Waiting … and Waiting on a Highway Funding Fix

30449450Federal highway funding is running low. Nothing new there. The Indiana Chamber, and many others, have called for long-term solutions from Washington instead of short-term fixes that simply extend the uncertainty.

How are states reacting to the current dilemma. According to the Kiplinger Letter:

  • Arkansas, Georgia, Wyoming and Tennessee have postponed 440 projects totaling more than $1.3 billion
  • Iowa, South Dakota and Utah have increased gas taxes. Others that may follow include Georgia, Idaho, Minnesota, Nebraska and South Carolina
  • Seeking funds from advertisers: Virginia sells space on highway rest stop signs to GEICO; Travelers Marketing sponsors highway patrols in Massachusetts
  • Partnering with private investors: Florida is seeking private funds to rebuild portions of Interstate 4; New Jersey, Pennsylvania and Virginia are seeking similar ventures

Kiplinger editors add:

But states can only do so much on their own. Ultimately, Congress must act. Odds favor another temporary fix this fall. A long-term solution will likely wait until 2017. Congress and a new president will have a fresh opportunity to tackle broad tax reform, including a possible hike in federal fuel taxes, which no longer approach what’s needed to pay for highway work.

Not what many want to hear in terms of the time frame.

It Was Big (Ten); It Can Be Bigger

In the college football world, a lot has happened since last Saturday’s Big Ten Championship game unfolded in Indianapolis for the second consecutive year. (More on that in a minute). Northern Illinois crashed the Bowl Championship Series party, creating a venom that is usually reserved for teams that are on the outside looking in when it comes to the NCAA basketball tournament.

The coach who won that Big Ten title game has bolted Wisconsin for Arkansas in an unexpected move. Notre Dame, Ball State and Purdue learned their bowl destinations, with the Boilermakers hiring a new coach — from that same no-respect Mid-American Conference as Northern Illinois and Ball State. (In case, you didn ‘t know I’m a Ball State grad and proud to be making the trip to Florida for the always popular Beef ‘O’ Brady’s Bowl).

But my focus is back to Indiana and the business of sports. Yes, the 41,000-plus in attendance at Lucas Oil Saturday night was a dramatic drop from more than 62,000 a year earlier. Yes, TV ratings were down (falling almost as fast as the Nebraska defenders as Wisconsin running backs piled up more than 500 yards in a 70-31 victory). Yes, there is concern despite Indy being in the middle of a five-year contract to serve as host. Many say the attendance problem would have been solved if undefeated Ohio State had not been on probation, but that falls into the category of things we can’t control.

I volunteered both Friday and Saturday at the Big Ten Fanfest at the Indiana Convention Center and attended the game. A few observations.

  • Wisconsin and Nebraska fans showed up and they liked what they saw. I talked with numerous parents and family members who, like so many before them, truly appreciated downtown Indianapolis and all its amenities. They enjoyed Georgia Street before the game and they, at least on the Wisconsin side, enjoyed a winning effort in Lucas Oil for the second straight year.
  • Yes, this is only anecdotal, but I witnessed far fewer fans from the Hoosier state taking part in either the Fanfest or the game. On a smaller scale, the Fanfest was similar to the NFL Experience that took place in conjunction with Super Bowl XLVI earlier this year. An opportunity seemed to be missed in not generating more interest and participation on a local or regional level.
  • These events, and many others, bring a true excitement and economic impact to downtown. The benefits both in the short term and in further establishing the Circle City as a destination spot are numerous.

Let’s allow the creative people who do such a good job bringing these sports championships here to work on ways to bring more fans into the fold. And if you’re looking for something else to do in late November/early December on a post-Thanksgiving weekend, give the Big Ten and its championship a good hard look in coming years.

Governors Faced with Difficult Medicaid Decision

The Medicaid expansion decision for each state is one of several critical aspects of the Affordable Care Act, which was recently deemed Constitutional by the Supreme Court. Although federal dollars are at stake, it’s not a given that states (including Indiana) will agree to the changes to the program for low-income residents. Stateline offers a strong summary.

