Policy Area

A modernized Medicaid system will give states greater flexibility with reduced administrative burden. The Deficit Reduction Act of 2005 gives states additional flexibility to provide health insurance coverage among low-income but healthy children and families that reflect the 21st century dynamics in health insurance and increased options for community alternatives rather than being stuck in the assumptions that are now 40 years behind the times.

If there is one thing the past year has taught us, it is to expect the unexpected. No one could have foreseen some of the events our nation has experienced during calendar year  2005—events that have had tremendous impact on citizens and, by default, also on governments. Uncertainty spawned by unpreventable natural occurrences, coupled with longstanding issues faced by state governments, has made this year an interesting one, to say the least. However, state governments continue working to learn from the past and make informed decisions for the future.

While the national economy began to ease its way out of the recession two years after economists declared an end to the debilitating condition, state economic development organizations continued their ardent efforts to further economic development in 2005 as though the recession was still nipping at the nation’s heels. States’ ardent drive for local economic advancement expanded in several areas, from increased efforts to lure filmmakers to developing comprehensive information Web site portals for businesses seeking to relocate.

Governors did seem to concentrate heavily on their education budgets this year, and then on the budgets of other activities that are primary to the mission of state government. Yet threaded through these addresses is a stronger consideration of a multi-pronged and multi-year view of government operations—understanding state education services on a continuum from pre-kindergarten to work force retraining, for instance. Governors are aware of the federal government’s slowing financial support as well as its poor reaction to Katrina and what this means for state coffers.

The clash over cash to corporate projects is headed to the country’s highest court, and is also the subject of a new bill in Congress. What emerges from those two branches of the federal  government may go a long way toward solving state and corporate uncertainty about incentive programs. Details of a case in North Carolina may offer some guidance as to what lies ahead.

Only two governorships were contested and decided in the elections of 2005—those in New Jersey and Virginia. In both political situations the races seemed very close in the campaign “horserace” polls, yet in the final vote count, the Democratic candidates won by nearly nine points in New Jersey and by nearly six points in Virginia. This continued the Democratic Party’s control over these two gubernatorial chairs and left the 50 states split with 28 Republican governors and 22 Democratic governors holding office in 2006.

Congress reauthorized the nation’s welfare bill along with the Deficit Reduction Act of 2005. The legislation substantially changes TANF’s work participation requirements. States will need to meet a 50 percent participation rate for all families receiving assistance, including those in separate state-funded programs. The rate will be adjusted downward for any caseload decline occurring after 2005. The new participation requirement will present a challenge to many states. Current work participation rates generally fall substantially below the new requirement. Also, many states have depleted their TANF reserve funds, leaving them little flexibility to develop new strategies to increase work among caseload participants.

Court security proved to be a danger that could bring the branches of government together. A series of summits brought together officials from all three branches of government at the local, state and federal levels. The result was A National Strategic Plan for Judicial Branch Security. Other dangers were not adequately addressed, especially those resulting from efforts for politicize the judiciary in ways that pose fundamental threats to longstanding checks and balances among the branches of state government.

The United States and Canada have the largest and most diverse bilateral economic relationship in the world. Even though the national governments establish the broad policy parameters in their respective federal systems, state, provincial, and municipal governments are becoming more actively involved in cross-border relations. This proliferation of trans-border linkages among subnational governments can be expected to accelerate in the future.

State policymakers, like those in many other fields, are facing a crisis in leadership. Recent studies of leadership recommend greater attention to shared leadership and a “values”  perspective. But the most recent literature also recognizes leadership is an art rather than a science—an art that can be learned.

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