NCSL Top 12 Legislative Issues of 2012

From the National Conference of State Legislatures --

Forty-six states will hold a legislative sessions in 2012, and many policymakers cannot shake the fact that the sluggish economy has controlled the nation’s legislative agendas for the past six years. But for the first time since the recession began, lawmakers will not spend the first part of their legislative session addressing new budgets shortfalls that have opened up since the legislature passed a budget. States are now halfway through the second quarter of FY 2012; new budget gaps are practically nonexistent.

This does not mean states are rolling in the dough. Revenue collections over the past year have increased for states, but at a very slow pace. A new "State Budget Report" released in December by the National Conference of State Legislatures (NCSL) shows state economies are starting to rebound and show signs of strength.

“The revenue growth states have experienced has helped to mitigate budget shortfalls,” said William Pound, executive director of NCSL. “It could help stave off some of the deep cuts that lawmakers have made in previous sessions.”

Innovation has been the key over the last few years, as state lawmakers and legislative staff have been forced to do more with less. States have looked at public-private partnerships in corrections and transportation, creating state-owned banks, privatizing social services and even consolidating state agencies and functions, such as combining state park and wildlife duties under one agency.

Money is the starting and stopping point for virtually every state program and service. This year will be no exception and the budget will still dominate the agenda for most states in 2012, especially with the uncertainty of the how federal deficit reductions will affect fiscal year 2013 state budgets.

Each year, NCSL develops an annual list that examines some of the most pressing and important topics on state legislative agendas. The Top 12 of 2012 is not meant to cover every topic or issue states will tackle during the upcoming legislative session, but rather to highlight some of the program areas and issues that will command the attention of policymakers.

The top 12 Issues of 2012 are listed in no particular order.

Federal deficit reduction affect on state budgets

The actions taken by Congress to reduce the federal deficit will have a significant impact on the states and FY 2013 budgets. Lawmakers in eight states—Hawaii, Maine, Maryland, Massachusetts, Tennessee, Utah, Vermont and Virginia—developed contingency plans in the event that federal cutbacks were recommended by the Joint Select Committee on Deficit reduction or in case automatic cuts went into effect. Action by Congress will likely happen in FY 2013. Several states have indicated this will be a significant issue to grapple with in 2012 legislative sessions.

Budgets

The Great Recession has given way to what some are calling the Great Unknown for several reasons. Unemployment rates are still in the double digits in some states and the demand for state services, especially Medicaid, are expected to remain high for the foreseeable future. In addition, the level of support from the federal government could be changing. Even though half the states predicted in NCSL’s "State Budget Update" that revenues are likely to meet FY 2012 estimates, budget officials recognize state economies are fragile.

Jobs and state economies

Many states have proposed job creation initiatives to address the effects of the recession on state unemployment rates. A number of these initiatives involve state tax credits for creating new jobs. Other proposals include small business development, increased capital in local financial markets, changes to state development funds and investments in green energy. In addition, a number of states have initiated state-level stimulus plans to create jobs and spur economic development. Public spending on infrastructure projects, small business development, job creation incentives, and investments in green energy and health technology are some of the ways states have tried to jump start their own economies.

Pensions

Over the past two years, 40 state legislatures enacted significant revisions to at least one state retirement plan. The changes have ranged from increasing employee contribution requirements, and age and service requirements for retirement, to revising cost-of-living adjustments. In 2012, states are expected to continue to look at redesigning retirement plans, controlling costs for retiree health care programs, and emphasize managing unfunded liabilities.

Medicaid: Efficiencies and quality

Recent studies have confirmed what many policymakers already know: The tough economy is making it difficult to balance or even plan for their state’s Medicaid budgets. In 2011, nearly every state implemented some form of cost containing action within their Medicaid program. However, states are not just cutting to meet budget demands. State policymakers—looking toward the 2014 eligibility expansion of Medicaid dictated by the ACA—are exploring innovative ways to improve the value of the Medicaid program. To do this, states are aligning incentives with their desired outcomes and experimenting with new payment models, such as attaching provider payments to patients’ health outcomes, and with new delivery systems by creating medical homes and streamlining services for those eligible for both Medicaid and Medicare.

Elections: ID and early voting

In an election, the goal for states is to ensure all votes cast are valid, and that all valid votes are counted. While 2012 may not see the volume of voter ID legislation that states saw in 2011, the issue will continue. A flurry of lawsuits could surround the voter ID legislation states passed in 2011, and some states will reintroduce voter ID laws in 2012. Also, the 2012 presidential election will be the first big election with so many new voter ID laws in place; 31 states now require all voters to show ID before voting at the polls. States may struggle with implementation of their voter ID laws well before Election Day, since they must run voter education campaigns and get free IDs into the hands of those who need them. The voter fraud vs. voter disenfranchisement arguments will continue, as both sides seek evidence to support their views. Making sure voters are registered in time to cast a ballot in 2012 is another key issue lawmakers could grapple with in 2012. Issues like same-day registration, modernization (online and iPad voting), proof of citizenship to register, and keeping voters on voter rolls. Over half the states allow some method of early voting. In 2011, key states such as Ohio and Florida cut back the timeframe in which voters can cast a ballot. 2012 may bring more legislation to restrict pre-Election Day voting because of administrative and/or cost concerns, or partisan lines.

