the journal of state governmentth e j o u r n a l … · on the other, david osborne, the co-author...

SPECTRUMSPECTRUMT H E J O U R N A L O F S T A T E G O V E R N M E N TT H E J O U R N A L O F S T A T E G O V E R N M E N T

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T H E C O U N C I L O F S T A T E G O V E R N M E N T ST H E C O U N C I L O F S T A T E G O V E R N M E N T ST H E C O U N C I L O F S T A T E G O V E R N M E N T ST H E C O U N C I L O F S T A T E G O V E R N M E N T ST H E C O U N C I L O F S T A T E G O V E R N M E N T S

Symposium:

In This Issue:

Fiscal Federalism and State Budgeting Fiscal Federalism and State Budgeting

Foresight & Emerging Trends

Policy Options

State Revenue Choices and Gubernatorial Initiatives Katherine G. Willoughby Georgia State University

Budgeting in Tough Times: The Three Decisions and Nine StrategiesDavid Osborne and Peter HutchinsonPublic Strategies Group

The Crisis in Fiscal FederalismJohn Kincaid Meyner Center, Lafayette College

The Rising Costs of Gubernatorial ElectionsThad Beyle, University of North Carolina at Chapel Hill

The Future of Drought Management in the StatesJim Geringer, Former Governor of Wyoming

New Strategies for State Court ReformAlfred P. Carlton Jr., American Bar Association

Ballot Design: How to Improve Life at the Ballot Box Richard G. Niemi, University of Rochester Paul S. Herrnson, University of Maryland

Federalism and Intergovernmental RelationsDeil S. WrightUniversity of North Carolina at Chapel Hill

The Council of State Governments, Preparing States for Tomorrow Today

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Helping State Leaders Better Prepare for the Future

Council OfficersPresident: Gov. Mike Huckabee, Ark. Chair: Rep. Daniel E. Bosley, Mass.President-Elect: Gov. Frank Murkowski, Alaska Chair-Elect: Sen. John Hottinger, Minn.Vice President: Gov. Ruth Ann Minner, Del.Vice Chair: Assemblyman Lynn Hettrick, Nev.

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Spectrum: The Journal of State Government seeks to be an honest observer of the state government arena and a vehicle for express-ing the newest ideas and latest thinking on state policies and institutions. The mission of Spectrum is to provide reliable informationand insightful analysis on public-policy issues to anyone whose interest in state government stretches beyond the limited, short-termgoals of the status quo.Spectrum seeks to develop common ground among entities and individuals who are interested in improving state government and tounite practitioners, academics, businesses, the media and others in a common understanding of the problems and solutions that areunique to the governance of the American states and territories.

Spectrum StaffDaniel Sprague: CSG Executive DirectorKeon S. Chi: Editor-in-ChiefKelley Arnold and Heather Perkins: Associate EditorsJeff Bledsoe: Graphic Design Coordinator

ISSN: 1067-8530, Copyright 2003, The Council of State Governments

The opinions expressed by authors are their own and do not necessarily reflect opinions or policies of The Council of State Governments.

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2 SPECTRUM: THE JOURNAL OF STATE GOVERNMENT SUMMER 2003

Keon S. Chi

E D I T O R ’ S N O T E

Editor’s Note

During the 2003 legislative sessions, as in 2002, governors and legislators in most states have struggled with unprecedented financial crisesin very much the same ways as before — by raising revenues, cutting spending and improving management. One of the key questionsthey will have to ask now is, would these short-term solutions to budget shortfalls be sufficient to provide essential services to the publicin the future?

The symposium in this issue of Spectrum addresses some of the more long-term issues in state budgetary processes. On one hand, JohnKincaid, former executive director of the U.S. Advisory Commission on Intergovernmental Relations, and federalism scholar Deil Wrightof the University of North Carolina at Chapel Hill call for fundamental fiscal reform by both the federal government and the states andcloser collaboration between them. On the other, David Osborne, the co-author of Reinventing Government, and his colleague, PeterHutchinson, with the Public Strategies Group, propose specific strategies for budgeting in times of fiscal crises. To some readers, their rec-ommendations might sound too radical, but they warrant serious debates by those who are concerned about improving state budgeting ona long-term basis. To help readers better comprehend current trends in fiscal conditions of the states, we have included an article on staterevenue choices and gubernatorial initiatives in 2003 by Katherine Willoughby of Georgia State University. In a nutshell, state policy-makers might want to devote more time to addressing structural-deficit issues than they have in the past.

This issue of the quarterly journal also includes an article on drought management in the states by former Wyoming Governor JimGeringer; an article with a serious of new recommendations to reform state courts by Alfred P. Carlton, president of the American BarAssociation; and a proposal to redesign election ballots by two research scholars: Richard G. Niemi of the University of Rochester andPaul S. Herrnson of the University of Maryland. Finally, we have included a short article, with a corrected table, on costs of gubernatori-al elections by a foremost expert on governors, Thad Beyle of the University of North Carolina at Chapel Hill.

Keon S. ChiEditor in Chief

W E W A N T Y O U R P E R S P E C T I V E

The Council of State Governments would like to hear about your experiences with the difficult public policy issues affecting stategovernment. Information exchange among policy-makers has always been a goal for Spectrum. We are continuing the tradition byoffering “Perspectives” or “Policy Options.” This is a forum for sharing your ideas and recommendations on key policy issues withother state officials.

Submissions should be no longer than 800 words. Please include address, telephone number and photo. Send two hard copies to:Editor, Spectrum: The Journal of State Government, 2760 Research Park Drive, P.O. Box 11910, Lexington, KY 40578-1910. If youhave any questions, call Kelley Arnold or Heather Perkins at CSG (859) 244-8000 or e-mail [email protected] or [email protected].

SPECTRUM: THE JOURNAL OF STATE GOVERNMENT SUMMER 2003 3

Policy Options

Spectrum: The Journal of State Government (order#SPECTRUMSUB) is published quarterly by The Council of StateGovernments. Annual subscription: $49.99. Single copies: $15.99. For address changes and subscription orders, notify: TheCouncil of State Governments, Publications Sales Department, 2760 Research Park Drive, Lexington, KY 40511, (800) 800-1910.

Keon S. Chi, Editor-in-Chief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3


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S P E C T R U M : T H E J O U R N A L O F S T A T E G O V E R N M E N T

Editor’s Note

Table of Contents

Symposium: Fiscal Federalism and State Budgeting

Foresight & Emerging Trends

The Future of Drought Management in the States Jim Geringer Former Governor of Wyoming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

The Rising Costs of Gubernatorial Elections Thad Beyle University of North Carolina at Chapel Hill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

New Strategies for State Court ReformAlfred P. Carlton Jr.American Bar Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30

Ballot Design: How to Improve Life at the Ballot BoxRichard G. Niemi University of RochesterPaul S. HerrnsonUniversity of Maryland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35

The Crisis in Fiscal FederalismJohn Kincaid Meyner Center for the Study of State and Local Government, Lafayette College . . . . .5

Federalism and Intergovernmental RelationsDeil S. Wright University of North Carolina at Chapel Hill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

State Revenue Choices and Gubernatorial Initiatives Katherine G. WilloughbyGeorgia State University . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Budgeting in Tough Times: The Three Decisions and Nine StrategiesDavid Osbourne and Peter HutchinsonPublic Stategies Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18


John Kincaid

The states’ fiscal crisis is due to the country’s economic downturn and to changes in fiscal federalism that have exposed state fiscalsystems to the impacts of federal policy making, economic developments and demographic changes to greater degrees than in thepast. The states face growing long-term contradictions between escalating spending pressures and eroding tax bases over whichstates have limited control. Short-term crisis-management, such as cutting spending, increasing taxes, accelerating tax collections,delaying bill payments, expanding gambling and using up reserves, are damaging, stopgap tactics. Long-term solutions will requiremore fundamental fiscal reform by both the federal government and the states.

The Crisis in Fiscal FederalismJohn Kincaid, Meyner Center for the Study of State and LocalGovernment, Lafayette College

S Y M P O S I U M : FISCAL FEDERALISM AND STATE BUDGETING

cent increase in FY 2000 to a 14 percent decline in FY 2002.Gov. Gray Davis forecasted a $34.8 billion budget gap for FY2003 – a gap larger than the budget of every other state exceptNew York (which faced a $10 billion shortfall in 2002). Indeed,California and New York, together, have accounted for nearlyhalf of all states’ shortfalls. Nationwide, state revenue collec-tions were 6.3 percent lower in FY 2002 than in FY 2001,although spending grew by 1.3 percent.

Local governments also face crises. In FY 2002, Boston andPittsburgh, for example, each faced “budget gaps of more than$60 million.”4 New York City faced a $6 billion gap as well.Most counties, municipalities, townships and school districtsacross the country faced shortfalls induced by falling revenuesand/or declining state aid.

To close the gaps, many states increased taxes by a com-bined $9.1 billion in CY 2002, thus ending eight years of tax-cutting that began in 1994. They enacted about $2 billionother revenue enhancements (e.g., tuition increases for stateuniversities), while also reducing spending and expendingreserves. Nineteen states increased tobacco taxes in 2002(ranging from a 7-cents-per-pack increase in Tennessee to a70-cents-per-pack increase in New Jersey). This most preva-lent type of increase was expected to generate about $2.9 bil-lion in new revenue for FY 2003. Many state and local gov-ernments have also increased taxes on land and wireless tele-phone services.

About 13 states raised fees, mostly for motor vehicles; sixenacted tax-amnesties; and some accelerated tax collections.States also used tobacco-settlement money to close budgetgaps, and about a dozen states in 2002 sold billions in futuretobacco payments to bondholders at below face value in orderto obtain cash. Wisconsin, for instance, sold $6 billion infuture tobacco revenues for $1.3 billion. Proposals to expandgambling and introduce new gambling, especially lotteriesand slot machines, were also floated in many states.

he states’ fiscal crisis, which began in 2000and will continue into 2005 (and beyond,for some states), is cyclical. State revenuesand budgets will grow again, with improve-ments in the nation’s economy. However,the severity of the crisis raises basic con-cerns about fiscal federalism. The National

Governors Association reported that the states’ fiscal crisis istheir worst such crisis since the World War II era.1 Yet the eco-nomic downturn that produced the crisis was the least severesince that era, and the boom that preceded the crisis was thegreatest of the postwar era.

