a stateline.org report2004 Stateof the States PREFACE his is Stateline.org’s fourth first woman chosen to lead Louisiana; and a long- annual State of the States time national political powerbroker. Still another report, and we think you’ll element of the book is a set of maps and charts that find it a useful companion will show at a glance how the states divide during this election year. In this publica- politically. tion, our writers not only highlight sig- State of the States exemplifies the timely, in- nificant state policy developments in depth, non partisan information you’ll find every education, health care, tax and budget weekday in the pages of Stateline.org. Our free matters, social issues, energy and the envi- online news site is funded by The Pew Charitable ronment and homeland security in 2003, Tr usts as part of its efforts to inform the public, but also identify trends likely to emerge in policy makers and the press on key issues and 2004. All this will hopefully help you sort trends. Make Stateline.org a bookmark. If you through the campaign rhetoric as candi- haven’t done so already, I hope you’ll also sign up dates for local, state and federal office, for our free daily and weekly email newsletters. including the men and women competing They’re a convenient way to stay on top of impor- for 11 gubernatorial posts as well as the tant events in the 50 state capitals. To subscribe, presidency, gird for battle on November 2. simply visit Stateline.org and click on “E-mail You’ll also find profiles of several “new faces” Newsletter” under the Resources at the top of our T— state leaders who assumed power in 2003 or homepage. who were elected to terms beginning this year. Arnold Schwarzenegger, of course, is the most famous of the new faces, but others in the group are equally interesting. They include two former military aviators, one was a prisoner of war in Viet- Managing Editor nam; a grandmotherly latecomer to politics; the 1 Stateline.org is a non-partisan, non-profit online news publication that reports each weekday on state government. Funded by The Pew Charitable Trusts, Stateline.org was created in 1999 to strengthen and enrich U.S. political journalism by providing information about polit- ical activity in the 50 state capitols. In an era of declining news media presence in statehouses, Stateline.org helps fill the coverage gap. Stateline.org features original stories by staff reporters who track pol- icy trends and highlight the people and events that affect state politics. Our journalists sort through more than 140 online news sources each weekday to link readers to the best of state policy news from across the country. We also provide statistical data and daily and weekly e-mail newsletters. ED FOUHY, Executive Editor GENE GIBBONS, Managing Editor CHRIS CONNELL, Project Editor DAVIDNAGY, Copy Editor tateline.org TIFFANY SHACKELFORD, Publications Manager RANDY RENJILIAN, Business Manager RYAN FOX, Fulfillment NEWSPHOTO CREDITS: The Associated Press S 2 CONTENTS 5 OVERVIEW 9 POLITICS 17 HEALTH CARE 23 EDUCATION 29 TAXES & BUDGET 33 SOCIAL POLICY 41 ENVIRONMENT & ENERGY 47 HOMELAND SECURITY 50 NEW FACES 58 MAPS OVERVIEW By Ed Fouhy, Executive Editor In this year’s State of the States report, Stateline.org staffers have attempted to sort out the key policy developments affecting the states in 2003 and look ahead to the 2004 elections. As in the past three years, the story of the State government expenditures adjusted for states is largely but not exclusively one of budget- inflation are level or declining but, like an increas- induced pain. The National Governors Associa- ingly ravenous man who came to dinner, Medicaid tion characterized the situation faced by its remains voracious. Its costs jumped 9.2 percent in members – the 42 men and eight women with the 2003, several times faster than inflation. Medicaid most on the line — as the greatest crisis for the now accounts for nearly 21 percent of state expen- states since World War II. “There’s been negative ditures. Appropriations for K-12 education, a growth of state tax revenue for the full fiscal year – sacred cow for legislators and governors, are slim- the first time since 1946,” noted NGA executive mer than in the recent past, but were largely director Ray Scheppach. spared the cuts inflicted on other programs. Don Boyd of the Rockefeller Institute, another respected voice on such matters, reported, “Nearly every state faced budget gaps beginning in fiscal year 2002 and those gaps grew in fiscal 2003 and 2004.” By year’s end, eight states had used their tobacco money, 13 had tapped into rainy day funds, 31 had cut spending and 23 had reduced their work force. There was a glimmer of hope late in the year as optimists pointed to slowly