T h e C ou n c i l o f S tat e G o v e r n m e n ts | I n s i g h ts & I n n o v at i o n s
HOT TOPIC : North America
Why Canada & Mexico Matter to the States
10 Countries Important
to States For Global Trade States Go Own Way on Immigration Effects of NAFTA Two Decades Later
Now It’s Time to Govern
“(International trade) is our ticket out of this recession, but it is also our future.“
—Washington Governor Chris Gregoire, chair of the National Governors Association
Plus : Compact Would Give States Power Over Transmitting Power
JULY | AUG 2011
CAPITOL IDEAS | contents © Getty Images/Jennifer Thermes
On the Cover Washington Gov. Chris Gregoire, the 2010–11 chair of the National Governors Association, says new governors face some daunting challenges. But, she said she told them at an NGA orientation retreat, now is the time to “set your partisanship behind you, now it’s time to govern.” COVER PHOTO BY AARON BARNA
JULY / AUGUST 2011
HOT TOPIC—NORTH AMERICAN RELATIONSHIPS
HOT TOPIC— FOREIGN TRADE
HOT TOPIC— IMMIGRATION
TRANSMISSION LINE SITING
Erik Lee, the associate director of the North American Center for Transborder Studies at Arizona State University, says geography, security and employment are three big reasons Canada and Mexico matter to the U.S.
A survey by the State International Development Organizations, known as SIDO, found at least 37 states operate trade offices overseas. See 10 countries that have attracted a number of states looking for trade opportunities.
State policymakers are frustrated at the inaction of the federal government with regard to immigration. Many are going their own way in addressing the issue.
A proposed compact would assist states in streamlining the nation’s energy infrastructure.
JULY / AUG 2011
contents | CAPITOL IDEAS
© AP Photo/Rick Bowmer
hot topic | 14 north american relationships Erik Lee, the associate director of the North American Center for Transborder Studies at Arizona State University, says geography, security and employment are three big reasons Canada and Mexico matter to the U.S.
16 nafta update
After 17 years living with the North American Free Trade Agreement, state legislators are paying more attention to trade deals their states join.
18 transportation and trade
Transportation of freight is vitally important to trade across North America. Many states are taking action to ensure that freight moves freely.
24 foreign trade
A survey by the State International Development Organizations, known as SIDO, found at least 37 states operate trade offices overseas. Ten countries attract a number of states looking for trade opportunities.
26 border security
JULY / AUG 2011
The border with Canada may pose a bigger threat to the U.S. than the southern border, according to a new report from the U.S. Government Accountability Office.
28 immigration State policymakers are frustrated at the inaction of the federal government with regard to immigration. Many are going their own way in addressing the issue.
32 GROWING HISPANIC POPULATION
The U.S.’s Hispanic population grew 43 percent from 2000 to 2010, but that population grew faster in some states than in others.
feature | 42 transmission line siting
A proposed compact would assist states in streamlining the nation’s energy infrastructure.
44 STATE GAS TAXES
The federal gas tax hasn’t been raised since 1993, and has never been adjusted for inflation. Although the price of gas continues to rise and fall, the amount of each state’s gas tax has nothing to do with that fluctuation.
© AP Photo/Krista Kennell/Sipa Press
© AP Photo/The Lafayette Daily Advertiser, P.C. Piazza
they said it | 5 INTERNATIONAL TRADE regional roundup | 6 EAST 7 SOUTH 8 MIDWEST 9 WEST by the book | 10 NORTH AMERICAN TOURISM
Tourism has long been an important source of trade across North America.
in the know | 12 TRADE OUTLOOK
Tim Keating, senior vice president of government operations for The Boeing Company, says the U.S. can and will compete in the global market.
10 questions | 34 Washington GOV. CHRIS GREGOIRE
The 2011 chair of the National Governors Association offers some advice to new governors facing tough times: “Set your partisanship behind you, now it’s time to govern.”
straight talk | 38 has nafta helped?
Businesses and other stakeholders discuss the effects of the North American Free Trade Agreement 17 years after implementation.
stated briefly | 40 AFFILIATE & ASSOCIATION NEWS
News from The Council of State Governments and its affiliates
how to | 46 use facebook on the road | 47 UPCOMING MEETINGS shout out | 48 rep. eddie lucio
Meet Texas Rep. Eddie Lucio, who says public service and leadership are part of the family business.
CSG’S EXECUTIVE DIRECTOR | note
It’s a Small World in Search of Big Ideas The late speaker of the U.S. House of Representatives, Tip O’Neill, once said, “All politics is local.” Anyone who has ever run for a state or local office can certainly relate to the truth that saying expressed. Candidates know voters care most intently about the issues that directly impact their daily lives and wallets. Usually those issues are close to home. It is also increasingly clear that the definition of “local” is rapidly expanding. It is safe to say jobs and energy are among the most “top of mind” issues for citizens today. The solutions for those challenges are directly impacted by global events and trends. Citizens and lawmakers are quickly realizing their “own backyard” is, in fact, the world. Speaker O’Neill’s saying might best be revised by the popular bumper sticker, “Think Globally, Act Locally.” With this issue of Capitol Ideas, The Council of State Governments is here to help you do just that. CSG has, at its core, the mission to promote excellence in state governance by connecting state leaders to the resources and insights they need to effectively navigate today’s policy environment. Some citizens believe their lawmakers should never look beyond the boundaries of their state and the media is often far too ready to criticize a legislator for, God forbid, travelling out of state to gain insights to better serve their state and its residents. I understand the politics of all of that—I just think the result is shortsighted and ultimately self-defeating. In today’s world, legislators should be encouraged to travel, to seek better ways of addressing issues, to connect with other leaders and learn from each other. This works best eyeball to eyeball. Anyone in politics will tell you relationships matter, and yet, so many lawmakers are prevented from taking the first step out of their state to foster the relationships they can leverage to be even more effective back home. New ways of thinking, inspiration for transformation, finding out what has worked elsewhere seldom can be found by narrowing one’s horizon. No one has time for junkets. The challenges facing our states are too intense and the solutions are too elusive. What we need is more opportunities to bring leaders together, outside their own states, in a civil, nonpartisan forum with the goal of enhancing understanding, sharing insights and formulating solutions. That is the very reason the states came together to create CSG in 1933. It is essential we give our members a good reason to invest their time and money in attending our meetings, training sessions and conferences. Study the agenda for our regional meetings this summer and check out the incredible program we have put together for our National Conference and North American Summit in October. When you do, I hope you will agree CSG is delivering on our promise to provide you with what you need to lead, produce results and deliver on your promise to the citizens you serve.
Please let us know how we can serve you and I hope you enjoy this issue of Capitol Ideas. At The Council of State Governments, it is easy for us to think globally, because we think the world of our members. Very truly yours,
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I hope you will plan to expand your horizons and join us for an exploration of big ideas in an increasingly small world. What better way to think globally and prepare yourself to act locally? To get all the details, simply visit www. csg.org online or give us a call toll-free at (800) 800-1910.
CSG enjoys close ties to many of the provinces in Canada that have chosen to affiliate with our regions and we work closely with Mexican state leaders through our Border Legislative Conference and Border Alliance. We know U.S. state leaders have much to learn from provincial and state leaders in Canada and Mexico and we have mutual interests worth pursuing together. After all, borders are only lines on a map. Trade, commerce and people flow across those borders and we all have a stake in the prosperity and security of our North American neighbors.
3 capitol ideas
In this issue, we preview many of the topics that led us to conclude state leaders could significantly benefit from convening a North American Summit. The CSG North American Summit will be a part of our 2011 National Conference in Bellevue, Wash., (metro Seattle), Oct. 19–23. It’s the perfect place to come together to study the trends shaping the future of our continent.
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CAPITOL IDEAS, 1549-3628, JULY/AUG 2011, Vol. 54, No. 4—Published bi-monthly by The Council of State Governments, 2760 Research Park Dr., Lexington, KY 40511-8482. Opinions expressed in this magazine do not necessarily reflect the policies of The Council of State Governments nor the views of the editorial staff. Readers’ comments are welcome. Subscription rates: in the U.S., $42 per year. Single issues are available at $7 per copy. POSTMASTER: Send address changes to Capitol Ideas, Sales Department, P.O. Box 11910, Lexington, KY 40578-1910. Periodicals postage paid at Lexington, Ky., and additional mailing offices.
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The Council of State Governments president Gov. BRIAN SCHWEITZER, Montana | president-elect Gov. Luis Fortuño, Puerto Rico chair Deputy Speaker BOB GODFREY, Connecticut | immediate past chair SENATE PRESIDENT DAVID L. WILLIAMS, Kentucky
JULY / AUG 2011
executive director/ceo DAVID ADKINS (email@example.com) | washington, d.c., director CHRIS WHATLEY (firstname.lastname@example.org) east director WENDELL M. HANNAFORD (email@example.com) | south director COLLEEN COUSINEAU (firstname.lastname@example.org) midwest director MICHAEL H. McCABE (email@example.com) | west director KENT BRIGGS (firstname.lastname@example.org)
gov. brian schweitzer Montana CSG National President
Deputy Speaker bob godfrey Connecticut CSG National Chair
Hon. gordie gosse, jr. Nova Scotia CSG East Co-Chair
MLA Leo Glavine Nova Scotia CSG East Co-Chair
Sen. Mark Norris tennessee CSG South Chair
Rep. Scott Reske Indiana CSG Midwest Chair
Rep. Marcus Oshiro Hawaii CSG West Chair
INTERNATIONAL TRADE | they said it “We must think holistically about international trade and recognize that world trade can cause economic adjustments that require training and temporary support to individuals in impacted industries.” —Letter from 25 governors to President Obama and Congressional leaders in support of new international trade agreements with South Korea, Colombia
“… We need to export more of our goods. Because the more products we make and sell to other countries, the more jobs we support right here in America.” —President Barack Obama, during his 2011 State of the Union speech
and Panama in which they encouraged support for the Trade Adjustment Assistance Program to help U.S. workers
“A significant percentage of all things we export are
manufactured goods, and the
demand for these goods is enormous throughout the world.” —Ron Bloom, an economic adviser to President Obama
among 2012 presidential contenders
”… Trade is one of the best ways to grow our economy through high-paying jobs for American workers and increase opportunities for American farmers, ranchers and business owners.” —Iowa Gov. Terry Branstad, in a May 23 press release urging passage of free trade agreements with Colombia, Panama and South Korea
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during a Republican debate in New Hampshire
—Former Minnesota Gov. Tim Pawlenty
“I’m for fair and open trade, but I’m not for being stupid and I’m not for being a chump.”
regional roundup | CSG EAST
DE • MA • MD • ME • NH • NJ • NY • PA • RI • VT • NB • NL • NS • ON • PE • PR • QC • VI
The East UNICAMERAL BILL
Maine Rep. Linda Valentino has introduced a bill calling for an amendment to the state constitution to merge the state Senate and House into one legislative body. The bill proposes a 151-member unicameral body in which members would be referred to as senators. Valentino’s goal is to increase legislative efficiency and reduce costs, reported the Kennebec Journal. Nebraska is the only state that has a unicameral legislature.
Repeat DUI offenders in Vermont will face potentially longer jail sentences thanks to a law signed by Gov. Peter Shumlin. In addition to increased jail time, if a person has a repeat DUI conviction with a blood alcohol limit of at least 0.16, the legal limit for driving may be reduced for them from .08 to .02 for a period of three years, reported the Burlington Free Press.
The Connecticut House passed a bill in May that would give sentence-reduction credits to prison inmates if they participate in self-improvement programs. The contested and controversial bill was amended to prevent those convicted of the most violent crimes from being eligible for the reduction, according to The Hartford Courant. Gov. Dannel Malloy is expected to sign the bill into law.
New Jersey Gov. Chris Christie in May signed into law a bill requiring background checks for school board members, The Record of Bergen County, N.J., reported. Every board member, in both local districts and charter schools, will be required to undergo a criminal background check within 30 days of being elected or appointed to a board. The law also forbids people who have committed certain drug-related or violent offenses from serving on a school board.
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© Getty Images/Imagezoo
SUNY IMPACT A State University of New York study revealed the tremendous impact the university system has on the state. According to the study authorized by SUNY Chancellor Nancy Zimpher, SUNY has at least a $20 billion economic impact on the state. The report indicated the university system created $460 million in state and local taxes in 2008–09.
learn more about these and other in the Eastern Region, visit: Todevelopments capitolideas.csg.org and www.csgeast.org.