Although the lineup is shifting, more than a dozen Republican governors have suggested they might decline to participate in the Medicaid expansion. Governors in Florida, Iowa, Kansas, Louisiana, Nebraska, Texas, South Carolina and Wisconsin have said they will not participate. GOP governors in Alabama, Georgia, Indiana, Mississippi, Nevada and Virginia indicate they are leaning in that direction.

Meanwhile, about a dozen Democratic governors have said their states will opt in. The rest have not declared their intentions.

According to data from the Congressional Budget Office, the federal government would spend $923 billion on a full Medicaid expansion between 2014 and 2022, and states would spend about $73 billion. But nobody is sure how many people will enroll in the Medicaid expansion. According to a 2010 report by the Kaiser Family Foundation, states’ share of the Medicaid expansion could range anywhere from $20 billion to $43 billion in the first five years.

According to Kaiser, most states opting into the expansion likely would have to ramp up their Medicaid spending between 2014 and 2019, but four would spend less (Hawaii, Maine, Massachusetts and Vermont) and several others would have to boost state spending only slightly.

Mississippi’s Medicaid program, for example, cost a total of $4 billion in 2011—the federal government paid $3 billion, and the state paid $1 billion. Expanding that program to everybody at or below 138 percent of the federal poverty line would cost the state as much as $581 million between 2014 and 2019, according to Kaiser’s 2010 study.  That’s a 6.4 percent increase in state spending compared to what Mississippi would spend without an expansion

The day after the Supreme Court ruled the Medicaid expansion was optional, Mississippi Governor Phil Bryant, a Republican, said: “Although I am continuing to review the ruling by the Supreme Court, I would resist any expansion of Medicaid that could result in significant tax increases or dramatic cuts to education, public safety and job creation.”

Social Media and Politics: Nebraska Awkwardness Edition

PR Daily has this troubling Twitter anecdote from the Nebraska Senate Primary. The details follow, but one candidate is basically accused of trying to "follow" his opponent’s daughter on Twitter. Sounds creepy at first, but in his defense, he delegates Twitter management to an aide. But it makes for an interesting exchange:

Talk about an awkward debate moment.

During a debate in Nebraska last week, one Republican Senate candidate, Nebraska Attorney General Jon Bruning, accused his opponent, state Treasurer Don Stenberg, of being “creepy” for following his 14-year-old daughter on Twitter.

Bruning unleashed this salvo:

“Let me ask you this, Don. This Sunday, my daughter walks in, and says, ‘Don Stenberg’s trying to follow me on Twitter.’ My daughter’s 14-years-old. Now you tell me: I’d like to know, why does a 62-year-old man want to follow a 14-year-old girl on Twitter? I’d really like to know. She said, ‘Dad, that’s kind of creepy.’"

In return, Mr. Stenberg said the following:

“Quite honestly, I don’t do my own Twitter. Dan Parsons does it for me. We’ve got thousands and thousands of folks, and as soon as we get done here, I’ll call Dan and make sure that’s taken off. I don’t think it’s appropriate.”

That’s not a bad verbal response, but note his body language. His vocal delivery is much less sure than it was in his previous answer, and his post-answer body language reveals obvious anger. It’s hard to tell whether his ire is directed at his opponent or at his aide who requested to follow Bruning’s daughter; either way, his annoyance is obvious.

He lost control of the moment—and as a result, he lost the exchange

In these situations, maintaining control is critical. Stenberg’s approach of running toward the charge (“I don’t think it’s appropriate”) was a good one. But he should have delivered that line (or my suggested lines below) with full confidence:

“Jon, I agree with you. Children should not be fodder in political campaigns, and this is the first I’m hearing that one of my campaign aides tried to follow your daughter on Twitter. As soon as this debate ends, I’m going to have a conversation with my staff and make sure nothing like that ever happens again.”

