Out of Control

A Joplin Globe editorial says "here is a toll plan that ought to be included in the discussion the next time legislators talk about long-term highway solutions: a public-private partnership to build toll roads for big trucks. Those four-lane routes would parallel interstates 44 and 70 and perhaps even U.S. 71, which one day will be folded into the interstate system."

The column cites Reason Foundation's recent toll roads study, a joint effort with the Show-Me Institute.

Back in 2004 USA Today noted, "Truck-only toll lanes are the brainchild of Robert Poole, an engineer who oversees transportation studies at the Reason Foundation, a libertarian think tank in Los Angeles."

Poole's Studies:
Corridors for Toll Truckways: Suggested Locations for Pilot Projects
Toll Truckways: A New Path Toward Safer and More Efficient Freight Transportation

Via the Indianapolis Star – "Indiana Treasurer Richard Mourdock announced Monday that in 2007 the state earned more than $287 million in interest from its investment of proceeds from the $3.8 billion lease of the Indiana Toll Road."

It’s important to revisit and highlight this massive toll road and financial success because the popular (and incorrect) take on Gov. Mitch Daniels’ lease of the Indiana Toll Road (ITR) for $3.8 billion early in 2006 went something like this: ‘Though it raised a lot of money, the deal was a political loser, costing the GOP control of one house of the legislature and making Daniels a likely one-term governor. Those perceptions weighed heavily in New Jersey Gov. Jon Corzine’s rejection of privatization, in favor of a state-agency 'monetization' of that state’s toll roads (which is also proving very unpopular).’

But the politics of the Indiana Toll Road privatization are not what they seem. To begin with, the initial 2006 election-day fallout was limited to three seats changing hands, which did lead to the Democrats gaining a slim 51-49 edge in the House. But that was then. Today, as the invested proceeds from the ITR lease have jump-started $6.5 billion of major new construction between 2005 and 2015, many labor unions seem to be having a love-fest with the Republican governor. Several union leaders are on Daniels’ re-election campaign steering committee, and last December a bevy of others formally endorsed him for re-election—including the Teamsters, the Operating Engineers, Carpenters, Sheet Metal Workers, etc. And pundits think the GOP has a decent shot at winning back the lost House seats this November.

Besides welcoming all the new highway construction, the labor movement also appreciates that no ITR employees were made worse off by the privatization. All 550 employees were offered jobs with no reduction in pay and benefits either with the toll road company or with the state. According to a recent GAO report, about 85% transitioned to the toll road company, and 115 were offered jobs with the state. All those that left state employment got paid for accrued vacation time, and their pension plan contributions and vested benefits were preserved.

Operationally, the concession company is well along on widening 10 miles of the ITR on the western end, where it is used heavily by commuters into the Chicago metro area, at a cost of $250 million—part of about $700 million in near-term improvements the company committed to as part of the deal. It is also equipping the entire ITR with electronic toll collection (which it never had before)—and has joined the interagency group for interoperable electronic tolling throughout the Northeast and Midwest: the E-ZPass system. The western portion is already in operation, and the eastern section’s electronic tolling will be completed by April.

All of this was enough to provoke Governing magazine into a long and mostly positive profile of Daniels and his first term. Obviously, leasing existing toll roads carries political risks. But when done carefully, the benefits can outweigh the costs.

Reason Foundation's Sam Staley has an op-ed in today's Ohio's Times-Gazette on the state's proposed stimulus package. Sam writes, "Restoring Ohio's economic vitality will be difficult under the best of circumstances. But the solution is not in having state government pick winners and losers by rewarding favored, politically correct businesses over others not on their political radar screen. On the contrary, the key will be in creating a policy environment where broad-based entrepreneurship and business investment is welcomed and nurtured."

New York Gov. Eliot Spitzer, who’s been all worked up about violence in video games, and his friends in the New York Department of Criminal Justice are wiping the egg off their faces after a 20-minute presentation cited a well-known Internet hoax and parody site, Mothers Against Videogame Addiction and Violence (www.mavav.org) as an important “parental resource.” The site, in truth, does a terrific job of spotlighting and lampooning the very type of moral panic Spitzer’s fomenting.

The MAVAV citation caps a sensationalized presentation filled with errors, inaccuracies and misinformation about the so-called dangers of violent video game content, including the since-discredited report that the Virginia Tech shooter was an avid player of Counter-Strike.

With the ominous title “Video Games and Children: Virtual Playground vs. Danger Zone,” the slide show was designed to drum up support for state new laws restricting the sale of video games.

For more see Cord Blomquist’s post at Technology Liberation Front and this entry at Gamepolitics.com. Note also that all of New York State's links to the presentation are currently down.

Despite a lack of general sympathy, the NFL is attempting to apply pressure at the state level to force cable companies to carry the NFL Network on its larger tier of “expanded basic” channels.

NFL Commissioner Roger Goodell and Dallas Cowboys owner Jerry Jones addressed the Texas House of Representatives’ Regulated Industries Committee in Austin yesterday, and although they said they were not seeking legislation or aribtration that would require cable companies to carry NFL Network on expanded basic, that’s more or less exactly what they wanted.

In its Texas markets, Comcast makes the NFL Network part of an add-on package of sports channels for $7.95 a month. Time Warner Cable has not come to terms with the NFL for carriage. DirecTV, Dish Network and AT&T all carry the network as part of an expanded basic-like line-up.

The NFL Network aired the first of eight scheduled games Thanksgiving night. They will continue through the end of the season. Despite NFL Network's marquee match-up between the Green Bay Packers and the Dallas Cowboys Nov. 29, league attempts to sway the Federal Communications Commission to press the cable industry generated little interest. Even several media outlets, including USA Today, never champions of the cable industry, thought the NFL was overreaching.

And it is. Government should not be arbitrating business decisions at all. In fact, the NFL should be careful about what it wishes for.

“As America’s team, the Dallas Cowboys have millions of fans outside the home market who are being kept in the dark by Big Cable,” said Jones.

