Copyright 1999 The Houston Chronicle Publishing Company
The Houston Chronicle
August 10, 1999, Tuesday 3 STAR EDITION
SECTION: A; Pg. 18
LENGTH:
799 words
HEADLINE: States riding high, but how long
can it last?
BYLINE: DAVID S. BRODER; Broder, a
Pulitzer Prize-winning political reporter, writes a nationally syndicated column
from Washington, D.C.
BODY:
TWENTY years after he
attended his first meeting of the National Governors' Association as the
freshman governor of Arkansas - and the youngest in the nation - President
Clinton returned to St. Louis Sunday to meet again with his former colleagues in
the NGA. He talked about the "partnership" he had promised to forge in 1993 and
said that, at least from the White House vantage point, "it has worked."
Rhetoric and partisanship aside, most governors agree. And clearly from
the perspective of two decades, the balance of power and responsibility between
the states and the federal government is far removed from where it was in the
1970s - and a lot closer to what the authors of the Constitution had in mind.
From the New Deal to the start of the Reagan administration in 1981, the
flow of dollars and power was heavily toward Washington. Since then it has
slowed, and in some respects, reversed. The Supreme Court has played a major
role - thanks to Republican appointees - as it has rediscovered the 10th
Amendment and been fairly aggressive in striking down federal statutes that it
judged had trespassed on the reserved powers of the states.
But having
former governors in the White House for all but four of the last 20 years also
has had an impact. Jimmy Carter, Ronald Reagan and Bill Clinton all had observed
firsthand the growth in fiscal capacity and organizational talent in the states
and, more important, had experienced their own frustrations in dealing with
federal bureaucrats.
Slowly at first, and then at an accelerating pace
since Republicans took control of Congress in 1994, the states' role in vital
areas of government has been increased. The welfare reform bill of 1996 was a
landmark, but certainly not the end of the process.
The numbers tell the
story. Peter Harkness, editor of Governing magazine, said in St. Louis that,
putting aside Social Security and Medicare, state and local governments now
outspend Washington. Only 13 percent of public employees are on the federal
payroll, he said. And every public opinion poll shows greater trust in local and
state government than in Washington.
With most states enjoying
prosperous times - Hawaii being the most notable exception, because of its
dependence on the Japanese economy - it seems to be a golden age.
But
there is a real question how long it may last. Prudent governors of both parties
have insulated their states against a recession by building up their rainy day
funds to record levels. What they cannot do is turn back the process of
globalization that is remaking the economic world - and inevitably will reshape
the political world as well.
No one understands this process - and both
its promise and peril for the states - better than Utah Gov. Michael O. Leavitt,
who became chairman of the NGA this week. For years, he has been preaching to
his fellow governors that the communications and technology revolution that
facilitates the flow of capital, information and jobs across old national
boundaries will force a redefinition of the role of states within this republic.
The issue already has arisen in connection with the taxation of
Internet commerce. States now derive about two-fifths of their
revenue from the sales tax, but as more and more goods and
services are offered on the Internet, the collection of those
taxes has become more and more problematical. Vendors do not
want to have to calculate and apply a separate tax rate for each city and state.
Some reject the burden of being the tax collector. And the question of where the
tax applies, and which jurisdiction is entitled to receive the revenue, is not a
simple one.
The issue is under study by a commission headed by Virginia
Gov. Jim Gilmore, and software now coming on the market may solve some of the
problems. But Leavitt clearly sees a serious threat to the single greatest state
revenue source.
At the same time, he recognizes that multinational
businesses have a legitimate need for simplicity and uniformity in the rules of
the game. The more complex the tax and regulatory systems they face, the greater
the friction and loss of efficiency. "The challenge," he says, "is how we
provide simplicity and uniformity without recentralizing power and losing the
advantages of local control."
What Leavitt grasps - probably more
clearly than many of his colleagues - is that the same economic force that has
required the nations of Europe - including those larger in population than the
largest American states - to surrender some of their sovereignty to the European
Union will be applied domestically to the 50 states.
How the devolution
forces in our political and judicial systems confront the economic pressures of
globalization will challenge political leaders for at least the next 20 years.
TYPE: Editorial Opinion
LOAD-DATE: August 11, 1999 