Once he successfully finished running toward the charge, he could have taken the opportunity to counter-attack:

“But you know, Jon, I’m disappointed in you. Instead of speaking to me privately about this, one father to another, you opted to use this situation as an opportunity to score cheap political points. That’s exactly the kind of political stunt voters are sick of, and as far as I’m concerned, you ought to be ashamed of yourself.”
 

Canada Moving Forward After Pipeline Rejection

The January decision by the Obama administration to reject the Keystone XL pipeline drew plenty of criticism in the United States. Canadian officials, while accepting the explanation offered, are concerned, and they are not sitting back and waiting for a potential change of course from their southern neighbors.

Roy Norton, Consul General of Canada, spent last week at meetings and events in Indiana. Norton is responsible for Canadian interests in trade, investment, the environment and more in Indiana, Michigan, Ohio and Kentucky. Norton provided his analysis of the Washington rejection of the pipeline that would transport oil resources from the tar sands of Alberta province to the U.S. gulf coast.

Norton says Canadians are “disposed to take at face value the assurances that President Obama offered Prime Minister (Stephen) Harper that this was a process-related issue, not a substantive decision.” In other words, Obama cited additional environmental review due to Nebraska seeking a rerouting of the pipeline and a deadline set by Congress as the reasons for the rejection at this time.

Although TransCanada, the energy infrastructure company behind the pipeline, has indicated it will reapply for a U.S permit, Norton described the significance of the relationship between the two countries and the next steps for Canada that are already in progress.

“There is concern. Ever since NAFTA (the North American Free Trade Agreement), our resources have been predicated on the notion that we would develop them to export them to you (the U.S.), and 99% of Canadian oil exports have come to the United States. The entire industry has been organized on a principle that suddenly may seem in question: Does the United States continue to want that oil? And if you don’t, we’re not going to just stop developing it.

“The prime minister made clear, in a little jocular way, that we’re not a northern national park for the United States.” Norton continues. “We’re a G7 country with an industrial economy. We happen to sit on the third largest reserve of oil after Saudi Arabia and Venezuela. Ours, other than the U.S., is the only one (oil supply) not government controlled; it’s total private sector investment.”

Harper traveled to Asia earlier this month and entered into an agreement on energy cooperation with the Chinese.

“Our objective, very much,” Norton adds, “is to build a pipeline to (our) West Coast and to be able to sell oil to China, Japan, whoever. Two or three years ago, the prime minister said Canada is an emerging energy superpower. Somebody challenged that and said you can’t be a superpower if you have only one market. So, in business terms, it’s probably true that it’s prudent for us to have more than one market. So we will seek to diversify.”

Norton closes with some of the numbers related to Canadian oil production and potential benefits for the U.S. and Indiana from the proposed pipeline:

  • Sixty cents of every dollar invested in the Alberta oil sands come back to the United States in consumption. “You benefit more from Canadian resource development than you benefit as a country from resource development (anywhere else).”
  • Currently, $160 billion in private sector investment is underway to take production of the oil sands from two billion barrels a day to three and a half billion barrels a day.
  • That increase, with the pipeline, could create “in the order of 343,000 jobs in the United States, 7,500 of those in Indiana” – citing Caterpillar and dozens of other Indiana operations that currently or would supply the oil production and the pipeline.

The Chamber’s May-June BizVoice® magazine will have more from Norton on issues important to Indiana and his country.

Insiders Say Pipeline Not Dead Yet

We’ve told you more than a few times in recent months that the proposed Keystone XL pipeline is an important project for Indiana and our country. Check out this two-minute video. After all, the $7 billion project will bring 700,000 barrels of oil a day from Canada to the U.S.

When the Obama administration recently delayed a final ruling (citing the need to reroute in Nebraska, but realistically putting off a politically tricky decision until after the 2012 election), many considered it a death knell for the proposal. But a group of energy and environmental insiders put together by the National Journal team in Washington differs with that assumption. Check out the latest.

