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.

Some Legislators Pushing to End U.S. Senate Elections

For politicos, Indiana's 2012 U.S. Senate primary and election had it all: Drama. Faction rivalries. Gaffes. But if it was up to some legislators, the ultimate victor would not be left up to the general voting public.

Some Georgia Republicans are seeking a repeal of the 17th Amendment, and want state legislators to start appointing Senators in order to bring more power back to the states. The Huffington Post writes:

The resolution calls on Congress to begin the process of repealing the 17th Amendment, passed in 1913, which provided for the direct election of senators. State Rep. Kevin Cooke (R-Carrollton), the main sponsor of the resolution, told the Douglas County Sentinel that moving the power back to state legislatures would allow for the original intent of the Constitution.

“It’s a way we would again have our voice heard in the federal government, a way that doesn’t exist now,” Cooke told the paper. “This isn’t an idea of mine. This was what James Madison was writing. This would be a restoration of the Constitution, about how government is supposed to work.”

In the text of the resolution, Cooke cites Madison's writing in the Federalist Papers, specifying that members of the Senate would be "elected absolutely and exclusively by state legislatures."

The resolution says the 17th Amendment has prevented state governments from having a say in federal government and that repealing the amendment would hold U.S. senators accountable to the states. The federal government has grown in "size and scope," it says, in the century since the amendment was adopted.

The 17th Amendment was adopted out of concern for state-level corruption influencing Senate elections, which Cooke said would not be the case now.

“It’s the responsibility of each and every citizen to make sure of who gets elected to office, that they’re principled people,” Cooke told the Douglas County Sentinel. “You can look at the current state of ethics and transparency. Anybody has the ability to look at money being donated to campaigns. It would keep anything from being done out of the public eye.”

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.”

Column: Right-to-Work States Have Economic Advantage

Andrea Neal of the Indiana Policy Review Foundation penned the following column on right-to-work laws for the Times of Northwest Indiana. The Indiana Chamber has been an advocate for developing a right-to-work law in the state:

It doesn’t take an economist to spot the common thread in these recent economic development headlines:

• Chattanooga, Tenn., July 29: "Volkswagen hires 2,000th employee."
• Shreveport, La., July 28: "NJ-based bag manufacturer to build Louisiana plant."
• Decatur, Ala., July 21: "Polyplex to build $185 million plant."
• West Point, Ga., July 7: "Kia builds vehicle No. 300,000."

All four stories have Southern datelines. All come from states with right-to-work laws, which prohibit labor contracts that require employees to join a union or pay a union representation fee.

This is the issue that prompted the five-week House Democratic walkout during the 2011 Indiana General Assembly. The Democrats — a minority in both House and Senate — had no other leverage. So when a right-to-work bill came up unexpectedly in a session that was supposed to be about the budget, redistricting and education, they bolted. Republicans capitulated and took the legislation off the table.

In 2012, it will return with a vengeance, and this time Democrats can’t avoid it. Right-to-work has been promised a full public airing. The Interim Study Committee on Employment Issues, chaired by Sen. Phil Boots, R-Crawfordsville, is taking a first crack this summer and hopes to recommend a bill by November. Gov. Mitch Daniels, who didn’t support the bill last session, has hinted he might this time around.

The debate goes back to 1935 when Congress passed the National Labor Relations Act protecting employees’ rights to form, join and be involved in unions. One section of the law permitted contracts that made union membership a condition of employment. Congress modified that language in 1947 when it said states could prohibit these. In response, 22 states passed right-to-work laws. Indiana is one of 28 that currently does not have such a law.

Predictably, at last week’s study committee hearing, business interests favored right-to-work while union leaders opposed it. The economists were divided. Richard Vedder, of Ohio University, summarized research showing that right-to-work states have higher rates of employment, productivity and personal income growth. Marty Wolfson, of the University of Notre Dame, testified that right-to-work laws result in lower wages and benefits.