New Hampshire Courts Cut Workforce Faced with funding gaps it could not overcome, the New Hampshire judicial system has cut its workforce by 13 percent through layoffs and retirements. The judicial system made the move to partially offset a $3.2 million deficit in its 2011 fiscal year budget, reported the New Hampshire Union Leader. The judicial branch also eliminated nearly 100 vacant positions and instituted 12 unpaid furlough days that recently closed courts. Some opponents of the cuts said the effort to close the funding gap has led to delays in service throughout the system and these delays can have real-life implications for residents. “In many cases, justice delayed becomes justice denied,” Manchester District Court Assistant Melissa Laferriere told the New Hampshire Union Leader. “When a domestic violence victim can’t get a restraining order, when a family can’t have their mentally ill child committed, when a landlord can’t get
an order to evict the tenants who are damaging his building, in all these cases, court delays have real consequences for the citizens who are looking to the judicial branch for help.” New Hampshire Supreme Court Chief Justice Linda Dalianis said the state would no longer close the courts to the public to try and save money. “Our doors will be open; our judges, administrators and state will be at work five days a week. We will not shut down our courts again to save money,” said the chief justice during a speech at the University of New Hampshire School of Law. The workforce reduction, which affected 73 people, is just one way court officials expect to save money. On the recommendation of the New Hampshire Judicial Branch Innovation Commission, the state plans to reorganize and combine the district, family and probate courts into a circuit court.
CSG SOUTH | regional roundup
AL • AR • FL • GA • KY • LA • MO • MS • NC • OK • SC • TN • TX • VA • WV
© Getty Images/Rob Colvin
BREWERIES AND BREW PUBS
Alabama lawmakers have approved a bill to permit brew pubs to distribute their beers and allow breweries to serve their products at their plants, reported The Associated Press. The legislation, sponsored by Sen. Bill Holtzclaw of Madison, is expected to bring more jobs to the state by expanding the number of breweries and brew pubs. Under the new measure, brew pubs must be located in historic districts or areas designated as economically distressed by city councils.
Tennessee lawmakers and police are struggling to curb the sale of synthetic substances that produce effects similar to those of illegal recreational drugs, such as cocaine, marijuana or Ecstasy, according to The Tennessean of Nashville. Officials must find a way to stop the drugmakers’ ability to make slight changes to substances, effectively skirting the ban.
South Carolina Grants Amazon Five-Year Tax Exemption
JOBS FOR JOPLIN
The Clarion-Ledger of Jackson, Miss., has reported that five Mississippi schools will receive more than $6.9 million in the 2012 fiscal year to improve their performance. The funding comes from the U.S. Department of Education’s School Improvement Grants, designed to turn around the nation’s lowest-performing schools. Four schools have opted to apply a transformation model—replacing the principal and making changes to instruction, training and community outreach—and one has chosen a turnaround model replacing the principal and half of the school staff.
learn more about these and other in the Southern Region, visit: Todevelopments capitolideas.csg.org and www.slcatlanta.org.
JULY / AUG 2011
After a deadly tornado ravaged Joplin, Mo., Gov. Jay Nixon committed $25 million from the 2012 fiscal year state budget to pay for immediate costs of the natural disaster. The governor also announced an initial $5.8 million investment to establish the Missouri Disaster Recovery Jobs Program, which will create temporary jobs for workers who were left unemployed. According to the governor’s news release, the program will employ more than 400 workers to assist with cleanup and humanitarian efforts.
of the taxes due on sales, but the company is not required to disclose buyer information to state revenue officials. Online consumers are expected to independently pay taxes on purchased items. The initial tax loss from the exemption is estimated at $2.5 million annually, however, supporters say state and local treasuries will net a minimum of $11 million each year from payroll and property taxes from the online retailer. Construction on the $125 million center near Cayce, S.C., is set to resume once the law takes effect. It is expected to be the area’s largest development in recent years. Amazon received a free site, property tax cuts on equipment, state job tax credits and repeal of Lexington County’s restrictions on Sunday morning sales to support the company’s 24-hour operation. For more information, view the Southern Legislative Conference of The Council of State Governments’ fiscal alert publication, “Amazon.com and the States Untapped Revenue Streams,” at http://www.slcatlanta.org/ publications.shtml.
South Carolina lawmakers voted in June to grant Amazon a five-year exemption from sales taxes on purchases by South Carolina residents, The State reported. The vote was a considerable defeat for businesses that maintain physical store operations, as they complained the online rival was being given unfair benefits. Many political leaders in the state sympathize with the brick-and-mortar businesses. Gov. Nikki Haley consistently has argued the proposed exemptions are poor tax policy and discriminate not only against the big stores, but also against smaller independently owned businesses. The governor allowed the measure to be enacted without her signature. The legislation will permit the online retailer to open a distribution center, bringing approximately 2,000 jobs to the state by the end of 2013. Supporters suggest the potential number of jobs could double within a decade as Amazon surveys other parts of the state to build additional facilities, should sales increase. Amazon agreed to notify customers
Kentucky legislators passed a measure that gives city governments the authority to recoup tax dollars spent on maintaining vacant houses, The CourierJournal of Louisville reported. Municipal government liens for the cost of maintenance will be paid from the proceeds of the property sale before other creditors. Only unpaid property taxes will have higher priority than maintenance liens.
DEBT COLLECTORS Oklahoma recently passed a new law to stop the aggressive tactics used by debt collectors, according to The Oklahoman of Oklahoma City. The bill, which makes it illegal for debt collectors to threaten a debtor with a lawsuit after the statute of limitations has passed, or to use “obscene or profane language,” was adopted unanimously. The legislation also expanded the state’s “no-call” list to include text messages, except in cases where the consumer has agreed to receive them.
regional roundup | CSG MIDWEST
IA • IL • IN • KS • MI • MN • NE • ND • OH • SD • WI • MB • ON • SK
The Midwest CAPITOL WATER COOLERS
As Kansas starts the new fiscal year, taxpayers will no longer be responsible for footing the bill for capitol water coolers. Effective July 1, state officials now have to pay for their own water and water coolers. Total savings to the state are estimated at about $100,000 per year, reported the Lawrence Journal-World.
The Wisconsin Legislature’s budget committee in June voted to go along with Gov. Scott Walker’s plan to shut down two juvenile prisons. The move would close Ethan Allen School and Southern Oaks Girls School, both located in southeastern Wisconsin. The state would transfer inmates to other facilities. The Associated Press reported that closing the facilities would save the state about $46 million during the next two fiscal years.
DES MOINES ON TOP The Des Moines metro area has the highest median income in the nation relative to the cost of living, according to an analysis of U.S. metropolitan areas with populations of 500,000 or more, by U.S. News & World Report. The 2009 median household income in Des Moines was $56,576; when adjusted for cost of living, it was $62,446.
CIVIL UNIONS The Illinois civil union law took effect June 2, allowing samesex and heterosexual couples to enter into civil unions with rights similar to those of married couples. The law—which Gov. Pat Quinn signed in January— grants hospital visitation rights, adoption and parental rights, pension benefits, the right to share a room in a nursing home, inheritance rights, the ability to make emergency medical decisions for a partner, and the right to dispose of a partner’s remains, according to the governor’s office.
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Because of the deluge of rain across the Midwest this spring, many farmers could face reduced yields and delayed harvests this year. The wet weather has led to muddy fields, preventing farmers from getting crops in the ground. As of June 1, only 55 percent of North Dakota’s spring wheat crop had been planted, reported the Grand Forks Herald. Typically, the newspaper reported, 95 percent of spring wheat would have been planted by June 1.
© Corbis/Paul Levinson
learn more about these and other in the Midwestern Region, visit: Todevelopments capitolideas.csg.org and www.csgmidwest.org.
New Ohio Law Cracks Down on Pill Mills Ohio Gov. John Kasich signed House Bill 93 into law in May. The new law strengthens the state’s fight against doctors who illegally dole out large doses of pain medication. Kasich signed the bill as an emergency measure, allowing it to take effect immediately. The bill, which had bipartisan support, bolsters the Ohio Automated Rx Review System to help pinpoint extensive prescription drug use. The new law also limits a prescriber’s ability to personally furnish prescription drugs, improves licensing and law enforcement for pain-management clinics and develops a statewide prescription drug “take-back” program, according to The Columbus Dispatch. The “take-back” program allows Ohioans to turn in unused prescription drugs to keep the drugs from being sold on the street. “If you overprescribe, we’re going to come get you. This is about our children. It’s about our mothers and fathers. It’s really about Ohio fami-
lies,” said Kasich. “If you’re out there breaking the law, you may get away with it for awhile, but these professionals, they’re gonna come get you.” State officials hope to lower the staggering statistics that reflect how bad the prescription drug abuse problem has become in Ohio. According to a 2010 report by the Ohio Prescription Drug Abuse Task Force, “unintentional drug poisoning” has been the leading cause of injury death in Ohio since 2007. Additionally, the state’s overdose death rate tripled between 1999 and 2006. During that same time period, the rated doubled across the U.S. And in 2008, prescription drug overdoses were more common in Ohio than heroin and cocaine overdoses combined. The new law joins the efforts already put in place by Ohio Attorney General Mike DeWine. In February, DeWine announced the addition of three prosecutors to focus solely on prescription drug abuse. He also pledged to offer training for local law enforcement.
AK • AZ • CA • CO • HI • ID • MT • NM • NV • OR • UT • WA • WY • AB • AS • BC • GU • MP
CSG WEST | regional roundup
© Corbis/Steve Kropp
Colorado Governor Vetoes Bill to Increase Health Care Premiums
California Gov. Jerry Brown has eliminated more than 400 administrative positions in the state’s Department of Corrections and Rehabilitation. The restructuring effort will save California taxpayers $30 million, according to the governor’s office. These cuts are in addition to the roughly 1,000 prison headquarter positions that have already been cut during the past 18 months, reported California Watch.
A New Mexico program that supplements food stamp benefits for low-income elderly and disabled residents will end July 1, The Associated Press reported. The program, which began in 2007, supplemented food stamp benefits to ensure at least $25 a month in assistance. The state did not include the program in the 2012 budget.
TOURISM SPENDING The Hawaii Tourism Authority reported visitor spending was up 17.8 percent during the first four months of 2011 compared to last year. Additionally, figures showed an increase in the average daily spending from $159 per person in April 2010 to $178 per person in April 2011. The April figures were the 12th consecutive month of double-digit increases in tourism spending, reported The Associated Press.
» JULY / AUG 2011
and 250 percent of the federal poverty level would have been required to pay monthly premiums of $20 for one child and $10 for each additional child, up to a limit of $50 per month per family. Hickenlooper noted the Department of Health Care Policy and Financing estimated approximately 20 percent of those currently enrolled in the Child Health Plan Plus program—about 2,500 children—would drop out of the program because of the increased premiums. While Republicans expressed disappointment with the governor’s unwillingness to sign what they saw as a vital step in health reform, Hickenlooper said he will move forward with other reforms. In a letter to the General Assembly, the governor said the Department of Health Care Policy and Financing will conduct a cost analysis that will lead to changes in enrollment fees.
MINERAL VALUATION Wyoming Gov. Matt Mead said the overall value for minerals produced in his state was $15.5 billion in 2010, according to a press release. This represents a 23 percent increase over 2009 and is the second highest value ever. “This is another sign that in Wyoming, we are headed in the right direction,” Mead said.
Colorado Gov. Bill Hickenlooper in May vetoed a bill that would have required some parents with children enrolled in the state’s Child Health Plan Plus to pay higher premiums, reported The Denver Post. In a letter to the General Assembly that explained the reasons for issuing his first-ever veto, Hickenlooper said he understood the bill was passed with good intentions, but he believed the undesirable effects were too great. Under the current program, families pay annual fees of $25 for one child or $35 for more than one child. The fee is waived for pregnant women and families with incomes less than 150 percent of the federal poverty line, according to The Denver Post. Senate Bill 11-213 would have increased these fees exponentially, which Hickenlooper cited as his major concern. Under the bill, families with household incomes between 205
TAX COLLECTIONS State tax collections in Arizona are up 17 percent over last year, reported The Arizona Republic of Phoenix. Due to the increase in collections, the state has been able to cut the 2011 fiscal year deficit by 47 percent, according to information released by the Joint Legislative Budget Committee.
learn more about these and other in the Western Region, visit: Todevelopments capitolideas.csg.org and www.csgwest.org.
by the book | NORTH AMERICAN TOURISM
Destination: North America Tourism has long been an important source of trade across North America. Canada and Mexico are among the top five for tourists visiting the U.S., and U.S. citizens topped the number of visitors to Canada in 2010. Mexico is a tourist hot spot, and Expedia reports travel bookings to the nation are up 25 percent over the past 12 months.