The current crisis, then, is somewhat different from pastcrises. A key difference is that state budgets are more deeplyaffected by federally induced costs during today’s era of coer-cive or regulatory federalism. In turn, the related shift of feder-al policy making from places to persons2 has pushed state budg-ets away from programs tied to particular places, such as eco-nomic development and transportation programs, toward enti-tlement and welfare programs aimed at persons, such asMedicaid. These “person” programs have significant nondiscre-tionary cost pressures built into them by federal policy making,demographic developments and economic cycles. Additionally,they are extraordinarily difficult and painful to cut.

The Fiscal Crisis

The fiscal crisis arrived quickly and unexpectedly for moststate officials. In January 2001, the National Conference of StateLegislatures reported that the states enjoyed “excellent” fiscalhealth3, even though state revenues had begun to decline in thethird quarter of CY 2000. Eight months later, NCSL announcedthat most states faced budget shortfalls, with an expected $49.1billion collective shortfall for FY 2002. Shortfalls continued tomount to an estimated $85 billion for the end of FY 2004. InCalifornia, for example, state revenues plunged from a 23 per-

TT


Overall, states reduced spending growth from 8.3 percent inFY 2001 to 1.3 percent in FY 2002, but reserves were expect-ed to decline to $13.2 billion in FY 2003, compared to $31.5billion in FY 2001.

The crisis had roared into the states after nearly a decade offiscal plenty following the 1990-1991 recession. States sawseemingly ever-increasing revenues from capital-gains, divi-dend, earned-income and other taxes boosted by a stock-mar-ket boom, low unemployment, high overtime pay and robustconsumer spending. Welfare reform in 1996 kept federal fund-ing high for Temporary Assistance for Needy Families, andthe tobacco settlement provided extra revenue. As a result,states cut taxes and funded more programs.

The Federal Role in the Crisis

In December 2002, President George Bush invited thecountry’s two dozen new governors to the White House. Manydeclined the invitation because they were busy preparing toface their upcoming fiscal challenges. Yet, most state officialssaw the federal government as being partly, even substantial-ly, responsible for the states’ crisis, for several reasons.

First, they viewed unfunded federal promises and mandatesin health (especially Medicaid), education, welfare, homelandsecurity and election reform as significant strains on statebudgets. For example, the federal government had not provid-ed the $3.5 billion promised to help train and equip state andlocal police, firefighters and rescue personnel for terrorism.The U.S. Conference of Mayors reported that cities werespending $2.6 billion of their own money on homeland secu-rity. Similarly, the No Child Left Behind Act of 2001 imposesan estimated $35 billion in annual costs on the states for stu-dent testing, data collection, and higher teacher and curricu-lum standards for public schools; yet, the promised $28 billionfor student testing and teacher training did not come throughfrom the federal government. The Help America Vote Act of2002 requires states, among other things, to supply votingequipment guaranteeing minimum errors, maintain voter-reg-istration rolls, establish voter-identification rules, assure vot-ing access for persons with disabilities and create proceduresto resolve voter complaints; however, Congress appropriatedonly $1.5 billion of its promised $3.8 billion.

In addition to the budgetary strain from unfunded mandates,some state officials argue that federal tax reductions arereducing income and estate tax revenues for the many stateswhose tax codes are coupled to the federal code. Moreover,they claim, federal curtailments of state tax bases, especiallythe Internet Tax Freedom Act of 2001, are also to blame.

The governors have sought aid from the federal govern-ment, especially to help fund Medicaid, but state officials havenot been unified on a call for comprehensive fiscal relief.Governors requested, but did not receive in 2002 a one-shotsubsidy of about $12 billion for Medicaid and social services,although the U.S. Senate approved such aid in July 2002.

Economist Felix Rohatyn proposed federal revenue-shar-ing5 to help the states, as did Alice Rivlin of the Federal

Reserve Bank and others. However, R. Glenn Hubbard, chair-man of the President’s Council of Economic Advisers, said,“As to … whether federal taxpayers should be on the hook forstates’ budget problems, I’m skeptical.”6 Even U.S. Sen.George Voinovich (R-Ohio), ordinarily sympathetic to thestates and later supportive of state aid, said, “Every timesomething goes wrong, everybody comes to Washington.Nobody likes to increase taxes, so they want us to borrow themoney.”7 Already, the federal government provides about 25percent of the states’ general-fund revenues through itsapproximately 608 categorical grants and 17 block grants.

The States’ Role in the Crisis

An immediate factor in the states’ crisis is the balancedbudget requirements present in 49 of the 50 states (Vermontbeing the exception). Unlike the federal government, thestates cannot engage in deficit spending; consequently, spend-ing reductions and tax increases enacted to balance state budg-ets will create fiscal and service pain for citizens and alsocounteract federal stimulus policies. State recessionary anddeflationary actions could “shave as much as a half-point fromthe economy’s growth so that ‘overall fiscal policy will be nomore than neutral’” in 2003.8

These responses to the crisis indicate, too, that many stateofficials viewed the increased revenues of the boom years aspermanent rather than cyclical. Additionally, many new gov-ernors discovered after their election that their state’s fiscalcrisis was much worse than announced by the outgoingadministration. For example, Gov. Mark Warner said he tookoffice in 2001 believing that Virginia’s budget shortfall was$750 million; actually, it was $3 billion more.9

Many commentators blamed the crisis on excessive statespending. Cait Murphy, senior editor of Fortune magazine,opined, “it’s a rare politician who doesn’t adore spendingother people’s money – and governors in both parties spentlike drunken sailors during the late ‘90s.”10 The number ofstate employees in California, for instance, grew from 282,000in 1999 to 326,000 by 2001, with most of this growth being inprisons and state universities.11 Between 1994 and 2001,moreover, some 43 states enacted tax cuts amounting to about$40 billion in foregone revenue.12 The states, therefore, pre-cipitate fiscal crises by overspending and undertaxing duringbooms and underspending and overtaxing during busts. Theonly solution, editorialized the Wall Street Journal, “is tostraightjacket the politicians before they can spend again.”13

The solution, however, is neither so easy nor so draconian.

Underlying Causes of the States’ Fiscal Crisis

States increased spending and decreased taxes during the1990s, but their spending was not necessarily profligate.According to U.S. Bureau of the Census data, real general-government spending during most of the boom years (1992-1999) actually slowed to 3.4 percent per year, compared to 4.4percent per year between 1980 and 1992. Only near the end ofthe boom, from 1999 to 2001, did spending increase to about


5 percent per year.14 States also cut taxes, but revenues stillgrew at an average annual rate of 4 percent between 1992 and1999. State own-source spending increased from 8 percent ofpersonal income to 8.4 percent between 1989 and 1999, “thelowest level of growth in any of the last five decades since1949.”15 Local own-source spending increased from 6.5 per-cent to 6.6 percent between 1989 and 1999. Total federal-state-local spending dropped from 30.3 percent of GrossDomestic Product to 28.1 percent by 1999, although the stateand local share of GDP increased from 9.1 percent in 1989 to9.4 percent in 1999.

To the extent that states increasedspending during the boom, their keyexpenditure objects were health care(mainly Medicaid) and primary andsecondary (K-12) education.Medicaid, enacted in 1965 to pro-vide public health insurance forlow-income people, covers morethan 40 million recipients, or aboutone in seven Americans. The feder-al government funds states for 50percent to 76.8 percent ofMedicaid’s costs, depending oneach state’s per capita income.Total, real Medicaid costs increasedfrom $135 billion to $209 billionbetween FYs 1992 and 2001, about5.1 percent per year, totaling 56 per-cent. Nominal Medicaid spendingrose by about 11 percent in 2001and by 13.4 percent in 2002. Today,Medicaid is on average, the secondlargest component of state budgets(after K-12 education), accountingfor about 20 percent of state budg-ets, compared to 10 percent 20 yearsago and an expected 25 percent by2005. Since the early 1990s,Medicaid costs have grown fasterthan the Consumer Price Index, theCPI’s medical care index and gener-al state expenditures.

Costs are being driven up byhealth-care inflation, rising case-loads, increasing prescription-drugcosts and higher premiums for pri-vate health insurance (which has increased the number ofuninsured Americans). The number of children and adultscovered by Medicaid increased significantly, due largely tofederal and state expansions of eligibility, especially for preg-nant women and children and for families otherwise notreceiving public welfare. Although the number of elderlyrecipients did not increase significantly, their costs did so,especially for nursing homes and prescription drugs. The

number of disabled recipients and their costs both increasedduring the 1990s. The elderly and disabled constitute less than30 percent of Medicaid recipients, but more than 70 percent ofMedicaid spending. Indeed, Medicaid pays for about 46 per-cent of all nursing-home care.16 Medicaid was the largest cat-egory of increased state spending during the 1990s. Increasesoccurred mostly in the early 1990s, but costs picked up againby 2000. Consequently, facing fiscal crises, 45 states acted toconstrain growth in Medicaid spending in FY 2002.

K-12 education accounted for the second largest increase instate spending. Expenditures grew by about 32 percent

between 1992 and 1999. Even so, state spend-ing for K-12 education increased from only 2.1percent of personal income in 1989 to 2.3 per-cent in 2000.17 K-12 spending increased forthe following reasons:• school enrollment rose by 9.4 percent between1992 and 1999; • the number of teachers grew by 18.2 percent(due to increased enrollments, demands forsmaller class sizes, and needs for more specialeducation), and the employment cost index forschools increased by 45.5 percent between 1989and 1999 (due partly to increased teachersalaries); • the number of special-education studentsincreased by about 1.5 million from 11.8 percentof all students in 1993 to 13 percent by 1999; • states hiked capital spending for school con-struction and reconstruction.

All other spending categories grew modest-ly (e.g., corrections), remained flat or declinedduring the roaring 1990s.Whatever fat accumulated in state budgets dur-ing the boom was lean compared to expendi-ture increases for human services subject toonly limited state control. This is a salientcharacteristic of the current fiscal crisis. Statebudgets are tied tightly to federal policymak-ing, especially through the intergovernmentalMedicaid program, which accounts for morethan 42 percent of all federal aid to states andlocalities. The shift in federal policymakingfrom places to persons since the mid-1970s,which is reflected in the fact that 64 percent ofall federal aid is now dedicated for payments

to individuals, has driven state budgets in the same direction.Overall, the states’ human services programs are affected notonly by state policymaking but also, and sometimes more sub-stantially, by federal policymaking (and national interestgroups behind that policymaking), demographics and eco-nomics. Morally and politically, moreover, they are difficult tocut, especially during economic downturns when human serv-ices demands increase. Cutting spending for highways incon-

“Medicaid wasthe largest category of

increased statespending during

the 1990s.Increases

occurred mostlyin the early

1990s, but costspicked up again

by 2000.Consequently,

facing fiscalcrises, 45 statesacted to con-

strain growth inMedicaid spend-ing in FY 2002.”


veniences drivers, but cutting spending for nursing home carehurts people. Furthermore, many person programs, such asMedicaid, are entitlements.