“As long as there is substantial money to be made from developing the tar sands, they will be developed,” one Insider said.

Insiders predict (64% to 36%) that the economic and political reasons for the pipeline will eventually win out, arguing that the oil industry may hold out hope for a future Republican administration and GOP majorities in both chambers of Congress—under which the project would likely win swift approval.

Canadian pipeline developer TransCanada said that it will move the route out of Nebraska’s environmentally sensitive Sandhills area. The State Department last week proposed the rerouting to protect a massive aquifer there. Company officials, who had claimed that such a reroute wasn’t possible, said that the move will likely require adding 30 to 40 more miles of pipe to its 1,700-mile proposal.

President Obama was accused last week for making a political play with the pipeline, because the reroute would delay the decision past the 2012 election. For that same reason, though, most Energy Insiders believe the project will ultimately be approved. “Eventually, politics will be set aside,” said one.

In terms of politics, Insiders were split on whether the reroute decision and the consequent delay would benefit Obama. Just over half – 51 percent – said that the delay would help the president; 49 percent said it would not.

The delay until after the 2012 election “is a significant indicator of just how bad the Obama insiders think their election prospects are right now,“ one Insider said. In appeasing environmentalists but sacrificing some independent votes, the administration wanted to ensure it held onto its political base and contributions, Insiders said.

 

It’s My Party and I’ll Switch If I Want To

Rumor has it that three members of Congress (Democrat senators Joe Manchin of West Virginia and Ben Nelson of Nebraska, as well as Republican senator Olympia Snow) are at least thinking about switching parties. The results of past such moves are definitely mixed.

According to Congress.org:

The biggest reason that people speculate about lawmakers switching parties is that it might help them get re-elected. (Manchin, Nelson and Snowe are up in 2012.)

But will it? We took a look at some recent lawmakers who switched parties to see what happened next.

Failures

The government’s most recent party switcher is Sen. Arlen Specter (D-PA). He spent almost 30 years as a Republican and switched to the Democrats in 2009, at least in part because he thought he had a better chance of winning reelection.

That logic turned out to be highly flawed: Specter didn’t even make it to the November general election, as he lost the Democratic primary to Joe Sestak.

A couple of months later, Rep. Parker Griffith (R-AL) suffered a similar fate. Griffith was elected as a Democrat in 2008, switched parties just a year after joining Congress, and lost the Republican Party primary in Alabama’s fifth district by nearly 25 points.

And then there’s Florida Gov. Charlie Crist.

Crist was elected as a Republican in 2006 and decided to run for Senate this year, but when it appeared he was close to losing the Republican primary to Marco Rubio, he dropped out of the party and ran as an independent.

Rubio won the general election by 20 points anyway.

Successes

In contrast to those three, a handful of politicians have successfully made the switch in recent years.

Most prominent among them is Alabama Republican Richard Shelby, who was elected to the Senate in 1986 as a Democrat. He traded teams and joined the Republican Party in 1994 as part of the Newt-Gingrich-orchestrated wave election, and he has cruised to reelection three times since, including this year.

Shelby isn’t the only one to have turned on his original party and lived to tell about it.

Rep. Ralph Hall (R-TX) is the oldest man in Congress—he was first elected in 1980—and always considered himself a conservative Democrat.

Hall even helped found the Blue Dog Coalition, the fiscally conservative group of Democrats that lost two dozen seats in last week’s midterms.

But Hall has been able to hold onto his since his switch to the Republican Party in 2004, and it looks like he can serve until he’s ready to retire: He won 73 percent of the votes last week.

And the rest

There are also several recent examples of Congressmen who switched parties with limited aims.

Former Sen. Jim Jeffords (I-VT) served 12 years as a Republican, then left the party to become an independent and caucus with Democrats in 2001. He never sought reelection, so it’s hard to draw any particular lesson.

The experience of Ben Nighthorse Campbell (R-CO) is similar to Jeffords’.