“This is about fans and consumers having access to the programming they want,” Goodell asserted.

Oh, really?

If, as Goodell and Jones protest, cable companies are doing fans a disservice by making out-of-market games inaccessible, why allow Monday Night Football to move to ESPN? Why extend DirecTV’s exclusivity on the “NFL Sunday Ticket” package? Why not allow “Big Cable,” with its 60 percent market share, to offer the season game package, too. Why acquiesce to CBS and Fox’s demands that they rotate “doubleheader” Sundays, a deal that essentially guarantees each network, on alternating weekends, the higher-rated 4:15 p.m. kickoff slot free of a competing telecast? Better still, why not open all out-of-market games to a la carte pay-per-view?

The NFL clearly has the power to do so, but it will mean less revenue from the networks, who are willing to pay handsomely for exclusivity.

So what’s good for the goose is good for the gander. If the cable companies feel the NFL Network rates placement on a special tier, it’s their right to make the call, Packers-Cowboys showdown not withstanding. By the way, this Thursday, the NFL Network serves up Denver and Houston in a battle of 6-7 teams. That’s followed Saturday night by an utter meaningless game between Cincinnati (5-8) and San Francisco (3-10).

Must-see TV!

Another fire season has resulted in tragedy in Southern California and, once again, the federal, state, and local governments have shown that they still haven't learned how to deal with the threat. By now, you have probably heard about a lot of the bureaucratic bungling and red tape that impeded response efforts. As a San Diego resident, I had a front-row seat to the ineptitude. For example, despite the fact that the city is surrounded by three military bases, military assets went unutilized or underutilized. State rules require each federal helicopter to carry a licensed "fire spotter" from the California Department of Forestry and Fire Protection (Cal Fire). Unfortunately, Cal Fire didn't have spotters available, so nearly two dozen Marine, Navy, and California National Guard helicopters remained on the ground. In addition, two of the National Guard's C-130 cargo planes were unable to help because they still have not been fitted with tanks to carry thousands of gallons of water or fire retardant, despite promises to do so four years ago after the Cedar and Paradise fires ravaged the area. (For more details, see this Associated Press story.) Meanwhile, government officials from the president to the governor to the mayor to the County Board of Supervisors to spokesman from various government agencies constantly held press conferences where they stood around and congratulated each other on what a great job they were doing.

Some may say that the problems in responding to the fires in San Diego and elsewhere were just a matter of poor leadership. While this is true to some extent, I think there are problems with allowing government to handle such issues in the first place, problems that no change in leadership can fully address. The problem can be illustrated in the difference between public and private property and the different incentives of public land managers and private property owners. Government land management tends to be reactive, while private property management is proactive. Why is it that we never hear about the government clearing overgrown brush, creating fire breaks, or conducting controlled burns throughout the year, rather than responding only after there is a crisis and throwing money at the problem when it is too late?

Fire prevention is essentially about risk management and property protection, two of the things that free markets handle best! Author and columnist Lew Rockwell recently wrote an article on this issue. According to Rockwell,

Are we under the impression that private markets can't handle risk management? Private markets specialize in protection of property, particularly against natural risks. If the land were privately owned, it would be protected against burning through better management. If it had to be burned, the burning would be controlled. Unexpected events like droughts and winds would be calculated into management decisions.
What's more, there would be serious liability issues. Any owner of property who let fires rage would be directly responsible for imposing fires on others. This is the way markets work. If my bathtub overflows, floods my house, and then the waters flood my neighbor's house, I am responsible via my insurance policy. So, yes, there would be a price to pay for fires on your land that harm others' property.

What do we have today? We have fires that are no one's responsibility.

Perhaps it is time to rethink allowing government to manage our fire prevention efforts.

There have been a couple of developments recently that should give California taxpayers some hope in the fight against ever-rising public pension costs.

The first was the Third District Court of Appeal decision that upheld a previous ruling that the $560 million pension obligation bond authorized by Gov. Schwarzenegger and the State Legislature in 2004 was invalid because it was not approved by the public or a two-thirds supermajority in the Legislature. (Read the court's decision here.) According to Harold Johnson, an attorney for the Pacific Legal Foundation, which fought the bonds, "It's a big victory and a sobering message for the spendthrifts in the Legislature. They can't use the credit card to cover ongoing costs of government." (See a good Orange County Register story about the decision here.)

The second piece of good news came in the form of a public pension reform initiative proposed by the California Foundation for Fiscal Responsibility, which was formed by former Assemblyman Keith Richman, author of the failed 2005 pension reform proposal.

The CFFR's initiative focuses on improving the state's traditional defined-benefit (DB) system, rather than switching to a defined-contribution (DC) plan like the 2005 proposal. It would amend the state constitution to limit pension and retiree benefit levels (although these limits could be overturned by a supermajority vote), and would apply to local government agencies as well as the state. Here are some of the details:

Retirement age for new, non-safety employees would be aligned with Social Security requirements (65 years for most; public safety workers such as police and firefighters would be eligible to retire ate age 55)
Pensions for new public employees (including any Social Security payments) would be capped at 60-67 percent of an employee's final compensation
Pension calculations would be made based on the average salary of the five highest earning years (California is the only state in the nation that bases its pensions on just the single highest earning year, which encourages "pension spiking")
Pension calculations would only include base salaries (no adding in accrued vacation time or overtime to boost pension payments)
Post-retirement health benefits would be actuarially reduced for employees that retire early
"Contribution holidays," where the state does not make any contributions to the pension system in a given year because pension fund returns have been particularly good (which then forces the state to make larger payments to compensate when returns are low or negative), would be prohibited
Post-retirement health benefits would be actuarially reduced for employees that retire early
Retroactive benefit increases, such as those authorized by the now infamous SB 400 legislation in 1999, would be prohibited
Death and disability benefits are protected for all new and current employees
The state can increase benefits or otherwise modify the provisions of the measure with a three-fourths vote
Local governments can increase benefits with a two-thirds vote

The proposal is expected to produce cost savings of at least $500 billion (that's "billion" with a "B"!) over 30 years. The savings come largely from encouraging employees to work longer, which affords them greater income in the long run and reduces the amount of time (and costs) the government must pay for their post-retirement health benefits.