The Federal Remedial Responsibility

The federal government, therefore, has some remedialresponsibility for the states’ fiscal crisis insofar as it has loadedcosts onto states via policy changes and conditions of aid forprograms such as Medicaid, failed to fund mandates, declinedto appropriate fair shares of funds for new policy initiatives andpreempted or curtailed states’ authority to adjust their tax sys-tems to contemporary economic realities.

A revival of 1970s-style revenue sharing or enactment offederal counter-cyclical aid is unlikely and perhaps unwise,even though it would counteract thestate’s anti-stimulus tax increases andspending reductions. The formerGeneral Revenue Sharing program of1972-1980 (for the states) failed toachieve its objectives. GRS fundsoften replaced state own-source rev-enues or went into operating costsrather than capital investments.Automatic counter-cyclical aid trig-gered by rising unemployment orother economic indicators would cre-ate a moral hazard that could weakenincentives for state fiscal reform.

In May 2003, Congress did enact$20 billion in Medicaid and generalsupport for the states over 2003 and2004 as part of its tax cut compromisewith President Bush. Earlier, states hadobtained $6.4 billion more over 10years for Food Stamps; 13 additionalweeks of federally funded unemploy-ment insurance payments; up to $8 bil-lion in accelerated Reed Act payments;a $1.1 billion block grant to help stateand local governments respond tobioterrorism; and $100 million toenhance emergency-managementplans.18 State and local officials alsoobtained restoration of half of a sched-uled $8.5 billion reduction inTransportation Equity Act for the 21stCentury funding for surface transporta-tion.

Targeted aid and specific expense reimbursements aremore efficient than general aid; however, the federal govern-ment’s willingness to share costs commensurate with the fis-cal consequences of its policymaking is exceeded by itseagerness to shift costs onto the states. Hence, the governorshave not yet achieved their major objective of full, or fuller,federal funding of long-term care under Medicaid – a cost

slated to grow with the country’s aging population.At the same time, federal policies – such as the Internet Tax

Freedom Act (extended in 2001 to November 1, 2003) and theU.S. Supreme Court’s Bellas Hess and Quill rulings – haveconstrained states’ authority to bring their tax systems in syncwith today’s economy. The inability to collect sales and usetaxes on out-of-state mail order and Internet sales costs stateand local governments about $16.4 billion a year.

The Bush administration’s new $350 billion tax cut will fur-ther depress revenues for states coupled to the federal taxcode, but more problematic is the administration’s considera-tion of shifting federal taxation from income to consumption– perhaps a value added tax or national sales tax. Althoughthere is virtue in hiking taxes on consumption, and the United

States is the only Organization for EconomicCooperation and Development country lack-ing a value added tax,19 to produce revenueequivalent to current federal revenue, anational sales tax would have to be about 25percent. Politically, this could compel statesto repeal income taxes and increase sales-taxrates. A key problem, though, is that unlikesome other federal countries, the U.S. gov-ernment is neither obligated nor motivated toconsider, relieve or coordinate with state taxsystems when it alters it own tax code.Ultimately, repairing the nation’s fiscal feder-alism is a political, perhaps even constitution-al, issue. So long as federal officials can enjoypublic acclaim for reducing taxes and seemingnot to be spending tax money on popular pro-grams – while quietly passing on to state andlocal officials the pain of extracting the moneyfrom taxpayers– they will do so.

The States’ Remedial Responsibility

However, states also have been timid aboutreform. Although state revenue systems arenot in immediate danger of becoming obso-lete,20 obsolescence is on the horizon. Statesales taxes, for instance, are stuck in the rotarydialing era when Americans purchased moreconsumer goods than services; yet states areextending the sales tax to services, whichaccount for about 60 percent of the economy,at a snail-mail pace. Completing theStreamlined Sales and Use Tax InterstateAgreement (approved by representatives of 31

states in November 2002) and obtaining congressional approvalof it would be another important step.

The 41 states that levy a broad-based personal income taxneed to consider such roller coaster distortions as excessivereliance on upper income filers and on capital gains and divi-dend income. In California, for example, the top 10 percent offilers pay 75 percent of the personal income tax. In FY 2000,

“States shouldincrease their

rainy day fundsand other

reserves beyondthe conventional

level of 5 percent of

expenditures,and also recon-ceptualize theirrainy day fundsas long- term

fiscal insurancerather than as

short-termstopgaps for

fiscal trouble.”


California received $17 billion from capital gains taxes; in FY2002, it received less than $5 billion. These states also need torethink their couplings to the federal income tax code.Likewise, states should stem the erosion of the corporate taxbase by reforming their corporate taxes individually or, prefer-ably, in concert with each other, perhaps even adopting a com-mon tax for interstate corporations.

States should increase their rainy day funds and otherreserves beyond the conventional level of 5 percent of expen-ditures, and also reconceptualize their rainy day funds as long-term fiscal insurance rather than as short-term stopgaps forfiscal trouble. In turn, states should de-emphasize tax cuts dur-ing booms in favor of tax refunds, so that tax rates remain inplace for bust years. States also should moderate their appetitefor levying more fees, raising “sin taxes” and expanding gam-bling during lean years. These policies have their place, butexcessive reliance on them has regressive impacts. State fiscalreform should foster both equity and efficiency.

Stricter accounting and transparency rules should ensurethat no new governor or legislator is surprised by an unex-pectedly large budget shortfall on inauguration day, and statesshould rein in “creative” borrowing, especially to close budg-et gaps, such as underselling future tobacco settlement pay-outs. The credibility of state fiscal policymaking is severelyweakened by bait-and-switch tactics, such as diverting tobac-co settlement monies that were to be used to reduce tobaccouse and help pay associated health care costs.

More generally and ominously, the states face long-termcontradictions between unavoidable spending pressures anderoding tax bases due to federal policymaking, the changingeconomy, demographic developments and the larger roleplayed by the states in funding social services and education,and now homeland security, than was true 20 or 30 years ago.The nation’s aging population, for example, will put tremen-dous upward pressure on spending and downward pressure ontaxes and also pose morally anguishing policy dilemmas.Consequently, the states need to look forward more funda-mentally than superficially, as well as more intergovernmen-tally, in order to pull up from their slippery fiscal slope.

Endnotes1Robert Pear, “States Are Facing Big Fiscal Crises, GovernorsReport,” The New York Times, 26 November 2002, sec. A, 1-22. 2John Kincaid, “State-Federal Relations: Continuing RegulatoryFederalism,” The Book of the States 2002 (Lexington, KY: TheCouncil of State Governments, 2002), 25-32. 3National Conference of State Legislatures, “State Tax Actions 2000:Executive Summary,” (Washington, D.C.: National Conference ofState Legislatures, 2001).4Michael Powell, “A Fiscal Hangover,” Washington Post NationalWeekly Edition, 2-8 December 2002, 13-14.5Bob Herbert, “For Struggling States, All Solutions Point toWashington,” The New York Times, 12 December 2002, sec. A, 21.6Jonathan Weisman, “Blame Washington,” Washington Post NationalWeekly Edition, 16-22 December 2002, 29-30.

7Jackie Calmes, “States Confront Fiscal Crisis,” Wall Street Journal,18 December 2002, sec. A, 4.8Ibid.9Ibid.10Cait Murphy, “In a Bad State,” Fortune 146 (December 9, 2002):34-35. 11John M. Broder, “Loss of Boom’s Billions Sinks California,” TheNew York Times, 2-8 December 2002, sec. A, 21.12Weisman, 30.13“California’s Gray Hole,” Wall Street Journal, 20 December 2002,sec. A, 14. 14National Association of State Budget Officers, State ExpenditureReport 2000 (Washington, D.C.: National Association of StateBudget Officers, 2001). 15Elizabeth McNichol and Kevin Carey, “Did States OverspendDuring the 1990s?” (Washington, D.C.: Center on Budget and PolicyPriorities, October 15, 2002), 2.16U.S. Health Care Financing Administration, U.S. Department ofHealth and Human Services, A Profile of Medicaid: Chart Book 2000(Washington, D.C.: U.S. Government Printing Office, 2001).17McNichol and Carey, 10.18Carl Tubbesing, “What States Want from the Feds,” StateLegislatures 28 (October/November 2002): 17. 19Michael Keen, “States’ Rights and the Value Added Tax: How aVIVAT Would Work in the United States,” Proceedings of the AnnualConference on Taxation of the National Tax Association(Washington, D.C.: National Tax Association, November 8-10,2001), 195-99. 20Robert Tannenwald, “Are State and Local Revenue Systemsbecoming Obsolete?” National Tax Journal 55 (September 2002):467-89.

John Kincaid is the Robert B. and Helen S. Meyner Professor ofGovernment and Public Service and director of the Meyner Centerfor the Study of State and Local Government at Lafayette College inEaston, Pennsylvania. He is also editor of Publius: The Journal ofFederalism and former executive director of the U.S. AdvisoryCommission on Intergovernmental Relations. 002 Kirby Hall of CivilRights, Lafayette College, Easton, PA 18042-1785. (610) [email protected].

Bio


Deil S. Wright


the Washington metro area. These recent crises of September2001 and October 2002 represent a severe shock to the nation-al psyche and to the functioning of American federalism.

A second source of trauma to state-national relations is fis-cal. A combination of forces conspired to produce the currentfiscal catastrophe among the states. The executive director ofthe National Governors Association, Ray Scheppach, hascalled this “the worst fiscal situation since the Second WorldWar.”2 Fiscal year 2003 produced state budgets with aggregateshortfalls approaching $50 billion. Estimates for FY 2004 areexpected to exceed $80 billion. For California alone the likelydifference between projected outlays and expected revenuesexceed $30 billion.

What are the roots of this fiscal trauma? Foremost is thebursting of the bubble economy of the 1990s, followed by thecyclical downturn during 2000-2003. Economic growth in the1990s consistently produced more revenues than forecasted,despite the fact that state tax reductions during the 1990s arenow lowering annual state revenues by about $40 billion. Forexample, capital gains tax revenues surged at an average 27percent annual growth from 1994 to 2000. Consumer spendingsoared as savings rates plummeted and sales tax revenuesescalated. On the spending side, Medicaid increases abatedand welfare “windfalls” (from declining rolls) combined withblock grants gave the states more fiscal flexibility.

