NR Digital

States Right

by John Hood
The Democratic wipeout beyond the Beltway

Voters obviously gave the president plenty to wince about on Election Day, so it is understandable that one particular irony escaped his notice: Barack Obama, whose most substantive political experience before his White House bid was serving three terms in the Illinois state senate, has in just two years managed to reduce his party’s power in state capitals to its lowest point since the 1920s.

While the number of GOP congressional victories in 2010 was impressive, the idea of a Republican majority in the House doesn’t take much getting used to. After all, the party lost the House only four years ago. But the new Republican majorities in the states have no precedent in living memory. On Election Day, the GOP netted half a dozen new governorships and nearly 700 state legislative seats. It was the largest swing of power in state government in nearly half a century and gave Republicans 53 percent of all state legislative seats in the country — their highest share since 1928.

Going into the 2010 elections, Democrats controlled 60 of the nation’s 98 partisan legislative chambers, the Republicans held 36, and two were tied. (Nebraska has a nonpartisan and unicameral legislature.) Now Republicans have majorities in 56 chambers vs. the Democrats’ 40, and there are two ties. Perhaps the sweetest victories for the Republicans were in Great Lakes states, where only two years before GOP fortunes had seemed particularly dim. Republicans now hold the governor’s office and both houses in Indiana, Michigan, Pennsylvania, Ohio, and Wisconsin — all potential battleground states for 2012. As for the most historic gains of 2010, they were in Minnesota, where Republicans will enjoy their first-ever majority in the state senate, and in Alabama and North Carolina, where Republicans in each state won control of both houses for the first time since Reconstruction.

The story of GOP gains in the states isn’t just about Democratic governors’ and legislatures’ giving way to Republican ones. In places where Republican reformers had already gained some important ground in recent elections, the 2010 cycle gave them the additional allies they need to advance key conservative legislation. Popular Republican governor Mitch Daniels, for example, can now call on the services of GOP majorities in both chambers of the Indiana legislature. And what were slim two-seat house majorities in Texas and Tennessee are now 48- and 30-seat GOP supermajorities.

Observers of national politics tend to look at legislative elections through the lens of congressional redistricting. There’s no question that Republicans’ new ascendancy in state capitals has boosted their chances of retaining and even expanding their House majority in coming elections. Michael Barone observes that among the states with at least six congressional districts, where lawmakers have sufficient room to indulge their penchant for electoral cartography, Republicans now control redistricting in 13 with a total of 165 House seats, while Democrats control only four, amounting to 40 seats. Ed Gillespie, former head of the Republican National Committee and a principal strategist of this year’s nationwide GOP push for legislative wins, says that this Republican advantage may turn out to be worth 15 to 25 congressional seats. (That doesn’t mean the party will necessarily net that many seats in 2012; the gains from redistricting may just offset some of the normal receding that tends to follow a wave election.)

But it would be a mistake to reduce the significance of this year’s Republican legislative victories to a line-drawing exercise. State governments matter. Governors and state legislatures make critical decisions about many issues important to conservatives — education, health care, taxes, business regulation, property rights, and abortion and family policy, just to name a few. Thanks to the Tea Party movement and recent fights over Obamacare and climate-change legislation, the future of federalism is a hot political topic. If Republican leaders in Washington succeed in their intention to roll back federal encroachments on state and local prerogatives, newly empowered governors and legislatures will have to step up and handle some of the country’s biggest public-policy challenges.

At the top of the priority list, of course, is the country’s weak economy and the fiscal imbalances that act as both a reflection and a cause of it. By now, just about everyone outside of the White House, union offices, and faculty lounges recognizes that American government is too big, too expensive, and too burdensome on private households and businesses. While Washington is responsible for most of the problem, there’s enough blame to go around. Last year, expenditures by federal agencies and departments made up about 21 percent of GDP, while states and localities accounted for a bit over 14 percent (that’s 11 percent funded by direct state and local revenues and another 3 percent in state-managed federal grants, primarily for Medicaid). The size of state government has roughly doubled in real terms in recent decades via the expansion of existing institutions such as public schools and universities as well as through the creation of new programs in economic development, early-childhood education, health care, and transportation. Rather than budget their revenue gains conservatively during boom years, building up rainy-day accounts and setting aside reserves to finance trillions of dollars in preexisting pension and health-care obligations, governors and state legislatures opted for the new, the shiny, and the path of least resistance.