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on its credit cards by Visa reported amounts spent s $4.4 billion in 2010, inbound visitors to Mexico wa up from $4 billion in 2009. edia, travel bookings According to a report from Exp nds to Mexico are up made through its various bra months. 25 percent over the past 12
NORTH AMERICAN TOURISM | by the book THE BOOK OF THE STATES Since 1935, The Council of State Governments’ The Book of the States has been the leading authority on information about the 50 states and territories.
Top 10 Countries of Origin for U.S. Visitors 2010 International Visitor Spending
$14.6 b $11.6 b
U.K. $8.7 b
Top 10 International Visitor Arrivals to Canada 2010 (Excludes Immigrants, Former Residents, Military)
Japan China S. Korea Australia 0.24 m 0.2 m 0.17 m India 0.24 m 0.13 m Mexico Germany 0.34 m 0.12 m France 0.44 m United Kingdom 0.73 m
United States 20.2 m
Top Three Destinations for Tourism Investment in Mexico During the First Quarter of 2011
11 capitol ideas
san luis potosi $101.43 m
mexico city $164.18 m
Sources: U.S. Department of Commerce, International Trade Administration, Manufacturing and Services, Office of Travel and Tourism Industries, May 2011. Statistics Canada, February 2011. Mexico’s Tourism Ministry.
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Nayarit $164.18 million
in the know | TRADE OUTLOOK
The U.S. Can and Will Compete in the Global Market
TIM KEATING SENIOR VICE PRESIDENT OF GOVERNMENT OPERATIONS THE BOEING CO.
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It is hard to exaggerate the importance of trade to Boeing, which every year is one of America’s largest exporters of manufactured goods. Last year, two-thirds of the revenue we booked from commercial airplane sales came from customers outside the United States, and more than 80 percent of our current $255 billion commercial airplane backlog is destined for customers overseas. The global demand for Boeing products and services supports tens of thousands of jobs at Boeing and its 22,000 suppliers across the United States. The U.S. Department of Commerce estimates there are 6,000 jobs behind every $1 billion in export sales. By that measure, the $26 billion of Boeing exports last year directly supported more than 156,000 U.S. jobs. Those are impressive numbers, but the best may yet be ahead of us. We conservatively estimate that there is a $3.6 trillion global market for commercial airplanes over the next 20 years, more than 80 percent of it outside the United States. With 95 percent of the world’s population and 70 percent of global purchasing power outside the United States, it is no surprise that the biggest opportunities for Boeing and for every other American business are in other countries. And that is why we must fully embrace and encourage international trade. The potential benefits of trade to the U.S. economy are huge, and the fears of trade exaggerated because America can compete and win in the global market. Of course, trade is a two-way street. U.S. access to overseas markets is granted in exchange for foreign access to the U.S. market. Access to foreign markets is one of the reasons companies like Boeing purchase some of the parts and services they need from other countries. The other reason is that companies like ours can compete successfully only if we maintain our technological edge, and that means tapping into the best ideas, the best talent, and the best products and services
wherever they may lie. Mostly, we find the best right here in America, but we need to think globally when partnering to keep our competitive edge and our factories humming here at home. Government also plays an important role in helping U.S. companies and their workers compete globally. In brief, this is what American businesses need from government: Investments in education, particularly science, technology, engineering and math education—Leadership in those fields is crucial to America’s future success in a knowledge-based global economy. Ratification of pending free trade agreements and negotiation of more FTAs— Where FTAs have been established in the past, the U.S. is running a trade surplus, and many of our European and Asian competitors are aggressively establishing FTAs with their own trading partners. Enforcement of trade agreements—Foreign competitors and their government champions must be held to the agreements they sign; we need a level playing field. Advocacy of U.S. products and services— Other governments aggressively promote their countries’ products; the U.S. government must match those efforts. Continuation of Export-Import Bank loan guarantees for U.S. exports—If we can’t match what other governments provide in the way of export financing for their domestic producers, we’ll be at a significant competitive disadvantage; besides, the fees Ex-Im charges foreign customers for its services earn a profit for the U.S. Treasury and help lessen the federal deficit. Adoption of reasonable tax and regulatory policies. Coordinated government action in these six areas, combined with American ingenuity and enterprising spirit, will produce great results for our nation’s economy. We can and will compete successfully in the global market.
NORTH AMERICAN ISSUES | hot topic
SHARED BORDERS, Shared Issues ÂŠ Cobris/Ocean
Âť JULY / AUG 2011
The relationships the United States shares with Canada and Mexico are among the most important the nation has globally. Many states benefit from trade and tourism with our neighbors to the north and south. But those relationships are also complicated ones, as evidenced in some level of import/export imbalance, as well as how to handle the immigration issue and security along the borders. The Council of State Governments will hold a North American Summit in conjunction with its National Conference in October to explore issues of interest to all three nations. This issue of Capitol Ideas touches on those issues in an effort to illustrate the interconnectedness of the three nations.
Relationships with Canada, Mexico Among the Most Important for U.S.
hot topic | NORTH AMERICAN RELATIONSHIPS
Geography, Security and Employment:
. .S U the to atter M ico ex M and Why Canada by Erik Lee
JULY / AUG 2011
Our relationship with our neighbors Canada and Mexico often flies far below our collective radar in the United States. Events in China, Afghanistan, Iraq and even Colombia often take center stage—and often to our neighbors’ chagrin. And while we are long past George Washington’s famous warning against foreign entanglements, we often ask in frustration, “What do we have to gain by dealing with other countries?” On difficult days, this is as true for our North American neighbors as it is for anywhere else in the world. The answer is that our complex and messy democracy has— after much discussion—essentially decided that there is quite a bit to gain from these relationships. In particular, our economic relationship with our neighbors—while always contentious—forms one of the key pillars of the U.S. economy’s flexibility and continuing overall strength. First, it’s important to be absolutely clear on the numbers without getting lost in them. Canada and Mexico are G-20 countries with some of the largest and most robust economies in the world. They are the United States’ number one and number three trading partners, respectively. (China displaced Mexico from the second-place ranking shortly after it joined the World Trade Organization in 2001). This is two-way trade, which totaled $918 billion in goods in 2010; services trade totaled $99 billion in 2009. Canada and Mexico are the top two countries for U.S. exports. Of particular interest in North American trade is energy, which makes up a large part of this trade. Canada and Mexico are our first- and third-ranked foreign petroleum suppliers; Saudi Arabia is second. For a petroleumintensive economy such as that of the U.S., to have two of your top suppliers next door is fortuitous, to say the least. Simply put, that’s why we work with Canada and Mexico: geographical convenience and the security of the supply chain.
Trade Is Tough
And yet it is safe to say that these are not well-known facts outside of specific communities that deal with energy issues on a regular basis: oil company executives and middle-managers, energy agency bureaucrats, commodity traders, a few scattered academics and policy wonks. Main Street is largely unaware of this economic interdependence. Why is this? With respect to how our country deals
with trade issues in general and particularly with respect to Canada and Mexico, I very much want to emphasize the word “messy.” Getting a trade agreement through Congress is a Herculean task. The benefits of trade are broad, diffuse and not well understood by the public at large. The pain—both perceived and real—is felt acutely by a concentrated few. And the intensely detailed nature of trade agreements and negotiations is by its nature quite daunting and even regarded with suspicion by affected groups. So trade is both abstract and quite detailed, which is a truly bad combination for public officials trying to communicate its value. Coming to terms with the challenges of understanding trade is a difficult task for our neighbors, too. The Canadian example on the ambivalence of trade is an interesting one. Our northern neighbors bitterly debated the U.S.-Canada Free Trade Agreement and the merits of free trade more broadly during their 1988 elections. Yet it is interesting to see how Canada’s Department of Foreign Affairs and International Trade combines the mandates of our State Department and Department of Commerce. Essentially Canada has decided—over time, with much heated debate—that with more than 90 percent of its population living within 100 miles of the Canada-U.S. border, its international relations are its commercial relations, and particularly with its number one trading partner, the United States. Mexico is no stranger to bitter debates over trade either. The implementation of the North American Free Trade Agreement in 1994 coincided with an exceedingly difficult economic downturn in Mexico precipitated by the December 1994 peso devaluation. While NAFTA is perceived as a failure by a significant portion of Mexican society, many in the private and public sectors in Mexico don’t see it that way. In its relations with the United States, Mexico strongly emphasizes the importance of its trade relationship, though it has struggled with articulating exactly how this relationship is linked to creating and sustaining jobs in the United States. A new trade map developed by Mexico’s Secretariat of the Economy titled “U.S.-Mexico Economic Relations: Job Creation Starts with Trade,” seeks to address this gap in understanding. To take an illustrative example, according to the map, 13,100 jobs in New Hampshire depend on trade with
NORTH AMERICAN RELATIONSHIPS | hot topic
Mexico, and the state exports $769 million in goods to that country. Who knew?
Private Sector Challenges
15 capitol ideas JULY / AUG 2011
Erik Lee is the associate director of the North American Center for Transborder Studies at Arizona State University, a university-based public policy analysis and advisory group that collaborates with key partners to improve North American cooperation and prosperity. The center works to promote a safer, more prosperous, more competitive, more cooperative and more sustainable North American region. For more information, visit http://nacts.asu.edu/.
Businesses themselves do not view trade in a uniform fashion. The extent to which you benefit rather depends on where you are on the map and how big of a firm you are. The North American Free Trade Agreement had specific benefits for large companies that moved goods between subsidiaries in Mexico, Canada and the U.S. These companies are major employers and employ a huge number of people in the three countries. Yet one of the challenges of trade in general is how to push the benefits of trade to medium and small-sized companies. The farther down the ladder you go in terms of the size of companies, the more of a challenge it is to export. U.S. companies have the benefit of operating in the enormous U.S. market and many smalland medium-sized companies quite often have not (yet) even considered overseas operations or simply don’t yet have the means to enter overseas markets. The reverse is true as well; companies abroad often struggle to internationalize their operations. A recent Americas Quarterly article on trade noted that 90 percent of companies in Latin America do not engage in international trade. Governments are aware of this, of course. The Obama administration launched its National Exports Initiative in 2010 with an ambitious goal of doubling U.S. exports by 2015 “in order to enhance and coordinate federal efforts to facilitate the creation of jobs in the United States through the promotion of exports,” as the executive order explained. In what continues to be a painful economic recovery, it really comes down to jobs. And because the U.S. has an immense and immensely complex economy that essentially depends on Canada and Mexico’s economic cooperation, in all likelihood these two countries will continue to be our “goto” customers, next-door business partners and “jobs co-creators” for the foreseeable future.
hot topic | NAFTA UPDATE
Trade Deals Get More Attention Due to NAFTA The way Hawaii Rep. Roy Takumi sees it, states didn’t pay close attention to the impact free trade agreements would have on state policies in the 1990s, when Congress passed the North American Free Trade Agreement, known as NAFTA. They’re paying attention now. “As (free trade agreements) started to proliferate, legislators, including myself, became more aware of how these trade agreements went beyond international trade and encroached into what (were) matters that states and only states historically dealt with,” Takumi said. That includes procurement, investment and service policies. As Congress considers additional trade agreements with South Korea, Colombia and Panama, state policymakers are taking
action and making their concerns known. That includes what they perceive as lost jobs. But Takumi and others say it goes well beyond that. “In every (free trade agreement), there may be sections that are benefits and others that are not,” he said. “Or it could be beneficial/ negative to some states and not to others.” That’s why a growing number of policymakers are questioning whether the federal government should have the power to unilaterally bind states to provisions of those agreements. In fact, a bipartisan group of lawmakers from across the country crafted a letter asking Congress to prioritize state sovereignty in any U.S. trade agreements. “We strike a fine balance between the powers granted to the state and federal govern-
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“If we continue to expand these types of (free trade) agreements without any input from the states, state sovereignty will be eroded, diminishing our right to govern based on the characteristic needs of the locality.” —New York Assemblyman William Colton
by Mary Branham
ment, and as a democratic society, we must seek transparency to ensure that this balance is not skewed and rights are preserved,” said New York Assemblyman William Colton, a leader in the effort to get state opinions to Congress. He also sponsored the Jobs and Free Trade Act during this legislative session in New York. “If we continue to expand these types of agreements without any input from the states, state sovereignty will be eroded, diminishing our right to govern based on the characteristic needs of the locality,” Colton said. His legislation would require New York’s governor to get consent from the legislature before giving the U.S. trade representative permission to bind the state to any trade agreements. It also would establish a task force to analyze the potential effects of such agreements on state laws, regulations, the economy and employment. Hawaii was the first state to pass such legislation. Although no free trade agreements have been enacted since the state approved the legislation in 2007, Takumi believes it will help his state. “At a minimum, there would be hearings, which would enable the public to weigh in as to whether or not signing on to (a free trade agreement) is in the best interests of the state,” he said.