The favorable fiscal winds of the 1990s quickly became adestructive typhoon for the states. For example, state personalincome taxes grew at an average annual rate of 9.1 percentfrom 1995 through 2000, but in FY 2002 state personalincome tax revenues declined by 12 percent. For state salestaxes, the 1995-2000 annual average increase was 5.7 percent,contrasted with a 0.5 percent rise in 2002. The significance ofthese plummeting percentages can be more fully appreciatedwhen placed in the context of state revenue structures. Theincome tax normally provides about 40 percent of state taxrevenue and sales taxes constitute another one-third.

The American federal system has been shaken by the impact of recent traumatic events, especially the threats to homeland security andthe states’fiscal crises. These developments have produced deep seated tensions across a wide range of intergovernmental relationships.Recent trends toward coercive relations may be ameliorated by strategies fostering contingent collaboration.

By Deil S. Wright, University of North Carolina at Chapel Hill

Federalism and IntergovernmentalRelations: Traumas, Tensions and Trends

t is both appropriate and imperative to positionthis discussion in historical context. Volume I ofThe Book of the States (1935) asserted, “We mustmake a careful examination in order to determinewhich functions can best be performed by thefederal government and which by the state gov-ernments … Emergencies may justify the states

in lending some of their powers to the federal government, butthe fact should be faced that indifference or acquiescence inthe federal government’s retention of such powers will alterthe basic structure of our government.”1 This message fromthe distant past can be viewed as a mixture of description, pre-diction and admonition.

It is beyond this essay’s scope and intent to review 70 yearsof evolving federalism and intergovernmental relations. In thespace allotted we cannot adequately describe or analyticallypredict events, nor can we offer judicious advice to the thou-sands of public officials (plus private and nonprofit actors)who shape the changing federalism/intergovernmental rela-tions landscape. The above quotation from 1935, however,identifies a prior critical time in state-national relationships.Recent developments demand that those relationships andissues be examined anew. Now is an equally significant junc-ture – after September 11 and the rise of a compelling concernfor homeland security. We pursue this overview under threeorganizing topics: traumas, tensions and trends.

Traumas

The trauma theme begins with the deep and wide woundssuffered by the nation, the political system and the citizenryfrom terrorist attacks. Without doubt, the events of September11 (and their aftermath) marked a tectonic shift, an off-the-scale earthquake, that altered and continues to reshape devel-opments in federalism/intergovernmental relations. A separatebut associated trauma was induced by the 21-day October“reign of terror” connected with the sniper-attack murders in

II


Revenues, of course, are only one side of the state fiscalledger. On the expenditure side Medicaid, the largest singleoutlay item in most state budgets, grew about 11 percent in FY2001 and exceeded budget estimates in 31 states. In FY 2002the growth was 13 percent and increases exceeded budget esti-mates in 36 states. A recent General Accounting Office analy-sis pegged Medicaid spending currently at 20 percent of statespending but projected it will reach 25 percent in five yearsand exceed 30 percent in 10 years. Nationwide, the scope offiscal traumas is evident. Budget gaps or shortfalls occurred in43 states in FY 2002 and similar if not more severe gaps areprojected for FY 2003.

The fiscal vise in which the states find themselves has beenaccentuated by recent coping strategies, which have been large-ly palliative. Most state-specific “solutions” in fiscal years 2001and 2002 merely postponed the day(s) of final fiscal reckoning.In sum, the traumas induced by security/terrorist threats andstate fiscal crises are likely to persist. No easy solutions areapparent and years of hard choices loom on the horizon.

Tensions

The history of federalism in the United States has been oneof shifting patterns and of fluctuating balances between twocontrasting themes. On one side of the relationship ledger arepatterns of conflict, contentiousness and cleavages. The otherside of the balance sheet reflects themes of cooperation, col-laboration and coordination. These parallel patterns of tensionon one track accompanied by tolerance on the other present aparadox of problems as well as a source of potential strength.The twin traumas of terrorism and fiscal crisis seem likely toelevate the significance of conflict (tension) and suppress thelevel of cooperation (tolerance) in the foreseeable future.

What is likely to explain such a probable pattern? There aremany underlying causes, but the prominence of tension over tol-eration can be foreseen in two specific policy or program arenas:homeland security and education. One theme permeating thesetwo policy arenas (and many others) is unfunded mandates.

Homeland Security

Passage of the Patriot Act of 2001 (P.L.107-56) constitutedthe opening chapter of an intense, extensive shift in the roleand responsibilities of national government agencies. The pri-mary entity through which domestic-targeted terrorism will beaddressed is the new Department of Homeland Security,signed into law on November 25, 2002. As one writer put it,“Homeland security will reshape the homeland.”3 In propos-ing the legislation, initially prompted by Congress, the presi-dent announced, “I propose the most extensive reorganizationof the Federal Government since the 1940s.”

The president and many commentators have compared theHomeland Security reorganization to the 1947 legislation thatcreated the Department of Defense. The parallel, however, ispoorly drawn, because the DoD changes contained far fewer

implications and consequences for the states and their locali-ties. Creation of the Department of Homeland Security hasimmense and compelling implications for federalism andintergovernmental relations, both immediately and in thelong-term future.

It is impossible to frame, much less detail, specific impactsof the legislation.4 Its broad scope, however, was conciselycaptured in the article cited above. “We are being led towardgreatly enlarging national control of domestic security andother functions traditionally controlled at the state and locallevel. This imperative has the potential to significantly tip thefederal system – in matters of politics, police functions andthe law – toward Washington to an unprecedented degree.”5

Observers and practitioners of federalism and intergovern-mental relations will grapple with the consequences of DHSfor the next several decades.

Education: No Child Left Behind

From an historical standpoint, education has been one ofthe most localized functions in the American political systemfor the past two centuries. From a financial standpoint, thenational government remains the rear-guard funder of elemen-tary and secondary education, underwriting less than 10 per-cent of all outlays.

This lesser or even minor fiscal role has not forestalled majornational involvement by Congress and recent presidents in edu-cation policies, programs, performance and mandates. Nowhereis the national role more evident than in the 2002 legislation(P.L.107-110) titled “No Child Left Behind.” The act providessignificant funding increases, but it also greatly enlarges thenational role in evaluating the performance of students, schooldistricts and states with regard to educational outcomes.

The intergovernmental implications of the new national leg-islation are enormous. First and foremost are federal mandatesfor annual reading and math testing for all students in gradesthree through eight starting in 2005. Building on these testscores is an array of performance requirements, perhaps themost significant of which is the “adequate yearly progress”standard. Each school must show a demonstrated level ofimprovement (or reduction in achievement gaps) every twoyears across six categories of students. The absence of suffi-cient progress in any school entitles the student (or parents)the freedom of choice to attend any of the better-performingschools in the district.

Criticisms of the legislation and implementing regulationshave been broadly based. Two of the more pointed ones havebeen captured in the arresting phrases, “No Child LeftUntested,” and “No Teachers Left.” Reducing or meeting theachievement gap requirements across the six groups of stu-dents poses Herculean challenges. In one state, NorthCarolina, statewide data are available from a long-standingstudent performance measurement system. Among hundredsof individual schools demonstrating “exemplary growth”


under the state program, less than 50 percent would meet thenational standards. Student scores in the technology orientedRaleigh metropolitan area reveal even more serious problems.Fully three-fourths of the elementary and secondary schoolswould fail to meet the national standards for achievement gap reduction.6

Homeland security and education are merely two of manypolicy arenas in which significant and ongoing tensions arelikely to be prominent, if not dominant, onthe future intergovernmental scene.Examples and elaborations could be drawnfrom additional policy areas such asMedicaid, welfare, the environment andpublic health (especially antiterrorist vacci-nation programs). Are these arenas repre-sentative of prospective national-state rela-tionships in the decade ahead? If so, then itappears probable that tension and conflictwill dominate over tolerance and coopera-tion in intergovernmental trends.

Trends

The preceding commentary has positedtwo alternative patterns or motifs spreadacross the nationwide canvas or landscapeof intergovernmental relations. They havebeen designated as tension/conflict and tol-erance/cooperation. The opening quotationfrom 1935 contains an unstated premiseabout the presence and even dominance oftension between the states and the nationalgovernment. National-state conflict has along and well-established history inAmerican federalism. There have been,however, periods in which cooperation hascome prominently to the forefront of theintergovernmental picture. What will be thehue, color or configuration of the near-termintergovernmental relations landscape?How is tension (conflict) balanced againsttolerance (cooperation) during the initialdecade of the 21st century?

The general answer to these questionshas been partially indicated in the discus-sion of homeland security and educationpolicy. A color-based metaphor conveys the pattern anddynamics of current trends. Shocking pink and redolent redhues of conflict and tension stand out over the subtle blues andsoft greens of cooperation and tolerance. While reddish colorsmay dominate the intergovernmental picture, the scene willremain one of multiple hues.

Recent Patterns: The Coercive-Collage Phase

More than a decade ago, Daniel Elazar, one of the most pro-lific and insightful scholars of federalism, observed, “The

condition of American federalism today is ambiguous butpromising.” He arrived at this judgment based on his descrip-tion of the central trend of the 1980s as “coercive coopera-tion.”7 With less optimism than Elazar, John Kincaid conclud-ed that, “The erosion of constitutional and political limits onfederal regulatory power … has produced a more coercive sys-tem of federal preemption of state and local authority andunfunded mandates on state and local governments.”8 Shortly

thereafter, Kincaid expressed outrightpessimism in The Book of the States,saying “The American federal systemcontinues to move in a centralist direc-tion, with the behavior of the federalgovernment becoming increasinglycoercive.”9

Elsewhere, I have described the trendduring the closing decades of the 20thcentury as the “coercive-collage” phaseof intergovernmental relations.10 Thecoercive theme accentuated Elazar’s andKincaid’s points regarding preemptionstatutes, unfunded mandates, adminis-trative regulations and adverse federalcourt decisions. The collage featurehighlighted the diverse, incompatibleand contradictory patterns appearing inchaotic and often confusing clusters.These messy and incongruous configu-rations seemed to defy consistencyacross policy areas. They challengedstate and local officials’ ability to com-prehend the confusion. They also con-fronted these officials with such com-plex situations that it was difficult to for-mulate effective strategies to deal witheither coercive or cooperative policiesemanating from national actions.

