States Are On the Frontlines In Dealing With the Recession

Progressives tend to focus on federal policy. Yet, a lot more legislating occurs at the state level. Every year, state legislatures consider 150,000 bills and enact 75 times as many laws as the U.S. Congress. And most domestic spending is directed by states—including bedrock programs such as public education, Medicaid, unemployment insurance, transportation, and public safety. So how are our states dealing with the impact of the recession?

This was the subject of a fascinating panel discussion at the America’s Future Now conference [1]with Georgia State Senator Nan Grogan Orrock, Arizona State Representative Kyrsten Sinema (author of the new book Unite and Conquer: How to build coalitions that win—and last [2]), Ned Lamont who in 2006 ran for U.S. Senate in Connecticut, and Nathan Newman who serves as executive director of the Progressive States Network [3].

A little background about progressives in the states. Before the 2006 election, Republicans controlled 20 state legislatures, Democrats led 19, and 10 were split. In 2009, Democrats control 27 legislatures, Republicans hold 14, and 8 are split. In little more than 2 years, Democrats tied for control of the Alaska Senate, and won majority control of the Arizona House and Senate, Delaware House, Indiana House, Iowa House and Senate, Michigan House, Minnesota House, Nevada Senate, New Hampshire House and Senate, New York Senate, Ohio House, Oregon House, Pennsylvania House, Virginia Senate, and the Wisconsin Assembly and Senate.

Some of these victories are historic. The last time Democrats held the governor’s mansion and both houses of the New York legislature was 1935. Every legislative body from Maine to Maryland, with the sole exception of the Pennsylvania Senate, is now Democratic. Every legislative body on the west coast, plus Nevada, is Democratic. And the Midwest is halfway there, with Democrats controlling Illinois, Iowa, Minnesota, and Wisconsin, and picking up one legislative house in Indiana, Michigan, and Ohio.

Clearly, progressives have a real opportunity. But just as Democrats have taken control of state governments, the Bush recession has left states with a tremendous fiscal crisis. According to the Center on Budget and Policy Priorities [4]:

At least 47 states faced or are facing shortfalls in their budgets for this and/or the next year or two. Combined budget gaps for the remainder of this fiscal year and state fiscal years 2010 and 2011 are estimated to total more than $350 billion.

President Obama’s Recovery Act provides $140 billion over two years for fiscal relief to states—only about 40 percent of the states’ budget shortfall. This is what we’ve seen:

First, because states are constitutionally required to balance their budgets, they’ve been forced to cut spending and/or raise taxes. So far at least 36 states have implemented budget cuts. This is not only devastating to state residents—especially people with lower incomes—but it’s also bad for the overall economy. It’s awfully hard to grow America’s economy when states are implementing hundreds of billions of dollars in job cuts.

It’s also difficult to pull the nation out of recession when some conservative governors refuse to accept funds from the Recovery Act. (Although Bobby Jindal of Lousiana and Sarah Palin of Alaska said they would refuse the money, but ultimately backed down and accepted it.)

There are two overall solutions to the crisis. One is to increase federal funding to the states. We need another federal stimulus bill that protects state-funded jobs and services. The other is to ensure that stimulus funds are spent in ways that actually stimulate the economy—saving and creating jobs.

You may be interested in an existing effort—a website at acountablerecovery.org [5]—that holds state and local governments accountable in the implementation of the Recovery Act, making sure the funding projects are transparent, accountable, fair and effective. For much more about progressive state policy, visit our friends at the Progressive States Network [3].