declining jobless rates and rising sales tax revenues in some ore than half the states states, evidence that the worst was over. Nonethe- raised taxes, in big ways (New York's $1.4 billion) less, when governors present their new budgets in Mand small (Wisconsin's $1.8 million.) Voters the months ahead, they will do so knowing there remain reluctant to tax themselves, as Alabama are no easy solutions left. The painless cuts have Gov. Bob Riley found last summer when he went been made. to the electorate with a plan to make the wealthy 5 overview pay more and the needy less. Alabamians emphat- The Pew Center on the States is based in Wash- ically said, “No thanks.” ington, D.C., where it often appears that few in Behind the harsh statistics is the story of how the White House and Congress understand the the prolonged fiscal crisis has hurt real people. In Constitution’s Tenth Amendment reserving most Kentucky, for example, a cost-cutting governor powers to the states. Notwithstanding that four of released convicts from prison early. In Texas, our last five presidents were once governors, states 54,000 kids were dropped from CHIP, the pro- have had to fight relentless efforts by Congress gram that provides health coverage for children and the White House to impinge on states’ Con- from low income families. Medicaid cuts in Mass- stitutional powers and impose unfunded federal achusetts left half a million seniors without needed spending mandates. eyeglasses. And in traffic-choked California, authorities said that lower gas-tax collections mean no new highway or transit programs are likely for the next five years. Jason White examines the wreckage as well as the signs that the worst is over. Aside from the fiscal crisis, the most watched development in the states this year was the recall of California’s Democratic Governor Gray Davis and the election of Republican Arnold Schwarzenegger. It was an outcome few could have anticipated when GOP Congressman Dar- prime example is that rell Issa financed the movement last spring to centerpiece of the Bush Administration’s domestic unseat the unpopular, second-term incumbent. program,A the groundbreaking No Child Left For six weeks the eyes of the nation, indeed of Behind Act. The education reform law was many nations, focused on Schwarzenegger, one of increasingly seen by state officials as intrusive and the world’s biggest box office names, as the actor underfunded. Nebraska Education Commissioner drove Davis from office and easily outdistanced Doug Christensen went so far as to call it “mean more than 100 rivals for the job of governor. spirited.” An all-Republican group of state legis- Veteran political writer Lou Cannon lators was rebuffed in an effort to get some of the recounts the tale of that bizarre campaign and the more odious requirements scaled back. challenges ahead for the former Mr. Universe and Special education, where the feds began dic- Te rminator. tating onerous requirements three decades ago, In Texas another act of political theater played remains one of the most egregious and expensive out as Democrats twice decamped from the Lone examples of Washington making promises that it Star State to frustrate a Republican redistricting fails to keep. Special ed alone is underfunded to plan. The wandering solons became the butt of the tune of $11 billion. late night comics, eventually returned to Austin While Congress was quick to order states to and lost their battle. modernize their election equipment in the after- 6 math of the Florida voting debacle of 2000, it has environmental enforcement; and Eric Kelder- been slow to come up with the promised man finds a vat of federal money with many spig- resources. States complained they are $2 billion ots for anti-terrorism measures. short of what’s needed to equip all voting booths This past year, like 2001 and 2002 with modern equipment. before it, ended with zero growth in The states didn’t lose all their battles. Wash- ington provided an extra $20 billion, half for tem- state taxes and revenues. The result is porary aid to fund state services and half to deal families’ struggling to pay both higher with the voracious demands of Medicaid. States state university tuitions and, in some also got $2.2 billion to help meet new Homeland Security requirements. The states kept control of places, higher state and local taxes; their welfare reform programs, at least for now. more kids without health insurance; And the streamlined sales tax project expanded to more seniors in need of services. All 41 states, a necessary first step if the states are to this is in sobering contrast to the begin to collect the sales tax dollars now eluding them thanks to the congressional ban on Internet previous 20 years, when state spend- taxation.