Current Pattern: The ContingentCollaboration Phase

The coercive-collage phase of inter-governmental relations has not expired.Indeed, it constitutes a legacy of ongo-ing significance. It is possible, however,to discern a trend that may offer a ray of

hope justifying Elazar’s cautious optimism over a decade ago.This pattern, phase or trend might be best termed “contingentcollaboration.” The various strains, features and elements evi-dent in this phase are too numerous to elaborate here. A fewessentials can be briefly identified, which may serve as guidesfor state policy-makers as they develop strategies to deal withintergovernmental issues based on a contingent collaborativeapproach.

A generic set of issues confronts federalism/intergovern-mental relations during the present decade, two of which,

“The history offederalism inthe United

States has beenone of shiftingpatterns and offluctuating bal-ances betweentwo contrastingthemes. On oneside of the rela-tionship ledgerare patterns ofconflict, con-

tentiousness andcleavages.The

other side of thebalance sheet

reflects themesof cooperation.”


homeland security and education, have been discussed brieflyabove. A Pandora’s Box of other policy areas could be men-tioned, but beyond specific policies or programs is a set ofcrosscutting issues fraught with immense intergovernmentalimplications. Among these are cultural/ethnic/linguistic diver-sity; the roles of nonprofit (including faith-based) organiza-tions; the balance among private, nonprofit and public sectorentities; and the character and cultivation of social capital(societal infrastructure) among citizens and civic groups.

The demands placed on state and local officials in con-fronting these issues are daunting. State policy makers mustdeal with resource restrictions, make decisions under condi-tions of increased complexity and greater uncertainty, copecreatively with extraordinarily difficult problems, and buildreform/reinvention capacities. Addressing and responding tothese demands should directly enhance public sector perform-ance and also increase the trust, confidence and assurancewith which the citizenry evaluates state officials and state gov-ernments. What is called for is 21st century leadership. This isnot the traditional “command and control” model of hierar-chical direction. Instead, federalism and intergovernmentalrelations leadership places a premium on the ability to forgeconsensus amid diversity, to network across organizationaland jurisdictional boundaries, and to find creative approachesto resolving intergovernmental conflicts.

The contingent character of contemporary intergovernmen-tal relations is grounded in the uncertain, unsettled or chancenature of actions, events or situations. The sniper attacks in theWashington D.C. metro area offer one example of contingency.Area law enforcement officers, aided (but sometimes hindered)by citizen reports, were confronted with the need to respond ina prompt, flexible, adaptive, ad hoc fashion. The fortuitousevents and clues leading to the suspects’ capture amply illus-trate the contingent aspects of intergovernmental relationships.

The collaboration feature of current intergovernmentalrelations is likewise demonstrated by law enforcementresponses to the sniper murders. Joint or concurrent opera-tions among police agencies, local-state-national, were thehallmarks of enforcement efforts. Task forces, partnerships,mutual assistance, cooperative activities and constant commu-nication dominated regional actions to find and arrest thekillers.11

Selective statements from a recent analysis of homeland secu-rity and the federal system aptly characterize the nature of thecontingent collaboration phase of intergovernmental relations.

Homeland security poses a major challenge for the U.S.intergovernmental system. It requires the close integra-tion of many functions and activities yet leaves littleroom for error … networks of national, state, and localorganizations of various types are being formed andwill continue to evolve in response to events and lead-ership decisions. Various other networks, some inter-locking, are being constituted and reconstituted inresponse to the threats to homeland security. Muchorganizational learning is taking place, and more will

take place in these networks as personnel at all govern-mental levels build new collaborative relationships.Much managerial craftsmanship is needed on the partof organizational leaders at the federal, state, and locallevels to make these networks function effectively.12

Contingent collaboration promises to be a distinctive fea-ture of federalism/intergovernmental relations trends.Whether it displaces the dominance of conflicts and tension isan open question. There is one highly probable outcome, how-ever. Progress, effectiveness and achievements of intergovern-mental programs are most likely to depend on contingent andcollaborative networks that span multiple organizationalboundaries. The preservation as well as the promise of ourfederal system as we have known it may hinge on the charac-ter and scope of contingent collaboration.

Endnotes1The Council of State Governments, The Book of the States, 1935,vol. 1 (Chicago, IL: The Council of State Governments, 1935), 94.2Associated Press, The News and Observer, 10 November 2002, sec.A, 11.3Daniel Henninger, “Homeland Security Will Reshape theHomeland,” Wall Street Journal, 22 November 2002, 16.4See in particular a special issue of Public Administration Review,devoted entirely to homeland security in vol. 62, September 2002.5Henninger, 16.6Tim Simmons, “New U.S. Standards Perplex N.C. Schools,” TheNews and Observer, 2 June 2002, 1.7Daniel J. Elazar, “Opening the Third Century of AmericanFederalism: Issues and Prospects,” The Annals 509 (May 1990): 11-21.8John Kincaid, “From Cooperative to Coercive Federalism,” TheAnnals 509 (May 1990): 139.9John Kincaid, “Developments in Federal-State Relations: 1900-91,”The Book of the States, 1992, vol. 29 (Lexington, KY: The Council ofState Governments), 616.10Deil S. Wright, “Understanding Intergovernmental Relations,” inJay M. Shafritz, ed. Classics in Public Administration, 4th ed. (NewYork: Harcourt Brace, 1997), 578-94.11Neely Tucker and Serge F. Kovaleski, “A Reign of Terror,” TheWashington Post National Weekly Edition, 28 October – 3 November2002, 10.12Charles R. Wise and Rania Nader, “Organizing the Federal Systemfor Homeland Security: Problems, Issues, Dilemmas,” PublicAdministration Review 62 (September 2002): 54-55.

Deil S. Wright is the alumni distinguished professor of political sci-ence and public administration at The University of North Carolinaat Chapel Hill. His five-decade research and teaching career hasfocused on intergovernmental relations with a special emphasis onthe states’ role in the American federal system. 204 Velma Road,Chapel Hill, NC 27514. (919) 929-2847. [email protected].

Bio


Katherine G. Willoughby


n 2003, state balances plunged by 70 percent from2000, when these balances reached their greatestheights.1 Last year, government shortfalls totaledalmost $40 billion, encompassing 7.8 percent of esti-mated general fund revenues. Chief executives usedmany familiar budget-balancing strategies to managethe fiscal crisis. On the revenue side, they did the fol-

lowing: increased taxes, especially those on tobacco and/oralcohol (close to 40 percent of states increased these taxes);instituted and/or increased fees and charges; and used up “rainyday” funds or borrowed from other reserves – in the words ofLouisiana’s Gov. “Mike” Foster Jr., “blowing through theirtobacco settlement monies.”2 About half of the revenue optionsnoted by governors in their 2002 state of the state addressessought increases to current revenue sources or creation of newrevenues.3 Toward that end, 24 states passed tax and fee initia-tives for 2003 that realized $8.3 billion.4

On the spending side, governors cut and delayed expendi-tures; shored up vacancies; initiated hiring freezes, layoffs andearly retirements; and continued efficiency efforts via reorgani-zations and downsizing. Presently, over half of the states haveinitiated cuts to Medicaid, health and human services, educa-tion, transportation services, and local government support toclose budget gaps expected through June 2003.5

Budget shortfalls are expected to balloon to $82 billion by2004.6 What avenues are available for governors to bring aboutfiscal solvency in the states? The following assesses their plansto navigate this continuing storm. The state government revenuesituation is then reviewed and conclusions drawn based on thecontent of governors’ state of the state addresses for 2003.

Gubernatorial Cheerleading: Pulling Together as a Family

In no less than 200,000 words, governors laid out their plansfor the upcoming budget year. Chief executives used distinctivemetaphors when describing their state’s budget crisis.According to Minnesota’s governor, “It’s huge. It’s mean. It’sugly. It’s the Incredible Hulk of budget deficits.”7 The stormanalogy was popular, with Maine’s governor referring to thecurrent situation as an ice storm, Michigan’s as a rain storm andFlorida’s as “storm clouds on the horizon.” “If last year’s budg-

et gap felt like a gale force wind, this year’s budget crisis willfeel like the ‘Perfect Storm,’” waxed the chief executive of Ohio.

Georgia’s Gov. Sonny Perdue, the state’s first Republicanchief executive since Reconstruction, likened administration ofthe state to flying an airplane – and in this case, one short onfuel. He concluded that, “We’ve got to fly smart, efficiently andeffectively to reach our destination. The weather is uncertain.The skies are still full of dark economic clouds. We’ll have abumpy ride for a while. Flying is in many ways an exercise intrust. And so is governing.”

Other governors also emphasized a reestablishment of trustin government that would be reflected in their administrations.Alabama’s governor claimed, “We are going to demand thatyears of waste and inefficiencies come to an end, and establisha government that is accountable to the people it serves. We willrestore the people’s trust in their state government.” Governorssuggested that their impending choices mirrored the hard deci-sions of maintaining a family budget. Gov. Craig Bensondescribed his state’s “kitchen table budget,” noting, “Just likefamilies have to sit around their kitchen tables and make toughdecisions about spending, New Hampshire’s state governmenthas to sit around its collective kitchen table to figure out how tolive within its means.” Tennessee’s chief executive concurredthat the state’s budget is “our family budget” and “just likemany Tennessee families, we face painful choices.”

State budget shortfalls are expected to balloon to $82 billion by 2004. What avenues are avail-able for governors to bring about fiscal solvency in the states? This article assesses their plansto navigate this continuing fiscal storm. The author then reviews the state government revenuesituation and draws conclusions based on the content of governors’ 2003 state of the stateaddresses.

By Katherine G. Willoughby, Georgia State University

State Revenue Choices andGubernatorial Initiatives

II

Table 1 Tax Shares for 2001 and 2002

Individual income tax 37.6 34.6General sales and gross receipts 32.5 33.5Motor fuel sales tax 5.5 5.7Corporate income tax 5.1 5.7Motor vehicle and operator license taxes 2.9 3.3Property tax 1.7 1.6Tobacco products sales tax 1.5 1.6Alcoholic beverage sales tax 0.8 0.8All other taxes 12.4 14.7

Percent of total tax receipts2001 2002Type of Tax

Source: Quarterly Summary of State and Local Tax Revenue, U.S. Census Bureau.All figures from "Table 3: Tax Collections by State and Type of Tax" for the first three quarters of 2002 and all four quarters of 2001. Available at http://www.census.gov/govs/www.qtax.html.


