and offering tax cuts to lure new industries. Tennessee Gov. Phil Bredesen, a conservative Democrat, has attracted more than $4 billion in new business investment to his state in the past 18 months through a series of tax breaks.
After two years of cutting and a third year on the way, government budgets are in such bad shape that some states are getting serious about their most difficult structural costs – compensation packages for public-sector employees.
Sacrifice. That’s a word that state leaders are starting to use. When it comes to handling long-term problems with the national debt, will Washington take their cue?