Policymakers like Takumi and Colton want to pre-empt the negative effects they have
NAFTA UPDATE | hot topic
“Exports support domestic jobs, but imports displace them.” The problem, Scott said, is the government economists simply looked at tariffs, which NAFTA eliminated. But tariffs weren’t the only thing that mattered in the agreement. Scott said the agreement contained 2,000 pages of measures designed to make Mexico a safer place to do business, as well as investor guarantees that eliminated certain tools Mexico had previously used. The agreement, for instance, eliminated the requirements that companies make investments in Mexico or export a certain amount of products, he said. “What that did was make Mexico a much more attractive place to invest,” Scott said. “The real driving force of NAFTA was the growth of foreign investment in Mexico.” Many companies, he said, closed U.S. factories and moved to Mexico to take advantage of low wages and a very friendly investment environment.
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Many of these free trade agreements, Scott said, allow states to opt out of certain provisions if they do so before signing on. And that’s just what they are doing with these new agreements after their experiences with NAFTA. Some state policymakers don’t like the sections on services and government procurement.
In past agreements, Scott said, states have been required to participate in government procurement agreements with other countries, which prevents them from purchasing locally made products. States are now opting out of those sections. “They’re using state purchasing power to keep jobs at home,” Scott said. And state officials are paying more attention to the new agreements that mirror NAFTA and other trade agreements approved in the past. “At a minimum,” said Takumi, “states should have the right to decide whether or not trade agreements are in the best interest of their citizens in areas such as procurement, investment and services that have always been under the purview of states and not the federal government.” As Colton from New York puts it: “As a state legislator, I have no constitutional authority to regulate interstate commerce, let alone commerce with other nations. But I do have the authority under the 10th Amendment to create laws that protect the people living in this state and to improve their quality of life.”
States Taking Action
© Cobris/ Paul Schulenburg
seen in the 17 years since NAFTA has taken effect. The nonpartisan Economic Policy Institute quantified that impact in a recent briefing report, “Heading South: U.S.-Mexico trade and job displacement after NAFTA.” As of 2010, the trade deficit had displaced 682,900 U.S. jobs, said Rob Scott, senior international economist and director of international programs at the institute, the author of the report. Every state and every Congressional district has lost jobs because of the trade imbalance that came when NAFTA took effect in 1994, Scott said. “Prior to NAFTA, we had a surplus with Mexico that was sustained for a decade or more … roughly balanced trade,” Scott said. “That changed very significantly after NAFTA took effect on Jan. 1, 1994.” And it’s hit every state. The most affected states are those in the Rust Belt, which were heavily dependent on manufacturing. Michigan was the hardest hit, losing 43,600 job opportunities—about 1 percent of state employment in 2005–07, according to Scott’s research. Economists predicted at the time NAFTA was passed the U.S. would gain several hundred thousand jobs due to growing trade surpluses with Mexico, according to Scott. But they also predicted that exports to Mexico would grow faster than imports. That didn’t happen. “These job losses are being driven by growing trade deficits with Mexico,” said Scott.
hot topic | Transportation and Trade
States Act to Keep
Freight Movin’ On by Sean Slone
JULY / AUG 2011
Transportation and Trade | hot topic
Interstate 5 is a major West Coast artery for trade, connecting Canada, the United States and Mexico. Between Vancouver, Wash., and Portland, Ore., I-5 crosses the Columbia River along a five-mile stretch that has long been considered one of the country’s biggest traffic chokepoints. The I-5 bridge, which handles more than $40 billion in freight traffic annually, is expected to see a 77 percent increase in large truck traffic in the next 20 years. The four to six hours of congestion the area sees daily could extend to 15 hours a day by 2030. “It’s … the only drawbridge left between Mexico and Canada on the interstate system on the West Coast,” said Oregon State Rep. Cliff Bentz, who co-chairs the House Transportation and Economic Development Commit-
tee. “It’s the only place where you actually have to stop (highway) traffic to let river traffic pass.” And an out-of-date bridge is only part of the problem, Bentz said. “There are seven interchanges—three on one side (of the bridge) and four on the other—that are hugely important to freight and export opportunities,” he said. “The congestion and the hazardous traffic situation presented by the bridge and the adjoining interchanges are making Oregon and that part of Washington less attractive to investment and business.” A bistate Columbia River Crossing Task Force began work in 2005, considering nearly 40 proposed bridge, tunnel and transit solutions to improve the area. The
© AP Photo/Rick Bowmer
19 capitol ideas
COLUMBIA RIVER BRIDGE Vancouver, Wash.— The Interstate 5 bridge spans the Columbia River. Legislatures in Washington and Oregon aren't expected to consider raising taxes this year to help pay for the $3.5 billion cost of replacing the bridge. But either or both states could raise taxes as early as 2012 to fund improvements.
» JULY / AUG 2011
hot topic | Transportation and Trade
governors of Oregon and Washington signed off this spring on one preferred alternative—a 10-lane truss bridge to replace the existing I-5 bridge. But much work remains. Federal and state agencies are conducting environmental and economic impact studies and policymakers are pondering how best to secure needed federal funding for the new bridge and other infrastructure improvements. Bentz was among the sponsors of a resolution during the legislature’s 2011 session that urged the federal government to build, rebuild and modernize bridges, interchanges and highways in the Columbia Crossing area “in recognition of the national benefits inherent in the area.” “The president and the secretary of transportation (Ray LaHood) have both expressed an interest in investing significantly in our nation’s transportation system and I think they would focus on areas of greatest impact and this is certainly one of them,” Bentz said. In addition to a federal commitment, the project will likely require tolling and perhaps other revenue mechanisms to become a reality, according to Bentz. But adopting new tolls to help fund the project could be a lot more difficult if a conservative political activist in Washington state has his way. Tim Eyman has said he may try to put a state initiative on the 2012 Washington ballot that would require the state legislature to approve new tolls, rather than an unelected transportation commission, which was given the authority in the state’s current budget. Gov. Chris Gregoire, who in May signed what lawmakers agreed was a bare-bones transportation budget for the next two years, has said Washington likely won’t have the money for either general road maintenance or major projects like the Columbia Crossing in the years ahead unless a new revenue source is found.
Freight Infrastructure Needs Significant
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Such are the competing interests many states are facing as they attempt to address infrastructure projects to improve the flow of commerce and trade in an era of concern about higher taxes and ballooning budget deficits. But the nation’s freight infrastructure needs are significant. In a July 2010 report, “Unlocking Freight,” the American Association of State Highway and Transportation Officials reported that: The current capacity of the nation’s roads, rails and seaports is not keeping pace with demand. Strings of bottlenecks are emerging along regional and transcontinental freight routes, creating corridors of congestion instead of corridors of commerce. The increase of exports and imports will intensify the flow of goods moving through U.S. international trade gateways at borders, airports and seaports. By 2020, the U.S. trucking industry will move 3 billion
more tons of freight than it hauls today. To meet this demand, the industry will put another 1.8 million trucks on the road. AASHTO says the U.S. must, among other things, develop a unifying national multimodal strategic freight plan to address these needs. But such a grand vision for the nation’s freight transportation system has been on hold for much of the last few years as Congress has failed to reach agreement on new legislation to reauthorize federal transportation programs.
Improving Freight Mobility
In the absence of such a plan, some states have already begun to contemplate their own freight futures. The Virginia Department of Transportation and other agencies recently completed a multimodal freight transportation study and investment strategy that officials believe connects transportation needs and economics in unique ways. “The study considers transportation needs and opportunities across all of the modes (of transportation), and looks for synergies and the opportunity for addressing bottlenecks as well as modal shifts (moving more freight to rail, etc.),” Virginia Transportation Secretary Sean Connaughton said via email. Connaughton said the study allows the state to prioritize both planned near-term transportation projects and potential long-term ones, and to identify policy actions that can help move nearly $2 trillion worth of freight annually through the state. That freight supports approximately $350 billion of Virginia’s annual gross state product. “The study’s benefit-cost tool will enable the commonwealth to choose projects that maximize economic and environmental benefits to the public, including the freight industry,” Connaughton said. “This is essential to targeting limited public resources to transportation solutions that will have the biggest positive impact on relieving congestion, improving safety and providing economic development.” Connaughton believes Virginia’s freight study is one other states will want to duplicate. “If the … nation is going to get behind investing more in transportation, it will be hugely helpful to develop analysis tools for the purpose of identifying why and where to spend our resources wisely,” Connaughton said. The study looks at freight generated in the state and flowing through it, whether by road, rail or water. “This view beyond our borders is unique and will enable Virginia to make better local decisions on transportation solutions that will benefit local, interstate and international commerce,” Connaughton said.
Addressing Port, Rail Needs
The widening of the Panama Canal, scheduled for completion in 2014, has prompted many states to ponder whether their infrastructure impedes the flow of commerce.
Transportation and Trade | hot topic
21 capitol ideas
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The widened canal will allow a new generation of supersized ships from Asia carrying nearly three times as many shipping containers to pass through, bypassing West Coast ports and instead docking at ports along the East and Gulf coasts to drop off their goods. From there, they will be put on trucks and trains travelling the nation’s highways and railways. Nearly every ocean and gulf port in the Eastern and Southeastern U.S. have projects in the works to prepare for the expected growth in international trade the expanded canal could bring. The costs of the projects total nearly $20 billion, according to recent reports, including one produced last year by the Southern Legislative Conference of The Council of State Governments. Ports need deeper channels to accommodate the bigger Asian ships. Port authorities are working with public and private partners to build new container terminals with larger cranes and state governments and railroad companies are funding improvements to highway and rail connections. Georgia, for example, is planning a new $140 million connector highway that will link the Port of Savannah more directly with Interstate 95. The state will fund the project, in part, by selling $91 million in state general obligation bonds authorized by the state legislature last year. State gas tax revenues will be used to retire the bond debt. The Association of American Railroads reported in 2007 that $135 billion is needed over the next 28 years to allow the nation’s railroads to keep pace with economic growth and the demand forecast. While the railroads themselves could fund $96 billion of that amount, public-private partnerships with the states, federal investment tax credits or other means would have to cover the balance of $39 billion. CSX Corp., the second-largest U.S. railroad, recently announced it would invest $160 million to improve its ability to move freight from the Port of Virginia at Hampton Roads to the Midwest. That will complete the $860 million National Gateway initiative, a series of projects in six states and the District of Columbia to speed the flow of goods between eastern and western rail networks. Last fall, Norfolk Southern railroad opened its Heartland Corridor between Hampton Roads and Chicago. Both the CSX and Norfolk Southern initiatives involved raising tunnel clearances on their rail lines to allow trains to transport double-stacked containers, so they can deliver more freight with fewer trains, increasing efficiency and reducing rail line and highway congestion.