Governors recognize the present state of governmentfinances as “a crisis of historic proportions,” “the worst fiscalcrisis since the Second World War.”8

Kansas Gov. Kathleen Sebelius equated her state’s situationto its struggles of long ago explaining that “The combinedforces of the economy and nature plunged our state into theGreat Depression and the Dust Bowl. Families, in the cities andon the farm, struggled to endure. Unemployment soared to lev-els never seen before or since. Kansans from all walks of lifewondered how we would get out of this, how we would surviveas individuals, and as a People.”

In an effort to alert citizens, agency personnel and legislatorsto the challenging decisions at hand, a few chief executivesalluded to governing as both an art and a science. SouthCarolina’s governor suggested that citizens think of him “as acarpenter. Just as a carpenter couldn’t possibly repair a homewithout the right tools, raising income levels in our state willrequire government to use new tools and new approaches.” JudyMartz, governor of Montana, considered managing the state asgardening, relaying a funny story to lighten the mood:

In early December, I was in Butte and met a 5-year-oldboy by the name of Dyllan Lane. As he was walking awaywith his mother, I heard him say, “Mom – I just met theGardener.” I laughed … and then I thought – you know, he’s right. I am a gardener – truly, we are all gar-deners. It is our job to nurture and grow our economy. Itis our job to prepare the soil and plant the seeds for futuregenerations, and it is our job to care for all Montanans.

Others quoted Winston Churchill, President John Kennedyor referred to Ronald Reagan’s tax initiatives when he wasgovernor of California. More so than last year, governorsacknowledged their states’ dire fiscal conditions, and they rec-ognized that painful and burdensome fallout from budgetarychoices is looming.

Pointing Fingers

These chief executives, however, are quick to note that theyare not to blame for the current mess. Collectively they empha-size that, “[E]vidence shows that state policy was generally quiteresponsible. Overall, states managed their budgets quite wellduring this period. They held spending growth down, built his-torically high rainy day funds and cut taxes. No one foresaw therevenue plunge in 2002, nor the explosion in health care costs.”9

The 2003 addresses provide a litany of reasons for continuedbudget gaps, including federal, state and other influences.

Federal Influences

Generally, governors placed heavy weight on the influencesof the national economy and current federal budget and policyfoci on homeland security and the war on terrorism on theirstate’s budgetary situation. And, many pointed to the require-ments of President Bush’s “No Child Left Behind” initiative toimprove education as a potential budget buster. Other federal

influences cited included health care and Medicaid require-ments and costs, along with cutbacks in federal aid to states.

State Influences and Other Factors

Governors mentioned a myriad of homegrown reasons forbudget problems that spanned political, legal, economic andmanagement factors. For example, they pointed to political andlegal problems such as:• Past partisanship across branches;• State constitutional amendments and codes holding states to

certain program requirements; and• Structurally unsound state tax systems and tax bases eroded

by past tax concessions.They also mentioned economic problems, such as an unwel-

coming and inequitable business climate in the state; burgeon-ing employee benefit costs; and exploding health care costs.In addition, the governors cited various management problems,such as:• Reliance on overly optimistic revenue projections;• Past overspending;• Use of one-time revenues to shore up continuation budgets;• Increased dependence on debt, poor use of debt, and faulty

transfers across funds; and• Poor management of agencies in the past.

Finally, several chief executives mentioned the added costsassociated with clean-up and citizen support subsequent to nat-ural disasters, such as ice and snow storms, floods and droughts.For example, North Carolina’s Gov. Michael Easley pointed outthat his state was the only one “paying for a flood while we arein a drought and recovering from three ice storms.”

Hard Choices

Nevada’s Gov. Kenny Guinn spoke for most governors whenhe said, “If I had to build this budget on only our existing rev-enues, I could not live with myself. The time has come to say,‘enough.’”

Just how did governors claim that they would solve theirstate’s fiscal crisis? Not surprisingly, they presented a multitudeof ideas for forging ahead, many which sound familiar.Governors mentioned one or more of the following remedies intheir individual addresses.

Federal Government

In their addresses, governors pressed the federal governmentfor more funding – particularly related to health care, Medicaidand homeland security – but also including prescription drugs,education, economic development, unemployment insuranceand transportation.

State Government

The governors suggested political and legal remedies such as:• Reducing partisanship across branches;


• Reducing earmarked revenues;• Tax reform;• Developing multistate compacts or alliances regarding pre-

scription drugs for seniors;• Providing local control of schools and education services;• Initiating tort reform related to medical malpractice and

workers compensation.

They also offered remedies to bolster state economies, including:• Generating a tax-friendly, competitive business environment;• Advancing biotechnology and other technology centers and

corridors within the state;• Advancing in-state industries (like oil production and export

in Alaska and wind power in South Dakota);• Advancing tourism in the state;• Advancing workforce and economic development via infra-

structure initiatives (employment), job training programs,and support for university research and development.

Governors’ budget strategies related to state managementincluded:

• Advancing more realistic, rather than overly optimistic, rev-enue projections;

• Layoffs, hiring and pay freezes;• Across-the-board cuts to services;• Cuts to travel budgets;• Cuts to grants and local government shared funding;• Adding personnel in auditing and performance analyst posi-

tions;• Using rainy day funds;• Creating new (contingency) funds to allow flexible response

to future fiscal crises;• Issuing debt, including securitization of and access to tobac-

co settlement funds;• Revisiting and reforming employee pensions and benefits

plans;• Privatization initiatives;• Performance advancements, including improving revenue

collection and enforcement, and advancing e-governance.Most governors advocated going to the federal government for

support in addition to one or more of the economically relatedchoices listed under “State Government” above. For example,Mississippi’s governor described the Mississippi Rural EconomicImpact Authority, which will oversee $20 million in bonds to pro-vide assistance to new and existing businesses, and train thosewho have lost their jobs in rural parts of the state. Oregon’s gov-ernor specifically mentioned building initiatives and putting peo-ple to work. In South Dakota, the governor called for an intern-ship program “in conjunction with the Board of Regents” to drawstudents to work and remain in the state. “I want $3 million in taxincentives for investment and job creation — including a taxcredit of $1,000 and up for rural businesses that create jobs pay-ing at least 110 percent of local prevailing wages,” claimed NewMexico’s Gov. Bill Richardson. In Wyoming, the governor pro-

posed allocating “$15 million a year over the next 10 years as agrant program to assist communities and counties in buildingWyoming’s economic development infrastructure.”

Regarding tax reform, many governors claimed dedication toa more equitable state tax system. “In Alabama we start taxingincome at $4,600,” said Gov. Bob Riley. “This is not just wrong– it is immoral. We are working to devise a tax reform policythat will be comprehensive and fair, but we will not allow hasteto replace thoughtful deliberation.” Louisiana Gov. Foster dis-cussed renewing existing revenue streams as well as reformingthe state income tax. “The Stelly Plan would be a net tax cut to83 percent of the state’s taxpayers – and would result in modestincreases on those with incomes above $60,000 – an estimated$9 increase for those making between $60,000 and $80,000. [It]is an overall tax cut for taxpayers – $14 million less for the statein the first year and $50 million less in the second year.”Likewise in Ohio, Gov. Bob Taft called for “sweeping reform ofthe personal income tax. Most taxpayers will pay less, and we’lleliminate all liability for more than half a million low-incomeOhioans.” Taft also called for broadening the base, yet reducingthe rate of the corporate franchise tax, as well as broadening thebase of the state sales tax to include “a wider array of services,conforming to the contours of our modern economy.”

Rather than dismiss tax increases out of hand, governorsillustrated discernment in mentioning revenue-raising strate-gies. Pennsylvania’s governor said, “I’m not ready to succumbto this national tidal wave [seeking tax increases across theboard]. While we may have to pursue a similar course, there areother avenues to exhaust first.” Nevada’s governor asked for aflurry of tax and fee increases – mostly business, amusementand gaming related – and requested the Legislature “to imple-ment these changes by April 1st, so that revenue can be realizedthis fiscal year.”

Table 2 State Tax Revenue Totals (in millions)

2002 $533,517 -3.8% 116.33 $458,624 -4.9%2001 $554,681 0.5 115.01 $482,289 -2.12000 $551,912 8.8 111.98 $492,867 4.31999 $507,135 5.2 107.33 $472,501 2.31998 $481,911 7.5 104.35 $461,822 5.71997 $448,107 5.4 102.58 $436,837 2.81996 $424,991 8.1 100.00 $424,991 5.71995 $393,168 4.4 97.77 $402,136 1.51994 $376,710 5.0 95.04 $396,370 2.31993 $358,813 5.4 92.59 $387,529 2.81992 $340,301 N.A. 90.28 $376,940 N.A.

Source: Quarterly Summary of State Tax Revenue, U.S. Census Bureau.Available at http://www.census.gov/govs/qtax/table2.pdf.Notes: Nominal dollars are from Table 2, "National Totals of State Tax Revenues,by Type of Tax." Figures are sum of four quarters for each fiscal year. Price indexfor state and local government consumption is taken from line 67, generated annual-ly for years 1992 through 2002, using table 7.11, "Chain-Type Quantity and PriceIndexes for Government Consumption Expendituresand Gross Investment by Type[1996=100]. Available athttp://www.bea.doc.gov/bea/dn/nipaweb/TableViewFixed.aso#Mid.

Fiscal year Nominal $

Percent change from previous

year Price index Adjusted $

Percent change from previous

year

SUMMER 2003 17SPECTRUM: THE JOURNAL OF STATE GOVERNMENT

Governors continued to promote efficiency measures andperformance initiatives as well. For example, Maine’s Gov.John Baldacci proposed to “get our state out of the liquor busi-ness. This budget privatizes wholesale and retail liquor opera-tions. The private sector has proven that it can run Maine’sliquor business with the same scrutiny and greater efficiency.”In Montana, the governor lauded the state’s newly redesignedbusiness Web site that provides “critical information to the busi-ness community” and the ability of citizens to conduct businesswith the state online. In Alabama, Gov. Riley “instructed [hisrevenue commissioner] to add additional auditors to uncoverany unpaid taxes from corporations who are not paying thetaxes they owe.”