Well, the fireworks came as promised. The American Legislative Exchange Council’s Telecommunications and IT Task Force approved model legislation for state deregulation of Voice over Internet Protocol (VoIP) calling, battling back a controversial amendment that would have applied the current carrier-to-carrier access charge scheme to VoIP calls.

The model “Advanced Voice Services Availability Act of 2007,” intended for use by state legislators, enjoins state public utility commissions from regulating rates, terms or conditions on interconnected VoIP services.

While the measure had strong support among ALEC public and private sector members, rural telephone companies feared the legislation would result in their loss of payments from other carriers for the completion of calls on their network. Groups such as the Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO), the Independent Telephone & Telecommunications Alliance (IT&TA) and the Pennsylvania Telephone Association all asked task force members to oppose the model bill on grounds it would raise rates for rural users.

During Thursday’s Task Force meeting at ALEC’s annual meeting in Philadelphia, David Bonsick, director of government and public affairs for Embarq, a telecommunications service provider with primarily rural operations areas, said, “flash-cutting to deregulation would likely cause irreparable harm to hundreds of rural telephone companies.”

Bonsick touched off some emphatic give-and-take between task force members over VoIP deregulation. An amendment that acknowledged the access charge issue but remained neutral on mandating or prohibiting payments was offered, then withdrawn. In the end, Bonsick proposed a stronger amendment that would have mandated payment of access charges for completion of VoIP calls, but it failed when his motion to vote was not seconded.

While rural companies do depend on access charges and intercarrier compensation for a substantial portion of their revenues, access rates are regulated by both federal and state mechanisms. Rates are not set by the market, but by complex formulas that, result in different carriers paying different access fees to the same rural company for the same connection. Some task force members argued that access payments thwart the development of competition from other technologies by keeping rural rates for conventional dial tone artificially low.

State Rep. Phil Montgomery of Wisconsin, the author of the model bill, said it was his wish to keep the access charge issue separate.

Truth be told Governor Arnold Schwarzenegger has always been in favor of public-private partnerships and privatization -- California's laws are fairly restrictive in what the Governor can do. Even when voters overwhelmingly support a measure to change the constitution and give the Governor more power state unions sue to fight and stop the activity.

California's infrastructure needs are tremendous -- and the Governor wants to tap the private sector to help build and finance it. In a recent town meeting in Monterey he explicity gave his support saying, "We'll miss out if we don't take private money and build public projects."

Specifically, California is alreadly looking at wind-power farms, ports and freeways. The governor's plan calls for a split of future profits and upfront concession payment to the state. His first proposed partnership is the lease of the state's lottery that brings in $1.1-billion in annual revenue. The proceeds would be used to pay down debt and finance new construction.

The plans face a tough uphill battle. Senate President Pro Tem Don Perata (D-Oakland) said that leasing "looks like a bake sale" and continues to believe that financing infrastructure is "part of state government." Perhaps what Perata doesn't understand is that the state maintains ownership and regulatory authority -- public-private partnerships are but another tool in the toolbox and bring a new pot of capital to be invested. Perata also doesn't offer up an alternative -- the investment is needed, the state can't afford more bonds and higher taxes. Without public-private partnerships California's infrastructure will only get worse (and its bad already).

Christian Probasco has written an article called “California Looms” for New West about California nanny statism and other legislative tomfoolery. Probasco fears that the legislative excesses of California may work their way to other states in the western region (and elsewhere). As he notes in his column,

California is a trendsetter state. Much like the weather, every Californian fad eventually makes its way over the Sierras and diffuses into the intermountain West. That’s wonderful, and it’s frightening, because there are some pretty disturbing things going on in the Golden State right now.

It is, I fear, a legitimate concern. As my colleague Skaidra Smith-Heisters is quoted as saying the article, “What is perhaps different about California is that politicians and voters are not shy about approving radical laws. They enjoy the sense that California is the first state to try new things.”

Among some of the nanny bills being considered in California:

AB 722—Would “phase out” the sale of incandescent light bulbs in favor of more energy-efficient fluorescent bulbs (despite the fact that harmful levels of mercury from fluorescent bulbs can add up in landfills, contaminating the soil and making their way into the food supply). This bill has been amended so that now, instead of banning bulbs outright, it would have the State Energy Resources Conservation and Development Commission set a minimum energy efficiency for bulbs. A nice P.R. move (banning things seems so harsh, but who can be against energy efficiency?) that would, in practice, still essentially ban incandescent bulbs.
SB 7—Would ban smoking in a vehicle—moving or stationary—in which there is a minor.
AB 86/AB 90/AB 97/SB 490—Would restrict the use of trans fats in restaurants and school cafeterias.
SB 120/SB 180—Would require caloric, trans fat, saturated fat, and sodium content information to be printed on restaurant menus.
AB 1634—Would require dog and cat owners to spay or neuter their animals by four months of age.

On their own, such nanny measures may seem innocuous, but small erosions of liberties can lead to large losses of freedom in the long run. As I said to Mr. Probasco in the article:

“In the grand scheme of things, it might seem like a minor inconvenience to buy a different kind of light bulb (and to have to start recycling instead of throwing them away) or to stop smoking in your own car if kids are present or include certain nutritional information on restaurant menus, but such minor violations of liberty add up over time. Before long, you look back and realize that you have given up a lot of your freedoms merely by acquiescing to others’ beliefs on how you should live your life.”

Philosopher and economist David Hume said, "It is seldom that liberty of any kind is lost all at once." If we want to continue to enjoy the blessings of a free society, it would be wise for us—in California or anywhere else—to heed his warning.