Their conclusions are not mutually exclusive. If you grant Wolfson’s point, the policy question remains: Which is better? A state with higher wages for some but a weaker economy overall or one with lower wages for some and more vibrant growth, not to mention freedom of choice for the worker?

Companies are voting with their feet. To the extent that manufacturers are expanding in the United States — and few are — they are choosing the South and West where right-to-work is prevalent.

Alabama Gov. Robert Bentley, in announcing the $185 million project by Polyplex, the world’s fourth-largest manufacturer of thin polyester film, was blunt: "Alabama is a right-to-work state, and we will continue to be one. That’s one of our advantages for companies who are looking to build on new sites."

Companies won’t readily admit this because what they say can and will be used against them. Currently pending at the National Labor Relations Board is a case against Boeing, which recently opened a second production facility in South Carolina for its 787 Dreamliner airplane.

South Carolina has a right-to-work law. Boeing’s other production site is in Washington state, which does not. The board’s complaint alleges that Boeing chose South Carolina in retaliation for strikes by Washington workers in violation of the National Labor Relations Act. Its proposed remedy would force Boeing to move its South Carolina operation to Washington. This would be an extraordinary use of federal power to promote the cause of organized labor at one company’s expense.

Right-to-work does not destroy unions. It gives workers the right to decide for themselves whether to join. "This greater accountability results in unions that are more responsive to their members and more reasonable in their wage and work rule demands," the Mackinac Center for Public Policy said.

It should come as no surprise to Indiana legislators that expanding industries favor that kind of relationship. The legislative choice is between protecting unions as we know them or protecting the long-term interests of Hoosier workers.

It’s Called the Economics of Education

"A vigorous, successful public education system is essential to Georgia’s economic prosperity." That is the second sentence of a recent report from the Georgia Partnership for Excellence in Education.

But you could substitute Georgia for the name of any other state. No matter the location, other key elements in the study also apply:

  • Main headline: Making the Connection: Why High School Graduation and Work Readiness Matter
  • How about this quote: "The best economic stimulus package is a high school diploma."
  • Or this pullout, in which the specific state numbers may vary, but the message is the same: "Approximately 50.7 percent of Georgia’s high schools are dropout factories — schools in which less than 60 percent of the freshmen class graduate on time."

The message is far from new. Even some of the factors contributing to the shortfall in Georgia have been cited in Indiana and elsewhere. They include sections on Early Life Experiences, Academic Achievement in Every Grade and Transition to Work or Postsecondary Education.

One of my favorite tools, and one you think would have an impact due to its straightforward approach, compares educational attainment to unemployment rates and average wages. We presented a similar chart in our lead story in the March-April BizVoice on higher education collaboration. The numbers, from the Georgia report:

  • Less than a high school diploma, 14.6% unemployment, $23,608 approximate annual earnings
  • High school grad, no college, 9.7% unemployment, $32,552 earnings
  • Some college/associate’s degree, 8.0% unemployment, $37,752 earnings
  • Bachelor’s degree and higher, 4.6% unemployment, $59,124 earnings

Read the study from Georgia here. It’s a shame these points have to be continually made instead of a total emphasis on improving our education systems to meet the glaring needs.

States: Feds Going Too Far in Power Grab

Texas Gov. Rick Perry raised a few eyebrows this spring with comments that were intrepeted as a secession threat. In brief, he said: "We’ve got a great union. There’s absolutely no reason to dissolve it. But if Washington continues to thumb their nose at the American people, you know, who knows what might come out of that."

Lawmakers in Texas and Georgia have also uttered that "s" word. More importantly, however, a number of other states have reignited the issue of federal control vs. states’ rights. It is a valid issue and one that Politico frames in this interesting article.

2010 Numbers Matter — for the Next 10 Years: Congressional Lines Redrawn

For those politically inclined, the work on the next election often begins before the current one takes place. In other words, while November 2008 was drawing plenty of attention at this time last year, there were at least some looking ahead to 2010. That is especially true when the "next" period ends with the number zero.