Current Tax Shares and Revenue Possibilities

State tax shares have changed little over the last year.Individual income and general sales receipts still comprise themajor portion of state tax revenues. The elasticity of the incometax accounts for the dip in share in 2002 noted below. Motorfuels taxes and corporate income taxes vie for the third largestsingle category of tax revenue for states. Motor fuel sales-taxrevenues increased as a share of the total, as did corporateincome tax revenues. States that closed tax loopholes related tothis source account for some of this increase. Tobacco productsales-tax receipts crept up just slightly as a share of total taxes,indicative of the increases to this tax enacted by 19 states lastyear.10 The “all other taxes” category includes receipts fromsales, licensure and other charges related to utilities, insurance,business, paramutuals, amusement services, hunting and fish-ing, as well as death and gift, severance and stock transactions.The increase in share from 2001 to 2002 in this category isdirectly attributable to many of the increases to and additions ofsuch taxes and fees made by states since 2001.11

Table 2 illustrates the dramatic plunge in tax dollars sufferedby states this past year. In the decade from 1992 to 2002, totalquarterly state tax receipts increased annually (in adjusted dol-lars) until the second quarter of 2001, when receipts dippedfrom the second quarter of 2000 by 1.4 percent. When com-pared to the previous year’s quarterly receipts, those in the 3rdand 4th quarters of 2001 dropped by 4.2 percent and 6 percent,respectively. The first two quarters of tax receipts in 2002 con-tinued to sink when compared to the previous year by 7.1 per-cent and 9 percent, respectively. By the third quarter of 2002,state tax receipts had flattened when compared to those in thethird quarter of 2001.

Clearly, crawling out of this recession will be very slow. RobertTannenwald discusses the problems of state revenue systems,including the shift to a service economy, the increasing impor-tance of intangible assets and their valuation, continued fiscalcompetition among governments, and perhaps most importantlyfor states, the rapid advancement of e-commerce.12 Each of thesefactors, a severely sagging economy, and the fact that past tax ini-tiatives have sought to soften the burden felt by taxpayers, all con-tribute mightily to the perfect storm in the states and undoubtedlywill make the future painful for governors and citizens alike.

Governors’ Parting Comments

In the end, these chief executives recognized the urgency oftheir budget problems and stated this urgency in their address-es. Given the revenue picture above, and the fact that recent taxincreases have sought to spare taxpayers increased liability (byway of tax amnesty initiatives, fund transfers, and advancingcollections), it is hard to believe that as this storm continues,more taxpayers will not get wet.

Not surprisingly, most addresses ended optimistically – refer-ring to the state as “a family, one people,” who with the gover-nor are committed to overcoming the day’s crisis and joining tocreate a “brighter future” for the state. Nonetheless, the gover-nors are realists and many pointed to discernment of the “coremissions” of state government. They called on citizens to con-sider the basic duties and responsibilities of states and to thinkabout ways to make sure that these programs, activities andservices are continued in the future. For each recognizes theenduring nature of government service, their responsibility, andthat of legislators and ultimately the public. In the words ofKentucky’s governor “I’ll do what I can, but ultimately theresponsibility lies with you. In 11 months, I’ll be gone. You’llstill be here.”

Endnotes1National Governors Association and National Association of StateBudget Officers, Fiscal Survey of the States. November 2002(Washington, D.C.: NGA and NASBO, 2002) ix. Accessible athttp://www.nasbo.org/publications.php.2Governor M.J. “Mike” Foster Jr. “2002 Regular SessionAccomplishments,” Accessed on March 10, 2003 athttp://www.gov.state.la.us. 3Katherine G. Willoughby “State Revenue Choices in Slow Times,”Spectrum: The Journal of State Government 75, no. 2 (2002): 9-11.4National Governors Association/National Association of StateBudget Officers, 9.5National Governors Association/National Association of StateBudget Officers, 1-6.6National Governors Association, “Governors to Meet with President,Cabinet Officials and Congressional Leaders During NGA WinterMeeting,” Press Release February 22, 2003 Accessed on March 11 athttp://www.nga.org/nga/newsRoom/1,1169,C_PRESS_RELEASE%5ED_5079,00.html. 7State government chief executives report annually or biennially to

Bio

Katherine G. Willoughby is professor in the Department of PublicAdministration and Urban Studies of the Andrew Young School ofPolicy Studies at Georgia State University in Atlanta. She is the authorof numerous articles on state and local government budget and policypractices and co-author of a book on public budgeting in the UnitedStates. Andrew Young School of Politics, Georgia State University,University Plaza, Atlanta, GA 30303-3083. (401) [email protected].

(Continued on page 34)


wo years ago public officials across the nationwere touting tax cuts and rebates. Today, thesame leaders are announcing and trying to man-age shortfalls of comparable size. The size andbreadth of the impacts is staggering. Virtually nounit of government has been exempt.But big fiscal challenges always bring with them

big opportunities. Rather than resorting only to traditional medi-cine – raising taxes, cutting spending and using reserves oraccounting gimmicks to put off dealing with today’s fiscal reali-ties – public leaders should look to the many innovations that havebeen pioneered over the past two decades to wring more bang outof the government buck. Below we explain our own twelve-stepprogram for public leaders serious about kicking the habit of fis-cal over-indulgence: the three decisions that matter most and thenine strategies needed to make it happen.

Budgeting in Tough Times: The Three Decisions thatMatter Most

Decision 1. Get a grip on whether the problem is short term orlong term. You cannot solve a budget problem when you are indenial. Begin by getting a grip on the extent and nature of the chal-lenge you face. Budget deficits can be cyclical (short-term) orstructural (long-term). Short-term deficits are typically caused bytemporary economic downturns. Structural deficits are caused bylong term gaps between projected revenue growth and the pro-jected cost of government-funded services.

Many jurisdictions have built up “rainy day funds” to help themthrough temporary, short-term budget difficulties. It will be tempt-ing to throw these reserve dollars at the problem right away. Andif not reserves, there are a host of other short term “fixes” that willtempt officials faced with immense budget problems. But usingone-time money in the face of long term or structural imbalancesis a recipe for disaster.

To complicate matters, a budget deficit may include both cycli-cal and structural components. To choose the right strategies, gov-

ernments need to analyze the source of the problem. To decidewhen and how to use reserves versus other budget solutions, gov-ernments must:• Develop a credible forecast of revenues both short and long

term.• Develop a credible forecast of current expenses both short and

long term.• Determine whether revenues will be adequate to meet forecast

expenses in the long term. (To identify possible structural gaps, it is best to forecast rev-

enues and expenditures over at least a four-year period.) If rev-enues will be adequate to meet expenses over the long term, thenthe jurisdiction can use reserves or other mechanisms to meet itsshort-term needs and remain fiscally sound. Options include:• Spending reserves• Using unspent funds in various accounts• Accelerating revenue• Delaying spending• Selling assets• Capitalizing future revenue to pay current costs• Temporarily cutting costs• Temporarily raising revenue

If revenues will not be adequate to meet expenses in the longterm—and this will most likely be the case— the jurisdiction willneed to make permanent changes in its expenses, revenues orboth. Once it has done so, it can use reserves to meet whatevershort term needs remain or to help make a gradual transition tolong-term solutions. But here’s the rub: delay makes the problemworse. Changes in spending or revenue accumulate over time. Thesooner they are made, the more they contribute to a solution.

How should governments proceed when they have to makelong-term fiscal changes? The normal response to the prospect ofspending cuts is gloom and doom about service cutbacks. Therewill, of course, be reductions. Jobs will be lost. But when all issaid and done, it is possible to increase the value created for citi-

TTBig fiscal challenges always bring with them big opportunities for reform. Rather than resorting only to traditional medicine, state gov-ernment leaders should look to the many innovations that have been pioneered over the past two decades. This article lays out a twelve-step program for state leaders dealing with fiscal crisis: the three decisions that matter most and the nine strategies needed to cut spend-ing without hurting services.

David Osborne and Peter Hutchinson,The Public Strategies Group, Inc.


David Osborne Peter Hutchinson

Budgeting In Tough Times:The Three Decisions and Nine Strategies


zens for each dollar of spending. Here’s how.Decision 2. The next step is to secure agreement on how much

your government wants to spend. Traditionally, governments startby looking at last year’s budget; then they look at projected rev-enues; then they look at departmental budget submissions; nextthey reduce these submissions and add up the total; and finallythey decide how much to increase or reduce last year’s budget.This approach is driven by last year’s costs.

This traditional approach focuses on the wrong things, in ouropinion. The first question should be: How much do we want tospend? There are many ways to decide this; one is to look at whatwe call the “price of government” (POG). Simply put, the POG iswhat we pay in taxes, fees and charges out of each dollar of per-sonal income for the whole range of government services we buy.The national average price of state and local government was rel-atively stable from 1970 through 1990; it then rose dramaticallyduring the last recession and stayed at a higher level through thelate ‘90s, in part due to rapidly rising health care costs. The taxcuts of the late 1990s were designed to bring the price more in linewith its historic average

While nationwide averages are interesting, each state andlocality has its own, and often surprising, pattern. The price ofgovernment establishes revenues raised “locally” – so called“own source” revenue. Add to that amount revenue from inter-governmental transfers (state and/or federal aid) and you havetotal revenue.

There is no one “right” price of government. Each governmentwill approach this issue differently. But it is useful to know howthe current price compares to the past price and how governmentsin the same area compare to each other. It is also helpful to under-stand why the price of government may have changed.

Assessing and then getting political agreement on the desiredprice of government early in the budget process is a crucial step.By setting a long-term goal for the price of government, leaderscan establish the fiscal context for their budgetary decisions. Theycan clarify how much revenue will be available, and therefore howmuch can be spent. Getting agreement about this helps put theemphasis where it belongs—on how to get the most value fromevery dollar spent.

Decision 3. Once agreement has been reached on the revenueside of the budget – the next step is to buy results that citizensvalue. Too much of the government budget process is focused oncosts. We have literally thousands of “cost codes” in our publicaccounting systems. We can, with relative ease, report on thewhereabouts of every penny of public money, but we know almostnothing about the results of all that spending. Sure, we want ourmoney accounted for, but what really counts are the results we getfor the money we spend. If a program manager or lobby groupsays that a budget should be raised because costs are going up,they should be told: “We don’t pay for higher costs, we pay forbetter results.”

Results-based budgeting is dramatically different from the tra-ditional cost-based approach. It changes the focus from budgetary

inputs (dollars, number of employees, equipment, etc.) to out-comes – what results governments achieve. It focuses debate onhow government spending makes a difference for citizens.Results-based budgeting requires a whole new set of “rules to thebudget game” that managers and elected officials play.

Under these “new rules” decision makers are responsible forthe three crucial decisions described above:• Getting a grip on the real problem.• Deciding how much they want to spend.• Buying the results they want for citizens.

Budgeting in Tough Times: The Strategies to Make ItHappen

The three decisions described above are critical to getting bet-ter results for citizens in tough times. They put the focus squarelyon buying better results for citizens. Then the challenge is to actu-ally produce those improved results, for less money. The ninestrategies described below provide the means. They make it pos-sible for managers and administrators to produce the desiredresults at the set price.