Government agencies and universities have accounted for the overwhelming majority of breaches in data security, according to Privacy Rights Clearinghouse, an organization that has been tracking data breaches since California made reporting of them mandatory in 2002.

State and federal governments have accounted for 60 percent of the reported breaches. The retailing industry, which is often demonized in the media as apathetic to consumer privacy, accounted for only 3 percent. Banks and financial institutions accounted for 9 percent.

Elizabeth Oesterle, senior director, government relations counsel for the National Retail Foundation broke down the breaches at last week’s National Conference of State Legislators’ Spring Forum. Governments, especially, she said, rely too heavily on social security numbers as identifiers.

No sooner did I absorb this when, upon arriving home from the conference, I found a letter from a state (which shall remain nameless) department of revenue inquiring about a tax return on a trust fund I manage. Not only did the letter contain the name, address and corresponding bank account number, but the "case number" was the social security number associated with the name on the bank account. Somewhere, on some PC, server, disk, tape or hard drive, this data resides alongside that of millions of other individuals. It’s a serious breach waiting to happen.

While thefts are invariable, one way states can protect their citizens’ identity and privacy is to stop using social security numbers as identifiers for other business. Ironically, some states now require this of private business. For example, Texas (not the state involved in this example) prohibits health insurers from using all or part of a policyholder’s SSN as an account number.

Just a quick follow to an earlier post about Michigan lawmakers' plan to fix the economy and education. One of the wise proposals included buying every student a new iPod. Turns out that two state lawmakers were among a group of politicians who made a trip to California that was paid for at least in part by Apple, the maker of iPods.

The lawmakers said the trip was about "about technology in the classroom" and educational uses for the popular audio and video players. Rep. Matt Gillard D-Alpena added that "I don't know that it has to be iPod-specific technology."

Seems a little fishy to me.

Michigan with one of the worst economies in the nation just keeps giving us fodder for how not to fix an economy. In short, they keep coming up with hairbrained idea after hairbrained idea. The Detroit News' latest editorial argues that what "Michigan faces is not a shortage of revenue, but an excess of idiocy."

The latest proposal will have the added bonus of not improving education. On Thursday, House Democrats offered this one up, "a spending plan that would buy a MP3 player or iPod for every school child in Michigan." No, I didn't make that one up...and check out what the Detroit News had to say about this idea, "An iPod for every kid? Are they !#$!ing idiots?"

There's a host of new spending programs and pledges to spend additional money in existing programs too--including floating bonds to pay for health care (that's right, Michigan is following in California's footsteps and pulling out the credit card to pay for expenses!). Figuring out how to pay for all these ideas hasn't been worked out yet but Rep. Steve Tobocman (D-Detroit) suggested that raising the income tax, levying a 6 percent tax on some services, and taxing junk food and soda were options all on the table. Only option that seemed dead on arrival was cutting the budget.

The last four lines from the Detroit News editorial say it better than I could ever hope for, so I'm just copying it:

"Stop the stupidity. Michigan can't tax or spend its way out of this economic catastrophe.

The only responsible option is to bring spending in line with current revenues. The mission must be to expand the tax base, rather than to expand taxes, by crafting a budget that encourages growth.

We won't get there by wasting money on early Christmas presents for Michigan kids."

Indiana Governor Mitch Daniels issued the Indiana State Government Performance Report for July to December 2006, its the fourth of his administration and is truly unique in state government. The midterm update shows that agencies are making steady improvement, with nearly 40 percent of results in the top-performing category compared to about 25 percent for a comparable period in 2005.

Daniels and his team at the Indiana Office of Management and Budget have worked tirelessly to show that state government can become a performance-based organization. An orgnaization that is committed to results and focused on continuous improvement in service and cost reduction. Performance measurement is used to ensure accountability but also empower employees to succeed. Truly a model for the nation.

The Commission for a New Georgia asks the fundamental questions of how government operates. But more importantly, how government should operate as well. They fill an all too common void in most statehouses where the needs of the bureaucracy are put ahead of those of the taxpayer. Governments' ultimate responsibility is to provide high quality services at a reasonable cost to taxpayers. That is the mission of the Commission for a New Georgia. Sadly these efforts often fail because of a lack of implementation. How many "blue-ribbon" commissions have been created throughout the years? Usually all we can show for their effort is a nice report. Once again, that's where the Commission for New Georgia sets itself apart. In just a short time many of their recommendations have been implemented, saving taxpayer dollars and improving customer service. The Commission for a New Georgia has established itself as a pioneer and a leader.

Cato does it again:

Only one governor receives an A this year— Republican Matt Blunt of Missouri

Who’s the worst governor in America? Blanco and Napolitano tied for the worst score.

Nine governors receive Fs. In alphabetical order, they are Kathleen Blanco of Louisiana, Michael Easley of North Carolina, Kenny Guinn of Nevada, Christine Gregoire of Washington, Mike Huckabee of Arkansas, Ruth Ann Minner of Delaware, Janet Napolitano of Arizona, Bob Riley of Alabama, and Brian Schweitzer of Montana.

More here.

As we mark the first anniversary of Hurricane Katrina's devastating landfall today, it is fitting that we look at the progress that has been made in rebuilding the region--and the lack of progress. As Harry Mount explains in a recent article for the UK's Daily Telegraph, there have been stark differences in the rebuilding effort between the public and private sectors:

[W]hile private business has flourished, public works have failed miserably. Schools are only just opening. University departments have been closed for good. Courtrooms don't have enough judges to deal with the renaissance of America's murder capital.

Mount continues:

This mismatch between private and public has nothing to do with shortage of public money; after Katrina, President Bush promised £58 billion ($110 billion) in federal aid for the victims. New Orleans and its crooked ways are partly to blame. Only this weekend, a pair of Bobcat excavators worth £50,000 ($95,000) were stolen from the Lower Ninth Ward, one of the hardest-hit areas of the city, where they were being used to build a memorial to the victims of Katrina.