Health: Reform in the states, health care exchanges, technology and benefits

This spring, the U.S. States Supreme Court will hear arguments on the Patient Protection and Affordable Care Act, better known as federal health reform law. With a ruling not expected from the nation’s high court until the summer multiple elements of health reform—establishing health benefit and health information exchanges, along with essential benefits packages—will remain a dominant issue for legislative sessions.

ESTABLISHING HEALTHE BENEFIT EXCHANGES: 
The establishment of exchanges will be a 2012 priority for those states that intend to do so. Many states will be considering action in 2012 to meet the Jan. 1, 2013, deadline to have a state plan and to be eligible to receive financial assistance from the federal government to set up a state-based exchange. Fourteen states passed legislation in 2011 to establish an exchange. Two states, Massachusetts and Utah, established exchanges in 2006 and 2009 respectively prior to passage of the ACA.

HEALTH INFORMATION EXCHANGE:
One focus for state legislatures in 2012 will be how to move health care providers, especially those participating in the Medicaid program, toward the adoption of certified electronic health records (EHRs). Essentially, instead of having a different health record at each doctor or provider you visit, an EHR will serve as one file that all of your doctors can see. EHRs, once fully implemented, are expected to provide doctors and health professionals with easier access to patient histories and data, resulting in cost-savings and better health outcomes by removing costly errors and duplications in services. In addition, states are responsible for building and implementing health information exchanges (HIEs) where those EHRs can be accessed by health care providers. HIEs function like an online file cabinet where your medical record is securely stored, and can be accessed by any doctor or health care professional you visit. By mid-year 2012, every state should have Medicaid EHR Incentive programs in place and will be working toward building an HIE by late 2014 or early 2015 as required by deadlines attached to federal cooperative agreements.

ESSENTIAL BENEFITS PACKAGE AFFECTING STATE MANDATES:
Major federal requirements are scheduled to be announced in the coming months. Almost 2,000 state laws already mandate varied health coverage, but some states’ requirements will differ from the federal list. This means an intense discussion in 2012-13 because premiums in some areas may go up and some may go down. State and federal requirements also cover different types of insurance, so coordination of benefits also will be part of the discussion. For states that are challenging the legality of the individual coverage mandate, the pending lawsuits also may affect legislative agendas next year.

Criminal Justice: Reducing crime, managing resources and reexamining juvenile justice systems

Lawmakers are interested in results-based, data-driven sentencing and corrections policies. A number of states are achieving safer communities with “justice reinvestment” and related strategies that manage growth in corrections expenditures, generate savings and increase the effectiveness of current criminal justice spending, and make investments that improve offender accountability and reduce crime. At least 10 states during the last two years have adopted justice reinvestment related sentencing and corrections reforms, often directing savings to improved probation and parole supervision or expanded access to drug treatment. In 2011, at least a dozen states addressed improved community supervision with laws requiring the use of evidence-based programs and providing alternatives to incarceration for probationers and parolees who break the rules. Recent sentencing and corrections reforms also expand access to drug treatment, and continued state legislative interest is expected in review of drug crime sentencing and diversion policies. In 2011, at least nine states expanded eligibility for community-based treatment programs such as drug courts or adjusted downward the criminal penalties for lower-level use and possession offenses. At least 13 states currently have study committees exploring corrections and sentencing policy changes to consider in 2012 legislative sessions.

The past decade has seen a steady decline in juvenile crime rates and also a reexamination of appropriate boundaries between juvenile and criminal justice systems. States also are pursuing juvenile rehabilitative and treatment policies; and actions to provide due process protections for juveniles. At least 10 states passed laws in the past two years requiring that counsel be provided to young people during all critical stages of juvenile proceedings, and at least half of the states increased mental health and substance abuse treatment for youth. Juvenile justice reforms in 2012 are expected to focus on approaches that control costs while also providing for public safety and better outcomes for young people in the justice systems. This includes actions to divert youth from institutional placement, invest in community based alternatives to incarceration, and expand prevention programs.