PREPARING FOR EXPANDED CANAL NEW ORLEANS, LA.—A tow boat moves up the Mississippi River at the Port of New Orleans. Port officials there and elsewhere in the South expect expanded trade due to the expansion of the Panama Canal. © AP Photo/Bill Haber
CSG’s Knowledge Center puts years of policy knowledge and resources at your fingertips. Read about today’s most pressing issues state policymakers face at this interactive policy website and clearinghouse. View all the information on a particular topic from across CSG’s network of organization and offices with the click of a mouse.
welcome to bellevue! Host City for CSG’s 2011 National Conference City Collaborations Focus on Technology, International Trade By Mayor Don Davidson | Bellevue, Washington
Bellevue is delighted to be the host city for The Council of State Governments’ 2011 National Conference and North American Summit in October. It’s a great fit. Two of the city’s largest employers, Microsoft and Boeing, both possess corporate characteristics that Bellevue has worked hard to cultivate in its effort to attract and retain great companies: their focus on technology and their focus on international trade. Boeing and Microsoft, however, are not the only innovative companies with a major presence in Bellevue. Our city is also the corporate headquarters for Expedia, Paccar, Esterline Technologies, Symetra Financial and Puget Sound Energy. These companies find Bellevue an excellent place to locate for several reasons, starting with our spectacular Pacific Northwest location, nestled between Lake Washington and Lake Sammamish, and surrounded by mountain views. Also, the city’s crime rate is among the lowest in the nation for cities of comparable size; Bellevue has a great education system and perennially places high schools on Newsweek’s annual list of the nation’s top 100 public schools. And Bellevue is known as “A City in a Park” because of its outstanding network of parks, trails and open space. Money Magazine named Bellevue the No. 4 most livable city in the nation in 2010, and Forbes Magazine recognized Bellevue as the No. 1 city in the nation for entrepreneurs in 2008. Today, our city is a regional hub in the technology corridor of the Puget Sound region. Bellevue, a few minutes east of Seattle, has 122,000 residents, 150,000 jobs and a daytime population of nearly 200,000. Companies with a focus on international trade also appreciate Bellevue for its growing diversity. Some 30 percent of Bellevue residents were foreign born, 35 percent speak a language other than English at home, and racially diverse groups make up more than 40 percent of our population. Future economic growth in Bellevue will likely hinge on trade, foreign investment and an emphasis on recruiting technology companies that play to our city’s strengths: mobile communications, life sciences research, clean tech systems, cloud computing, space technology research and advanced materials. But nothing should be taken for granted when it comes to economic development. It takes hard work and help from our partners to succeed. Bellevue is a leader in collaborating at the regional and state levels. One example of state-local collaboration is a project under way to recruit foreign investment and promote technology exports. Bellevue is designing and building a multilingual marketing website that will use the latest ideas from local technology companies; the website work is being funded through a grant from the state Department of Commerce. Bellevue also has led the formation of regional partnerships to provide local services, and it has worked collaboratively to identify and fund infrastructure improvements that support existing businesses and attract new ones. Forming partnerships with regional, state and national organizations is a key component in expanding Bellevue’s role as a center for technology and international trade.
hot topic | FOREIGN TRADE
canada # of State Trade Offices: 13 Exports to Country: $248,194,089,454 Top 3 States Exporting: Michigan, Texas, Ohio
mexico # of State Trade Offices: 19 Exports to Country: $163,320,752,355 Top 3 States Exporting: Texas, California, Michigan
States Take Trade Beyond the Borders by Jennifer Burnett
JULY / AUG 2011
In 1980, only four states maintained overseas trade offices. A lot has changed in the past 30 years. International trade is now a key ingredient to state economic development strategies, with at least 37 states operating offices overseas, according to a recent survey by the State International Development Organizations, known as SIDO, an affiliate of The Council of State Governments. State international trade offices engage in a variety of tasks, including export and foreign direct investment promotion. Information based on 43 states responding to the SIDO 2010 survey. Visit CSG's Knowledge Center for more information on the SIDO Survey on trade at knowledgecenter.csg.org.
brazil # of State Trade Offices: 10 Exports to Country: $35,357,376,959 Top 3 States Exporting: Texas, Florida, California
FOREIGN TRADE | hot topic STAY TUNED Visit www.csg.org for information about an upcoming CSG webinar on opportunities for states in international trade.
united kingdom # of State Trade Offices: 7 Exports to Country: $48,496,669,439 Top 3 States Exporting: New York, California, Utah
Germany # of State Trade Offices: 11 Exports to Country: $48,201,242,184 Top 3 States Exporting: California, Puerto Rico, South Carolina
China # of State Trade Offices: 29 Exports to Country: $91,878,263,856 Top 3 States Exporting: California, Washington, Texas
japan # of State Trade Offices: 21 Exports to Country: $60,545,481,743 Top 3 States Exporting: California, Washington, Texas
netherlands # of State Trade Offices: 2 Exports to Country: $34,997,732,191 Top 3 States Exporting: Texas, California, Puerto Rico
south korea hong kong
# of State Trade Offices: 5 Exports to Country: $38,843,771,795 Top 3 States Exporting: California, Texas, Washington
# of State Trade Offices: 4 Exports to Country: $26,569,309,718 Top 3 States Exporting: California, New York, Texas
25 capitol ideas
—Peter O’Neill, executive director of Center for Trade Development at the Pennsylvania Department of Community & Economic Development
JULY / AUG 2011
“It should be no surprise that most state economies will increasingly rely on global markets for domestic jobs creation.”
hot topic | BORDER SECURITY
Canadian Border May Pose Bigger Threat to U.S. Than Southern Border by Tim Weldon
JULY / AUG 2011
Drug dealers found an unusual vessel to smuggle narcotics into the U.S.—a remotecontrolled toy boat travelling across the St. Croix River from New Brunswick in Canada to Calais, Maine. Michael Riggs, a lieutenant with the Washington County, Maine, Sheriff’s Department, testified about the incident during a 2003 hearing of the Senate Committee on Governmental Affairs. Canadian author Jacques Poitras writes about the incident in Imaginary Line: Life on an Unfinished Border, scheduled for a September release. Washington County Sheriff Donnie Smith points out the difficulty of blocking drug trafficking across the river, which, in places, is no wider than the length of a football field. “You could easily put a remote-controlled boat and nobody would know, especially at night,” he said. “There’s so much border here that it’s very easy.” Maine’s border with Canada extends more than 600 miles, second only to Michigan in the continental U.S. The state has 17 crossings with New Brunswick and seven others connecting Maine and Quebec. Some of Maine’s crossings are staffed and open 24 hours a day, seven days a week; others are little more than outposts with gates that are open only part-time. “We have a border that is not nearly as protected as the one down in the south,” Robert McAleer, director of the Maine Emergency Management Agency, said. “Anybody who knows their way through the woods can cross that border, probably with relative ease.” Like all states along the Canadian border, Maine’s border is a porous line without high
fences, razor wire, trenches and strings of security cameras to deter terrorists and drug dealers from entering illegally.
The Northern U.S. Border
In fact, only 32 miles of the nearly 4,000-mile continental U.S.-Canadian border have “an acceptable level of security,” according to a recent report by the U.S. Government Accountability Office. That border between the continental U.S. and Canada consists almost entirely of plains, mountains, forests and waterways. “The maritime border on the Great Lakes and rivers is vulnerable to use of small vessels as a conduit for potential exploitation by terrorists, alien smuggling, trafficking of illicit drugs and other contraband and criminal activity,” said the December 2010 report, “Border Security: Enhanced DHS and oversight and assessment of interagency coordination is needed for the northern border.” This is the situation despite the nearly $3 billion federal investment to secure the U.S.-Canada border. The report also says the northern air border is vulnerable to low-flying aircraft that could, for example, smuggle drugs into the country. The U.S. Customs and Border Protection says the border is exploited by smuggling operations that could potentially support the movement of terrorists and their weapons, the report said. Federal and state policymakers are focusing on the vulnerability of U.S. borders following the killing of Osama bin Laden and heightened concerns about a terrorist reprisal. While the focus has largely been fixed on the U.S.-Mexico border, the northern border
may be even more susceptible to terrorists and drug and human traffickers, according to some observers. U.S. Sen. Susan Collins of Maine is one person concerned about her state’s vulnerability. “The U.S. Drug Enforcement Administration has cited Maine’s size and predominantly rural population as the ideal conditions for meth trafficking from Canada,” she said in a February news release.
Protecting Maine’s Border
Maine, along with other states, will get assistance in protecting its borders from $25.5 million in Department of Homeland Security grants aimed at strengthening border security along both the Canadian and Mexican borders. That amount includes a three-year, $4 million grant to allow Maine to improve communications at border crossings. McAleer said the funds will help strengthen communications at four or five border crossings with New Brunswick. For more than five years, Maine also has relied on a federal program called Operation Stonegarden. It enables Maine to reimburse local law enforcement agencies for overtime work. The result is a heightened law enforcement presence along the Canadian border. McAleer said Maine’s share of federal funding for Operation Stonegarden has been slashed over the past five years from $5 million to slightly more than $1 million this year. McAleer points to the need for sustainable federal funding to keep the vast northern border secure. He said the state budget doesn’t include enough funds to cover border security. He also contends the federal government,
BORDER SECURITY | hot topic
BORDER NOT SO SECURE WASHINGTON, D.C.— U.S. Sen. Susan Collins of Maine discussed a U.S. Government Accountability Office report in February that found U.S. border officials monitor less than 1 percent of the 4,000-mile U.S.-Canada border. © Getty Images/Alex Wong
—Robert McAleer, director Maine Emergency Management Agency
JULY / AUG 2011
It isn’t just U.S. policymakers noting the challenges involved in protecting a 4,000-mile border. In January 2004, the Government of Canada established the National Risk Assessment Centre at the Canada Border Services Agency to protect Canadians against current and emerging threats. Efforts to stop drug flow into Canada paid off June 14. Border officials searched a truck hauling raspberries entering Ontario at Detroit’s Ambassador Bridge and seized 39 kg of cocaine with an estimated street value of $3.9 million. The load was inspected “as a result of a refer-
“ We have a border that is not nearly as protected as the one down in the south. Anybody who knows their way through the woods can cross that border, probably with relative ease.”
Concerns in Canada
ral for a secondary examination,” the agency said in a release. The cocaine was reportedly discovered in a shipment from a California grower and destined for a distributor in the Etobicoke area of Toronto. Under Canada’s Smart Border Declaration, both Canada and the U.S. have agreed to build a “smart border” that protects against terrorism and the entry of high-risk people or contraband while facilitating the free flow of legitimate people and goods. The Canadian Border Services Agency reports that country’s ability to intercept high-risk people and goods is enhanced through analysis and information sharing with the U.S. by using sophisticated intelligence-gathering techniques and technology. “Canada’s Action Plan for Creating a Secure and Smart Border includes the measures already identified by our colleagues as well as new initiatives,” according to the agency website. Four pillars support the action plan: Secure flow of people; Secure flow of goods; Secure infrastructure; and Coordination and information sharing in the enforcement of these objectives.
not the state, is responsible for keeping the border safe. “We just happen to be on the border protecting the rest of the country,” he said. “To me, it’s a federal responsibility to help us protect the country, and that’s what we’re doing. We’re not just protecting Maine. “We have got to maintain that funding. Because every time there is a reduction, that puts a direct impact on the amount of work we can do to protect the country. And that’s not a good thing.”
hot topic | IMMIGRATION
n tio a r immig n o e tak es stat ed strat u Fr by Jennifer Ginn
JULY / AUG 2011
28 PROTESTING IMMIGRATION LAW PHOENIX, ARIZ.—Griselda Luna carried an American flag during a march to the state capitol in Phoenix protesting Arizona’s crackdown on illegal immigrants. Thousands of protesters marched through Phoenix calling for a boycott of Arizona after the adoption of Senate Bill 1070 in 2010. © AP Photo/Krista Kennell/Sipa Press
IMMIGRATION | hot topic
If one word could be used to describe state policymakers’ attitudes toward the lack of immigration reform on the federal level, it would be frustration. That frustration has led state policymakers to take matters into their own hands. In the first quarter of 2011, legislators across the country introduced more than 1,500 immigration bills and resolutions, according to the National Conference of State Legislatures. That’s almost 400 more than were introduced by the same time last year; it’s also a new record. “I think the American people are frustrated by the lack of immigration reform. It’s amazing to me that the only people who don’t seem to be frustrated are the politicians in Washington,” said Lynn Tramonte, deputy director for America’s Voice, a pro-immigrant advocacy group. Sen. Curt Bramble of Utah said he sees the federal government telling states they must educate the children of illegal immigrants, provide health care for illegal immigrants and jail those who have committed crimes. Yet states don’t have the authority to stop people from crossing their borders and only the federal government can deport someone, he said. “We have submitted resolution after resolution to Congress in the last 10 years, begging Congress to do something,” Bramble said. “… All of them say, ‘If this is a federal responsibility, do your job and solve the illegal immigration problem.’ What has the federal government done? They’ve ignored it. This is a 30–40 year problem and it’s finally gotten to the tipping point where the states have to do something.”
How We Got Here
The Turning Point
—Utah Sen. Curt Bramble, discussing immigration reform efforts in the states
JULY / AUG 2011
“This is a 30–40 year problem and it’s finally gotten to the tipping point where the states have to do something.”
Perhaps the most discussed immigration legislation came last year in Arizona with Senate Bill 1070. The U.S. Department of Justice has filed suit, saying federal law pre-empts the bill. Senate Bill 1070 requires a law enforcement official make a “reasonable attempt” to determine the immigration status of people with which they make a lawful contact. Detractors called it the “show me your papers” bill. Arizona Rep. Russ Jones expects several components of the bill to survive a court challenge. “I don’t think the issue is of us wanting it to go to the courts,” he said. “There’s a willingness to defend it in the courts and pushing to a point where we do eventually get something passed that will stand challenges in the Supreme Court for constitutionality. With that, it gives us standing in dealing with this issue of populations coming into our jurisdiction and (the federal government) leaving us few, if any, tools to deal with them.”
