Kelley Arnold

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Things are starting to look up for state pension systems.

“Conditions affecting public pension plans continue to improve,” said Keith Brainard, research director for the National Association of State Retirement Administrators.

That’s good news following years of warnings about the sustainability of state public pension systems. A Pew Center on the States 2010 report warned of a $1 trillion gap between what states had set aside for pensions and the real price tag for those benefits.

States Strive to Find a ‘New Normal’ in Providing Services

When Jennifer Granholm was governor of Michigan, she had to make cuts in state government—a lot of cuts. “It was two terms of shrinking the size of government and dealing with the shrinkage of tax revenues … from the contraction in our economy,” Granholm said.  She cut nearly $15 billion of state spending, shrinking the size of Michigan state government by 13 percent, more than any state in the country, from the turn of the century to the end of her second term in 2011. It was necessary, but it wasn’t easy.

Public pension systems continue to face significant challenges, a trend that has continued for more than a decade. While public pension difficulties alone would not be a destabilizing force on the economy, the fact that every other element of our nation’s retirement architecture also faces complex challenges requires the urgent attention of policymakers at all levels of government. The funding difficulties facing the Social Security and Medicare systems; the rising funding gap at corporate pension plans, record deficits at the Pension Benefit Guaranty Corporation (or PBGC, the federal entity that insures the benefits of private pension plans), low personal savings rate of so many Americans alongside the minimal amounts they have set aside for retirement, the “graying” of America with an increasing number of Americans now reaching retirement age and living longer; and the aforementioned public pension challenges cumulatively amount to a tsunami of red ink.

The lack of a true federal energy policy has been a source of frustration for policymakers on all sides of the ideological spectrum. Unfortunately, Washington will provide little clarity any time soon as the pattern of fits and starts and conflicting messages on energy policy will continue as gas prices climb.

But there is some good news despite the gloom. Oil and natural gas production is booming domestically, with states directing 96 percent of the increase in production since 2007. Solar installations doubled and installed wind energy increased by 31 percent over the past year.

The economics of alternative energy development, however, rely heavily on federal tax incentives and low-interest loans that have come under fire over their cost and charges of political favoritism by picking winners and losers.

The crystal ball is murky when it comes to predictions about energy consumption, markets and future trends.

Consider hydraulic fracturing, for example. Ten years ago, the U.S. Geological Survey estimated resource potential in the Marcellus Shale region was off by 70 times, according to current federal surveys.

“I think it’s essentially impossible to anticipate what energy markets are going to look like in 20 or 30 years, because the rate of change in technology and potential for climate change are so great and so disruptive that the world is going to be fundamentally different than it is now,” said John Petersen, the founder of the Arlington Institute, a nonprofit research organization that focuses on future global trends.

Puerto Rico Gov. Luis Fortuño has taken steps to lower energy costs and decrease the island’s dependence on foreign oil. He also sees benefits in working with other U.S. territories in the Caribbean to address energy challenges.

2012 is supposed to be the Year of the Electric Vehicle—the year when Americans stop asking if electric vehicles are for real, according to Pike Research.

The global marketing firm that analyzes clean energy markets, expects more than 257,000 plug-in electric vehicles will be sold worldwide in 2012. More than 66,000 of those will be sold in North America alone.

That’s a lot of new cars needing to be plugged in every night to recharge.

For the first time in more than 30 years, the Nuclear Regulatory Commission has given the go-ahead to build reactors at two existing nuclear power plants—one in Georgia and one in South Carolina. Some pundits have said this signals a nuclear renaissance for the United States, while experts agree that it’s more of a nuclear thaw.

“We are in expansion mode,“ said Steve Kerekes, senior director of media relations for the Nuclear Energy Institute, a policy organization representing the nuclear industry. “We readily acknowledge it’s going to be a fairly measured expansion. At best, we’ll have five new reactors online by the end of this decade.”

With no pun intended, Sen. Jim Kyle believes the future of solar energy in Tennessee is bright.

Kyle, sponsor of the state’s Clean Energy Act of 2009 championed by former Gov. Phil Bredesen, said the new solar farm near Memphis and the success of the Tennessee Solar Initiative will determine whether that future will be dimmed in any way.

“There’s a lot riding on these two particular projects,” Kyle, a 1986 Toll Fellow, said.

The economic forecast was anything but rosy when the Car Allowance Rebate System—otherwise known as Cash for Clunkers—kicked off in July 2009.

Unemployment had reached 9.4 percent. Both Chrysler and GM had filed for bankruptcy. Things were not looking good for the economy in general or automakers specifically. That’s where Cash for Clunkers came in.


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