But the chief culprit is a federal government clogged with bureaucracy and indecision, incapable of spending money even when it's got tons of the stuff.

The American government can just about arrange an orgy in a brothel -- fraudulent applications for Katrina aid were spent on champagne and prostitutes -- but it is hopeless when it comes to large-scale federal construction projects.

This paralyzing bureaucracy is not limited to Katrina recovery efforts, either. As Mount notes, the same maladies have impaired rebuilding efforts at the World Trade Center site as well.

In the five years since September 11, one building, 7 World Trade Centre, the third and least-known skyscraper to collapse that day, is the only one to have been rebuilt.

At 7 WTC, the site's leaseholder, Larry Silverstein, worked unencumbered by the attentions of government. As a result, the £350 million ($665 million), 52-storey tower went up this May without a hitch.

A couple of hundred yards from 7 WTC, Ground Zero is still a great big empty concrete tub.

Mr Silverstein owns the lease to the Ground Zero pit and the rights to rebuild all the space lost within it. But, while 7 World Trade Centre is outside the pit and entirely under his control, construction inside the pit is run by government, principally George Pataki, the outgoing governor of New York State.

We should take these lessons to heart when we consider options for rebuilding of the Gulf Coast, the World Trade Center site, and future disaster areas. It is not government planning, but market forces, that allow for the quickest, most appropriate, and most economical recovery of disaster areas. People and businesses will seek opportunities to invest their resources and offer their services where they are most needed--if only government will get out of the way and let them do it.

The bill, a compromise passed by the state Senate and expected to pass the House next week, would make the Bay State's minimum wage the highest in the nation in 2008, once the full increase takes effect.

Article here.

Don Boudreaux discusses minimum wage law here and here.

Play a bit of Texas Hold ’em on-line in Washington state and you’ll be the legal equivalent of a sex offender.

The Washington legislature this spring passed a law making Internet gambling a Class C Felony, the same status as the state's sex offender laws, and punishable by up to ten years in prison. Gov. Christine Gregoire (D.) signed the bill March 28. It becomes effective June 7. So all you on-line players in the Evergreen State still have a few weeks to get even.

Failing that, you can always go out to a local tribal casino or card room, both of which are legal in Washington. If you've really got a jones to make a wager, you can always run down to the corner store to buy a state lottery ticket. Understand that it's not that legislators don't want to you to gamble--it's that they don't want you to gamble with outfits they don't control. Hey, that's been the deal with every numbers racket since Arnold Rothstein wore short pants.

For more information about this bill, plus a collection of Internet posts testifying to its unabashed hypocrisy, visit here.

These are some of the more salacious procedures that taxpayers in Washington State pay for.

In his most recent review of state Medicaid expenses, Auditor Brian Sonntag found thousands of questionable expenditures in the 2004 fiscal year … Each year, the state and federal government spends more than $3 billion through Medicaid to pay for health care of the poor and disabled …Sonntag said the evidence in the report's small sampling of the entire Medicaid budget indicates that the state could be spending tens of millions of dollars on questionable procedures.

State Medicaid Director Doug Porter responds:

undergoing revision

But a sex-change operation still could be covered by Medicaid.

"Gender dysphoria is the diagnosis, the treatment for which is gender reassignment," Porter said. "Some physician has determined that it's a man who really should be a woman and they are suffering psychological effects of this condition, and the only correction to restore them to a higher function is a sexual reassignment."

Article here.

Fiscal conditions are improving in most states, as revenues rebound from the slump earlier this decade. From Stateline.org, here's a brief roundup of new tax cuts and spending proposals states are considering.

UPDATE: Cato's Chris Edwards writes in National Review that it's time for states to cut corporate and individual income taxes:

What will the states do with their overflowing coffers? During the revenue boom of the 1990s, states allowed their budgets to bloat as they expanded programs such as Medicaid to unsustainable levels. When the recession hit in 2001 and revenues stagnated, state officials moaned that they were innocent victims of a fiscal crisis. They responded by hiking taxes and clamoring for more aid from Washington.
. . . .

Otherwise sensible policymakers [...] apparently think that there is no harm in allowing spending to rise rapidly during booms, as long as tax rates aren’t increased. That is not correct: Every dollar used for budget expansion is a dollar sucked out of the private economy and not available for investment and job creation. The cost to California and other high-tax states of using rising revenues for added spending is that crucially needed reforms to improve tax competitiveness are not being made.

Some governors are using current budget surpluses to cut taxes. Unfortunately, most cuts this year are gimmicks — such as rebates and narrow credits — rather than reductions to tax rates. State policymakers seem to have forgotten that the purpose of tax cuts is to promote economic growth, not to buy off special-interest constituencies. Gov. Jon Huntsman of Utah is an exception: He is calling for a cut to the state’s top income-tax rate to “send a signal about our commitment to long-term competitiveness.”

Read the whole thing.

South Carolina Governor Mark Sanford issued his executive budget today.

There are several noteworthy pieces, including a $150 million tax rebate and the creation of a Sunset Commission. Perhaps the most impressive piece was this statement:

"We think it's important in terms of strengthening our economy to make sure that government's growth doesn't outstrip the rate of growth of people's paychecks and their wallets and their pocketbooks," Sanford said. "The government shouldn't grow faster than people's ability to pay for government."

Now if only the legislature will cooperate.

Impressed? Read up on Sanford's government reform efforts here.

One of Governor Jeb Bush's largest, and most important privatization initiatives got mixed reviews from the state's auditors office. The report noted that the Department of Business and Professional Regulation's "re-engineering" with Accenture to create an online licensing system, Internet portal and call center will save the state nearly $40 million.

The biggest knock on performance was the "interactive voice response" system -- but who doesn't hate these!

Bottom line: "The project has been successful in centralizing many functions, enhancing customer access to services and achieving staff reductions," and the state saved money.

Read more about Florida's privatization initiatives here and here.

