Economics and Finance

CSG Midwest
Michigan has become the third Midwestern state in three years to repeal its prevailing-wage law, which requires government contractors to provide employees with union-level wages and benefits for state or local public works projects. This legislative action came in June and did not require gubernatorial action. That is because the prevailing-wage repeal was scheduled to appear on the fall ballot. Under Michigan law, the Legislature has 40 days to adopt or reject a ballot proposal. If a proposal is not enacted within this time frame, it goes to the voters. The Detroit Free Press called the Legislature’s decision “the latest blow to organized labor.”
CSG Midwest
Minnesota has become the latest state in the Midwest to enact major legislative reforms designed to improve the long-term health of its public retirement system. SF 2620 received unanimous support in the state House and Senate.
“[It] stabilizes pension benefits for 511,000 [Minnesota] workers, retirees and their families,” Gov. Mark Dayton said when he signed the bill in late May.
Before enactment of this legislation, Minnesota faced $16.2 billion in unfunded pension liabilities; the new law puts the state on a path to fully fund its retirement system within 30 years. The state will contribute $27 million in 2019 and $114 million during the next biennium. Under the law, too, public employers and current public workers will pay higher contribution rates. The state also reduced the cost-of-living adjustment for current retirees.
CSG Midwest
Recent headlines have pointed to some of the strains (a mix of new tensions and a flare-up of longstanding conflicts) in the U.S.-Canada relationship. There have been proposed U.S. tariffs on steel, harsh words exchanged on Canadian dairy policy, and threats by President Donald Trump to end the North American Free Trade Agreement.
But dig a little deeper, and a much different story emerges — one of economic interdependence and cooperation in key areas such as energy and the environment.
“The relationship at the provincial-state level is probably as strong, if not stronger, than it has been since the mid-1980s,” says Carlo Dade, director of the Canada West Foundation’s Trade and Investment Centre, pointing, in particular, to the deeper relations built between state governors and provincial premiers.
Canada and the United States share much more than the largest binational border in the world; their peaceful relationship has contributed to economic growth in both countries as well as to the development of an intricate, integrated trading partnership.
“We are moving away from just being trading partners; now we are business associates that build things together and sell the finished products both domestically and around the world,” notes Christopher Sands, director of the Canadian Studies Program at the School of Advanced International Studies at Johns Hopkins University.
This thriving cross-border supply chain is one of several critical pieces of the U.S.-Canada relationship, and much of it is centered in the Midwest.

States continue to take significant actions in attempts to lessen barriers to workforce entry caused by occupational licensing. CSG currently facilitates a consortium of 11 states looking at occupational licensing reform as a part of the Occupational Licensing Assessing State Policy and Practice project in partnership with NCSL and NGA, funded by the US Department of Labor. However, the examples below come from states not currently participating in this project’s consortium, signifying that occupational licensing reform is a priority for states nationwide, and not just the 11 states participating in this CSG project.

An uptick in concern about digital privacy is sweeping the nation. Incidents such as injury law firm advertisements targeting emergency room patients based on location, smart home assistants recording conversations unbeknown to their owners, and Facebook’s Cambridge Analytica scandal have all contributed to concerns about digital privacy.

The home sharing industry is booming and the sharing economy is more than established in many cities across the United States. Companies like Airbnb and Uber are leading the way for the industry’s boom. As expected, property rights will be a hot topic surrounding these companies and property owners for years to come. Efforts made by the states to regulate this industry, promote economic growth and protect the best interests of their constituents will continue to be under a microscope.

A commonly cited argument for occupational licensing reform states that licensing results in restricted employment growth and higher wages for licensed workers, which in turn increases consumer costs. Higher wages benefit licensed workers, but wage disparity leads to inefficiency and unfairness, including reducing employment opportunities and depressing wages for excluded workers.

CSG Midwest
In 2017, because they lacked the authority to require the collection of sales taxes on remote sales, states and local governments lost up to $13 billion. With one Midwestern state leading the way, this legal and fiscal landscape could change soon, depending on how the U.S. Supreme Court rules in South Dakota v. Wayfair.
For now, a 1992 decision, Quill Corp. v. North Dakota, is the law of the land. It says that, minus congressional action, a state can only require businesses with a substantial presence, or nexus, to collect and remit the sales tax. That ruling has affected not only state tax bases, but the competitiveness of Main Street businesses as well — particularly with the rise of electronic commerce (see line graph).
Four years ago, The Council of State Governments, in partnership with the State and Local Legal Center and members of the Big Seven organizations representing state and local governments, filed an amicus brief critiquing Quill, which prompted Justice Anthony Kennedy to ask for a case to overturn the ruling.
CSG Midwest
No state in the Midwest requires that a certain percentage of contracts be given to minority- or women-owned businesses. (Outside the region, Connecticut requires that 6.25 percent of the value of state and local government contracts go to companies owned by women, minorities or disabled individuals.) However, at least three states have specific goals set in statute: Illinois, Ohio and Wisconsin.
CSG Midwest
In some rural parts of Ohio, access to broadband seems a long way off, with entire areas lacking access to high-speed internet service. For other businesses and residents, the infrastructure is frustratingly close, but out of reach.
“We have a marbling effect throughout the rest of the state — even in suburban and urban areas — where we have a street over here or a cluster of homes over there that cannot get broadband infrastructure built out to them,” Ohio Rep. Rick Carfagna explains.
Two separate bills are being considered this year to address those two distinct problems associated with Ohio’s digital divide.
Under HB 378, the state would use some money from its existing Third Frontier Initiative ($50 million for each of the next two years from the proceeds of bond issues) to help fund broadband infrastructure projects in underserved areas of the state.

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