Muzaffar Chishti, director of the Migration Policy Institute at the New York School of Law, said most people generally accepted that immigration policy was a federal matter until 1996. The Migration Policy Institute is an independent, nonpartisan think tank that studies the movement of people worldwide. “There were some occasional walk-ins by the states in immigration policymaking,” said Chishti, “generally relating to how to treat people within their jurisdictions, generally with respect to public benefits. It was very small, very narrow, very circumscribed (legislation).” Things began to change with new federal legislation in 1996. Particularly important, Chishti said, was the addition of Section 287(g) to the federal Immigration and Nationality Act. The addition authorized the federal government to sign agreements with states and localities to help enforce some aspects of immigration law.
The thought behind 287(g) agreements was “there are too many criminals on our streets,” Chishti said. “… It was meant to go after absconders, people who were issued their final orders (to leave the country) and were just not leaving.” Chishti said no 287(g) agreement was signed until 2001. After Sept. 11, that changed. More agreements began to be signed between the federal government, states and localities. And instead of being highly targeted toward specific illegal immigrant threats, they became more generic to go after people who haven’t committed serious crimes, Chishti said. “These agreements don’t really prohibit you from going after ordinary citizens,” he said. In 2006 and 2007, Chishti said, Congress debated intensely about immigration reform but never succeeded in passing legislation. “By the time Congress debated in 2006, people realized, ‘My God, we have 12 million unauthorized immigrants,’” he said. “That debate was potent, it was active. States began reacting.” Americans in general, however, seem fairly divided over just what they want their legislators to do. According to a May 2010 USA Today/Gallup poll, 53 percent of those surveyed said the main focus of the government should be halting the flow of illegal immigrants into the country. In that same poll, 43 percent of adults said the government should focus on dealing with the illegal immigrants who already are in the U.S.
hot topic | IMMIGRATION Jones believes the federal government hasn’t done enough to secure the country’s borders, needs to improve the speed and efficiency of the current points of entry, and should look at how to make the existing immigration law more flexible. Jones co-sponsored House Concurrent Memorial 2003 in the 2011 session. That bill urges federal policymakers to allow the U.S. Department of Labor to set up a commuter worker pilot program that would allow Mexican residents to cross the border to work, while still living in Mexico. “There’s a lot of things we can do to relieve pressure on those who get in line and try to (immigrate) the right way so the time they wait in the line is shorter,” Jones said. “There’s a lot of folks jaundiced at the idea of talking about immigration reform when other staples of the immigration system are broken.”
Utah’s Guest Worker Program
Utah took a different tack this year when its legislature passed a package of immigrationrelated bills. Part of the legislation deals with stricter enforcement of current immigration laws, much like Arizona’s bill. The unique part of Utah’s legislation is House Bill 116, which orders the state Department of Workforce Services to seek waivers and exemptions from the federal government to set up a guest worker program. To participate, a person must have worked or lived illegally in Utah before May 10, agree to a criminal background
check, have health insurance and provide proof of a job offer. Utah’s Bramble, who sponsored the bill in the senate, said the bill is a matter of practicality. “Here’s the problem,” Bramble said. “… All enforcement bills like Arizona and Georgia, those that get to illegal immigrants who have contact with law enforcement, don’t really do anything to stop identity theft, don’t do anything to stop the underground economy. “If you go after employers solely, what do you tell your agricultural businesses, what do you tell your construction businesses? … Throughout the history of our country, there’s always been a need for migrant workers to fill those jobs that Americans don’t aspire to. I looked at it from a practical point of view.” Chishti said he believes the supreme court will overturn both the Arizona and Utah immigration laws. He expects the courts will say, “… if there’s no conflicting (federal) law, states can operate,” he said. “Tuition, to me, is one of those things. Driver’s licenses are one of those things.”
According to NCSL, state legislators introduced 140 bills concerning illegal immigrants and education as of March 31. Most of them dealt with who qualifies to receive in-state tuition. This is one area where the patchwork of laws is particularly visible. Maryland passed legislation in March that allows illegal immigrants to pay in-state tuition
rates if they meet several qualifications, although MDPetitions.com is gathering signatures to put the issue on the ballot this fall. Connecticut passed similar legislation this session, making it the 13th state to do so. In South Carolina, meanwhile, illegal immigrants are banned from attending colleges or universities that receive public funding. Many states have passed legislation prohibiting illegal immigrants from receiving in-state tuition. Mark Krikorian, executive director of the Center for Immigration Studies, a nonpartisan research organization that supports stronger immigration laws, said such a patchwork of state immigration laws won’t do any harm for the most part. “The patchwork image really only applies if you’re talking about things that need to be done nationally, but are dealt with differently in each state,” he said. With in-state tuition, he said, “there’s no problem for anybody if one state does give illegal immigrants tuition discounts and another doesn’t.”
Tramonte of America’s Voice doesn’t think many states will pass stringent enforcement measures similar to Arizona’s. Georgia passed an Arizona-style bill this year—House Bill 87—but civil liberties and immigration-rights groups are challenging it in federal district court in Atlanta. “We’ve had about 25 states introduce Arizona copycat bills,” Tramonte said. “Only
President’s Vision for Immigration Reform Unlikely to Pass, Experts Say
JULY / AUG 2011
In May, the White House released “Building a 21st Century Immigration System,” President Barack Obama’s vision for fixing what the proposal calls “our broken immigration system.” The president’s vision includes commitments to securing national borders, holding businesses accountable and creating a path to citizenship for illegal immigrants. But national immigration experts doubt many of the ideas stand a chance of being passed into law before the 2012 presidential election. Obama’s plan looks very familiar, said Mark Krikorian, executive director of the Center for Immigration Studies, a nonpartisan research organization that supports stronger immigration laws. It’s similar to proposals that came from Presidents Bush and Kennedy, and U.S. Sen. John McCain. “It’s the same basic outline, the so-called comprehensive immigration reform, trading legalization for illegal immigrants already here … (with) promises of future enforcement,” Krikorian said. He said Congress may take small steps in immigration reform, but any comprehensive reform is unlikely.
“There isn’t going to be any grand legislation coming up in the next several years,” Krikorian said. “That’s not going to happen. Smaller measures are possible. Mandatory E-Verify could happen; it’s not impossible to see that happening. “Likewise, Sen. (Harry) Reid has talked about reintroducing the DREAM Act (which he did on May 11). He said openly he looks forward to pairing the DREAM Act up to mandatory E-Verify. … I don’t think it’s going to happen, but it could conceivably happen. That’s the outside of the envelope.” Lynn Tramonte, deputy director for America’s Voice, a proimmigrant advocacy group, agreed that action is unlikely in Washington, D.C., this year. “I think unfortunately, right now we’re in partisan gridlock in Washington on the issue,” Tramonte said. “We know Senate Democrats would like to pass the issue. Republican support has been falling in the past three years. … Those Republicans who have voted for immigration reform (in the past) are still in Congress. I think there is the infrastructure to get back to bipartisan problem solving, but there needs to be the political will.”
IMMIGRATION | hot topic a couple have passed and some have been dramatically changed. The Georgia bill brought the farming community out. (They’re) really worried about the impact the bill is going to have on their crops and their ability to keep their farms open.” Chishti thinks immigration legislation will not trend toward more enforcement in the long run. States are beginning to hear from businesses about how pro-enforcement legislation will hurt them, especially those that work across state lines. “I think the trend is in the other direction,” Chishti said. “I think ultimately, there will be an economic motivation for just having one single (immigration) policy, otherwise it creates this disparate treatment (for businesses) in different states. … If Arizona has a strong employer-
sanction law but a neighboring state doesn’t, business will go to that neighboring state.” Krikorian said despite what happens on the federal level, he doesn’t see the frustration among the states being assuaged anytime soon. “If, for instance, we have immigration hawks in the White House in January 2013 with a Republican majority in both houses, the Utah legislators who pushed amnesty are going to be even more frustrated than they are now,” Krikorian said. “On the other hand, if Obama wins re-election and claims a majority in Congress, pro-enforcement immigration hawk legislators are going to be as frustrated or more frustrated than they are now. … There’s still going to be considerable frustration on both sides. The discontent at the state level is likely to continue almost whatever happens.”
Tenets of Obama's Immigration Reform Plan responsibility for securing 1 Federal borders: Prevent “those who would do our nation harm” from entering the country. for businesses: Employers 2 Accountability who deliberately hire illegal immigrants
immigration system that reflects U.S. 3 An values and needs: Young people brought
© AP Photo/LM Otero
to citizenship: Illegal immigrants 4 Pathway already in the country should register, undergo background checks, pay taxes and a penalty, and learn English before becoming eligible for citizenship.
JULY / AUG 2011
EL PASO, TEXAS—President Barack Obama gave a speech on immigration reform in El Paso, Texas. The Obama administration released “Building a 21st Century Immigration System” in May, Obama’s vision for fixing what the proposal calls “our broken immigration system.”
to the country illegally should be able to stay if they serve in the military or go on to postsecondary education—the DREAM Act. Farmers should have a legal way to hire needed workers. The system should be improved for employers who need to hire foreign workers if U.S. workers are not available.
OBAMA’S IMMIGRATION PLAN
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should face consequences, while all employers should have a way to verify their employees’ immigration status. This refers to E-Verify, a voluntary government service that lets employers check immigration status on the Internet against Homeland Security and Social Security databases. The president has mentioned making use of E-Verify mandatory.
hot topic | GROWING HISPANIC POPULATION Top 10 States with Largest Hispanic Population 4 NY 3.4 m
CA 14 m
6 AZ 1.9 m
NJ 1.6 m
9 NM 953,000
TX 9.5 m
FL 4.2 m
Hispanic Population Grows 43 Percent
JULY / AUG 2011
The nation’s Hispanic population grew 43 percent from 2000 to 2010—from 35.3 million in 2000 to 50.5 million in 2010—and Hispanics now make up 16.3 percent of the total U.S. population, according to the Pew Hispanic Center analysis of Census Bureau figures. Two-thirds of the Latino population in the U.S. hail from Mexico, according to Pew. Most Hispanics reside in nine states that have large, longstanding Latino communities: Arizona, California, Colorado, Florida, Illinois, New Mexico, New Jersey, New York and Texas. The Hispanic population more than doubled in seven Southeastern states— Alabama, Arkansas, Kentucky, Mississippi, North Carolina, Tennessee and South Carolina—as well as in Maryland and South Dakota. Source: Pew Hispanic Center, “Census 2010: 50 Million Latinos.”
Top 10 States with Largest Hispanic Share of Total Population 9 NY 17.6 %
5 3 CA 37.6 %
NV 26.5 %
4 AZ 29.6 %
IL 15.8 %
CO 20.7 %
NJ 17.7 %
1 NM 46.3 %
TX 37.6 %
FL 22.5 %
Top 10 States with Largest Hispanic Population Growth 9 SD 103 %
7 4 5 AK 114 %
KY 122 %
TN 134 %
AL MS 145 % 106 %
GA 96 %
6 NC 111 % SC 148 %
DE 96 % MD 106 %
U.S.-MEXICO TRADE | hot topic
Hawaii exports just $2.6 million each year to Mexico; only the U.S. Virgin Islands, at $1.2 million, exports less to Mexico.
98 percent of Missouri’s
New Orleans is the largest seaport entry for trade from Mexico to the U.S. at $9.6 billion annually.
The biggest export sector of U.S. goods to Mexico is computers and electronic products.
For 17 states, Mexico ranks as the #2 export market. 6 million visitors from
U.S.-MEXICO TRADE Jewelry is one of New York’s largest exports to Mexico, accounting for $480 million annually.
Mexico is the second largest export destination for Idaho potatoes.
The U.S. is Mexico’s largest trading partner. Mexico is the U.S.’s third largest trading partner, after China and Canada.
33 capitol ideas
$109 million in goods traded between the U.S. and Mexico pass through the port of entry at Philadelphia each year.
99 percent of all soybeans produced in Nebraska are exported to Mexico.
Mexico was the U.S.’s second-largest supplier of petroleum in 2010, right after Canada and before Saudi Arabia.
JULY / AUG 2011
Mexico visit Texas each year; Mexico is the largest origin country for travel to the Lone Star State.
exported beer goes to Mexico. 96 percent of North Dakota’s malt exports go to Mexico.
10 questions | GOVERNOR CHRIS GREGOIRE ADVICE FOR TOUGH TIMES »
‘Set Your Partisanship Behind You, Now It’s Time to Govern’ © Steven G. Smith / Corbis
by Mary Branham
© AP Photo/Ted S. Warren
States are confronted with daunting challenges. What can state leaders do to create a climate in which people focus on solutions? “This year, knowing full well we face unprecedented times, we all set a path (in Washington) of working in a very bipartisan way and not letting politics and partisanship get in our way. We’re in a special session. ... It has been an example, in my opinion, of how you deal with very tough problems in unprecedented times. You set aside everything else, realize you work for the people, work together and get the job done.”