There is no question that the economy is doing much better. And no surprise, state coffers are lined with cash...and spending measures will soon be debated in states around the country.

Scott Pattison, the executive director of the National Association of State Budget Officers is right on when he notes that the memory of the recent downturn and the deficits remains strong in many states and that they should act as a brake for new programs.

Unfortunately, states' don't have a strong track record here - that's why state spending limits are so important.

Louisiana Gov. Blanco signed an executive order Saturday cutting a half billion dollars from the state budget, and opened the legislative session on Sunday asking legislators for their help to trim spending even further to address an almost $1 billion budget shortfall in the wake of Hurricanes Katrina and Rita. From The Advocate:

Blanco outlined her approach to addressing the estimated $960 million shortfall in state tax revenue that Hurricanes Katrina and Rita created.
She initiated the first part of her strategy Saturday by cutting nearly $500 million in state spending. The move rankled many lawmakers because the governor took the unprecedented step of making the cuts without their input.

For the rest of her belt-tightening plans to see fruition, she'll have to rally at least two-thirds of both chambers behind her. The governor wants to tap into a third of the state's $460 million "rainy day" savings account and borrow money.

She also will have to stave off attempts by legislators to restore what she chopped from the budget. Her cuts include so-called slush funds and other pet projects doled out to lawmakers.

Blanco wants legislators to go even further and cut their own budgets.

"I am cutting some of your favorite programs," Blanco said. "Some of you will consider these cuts way too painful and you'll try to avoid them. Let me warn you -- this is just the beginning."

Blanco invited critics of her cuts to look at the budget and bring her suggestions of better ways to slash state spending.

Sounds like a decent start. See the Governor's executive order here. It's also worth taking a look at Reason's recent study, The Sky Isn't Falling, as well as Priority Colorado, to see how states like Texas and South Carolina are using performance-based budgeting and activity-based prioritization funding models to institutionalize fiscal discipline by focusing spending on the highest priority needs and most effective programs. Louisiana would do well to take a page from this playbook.

But the Washington Times offers some less encouraging news:

Louisiana will spend $45 million on sports and livestock facilities and other new projects in spite of a looming deficit, frustrating some officials who say the frivolity reinforces the state's history of political patronage.
"We're in Washington with our hands out asking for $2 billion plus, and rather than holding on to the money to see what the needs are, they're spending it on local projects financing goat shows and lawn-mower races," says state Sen. Robert Barham, Oak Ridge Republican.

. . . .

"I like a good goat roping as much as anyone, but come on," Mr. Barham said. "It's funny, but it's sad. At a time when Louisiana needs so much to enhance its public image, the taxpayers are just shaking their heads and wondering."

The Louisiana state Legislature yesterday began a special two-week session to deal with record-setting budget shortfalls, but this spending, approved by the state's bond commission and headed by Gov. Kathleen Babineaux Blanco, will go unchallenged.

. . . .

The list of projects also includes reservoirs, a cargo airport, sewer systems, an Audubon Institute building, a hospital, a performing-arts center, a cruise-ship terminal, a light-rail line, a gene-therapy research building, a library, an arboretum and a technology transfer center.

Of course, the light-rail line stuck out like a sore thumb in that list. Given that it is usually a total loser, does it make sense to pour even a dime into light rail in Louisiana when there are so many other fish to fry?

The Wall Street Journal weighs in on tomorrow's vote on the Colorado Referenda C and D, which would take the reigns off state spending currently held in place by the state's TABOR (Taxpayer Bill of Rights) law:

Halloween arrived early in Colorado this year as supporters of a pro-tax ballot initiative rolled out scare tactics to dramatize the allegedly dire consequences of a "no" vote at the polls this Tuesday. We hope Colorado voters look to see what's hiding behind the fright costumes.
Advocates of what amounts to a $4 billion tax hike have deluged the airwaves with threats that senior citizens will go without their lunches, schools and state parks will close, college tuitions will soar, and programs to prevent poisoning, air pollution, ski lift accidents and teenage suicide will shut down. One TV ad shows the popular mayor of Denver jumping out of a plane as a metaphor for the carnage that awaits Colorado should the tax hike fail. (Miraculously, he survived.)

At stake here is the fight over the future of the famous Colorado Taxpayer Bill of Rights law, or Tabor, as it is now commonly called. Tabor was approved by voters in 1992 to end the tax and spending cycle of the 1970s and 1980s. It restricts increases in the state budget to the rate of population growth plus inflation. Any tax revenue collections above that cap are returned to taxpayers.

Some $3.3 billion, well over $1,000 per taxpayer, was returned to Coloradans in just the first five years. But when the high-tech bubble popped in 2000 and 2001, Colorado was hit hard and general fund revenues fell by 15% in two years. Now Republican Governor Bill Owens has joined hands with unions and the business community to call for a five-year "time out" on Tabor so state agencies can replenish their budgets. Taxpayer groups worry that once the state is freed from Tabor's fiscal discipline, it will never be restored.

This battle of Tabor has gained national attention because the law has become a template for at least two dozen other states seeking to restrain their own stampeding taxes. Colorado is a worthy role model: The tax cap is one of the main reasons that economists cite for the state moving to 10 percentage points above the national average in personal-income growth in the period after Tabor, from five points below it in the years before Tabor.

Despite the state's recent fiscal ills, a compelling case can be made that the automatic tax rebates in the 1990s saved it from even worse budget misery. The $3.3 billion that was returned to taxpayers would otherwise have been spent, probably on new obligations that would have created a permanently larger spending base. Jon Caldara, who is leading the "Vote No" campaign, points out that the rebates are all that "prevented us from looking like debt-ridden California in the last few years."

. . . .

We do have some sympathy for Governor Owens's argument that Tabor's limits put an extra burden on government services during economic downturns. Once revenues tumbled by 15%, it took the state three years to regain the revenues lost because Tabor ratcheted down permanently to a 15% lower revenue baseline during the recession.