The every-10-year-period means a new census, a reapportionment of House seats in Congress and new maps for both legislative and congressional districts. There will be a great deal of time to discuss the politics of drawing the lines. For now, the early projections are in place on which states will be winners and losers in the amount of representation they have in Washington.

The National Conference of State Legislatures has its reapportionment outlook. Remember, they are only estimates at this point, but Indiana’s nine seats appear safe. The state, of course, came up short after the 2000 and 1980 population counts — losing a spot in the House each time. (Indiana once had 13 districts before dropping one each after the 1940 and 1930 censuses).

So who wins and who loses in 2011? The big, big winner, according to NCSL, is Texas with the potential of gaining three seats. The South and West also look to benefit from one additional seat for Arizona, Florida, Georgia, Nevada and Utah.

On the other side, eight states stand to lose one seat each. They are Iowa, Louisiana, Massachusetts, Michigan, New Jersey, New York, Ohio and Pennsylvania.

Side notes: If the estimate holds, California would not increase its congressional power for the first time since becoming a state in 1850. Also, pending legislation would increase the size of the House from 435 to 437 — giving the District of Columbia its first vote and allowing one more state to add a seat. (Utah would gain the additional representative, for now, if the legislation passes this year.)

Butler’s Jukes Stands Tall Off the Court

Avery Jukes is a basketball player at Butler University. Being a key player off the bench for an always competitive and sometimes overachieving program would normally be enough to define a young person during his or her college days.

Much more than an athlete, the Georgia native founded the Jukes Foundation for Kids after a volunteer trip to Uganda last summer. The mission is to collect resources, clothing, food and funding for educational needs in the African country. A mechancial engineering and mathematics major, Jukes also plans to assist those in need in his college home by building a youth recreational park in Indianapolis.

The Jukes Foundation is hosting the 2009 Champions for Children Gala on April 17 at the NCAA Hall of Champions. The family friendly event will honor the 2008-2009 Butler basketball team and include other special activities. But it’s not about basketball; it’s a young man doing what he can to help others in need.

Kudos to Avery and best of luck with all his efforts.

You can learn more about the foundation or donate here.

Georgia Feeling Ripped by Rippers

The U.S. Chamber’s blog had an interesting post today about the problematic nature of counterfeiting and piracy and their impact on legitimate economies. Namely, it seems Georgia is especially plagued by these problems. (Is that why they call it Hot-lanta?):

The U.S. Chamber has sponsored a Gallup study which took a look at the impact of counterfeiting and piracy in Atlanta. The survey found that nearly 1 in 5 consumers have purchased an illicit product in the past year; 41 percent in the 18-24 age group have purchased an illicit product in that period; more than 80 percent say the ability to easily obtain them influenced their purchase decision; and a majority greatly underestimate the economic impact of these crimes. Despite the high incidence of these crimes, a vast majority of respondents favor tougher laws and penalties against these crimes.

The prevalence of counterfeiting and piracy in Atlanta should alarm consumers, the business community, and governments alike. Where these crimes exist, consumer health and safety, workers’ jobs, companies’ reputations, and government revenues are at stake. 

Regarding the 1 in 5 consumers part, that’s not surprising. In fact, consider me guilty as charged. But the only reason I purchased that bootlegged street copy of "You Don’t Mess with the Zohan" was that I simply could not wait until its official DVD release. What’s a guy to do?

Russia/Georgia Battle Shows Value of PR

If your communications team has gone round and round about your public relations initiatives, this article by Reuters UK might give you some insight into how valuable messaging can be in the midst of crisis. This piece explains how Russia and Georgia are fighting not just with weapons, but with PR strategies:

Russia wants to convince the world of its role as an honest broker, reluctantly intervening against an out-of-control Georgian president whose forces have carried out ethnic cleansing against the Ossetian people.

 Georgia in turn portrays itself as a plucky little country fighting off the resurgent Russian bear and suffering unfair Kremlin punishment on account of its drive to become a Western democracy and NATO ally.