What are the most important qualities of a successful state government in the 21st century?
JULY / AUG 2011
“… At the end of the day, government has to be absolutely flexible, which as you well know, it is not. (It needs to be) absolutely adaptable; seeing technology as its friend; making sure the lesson learned here is we have sustainable budgets for the long haul and a rainy day fund in case we should run into tough times, with an absolute emphasis on the key to the future, which in my opinion is education. … I think all states—it’s not unique to us—all states are going to have to fundamentally change, just like every business that’s going to survive this recession and, frankly, every family has had to change … in order to get out of this recession.”
Why has Washington’s Government Management Accountability and Performance program been successful? “I think anybody would say that it’s a success. We use data. We have performance measures. We use it as an opportunity to train managers for succession purposes because it gets you at a table looking at real-time data, and asking you to solve the problem. It sets some new standards. We have oral forums. We celebrate our successes
and then set higher standards. When things aren’t working we go after why not. … I don’t think it works if you don’t have absolute engagement from the top.”
What advice would you give to other states interested in replicating GMAP? “I warn people if you’re going to do it, it’s not for the faint. It takes discipline. It takes a laser-like focus. It takes time and it takes continuity. We implemented it in June 2005 and I have not let up one bit. I still go to (the meetings) myself. We celebrate our successes. And when things aren’t good, we ask the tough questions and we hold people accountable.”
What does your health care plan look like for Washingtonians? “Our goal is more affordable health care through higher quality health care. ... We’re implementing the Affordable Care Act. We’re one of the first states on the exchanges. We’ve also said it isn’t just about health care reform in the Affordable Care Act, it’s about the fact that my state budget is getting eaten up by health care inflation. I can’t spend as much money as I could on education because I’m spending it on health care inflation. We brought in the business community. We brought in providers. We brought in insurers. We brought everybody to the table. We set a goal of inflation of no more than 4 percent across the state, with savings projected of $26 billion over 10 years for our state.”
How important is international trade to Washington? “It’s our bread and butter. We’re the most trade-dependent state in the country. One in three jobs, directly or indirectly, is related to trade in my state. We export about $53 billion a year as of last year. Boeing is a
GOVERNOR CHRIS GREGOIRE | 10 questions
After six years in office, Washington Gov. Chris Gregoire knows the importance of trade and partnership in North America. She is the current chair of the National Governors Association and recognizes the many challenges facing all states, but especially those 29 new governors who took office this year. the full interview with Chris Gregoire at capitolideas.csg.org. Read
big part of it, no question about it, but it’s information technology, it’s industrial machinery, it’s wood, it’s medical products, a big agriculture sector. We’re the leading exporter on things like apples and cherries and pears and hops and frozen potatoes. So our total trade import/ export was $145 billion in 2010. ... It’s our ticket out of this recession, but it is also our future.”
What attracts businesses to Washington? “We have wireless technology to software to renewable energy to aerospace. Global health is a new burgeoning field for us. We have all of those things going for us. We have a highly educated workforce; 30 percent of our workforce has at least a bachelor’s degree. We’ve got great research institutions. … We’re very diverse people, which helps us in trade and all of that. We have a tax structure that’s very appealing to business. We have low-cost renewable energy that’s important for new sectors like composites. At the end of the day, what always ranks in the top tier of companies that are here or want to come here is our quality of life.”
What are your goals for the next few years? “As a governor, you set your goals and then circumstances take over, so my number one priority now is get us through the recession and that means I’ve got to put people back to work. I’ve got to make it affordable for (the) state and families and businesses to provide health care and I’ve got to make sure we’ve got an eye on the future, which means we have to have a highly skilled highly educated workforce, so education has got to be paramount. They’re all connected.”
Governor's 'Must Sees' The Council of State Governments will hold its National Conference and North American Summit in Bellevue, Wash., Oct. 19–23. Here are four things Gov. Chris Gregoire says attendees should do if they have time. 1. Visit Mount Rainer. “I hope the days are clear so they can see the majestic Mount Rainer.” 2. Take a cruise; enjoy Puget Sound. “It is fantastic.” 3. Visit the Pike Street market to see the flying fish. 4. Visit the old World’s Fair, science center and Space Needle.
JULY / AUG 2011
“Every time I go on a trade mission, I bring the university with me. We have exchanges of students and faculty. We sign agreements. We meet alums in every country we go to at large receptions, typically at the ambassador’s home. I created the life sciences discovery fund. It’s a partnership between our two research institutions, University of Washington and Washington State University, and the private sector. We have a star researcher program where we try to attract and retain innovative faculty; and we have a new emphasis on commercialization of the research. UW is ranked the 16th best research institution in the world. It is (the) largest public university in terms of grants. It’s an economic engine in my state.”
“The first thing I said when they came in was, ‘Set your partisanship behind you, now it’s time to govern.’ … Nobody knows what it’s like to be governor other than another governor. We share, we trade ideas, we work together. … (NGA) had an orientation retreat after they were elected, before they were sworn in. We really shared with them (that) this is probably the most difficult time to be governor since the Depression. Whatever decision they make, however they go about their business: keep in touch, keep in tune, listen, educate, be a partner with the public that they serve. So at the end, the public understands they’ve got their best interest at heart.”
How does the state help the University of Washington cultivate its research strength?
What have you learned that might be helpful for the 29 new governors across the country?
hot topic | U.S.-CANADA BY THE NUMBERS
The biggest export sectors of U.S. goods to Canada are machinery and vehicles.
Michigan is the top exporter to Canada among the states, with exports totaling $21 billion in 2010. More than 8 million U.S. jobs depend on trade with Canada, equal to 4.4 percent of total U.S. employment or 1 in 23 American jobs.
U.S.-CANADA TRADE More than $1 million worth of goods and services cross the U.S.-Canadian border every minute of every day.
JULY / AUG 2011
In 2009, Canadian crude oil and petroleum products represented 21 percent of U.S. crude oil imports, at nearly 2.5 million barrels per day, or 13 percent of total U.S. oil consumption. 931,900 jobs in California depend on trade with Canada.
The U.S.-Canadian border is the longest in the world at a length of 5,525 miles.
About 400,000 people cross the U.S.Canada border daily.
Canada was the leading export market for goods in 34 states in 2008, and was number 2 in 11 others. Hawaii exported the lowest total of goods in 2010, around $25 million. Only the District of Columbia and Virgin Islands exported less to Canada than the Aloha State.
Canada is the largest supplier of electricity, oil, nuclear power and natural gas to the U.S.
CSGâ€™s The Book of the States 2011
The only reference book youâ€™ll need for state information And there is only one place to get it ... CSG Order your copy today! Four easy ways to order: call 800.800.1910 | fax 859.244.8001 | email email@example.com | visit www.csg.org
straight talk | HAS NAFTA HELPED?
Straight how has nafta affected u.s. business?
Da mi en Ba rd Administrator Idaho Department of Commerce— International Business
Pe ter C. O'N eil l Executive Director
NAFTA A CATALYST
JULY / AUG 2011
ement is an important “The Nor th American Free Trade Agre and medium-sized catalyst for many of Idaho’s smallketplace for the first companies to enter the global mar Mexico have increased and time. Idaho exports to Canada des, mak ing both deca two last tremendously over the rt destinations for expo ) (of n seve top countries (in the) benefitted from an also Idaho goods and services. We have from both Canada ent stm increase of foreign direct inve NAFTA, as well as the re befo t exis not and Mexico that did ionals when crossing the eased restrictions for profess international borders.”
Center for Trade Development Office of International Business Development, Pennsylvania Department of Community & Economic Development
PENNSYLVANIA’S EXPORTS UP “Since NAFTA’s passage in 1994, U.S. exports to Canada and Mexico have increased by 149 perc ent and now represent one -third of all U.S. exports. Pennsyl vania’s exports to these markets mirror the national trend. Our nation’s geographic proximity to cross-bo rder buyers and NAFTA’s tariff-eliminating and transparency -inducing effects have prompted more Pennsylvania firm s to initiate exporting by cutting their teeth in these ‘clos e-to -home’ foreign markets. NAFTA’s provisions address ing and clarifying taxation, faster product registration s, national treatment reciprocity and automation of man y aspects of export documentation have resulted in incr eased trade, as well as cross-border investment among all three countries.”
HAS NAFTA HELPED? | straight talk
GOOD FOR FARMERS Jay Vr oo m President and CEO CropLife America
A CSG Associate
"NAFTA has been a wonderful ove rall positive for U.S. farmers and our industry. In fact, for crop protection product harmonization we got a leading star t with work in the orig inal U.S.-Canada FTA (free trade agreement), which began under Pres ident Reagan. A lot of work still remains to be done on the NAFTA platform to continue to benefit farmers and consumers in all thre e countries."
Pegg y Rotu ndo Maine Representative Served as Both Senate and House Chair of the Maine Citizen Trade Policy Commission
Ne f Ga rc ía Director of Governmental Affairs McLane Co. Inc.
A CSG Associate
GLOBAL NATURE OF ECONOMY
JULY / AUG 2011
“We still have a long way to go befo re we have a full understanding of NAFTA's impact on the trade economy. ... Before NAFTA, our economic focu s was pointed inward. NAFTA forced us to think about the global nature of our economy. This trade agreeme nt saw a paradigm shif t in our trade policy; we began to see Mexico and Canada beyond mere geographica l neighbors, but as vital components to our economy . Almost 20 years later, the United States has significantly expanded its global economic interests. However, the paradigm shift toward a fully robust system of free trade con tinues; the final chapter on NAFTA has yet to be written.”
“Maine has lost 32,000 manufacturing jobs since 1994 when NAFTA passed. Because its rules favor large corporations, NAFTA makes it harder for small businesses to compete. The trade agreement also permits international corporations to sue the U.S. government over state laws that are seen as barriers to corporate profit and unfettered free trade, posing a threat to state sovereignty and our capacity to pass laws that protect the health and well-being of the people of our state. Policy issues such as insurance regulation, pharmaceutical bulk buying and groundwater extraction are all subject to challenge under NAFTA. The voice of the states must be heard as international trade agreements are negotiated.”
MAINE LOST JOBS
stated briefly | AFFILIATE & ASSOCIATION NEWS
JULY / AUG 2011
AFFILIATE & ASSOCIATION NEWS | stated briefly
41 capitol ideas
» JULY / AUG 2011
feature | TRANSMISSION LINE SITING
Compact Would Give States Power Over Power Transmission Line Siting Compact Could Assist with Streamlining Nation’s Energy Infrastructure by Nathan Dickerson
JULY / AUG 2011
States in the central part of the country know that wind equals power—literally. And even though states like North Dakota and Kansas—two of the top three windiest states—want to share that power, they run into mountain ranges courtesy of nature and policy hurdles courtesy of state boundary lines. “Demand for energy will continue to grow, especially for electricity generated from renewable sources, and we need to reduce impediments to moving those electrons across state lines,” said Kansas Rep. Tom Sloan. States can’t do much about the mountains, but Sloan and others see a way around the policy hurdles that create energy bottlenecks. They’re working through The Council of State Governments’ National Center for Interstate Compacts to develop a Transmission Line Siting Compact to work through the policy hurdles created when exporting energy across state lines. Sloan and North Dakota Rep. Kim Koppelman co-chair the national advisory panel working on the project.
The Need For Transmission
The problem is this, according to Koppelman: “The lines don’t go efficiently from where the energy is produced to where it is needed.” While energy companies are willing to build those lines, the time investment is a major hurdle. Take American Electric Power, for example. The company spent 14 years securing necessary permits for a transmission line that crosses state borders and federal lands. It took less than 18 months to construct the line, Sloan said. “Simplifying the regulatory process would have reduced the time spent in the application process and reduced project costs—thereby lowering the ultimate cost of electricity to customers,” Sloan said. Congress recognizes the need for rapid deployment of energy and infrastructure, especially in light of the emphasis on renewable energy across the country. In the Energy Policy Act of 2005, Congress gave the Federal Energy Regulatory Commission backstop authority to site transmission lines in certain National Interest Electric Transmission Corridors, which are designated by the Department of Energy. That means the Department of Energy can decide whether a specific geographical region is experiencing heavy electric congestion and is in need of relief. If the department designates that region as a National Interest Electric Transmission Corridor, the Federal Energy Regulatory Commission has the authority to site transmission lines if a state or states in that region unnecessarily delayed or denied requests in the process. States contested this federal authority, and the Ninth Circuit Court of Appeals in February ruled the Federal Energy Regulatory Commission could not deem projects eligible for fast-track approval without first consulting with impacted states. Although the ruling does not expressly say states would have sole responsibility for interstate electricity transmission line siting, it does imply that states must be involved in the process. The Energy Policy Act of 2005 did grant advanced Congressional consent for states to form compacts to handle siting. That’s what state officials are now doing. “It became apparent that (stakeholders) want to build high voltage transmission lines, but generally are slowed or thwarted by differ-
TRANSMISSION LINE SITING | feature
ences in the way that states consider siting applications,” Sloan said.