Campbell was elected as a Democrat in 1992, changed parties three years into his term, won reelection in 1998 and retired in 2004, so the switch didn’t appear to do any harm. 

Too Much Government in Too Many Places

Check out these words of New York Attorney General (and candidate for governor) Andrew Cuomo:

Our system of local government is broken … New York has more than 10,521 overlapping governments, including counties, towns, villages, school districts, special districts and public authorities. These entities impose layer upon layer of taxing structures — with citizens receiving multiple tax bills annually — resulting in the highest local property tax burden in the nation … To hold government to account the people must have a government they can understand. But what they have today instead at the local level is a ramshackle mess. The current local government system is the product of sheer historical accumulation — not logic, reason or common sense.

Well said. No, make that very well said. The Indiana Chamber and many, many others have put forth a strong case in recent years that township government in our state is beyond repair. Each new revelation of outlandish township reserves, unsightly administrative costs to deliver poor relief and outright criminal behavior further makes the point.

But like most challenges, it’s not just an Indiana problem. The Governing magazine article that featured the Cuomo quote also included the following. Maybe, just maybe, the momentum will grow, lawmakers will step up to the plate and all Hoosiers will benefit.

Rich Pahls, a Nebraska state senator from Omaha, has proposed merging many of his state’s 93 counties. The jurisdictions were designed for the days of the horse and buggy, he pointed out to the New York Times, not an era when “people will drive 100 miles to the grocery store.”

New Jersey, meanwhile, has some of the highest property taxes in the country, thanks in part to its 567 municipalities, a third of them with fewer than 5,000 residents, along with 611 school districts and 486 local authorities. Bergen County alone has 70 school districts and 76 superintendents.

New York State has more than 10,500 governmental entities that levy taxes and fees, and that depend on state largesse for any number of needs. This includes towns, villages and a multiplicity of water, sewer, lighting, school, 911 and other districts. Erie County, which is where Buffalo is located, has over 1,000 such local governing entities alone.

But while political leaders in the U.S. have been talking about local government rationalization, in Denmark, they’ve actually done it.

In 2007, Denmark shrunk the number of municipalities from 271 to 98. County government was completely eliminated. Fully 455,000 local government employees were involved in the restructuring; and 30,000 physically relocated to a new site. The government projects $274 million (1.6 billion DKK) in savings from the restructuring.

The implementation of this massive reform, which began in 2002, offers important lessons as other governments look to achieve big cost savings through rationalizing local government.

Anyone hoping to rationalize the delivery of services from the state level on down must first understand where the opportunities lie to eliminate duplication and inefficiency. Then, you need to lay the groundwork for public acceptance of the change. Both of these goals can be served by gathering hard data on what every unit of government does, how much it spends and what it gets for its money. Only after these goals have been achieved can you make that information readily available to the public.

This is not an easy task. The collection of data alone is enormous. But data gives you the ability to shine a light on what is taking place under the status quo, making the tough task of driving change a little easier.

Single Legislative Body in Kentucky?

Forty-nine states do it one way — with two legislative entities (named the House and Senate in all cases, I’m presuming). Nebraska is the exception, with a single lawmaking body. Could Kentucky be the second to go that route? A state political leader said he is "intrigued" by the idea.

The Lexington Herald-Leader reported the following:

About half of the world’s sovereign states are unicameral, including the most populous — the People’s Republic of China — and the least populous — Vatican City.

House Speaker Greg Stumbo, D-Prestonsburg, said unicameralism is touted for saving money and working better in representation because it breaks the state down into equal districts with smaller constituencies — possibly 138 districts in Kentucky.

"This idea that there needs to be some overriding force to keep things in check, maybe as a country we have outgrown that," said Stumbo.

He said his staff has researched the issue and that such a move would require a change in the state Constitution approved by the legislature and Kentucky voters.

"I don’t know if the people of Kentucky would be interested in something like that or not, but I think it’s worth some debate at least," Stumbo said. "I’m intrigued by it. I don’t know if I’m for it, but it’s interesting."