However, the way to fix this is not to take a sledgehammer to the Tabor mechanism and force taxpayers to surrender billions of dollars in future tax rebates. The better answer is to negotiate an exception that protects the revenue baseline from falling so far during recessions. In our view, Mr. Owens gave away too much when he negotiated the five-year Tabor waiver, which the spenders will use as an opening for a major expansion of state government.

There's a good reason that Tabor is the taxpayer model of the nation. It has done precisely what its supporters said it would do in forcing politicians to set spending priorities the way that families and businesses do, and in requiring government to live within its means. If Coloradans abandon Tabor's discipline, even for a while, they may never get it back.

In case you missed it, be sure to check out Geoff and Adam's piece last week on Referenda C and D, as well as the Priority Colorado report from earlier this year. For more info on Ref C & D, see TaxIncrease.org.

Indiana Gov. Mitch Daniels continues to impress. Just eight months into an administration he's done more to reform government than most do in four years. As previously reported here, Indiana recently released an update on its accomplishments to date.

Now the govenor is focusing his attention on transportation. He's says he'll likely propose tolls for new highway projects and repairs to the existing Indiana Toll Road. Although there has been some discussion about a long term lease there too.

In a deceptive and down right dirty move the local AFSCME union sent pink letters to state employees 'notifying' them that they would lose their job on Dec 31 because of privatization moves. Mitch Roob, secretary of Family and Social Services Administration rebutted the letters, “It is a fabrication of a termination notice, and frankly it is a fabrication of the policies that this agency intends to pursue over the course of the next several months.” Currently FSSA is considering turning some state functions over to non profits and subjecting other services to competition. Historically this agency has been saddled with inefficiency and has been ineffective in its mission. Perhaps, AFSCME needs to be reminded that the mission of government isn't government employement but public service.

Recently the LA Center for Economic Development released this report which, among other things, discusses the disconnect between the business and political classes in California.

The authors suggest that state and local political leaders seem to be preoccupied with tangential, attention-grabbing issues, and fumble when it comes to fixing big problems, like lousy schools, mounting congestion, and unfriendly business climates.

Two recently proposed bills seem to make the authors’ point:

state officials may require salons to post citations on their windows

The rules, contained in a bill that has passed the Assembly and goes before the state Senate Appropriations Committee in the next week, come after three mycobacterial outbreaks at salons in Northern California infected more than 200 people over the last few years.

Its author, Assemblyman Leland Yee (D-San Francisco), said the legislation was aimed at cracking down on salons that don't follow state safety standards for manicure equipment. The bill would require more stringent rules for disinfecting those items and disposing of water from spas where customers soak their hands and feet.

Article here.

bill banning Internet hunting

The measure by Sen. Debra Bowen, D-Redondo Beach, was given final approval by the state Senate, which voted 27-5 to approve Assembly amendments to the bill.

The bill would make it a misdemeanor punishable by up to six months in jail and a $1,000 fine to use the Internet to hunt animals. The measure also would ban businesses that offer Internet hunting and prohibit the importation of animals killed via the Internet.

Article here.

Just six months into his term as Governor, Mitch Daniels issued his first (of likely many) update on his administration's efforts to improve efficiency and effectiveness.

To date, more than $150 million has been saved! Quite an accomplishment. While there are several large projects, and many more on the way, it's clear that 'no cut is too small' to report...and that they really start adding up to real money. Some of my favorites:

INDOT has transitioned from a yearly State road map to a two year map which saves tax payers $175,000 every two years.

The Department of Agriculture ceased operating a Bed and Breakfast with annual savings of $100,000.

Bureau of Motor Vehicles canceled the practice of purchasing bottled water for its home office and branches, resulting in annual savings of
$35,000.

The Department of Labor ceased the practice of allowing 11 employees that live in counties adjacent to Marion County to work from home (involved paying a multitude of additional expenses including home internet access, long distance phone calls, and mileage reimbursement to drive downtown for meetings). This move will increase employee accountability while saving the Department $30,000 annually.

The Hoosier Lottery redesigned their bi-monthly, full color newsletter to retailers to a black and white monthly publication
at a savings of $21,670 annually.

Medicaid spending is a serious problem and could result in your next tax increase (unless pension liabilities get it first!). Several governors are doing something about it -- Tennessee's Phil Bredesen slashed one of the most generous Medicaid plans in the country, TennCare, taking nearly 323,000 people off the rolls. Florida Gov. Jeb Bush is using a pilot program in two counties, "empowered care" to bring competitive pressures to Medicaid care. Furthermore, perhaps the most innovative plan is Gov. Mark Sanford's efforts in South Carolina. It is detailed in a Business Week article. The plan follows President Bush's "ownership society" outline -- "it would no longer provide unlimited care, instead offering beneficiaries a fixed amount of money each year to buy insurance and pay out-of-pocket costs. If they run through their accounts, they would have to pay for additional care on their own. But if they hold spending down, they could bank the leftover money to pay future medical costs -- or even use it to buy private insurance if they leave the program."

Unfortunately, not all governors are as innovative as these three -- Maine's governor, John Baldacci, continues to expand coverage and offer additional benefits to one of the most aging populations in the country. The Maine Heritage Policy Center has a wealth of information on "Dirigo Health" and reform options to keep the state afloat.

Remember the Akaka Bill? It might be in trouble.

For updates, stick with Hawaii’s own Grassroot Institute.

…

New York's Medicaid program is by far the most expensive and most generous in the nation. It spends far more - now $44.5 billion annually - than that of any other state, even California, whose Medicaid program covers about 55 percent more people. New York's Medicaid budget is larger than most states' entire budgets, and it spends nearly twice the national average - roughly $10,600, more than any other state - on each of its 4.2 million recipients, one in every five New Yorkers.

This shows what kind of a mess the system has become:

she claimed to have performed as many as 991 procedures a day

Whole article here.