As a result, when the recession began to hit in 2008, most states were woefully unprepared for the double whammy of steep drops in projected revenue and increased demand for public assistance. They had more fiscal obligations than their taxpayers could afford, particularly in states where unfunded liabilities for retiree benefits were already starting to hit the bottom line. During the past two fiscal years, states have had to close budget deficits totaling well over $100 billion. The 2011–12 fiscal year promises to be no different — only this time there’s less chance of a big bailout from Washington and less tolerance for tax hikes among a right-trending public that is properly worried about the effects of government spending on competitiveness and job creation. With budget gaps running 15 percent to 25 percent in many jurisdictions, state governments are going to have to make some very tough decisions in the coming months. To an extent scarcely imaginable just a couple of years ago, it will be conservative leaders making the most of them.

Consider the example of the Volunteer State. “Revolution” may be too mild a term to describe recent political events in Tennessee. Just four years ago, the state had a popular Democratic governor (Phil Bredesen, the former mayor of Nashville) and a Democratic legislature. In 2008, one of the few bright spots for the GOP in a dismal election cycle was its historic takeover of both houses of the Tennessee legislature. This year, state voters have not only expanded the GOP majorities but also elected Republican Bill Haslam as their next governor. It wasn’t even close: Haslam (another mayor, this time of Knoxville) defeated Mike McWherter (the son of a former Democratic governor) by a margin of 65 percent to 33 percent. Justin Owen, president of the free-market Tennessee Center for Policy Research, observes that with Haslam promising to fight it out with spending lobbies and special interests in Nashville to close the state’s projected $1.5 billion budget deficit without tax hikes, the expanded Republican majorities in both houses of the legislature will likely prove pivotal. Republican leaders already are committed to both short-run cuts and long-term budget reforms, Owen says, and they can “use their much stronger majority to make Tennessee a model state for fiscal responsibility.”

Maine is another state facing both major fiscal problems and a sea change in political leadership. For the first time since the early 1960s, both the governor and a legislative majority will be Republican. Tarren Bragdon, a former state legislator himself and the head of the Maine Heritage Policy Center, has taken a leave from his think-tank post to serve as co-chairman of the transition team for incoming governor Paul LePage. So far, the process has been “crazy,” he says, as job seekers circulate résumés and interest groups jockey for position in a newly Republican capital. Maine faces about a $1 billion deficit, amounting to nearly 20 percent of its budget, and, because this is only the latest in a series of fiscal gaps, “a lot of the gimmicky solutions [to balance the budget] have already been done,” Bragdon points out. About a quarter of the deficit is attributable to past decisions not to properly fund the state’s retirement system, a mess that LePage and the Republican legislature have no choice but to clean up. They will have to merge, prioritize, and privatize across the full range of state programs.

New Republican governors and legislators have policy priorities other than balancing budgets, but for now the initiatives with the best prospects are those that advance conservative causes while simultaneously reducing the fiscal pressure on states. When it comes to education reform, for example, charter schools aren’t just a handy tool for expanding choice and competition but also tend to cost less than district-run public schools, often because they don’t receive separate tax dollars for facilities. Bragdon says that Maine will probably enact its first charter-school legislation in 2011, while the new Republican legislature in North Carolina will likely send a bill abolishing its statewide cap of 100 charters to Democratic governor Bev Perdue. If she bucks the teachers’ union and signs the measure, she’ll shore up her weak reelection prospects in 2012. If she doesn’t, pro-charter lawmakers will likely have the votes to override her veto.

In addition to redistricting and public-policy considerations, there’s another reason state-level politics is important: Today’s state legislators are often tomorrow’s candidates for governor and Congress. Even before the 2010 elections brought former state legislators such as Marco Rubio into national prominence, 41 sitting members of the U.S. Senate and 223 members of the U.S. House had previously served in state houses or senates. For decades, Democrats used their majority status in state capitals to groom candidates for higher office — giving them useful experience in campaigning, raising money, running bills, and chairing committees. Now Republicans are in a position to do the same. Who knows? Perhaps there’s a future presidential candidate about to take office as a member of a new legislative majority. Barack Obama began his road to the White House with service in Springfield.

Come to think of it, the last Republican state legislator to become president was Calvin Coolidge. That turned out pretty well.

– Mr. Hood is president of the John Locke Foundation, a public-policy think tank in North Carolina.

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