Education: Funding and compliance

As states embark on their sixth straight year of budget deficits, they will look to education—both K-12 and higher education—for additional cuts. While higher education has suffered very deep cuts, K-12 has been somewhat immune. Together, K-12 and higher education consume nearly 50 percent of state budgets, so cash-strapped states looking for more cuts will have to go where the money is. As states look at K-12 cuts, they will want to consider how they might reallocate K-12 resources to programs that have shown consistent return on investment in terms of student achievement. This includes improving teacher and principal quality/effectiveness and funding K-12 differently. Higher education is likely to face even more cuts, pushing states to consider dramatic new arrangements with colleges and universities that will give them more flexibility over the limited dollars they receive from the state.

2012 will be a very important year for key federal education actions that will affect states. First, reauthorization of the Elementary and Secondary Education Act may occur early in the year and the U.S. Department of Education has announced waivers from some provisions of existing law. The waivers and reauthorization legislation both move away from some of the more restrictive components of No Child Left Behind. Accountability structures, including state standards, tests, and evaluations of teachers and principals will still be a focus of federal policy. In addition, the federal government may move on some important issues in higher education that will affect student financial aid and student debt. With many states expected to continue to cut both K-12 and higher education budgets in 2012, policy decisions at the federal level may affect state flexibility, state authority and state budgets. Over the last two years, 48 states have adopted the voluntary common core state standards. Two assessment consortia are now working with the states to design new tests that link to the new standards. State legislators will have much to do to prepare for implementing the new standards and assessments. This includes finalizing the design of the new standards, making sure teachers are trained and ready to teach to the new standards, and incorporating new tests into current state accountability systems.

Transportation: Funding and drugged driving

A large gap still exists between available revenue and actual money needed for infrastructure maintenance and new transportation projects. States will continue to seek new revenue sources in 2012 as revenue from the gasoline tax continues to decline. In addition, states expect a ruling on the federal surface transportation reauthorization in 2012 that will help stabilize state planning and funding of transportation projects.

Distracted driving is another transportation concern that made its way onto the radar screens of lawmakers during the 2010 legislative session. States continue to address the dangers concerning distracted driving, impaired driving and drugged driving. Drugged driving, in particular, has been implicated in an increasing number of vehicle crashes and fatalities. All but two states have passed legislation to create Prescription Drug Monitoring Programs (PDMPs), and the big issue now is funding them and getting them established. Only about 35 are currently functioning; most of those states track data only within their state and do not share information with other states. There has been a discussion of a national controlled prescription database (NASPER), but it remains pending in Congress. In the meantime, states are examining ways to address impaired driving that involves illegal substances and/or prescription drugs.

Environment: Implementing new federal regulations

As it expands to meet growing demands, the energy industry will have to comply with a wave of new federal regulations.  Aimed at protecting public health and environmental quality, new clean air and clean water rules will force significant changes by coal, natural gas and nuclear power providers. While utilities will pay the compliance costs, those costs will be passed on to consumers and ratepayers. States will largely be responsible for implementing the new federal standards in a way that protects natural resources, citizen’s health, and the economy. Many state lawmakers are concerned about these costs and how they can be reduced. Long-term planning for clean energy and efficiency can help avoid regulatory costs.

Natural Gas

New natural gas discoveries have been a game changer for the industry, lowering prices and adding stability. This has led to more construction of natural gas plants and some displacement of coal with natural gas. The new technology that has opened up these resources, fracking, has some worried about water contamination and other environmental impacts. States are working to develop adequate regulations to protect the environment given the explosion in natural gas extraction.

Other issues of interest to state lawmakers:

FORECLOSURES: States continue to address the ongoing housing crisis. With housing values staying depressed and unemployment numbers still elevated, policymakers are trying to find ways to help families stay in their homes.

FOOD SAFETY AND SYSTEMS:With the recent deaths from listeria-contaminated cantaloupes and salmonella outbreaks in eggs, food safety is topping many agendas. Congress passed the Food Safety Modernization Act in January 2011, which enhances the nation’s food safety regimen, much of which is done by states. States will either have to update their food safety programs or rely on the federal government to enforce these programs. Bills in 44 states were introduced in 2011 regarding food safety, and more are expected in 2012.

POVERTY AND THE IMPACT OF PUBLIC PROGRAMS: In this economic climate, states have had to cut funding at the same time that many families need support to find and keep a job. Many of these providers, like small businesses, have struggled. According to NCSL’s November "State Budget Update," four states reported overspending in social service programs. Maryland’s Department of Human Resources will need at least a $143 million to cover several programs and agencies, including the Temporary Assistance for Needy Families (TANF). Massachusetts noted its emergency homeless shelters were over budget in FY 2012 and Maine projects its Child Development Services program will request supplemental budget funding this fiscal year. Many states will look at the pros and cons of privatization as state funds remain tight and lawmakers look to improve the effective delivery of services.

NCSL is a bipartisan organization that serves the legislators and staffs of the states, commonwealths and territories. It provides research, technical assistance and opportunities for policymakers to exchange ideas on the most pressing state issues and is an effective and respected advocate for the interests of the states in the American federal system.