Compact: A State-Driven Solution
JULY / AUG 2011
—Kansas Rep. Tom Sloan, co-chair National Advisory Commission Transmission Line Siting Compact
“ Demand for energy will continue to grow, especially for electricity generated from renewable sources, and we need to reduce impediments to moving those electrons across state lines.”
The idea of the interstate transmission line siting compact took root following a meeting with federal and state regulators discussing the issue. Both Sloan and Koppelman were in attendance. “Federal regulators were frustrated with the lack of progress and were discussing intervening, overriding the states,” Koppelman said. “That’s when I asked whether anyone had ever heard of an interstate compact. They hadn’t really thought about that. It was as if a collective light bulb came on.” The pair approached CSG for assistance on pursuing the compact. CSG assembled a National Advisory Panel of state leaders from each of its four regions, consisting of representatives from federal and state governments and nonprofit organizations with a keen interest and authority over electricity transmission line siting. The advisory panel has met twice, working toward a goal of exploring the suitability of an interstate compact that would enable a more efficient and effective interstate transmission line siting process and, if appropriate, to make recommendations to guide the compact drafting process. The panel agreed the compact would improve the siting process and developed recommendations to guide the drafting of a compact. While the compact would be national in scope, it would be utilized regionally as a practical matter. It would work to improve efficiencies during the siting process, including implementing common application, pre-determined timelines and public hearings. The advisory panel agreed the agreement would be triggered whenever a transmission line is proposed. Only those states that are both members of the compact and impacted by the proposed line would be affected by the individual proposals. The compact would have other benefits. “The compact could create a forum to bring states together, which I trust could help state governments improve communications with one another and build stronger and more effective relationships,” said Bill Smith, executive director of the organization of MISO states, a regional transmission organization as defined by the Federal Energy Regulatory Commission. It also would create a faster process for deploying critical infrastructure to support our energy future. “The endorsement of a transmission line siting compact represents a key step toward developing a coordinated, more robust national high voltage transmission line system … which would, in turn, allow states that are energy producers but are less densely populated, like my home state of North Dakota, to deliver energy efficiently and rapidly to our more densely populated neighbors,” Koppelman said.
feature | STATE GAS TAXES
for Thought The federal gas tax hasn’t been raised since 1993, and has never been adjusted for inflation. But 60 percent of Americans believe the gas tax is raised automatically every year, according to a 2009 survey conducted by Building America’s Future and others. While many states have increased their state gas taxes during the last 20 years, 12 states and Puerto Rico have not done so in more than 20 years. No legislature voted to increase a state gas tax in 2010 or thus far in 2011, although several have tried. Gas tax hikes took effect in January 2010 in Nebraska and Florida. The fluctuations in the price of oil this year have even prompted several states to consider temporary or permanent reductions in their gas taxes. That’s despite the escalating costs of road construction and a growing backlog of maintenance in many states.
JULY / AUG 2011
GOING UP LAFAYETTE, LA.— Gas prices may be rising, as they did in May in LaFayette, La., but that doesn't necessarily mean states are getting more in taxes. Some states haven't raised gas taxes for many years.
© AP Photo/The Lafayette Daily Advertiser, P.C. Piazza
Most Recent Gas Tax Hikes Nebraska Jan. 1, 2010 Florida Jan. 1, 2010 Kentucky Oct. 1, 2009 District of Columbia Oct. 1, 2009 Minnesota July 1, 2009 Maine July 1, 2009 New York Jan. 1, 2009 Washington July 1, 2008 Iowa July 1, 2008 West Virginia Jan. 1, 2008 North Carolina Jan. 1 , 2008
STATE GAS TAXES | feature State Gas Tax Rates 2011 Per Capita Gas Tax Collections
Adjusted Total Receipts from State Gas Taxes (2009) Source: U.S. Census Bureau, State Government Tax Collections 2009. Available at http://www2.census.gov/govs/statetax/09staxss.xls.
Lowest Gas Taxes
Highs & Lows In addition to the state gas tax, drivers also pay a federal gas tax of 18.4 cents per gallon, which hasn’t changed since 1993. As taxes vary across the country, so, too, does the price of gas per gallon, and it may not correlate with the state tax rate. According to AAA, Alaska appears to consistently have the highest prices for regular gas, while South Carolina consistently has the lowest. The record high for a gallon of gas was set in July 2008 in Alaska—$4.695 per gallon.
Highest Gas Taxes
(in cents per gallon)
Alaska 8 Wyoming 14 New Jersey 14.5 South Carolina 16.8 Oklahoma 17 Missouri 17.3 Mississippi 18.8 New Mexico 18.8 Arizona 19 New Hampshire 19.6
Connecticut 51.9 New York 50.7 Illinois 50.6 California 50.5 Hawaii 49.4 Michigan 43.7 Indiana 43.6 Washington 37.5 Florida 34.4 Nevada 33.1
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(in cents per gallon)
Alaska July 1, 1961 Georgia July 1, 1971 Virginia Jan. 1, 1987 Oklahoma May 27, 1987 South Carolina July 1, 1987 New Jersey July 1, 1988 Tennessee April 1, 1989 Illinois Jan. 1, 1990 Louisiana Jan. 1, 1990 Colorado Jan. 1, 1991 Massachusetts Jan. 1, 1991 Texas Oct. 1, 1991
Longest Time Since GAS Tax Hike
State Gas Tax Rates 2011 Per Capita Gas Tax Collections
how to | HOW TO USE FACEBOOK
KEEP IT REAL AND STICK TO THE BASICS Ben Self, an online strategist and former technology director for the Democratic National Committee, says there’s no need to fear Facebook. He offers tips on the best way to sensibly use social networking sites. Self will speak at CSG's 2011 Toll Fellowship Program in September.
ENGAGE CONSTITUENTS. “Facebook allows you to either engage with or talk to people in a very easy way,” Self said. “There’s more than 600 million people now on Facebook worldwide. It allows those individuals to self-select what they’re interested in. … One of the great things about Facebook is you don’t have to be very comfortable (with computers) at all. You don’t have to know any programming language. … Anybody can very easily go in and set up a profile for themselves.”
UNDERSTAND THE MEDIUM. Self said you create profiles for people and pages for things, like offices or products. “A legislative office can have a page,” he said, “but an individual can have a profile. The primary advantage to a page is anybody who wants to can ‘like’ that page and be connected to that. Profiles require people to send out friend requests and have somebody accept it. … The big advantage to a profile is you can invite people to be your friend. You can go out, find constituents and invite them to be your friend.”
SHARE, BUT NOT TOO MUCH. Although certain tools allow you to hide comments from certain viewers, the safest bet for policymakers is to be careful what you post, Self said. “The safest way to be secure is to not put anything up there you wouldn’t want everyone to see. … If you go into it with the idea that it’s publically available information and only share things that are public, there’s no real security concerns with that.”
KEEP IT REAL. “One of the biggest mistakes is essentially faking it,” Self said. Busy policymakers have perfectly valid reasons to select a staff member to update Facebook profiles or pages, he said, but be careful. “If you have a staffer making updates, eventually it will be clear and could cause embarrassment for you. … You just have to be very, very clear at the beginning. … Just explain the situation on the page so everyone who engages with it has that basic understanding.”
STICK TO THE BASICS.
JULY / AUG 2011
Policymakers shouldn’t be too concerned with the hottest trends in social networking, Self said. His advice: Keep it simple. “I would argue that policymakers don’t need to worry about being on the leading edge,” he said. “… I think most people benefit the most from the basics. Use email appropriately. Develop websites with fresh content. Engage people with Facebook and Twitter.”
Let CSG Help You Enter the Digital World
Join CSG staffers at the CSG National Conference in Bellevue, Wash., Oct. 19–23 for social media boot camp. You’ll get great insights on how to create and manage your presence in cyberspace.
UPCOMING MEETINGS | on the road
National and Regional Meetings Registration and application deadlines may apply. Visit www.csg.org/events for complete details.
more information, visit: www.csg.org/events. For
NAST—Annual Conference Aug. 28–31, 2011 • Bismarck, N.D.
CSG/Eastern Regional Conference— 51st Annual Meeting and Regional Policy Forum Aug. 7–10, 2011 • Halifax, Nova Scotia
CSG/Midwestern Legislative Conference—Bowhay Institute for Legislative Leadership Development (BILLD) Aug. 12–16, 2011 • Madison, Wis.
The Council of State Governments— 2011 North American Summit Oct. 19–23, 2011 • Bellevue, Wash.
CSG/Midwestern Legislative Conference— 66th Annual Meeting July 17–20, 2011 • Indianapolis, Ind.
NASTD—34th Annual Conference and Technology Showcase Aug. 28–Sept. 1, 2011 • Omaha, Neb.
CSG/Southern Legislative Conference— 65th Annual Meeting July 16–20, 2011 • Memphis, Tenn.
NASCA—Institute on Management and Leadership Aug. 14–16, 2011 • Richmond, Va.
CSG—Henry Toll Fellows Leadership Conference Sept. 9–14, 2011 • Lexington, Ky.
CSG West 64th Annual Meeting July 30–Aug. 2, 2011 • Honolulu, Hawaii
CSG AFFILIATES NASCA (National Association of State Chief Administrators) | www.nasca.org NAST (National Association of State Treasurers) | www.nast.net/ NASTD (National Association of State Technology Directors) | www.nastd.org
Innovation is at the center of a new government dynamic. The 2011 Southern Legislative Conference Annual Meeting—set for July 16–20 in Memphis, Tenn.—highlights the many ways states are rising to the challenge of meeting the needs of their citizens and preparing the way for prosperity. This year's gathering will feature opportunities for state policymakers to discuss issues of importance during formal programs and talk informally with colleagues from across the region to share common challenges and solutions.
For more information, visit www.csgeast.org.
Learn more at slcatlanta.org.
JULY / AUG 2011
U.S.-Canada relations will play a big part of The Council of State Governments Eastern Regional Conference’s 2011 Annual Meeting and Regional Policy Forum in Halifax, Nova Scotia, Aug. 7–10. Monday will feature a governors/premiers panel as well as a discussion of perspectives on U.S.-Canada relations. The Tuesday plenary will compare and contrast the health systems in both countries.
SLC Meeting Highlights Innovations in the States
ERC Annual Meeting Will Focus on U.S.-Canada Relations
Photography by Texas House Photography
shout out | TEXAS REP. EDDIE LUCIO
JULY / AUG 2011
TEXAS STATE REPRESENTATIVE Public service and leadership are hereditary for Eddie Lucio III of Brownsville, Texas. Rep. Lucio followed in the footsteps of his father, Texas Sen. Eddie Lucio Jr., when he ran for office in 2006. “I’ve had the good fortune of growing up in a family dedicated to public service and to have a father who instilled the values of leadership and faith, which have guided me,” said Lucio. That dedication to his job continues to be influenced by family following the birth of his daughter, Olivia (pictured with Lucio). “Her addition to my life has significantly changed the way I view and approach much of my work. She is my inspiration and joy. When I am faced with tough decisions, I keep in mind what the effect may be for her and her generation’s future.” Rep. Lucio was a CSG Toll Fellow in 2010
Do you know someone in state government who deserves a shout out? Email Krista Rinehart at firstname.lastname@example.org.
more on Eddie Lucio, For visit: capitolideas.csg.org.
The Council of State Governments 2760 Research Park Drive P.O. Box 11910 Lexington, KY 40578-1910
C A PITOLIDE AS.CSG.OR G
BIG IDEAS... Small World. Listen. Learn. Lead. Join Us. CSG 2011 National Conference & North American Summit Bellevue, Washington | October 19–23, 2011 The CSG National Conference is designed to provide state leaders with the opportunity to discuss state government trends, share cutting-edge solutions and debate what’s next on the political horizon. Within this year’s National Conference, CSG will host its first international summit. We’ll discuss our shared opportunities and challenges with friends and partners to the north in Canada and to the south in Mexico. Don’t miss your chance to discuss issues with colleagues from your state, your country and the world!
For more information, visit www.csg.org or call (800) 800-1910.