Over the weekend a bunch of governors got together and griped about Medicaid:

recently eclipsed elementary and secondary education as the largest single portion of state budgets

Whole article here.

Indian reservations are the poorest places in America. Unemployment is high and life expectancies are low. A bizarre regulatory regime stifles economic activity and trust fund bungling by the Bureau of Indian Affairs hasn’t helped improve relations between Native Americans and the U.S. Government.

You’d think lawmakers would stay far away from anything that might replicate the reservation experience.

But now this:

[The Native Hawaiian recognition bill, A.K.A the Akaka Bill] would grant Native Hawaiians the same rights of self-government enjoyed by American Indians and Native Alaskans. The measure also would allow Hawaiians to form a native government.

Seems like this sort of segregation would make Hawaiian race relations, which are already rather sticky, even stickier. And at first whiff, this might smell like the concoction of some fringe movement.

But the bill has widespread support, from Hawaii’s Republican governor to the state’s all-Democrat congressional delegation, which claims to have the blessings of all 44 Senate Dems. Bush has been quiet on the issue, which supporters take as a sign that he wouldn’t whip out his unused veto pen to stop the bill.

And if the bill does become law it would form a separate government without a popular vote, which as this letter points out, is very different than the process that produced statehood:

Over 40 years ago, in keeping with the principle that a government should be created only with the consent of the governed, the citizens of Hawaii chose American statehood by an overwhelming margin. (Over 94 percent voted Yes to Statehood in 1959). The same choice would doubtless be made today.

Hawaii’s Grassroot Institute on this issue. Go there for updates.

And if a special Hawaiians-only government is formed, I suppose we’ll have to figure out who qualifies for admission.

The Wall Street Journal weighs in on the growing interest in state Taxpayer Bill of Rights (TABOR) laws, which require states to cap spending and rebate surplus taxes back to citizens:

Politicians and their spending beneficiaries in state capitals are about as fond of these Tabor laws as an alley cat is of a bell around its collar. Government employee unions and corporate lobbyists are expected to spend some $10 million to neuter Tabor in Colorado and even more to defeat Governor Schwarzenegger's "Live Within Our Means" budget initiative in California. Their hostility is all the more reason to think these ballot measures have real benefit.

A Taxpayer Bill of Rights is a long overdue addition to the architecture of state constitutions. Proposition 13 halted the aggressive encroachment of state government more than 25 years ago, but only temporarily: Even after adjusting for inflation, most state tax collections are two to three times fatter than they were then. The painful experience since is that only hard and fast constitutional limits can rein in the powerful spending interests that live off the government.

Read the whole thing.

“He makes the General Assembly look liberal, and that’s not easy to do.”

College of Charleston Prof. Bill Moore, referring to South Carolina Gov. Mark Sanford. Sanford had offered 163 budget vetoes totaling around $95 million. The legislature sustained only 10 of them for a $300 thousand savings.

Good grief.

"Simply because revenue is up does not mean it's party time at the Statehouse."

Acting New Jersey Governor Richard J. Codey, after announcing that state revenues for the current fiscal year will be $500 million higher than originally forecasted. If only there were more Governors with this courage.

Last week California's public safety workers were in the legislature pushing for benefits and pension increases.

Never mind that cities and counties already face budget-breaking
retirement costs. Voting along straight party lines - Democrats for
and Republicans against - members of the Assembly Public Sector
Committee approved a series of new measures to fatten already bloated
police and fire pensions. These bills are fiscal time bombs. They
fleece taxpayers, while pushing state and local governments ever
closer to insolvency.

The $75 million contract was signed Friday with Our Kids of Miami-Dade and Monroe counties, which will handle all foster care, adoption, and child welfare licensing operations.

Read on.

Many issues fall within the category: “Big Headline, Little Story.”

Take offshore outsourcing. There are all sorts of scary news stories that suggest it’s a huge problem, even though it actually affects only a tiny slice of the labor force.

Then there are other issues that really are huge problems, even though most in the media look at them and yawn.

Here’s our George Passantino, writing in the OC Register, on one of those:

more than a 1,500 percent increase in five years

This is why it’s a really big problem:

Equally troubling, the state's traditional pension plans are vulnerable to election-year pandering and campaign promises that lead to irresponsible benefit increases that taxpayers are forced to finance without any say in the decisions.

And here’s the solution:

Shifting new state workers to a 401(k) plan would stabilize the state's skyrocketing pension costs, while still allowing state workers to retire with dignity. Schwarzenegger's proposal would put newly hired state workers in 401(k)-style accounts that the employee contributes to, with the state also contributing a portion. Upon retirement, the size of each employee's pension would depend on the contributions made and the personalized investment strategy the employee used - unlike today's guaranteed pensions that can pay many state workers 80 percent to 90 percent of their annual salaries for life.

Read the whole article here.

Pennsylvania spent $2 billion on an economic stimulus program. Last year 70,500 jobs were created in the state.

But did the program create those jobs?

Guess what the governor’s answer is.

"It's just too sexually oriented, you know, the way they're shaking their behinds and going on, breaking it down," said Edwards, a 26-year veteran of the Texas House...

Under Edwards' bill, if a school district knowingly permits such a performance, funds from the state would be reduced in an amount to be determined by the education commissioner.

Whole story is here.

From Washington state:

Saying the state has "too many people pushing paper," Gregoire said the job-cuts proposal would save $50 million. "We must reduce bloated middle management."

Gregoire announced other cost-saving measures as well, such as changing the way state agencies buy goods to get cheaper prices and closing the state film office. Most of the items she outlined, including the layoffs, require approval by the Legislature. Altogether they're projected to save a little more than $120 million, an amount that does little to offset a budget shortfall estimated at more than $2 billion.

What kind of tax hikes are under consideration?

Options that have gotten the most discussion lately by lawmakers include so-called "sin taxes," on items such as cigarettes, and bringing back an estate tax that was knocked out by a recent state Supreme Court ruling.