1. Clear the decks. Eliminate programs or activities that are notcentral to the government’s core purposes or are no longer valu-able to citizens. Divesting will almost certainly mean disruption,but in return, governments will have resources they can invest inand results that matter to citizens. One of the most visible exam-ples of successful deck clearing has been the DefenseDepartment’s Base Closing effort. Similar challenges have con-fronted school districts with excess space and agencies with out-dated programs. In the Minneapolis Public School District sever-al years ago, for example, leaders first identified the “must do’s,”putting them on what they called their “dream list.” With that listin front of them, they proceeded to identify the “can live withouts”that would make their dreams possible. In short, they divested inorder to invest.

2. Consolidate. In many ways this is the favorite of politicians.Surely there are savings to be had from consolidating multipleagencies into super-agencies, or in consolidating smaller jurisdic-tions into larger ones or multiple service systems into one-stopcenters. If all consolidation means is moving boxes around on anorganizational chart, however, it is likely to result in many shotgunweddings, with few real savings and many new costs.

Consolidations most likely to produce savings or improveresults include:• Consolidating missions. Often when organizations are com-

bined they bring with them their various missions. Theresult is a lack of focus, if not outright conflict betweenmissions. Consolidations work best when the resultingorganization has a clear, focused mission and set of clear,limited performance targets.

• Consolidating funding streams. Far more powerful than consol-idating organizations is consolidating their funding streams.Categorical funding leads inevitably to categorical -- and there-


fore complicated -- organizations. Consolidate the funding,focus it on clear, high priority outcomes, and use it to purchasethose priority outcomes from whatever organizations can bestproduce them.

• Consolidating “steering” authority. Most government organiza-tions have both policy (steering) responsibilities and operating(rowing) responsibilities. These are not the same! Steeringfunctions focus on doing the right things, while rowing func-tions focus on doing them right. By separating these roles, bothcan be performed better. Once separated, steering can be con-solidated to assure that policy is integrated and mutually rein-forcing across a government unit. Using consolidated fundingstreams, steering organizations can “purchase” key results fromthose who row.

• Consolidating “rowing.” Operating units that do similar kindsof work are good candidates for consolidation. Examplesinclude the unit within a public works department that collectswater fees and a similar unit in finance or treasury that collectstaxes, or the units within highway and parks departments thatboth do grass cutting. In such cases the similarity of the workoffers consolidation opportunities.

• Consolidating layers. In one urban county there were eightlayers of management between the elected county board andthe front line employees. Layersmay have been necessary whencommunication was cumbersomeand employees were poorly educat-ed. But with today’s technologyand workforce the justification forso many layers is gone.Consolidating layers can savemoney. It can also improve serviceby delegating more authority tothose closest to the customersbeing served.

• Consolidating access. Much ofwhat government does involves thecollection and processing of infor-mation. Accessing what the gov-ernment knows has often beencumbersome and expensive forthose inside and outside of govern-ment units. Technology providesthe opportunity to consolidateaccess -- and doing so reducescosts and improves service.

• Consolidating “back room” activi-ties. Many organizations share com-mon back room functions e.g. phoneanswering, purchasing, data storage– even though the activities thatdirectly touch citizens are very dif-ferent. In these cases there is anopportunity to create a common

“back room” to more effectively support citizens service.3. Make services accountable to their customers. No one is in a

better place to judge the value of a service than those who use it.By giving them power, we can force service providers to improve,even while cutting spending. We can make services accountable totheir customers (and therefore of higher value) by:• Giving customers choices about their services and making sure

that the money follows the customers. This creates competitionbetween service providers for the customers’ business. Whenschool choice works this way, for example, school administra-tors begin to pay very close attention to what parents want.

• Requiring that governments post service standards and providecustomers a rebate or other redress if they don’t live up to them.That’s how it works today when you apply for a passport. Theyeither get it to you on time or you get your money back. Theresult is delighted customers who get passports much fasterthan they ever thought possible.

• Creating customer boards to provide direction to serviceproviders. The Minnesota Department of Administration used acustomer board to help it run the state’s internal telecommuni-cations service.

• Making it possible for customers to serve themselves through e-government. Web based services give customers control over

Table 1 Rules of the Budget Game

What’s the starting point? Last year’s costs. This year’s price. A fixed numberbased on the Price of Government.

PLUS

Unit, agency or department resultsand performance targets.

Cost-Based Budget Results-Based Budget

What’s the focus? Adding to and subtracting from last year. Spending what is available to get thebest results possible.

What gets added? This year’s increased costs (inflation)plus the costs for enhancements.

Nothing– the price is given.

Nothing– the price is given.What’s a subtraction?

What is the budget submission?

A “cut” from what was expected –including the additions.

Justification for the needs and the asso-ciated costs. Plus enough extra moneyso that there is enough left after thebudget is “cut.”

Results to be achieved at the speci-fied price.

What’s the job of the budget analyst? Find inflated costs and unnecessary“needs.” Probe how work is done andpush for more productive approaches.

Validate submitter’s ability to producethe results.

What’s the job of elected officials? Choose what to cut - find the “hidden”costs.

Choose which results to buy. More ofsome, less of others. Choose agenciesor organizations that give the mostresults for the money.

What are the incentives for budget

managers?

Build up costs, then when asked,propose unacceptable cuts (‘Closing the Washington Monument’)

Produce results that really matter.Demonstrate the connection betweenresults and the budget.


the time and convenience of the services they want. CatawbaCounty, NC recently launched an internet site where citizenscan track permits for which they have applied. In the future, thesite is to be expanded to allow citizens to apply for permits, payfor them, and schedule inspections online. The NationalOceanic and Atmospheric Administration put its commercialfishing permit renewals on the web and cut wait times from 30to 2 days.4. Make performance consequential. When there are no conse-

quences (rewards or sanctions) for performance, the results arelikely to be “good enough for government work,” but never as“good as possible.” The tools to get to excellence include:• Enterprise management. Make service organizations that can

sell their services “earn” their budgets by selling to citizens orother agencies – often in competition with private providers.Suddenly, survival depends on how well they please their cus-tomers and at what price. Many governments have turned theirmaintenance, printing, training, data processing and other inter-nal service operations into competitive enterprises, for example.Minnesota, Milwaukee, the Edmonton school district, evenAustralia and the United Kingdom have used this approach. Itcan save 10 percent a year for several years.

• Managed competition. Use competitive contracting to makepublic agencies compete with other agencies or private firms toserve public needs. When public agencies are required to com-pete they unleash the creative potential of their employees,because the incentives for success are so direct. Indianapolishas used such competitions to improve services and lower costsby an average of 25 percent. The Milwaukee area’s wastewatertreatment agency used this tool to cut its costs for operating itsplant and field operations by more than 30 percent.

• Performance management. Require every agency to set per-formance targets and then measure and report results againstthose targets. Doing so focuses attention on what matters most– results. To strengthen the focus, add rewards for success –

both financial and psychological -- as well as penalties for poorperformance. For example, use “gainsharing” to reward teamsthat cut costs while maintaining or improving service quality. Inthe late 1990s, managers at the Seattle area’s wastewater treat-ment operation agreed to let employees have half the savingsthey generated for the department. Over four years, total sav-ings were $2.5 million, with no reduction in service levels oreffluent quality.(It takes several years to develop an effective performance man-

agement system, and it requires serious investment. The first twoapproaches offer faster results and far greater savings; hence theyare more useful during a fiscal crisis.)

5. Increase flexibility in return for accountability. In exchangefor the new forms of performance accountability we havedescribed, give programs and their managers flexibility in howservices are delivered. Tying programs up in red tape while mak-ing them accountable for performance is a set up for failure. Giveany organization willing to commit itself to specific results flexi-bility in how it hires, pays, purchases and invests. The Office ofFederal Student Aid in the U.S. Department of Education is nowoperating in just this way. It is a “Performance BasedOrganization,” with both the accountability and flexibility it needsto succeed. Its performance has improved dramatically as a result.

A flexible performance agreement (FPA) is one way to assureaccountability while increasing flexibility. An FPA is a writtenagreement that articulates the overseeing organization’s expec-tations, the service organization’s goals and freedoms, how per-formance will be reported, and how that information will beused to trigger consequences, either positive or negative.

6. Reform how government works on the inside to improve itsperformance on the outside. All organizations are creatures, andoften prisoners, of their internal systems for budgeting, account-ing, personnel, procurement, and auditing. The messages thesesystems send about following the rules of bureaucracy are muchmore powerful than all of the leadership exhortations to per-

Figure 1 Price of Government

Source: U.S. Bureau of the Census, State and Local Government Finances www.census.gov/govs/www/estimate.html andBureau of Economic Analysis, Regional Accounts Data www.bea.doc.gov/bea/regional/reis.


form better. Lasting improvements in performance requireimproved systems.

Milwaukee’s purchasing department, by simplifying processes,giving more authority to departments in return for accountability,and using technology to cut costs and provide better information,was able to cut its staff by nearly two-thirds and its budget bymore than 55 percent.

Every one of these systems has a long history, and reform isoften difficult. If you cannot redesign them in the short term,empower a panel of Bureaucracy or Barrier Busters to giveorganizations selective relief from rules that get in the way ofresults or add needlessly to costs. Doing so will help improveresults and lower costs, while building the case for systemicreform.

7. Cut the cost of mistrust. The main purpose of 20-30 percentof all government spending is to control the other 70-80 percent.Much of that spending is based on the belief that most of us, ifgiven the opportunity, will lie, cheat and steal. This level of mis-trust is not only expensive, it undermines performance. For exam-ple, in special education today most teachers spend up to 50 per-cent of their time filling out forms to demonstrate compliance withfederal and state rules and regulations. If we could cut this cost ofmistrust and find less expensive ways to win compliance, wecould give our schools a massive infusion of what they need most– time to teach.

Montgomery County, Maryland has given its departmentsauthority to pay invoices in amounts up to $5,000 rather thansending them to central accounts payable. This created flexibilityfor departments and allowed a more than 50 percent reduction inthe accounts payable staff. Departments are still accountable fortheir actions, but at a much lower cost.

8. Get a return on capital investments. When operating budg-ets are tight, many governments turn to their capital budgets(supported by bonding) to deliver good news to their con-stituents. For a small increase in debt service (in the operatingbudget), governments can launch relatively large expendituresfor roads, bridges, buildings and technology. Among the top pri-orities for capital should be investments designed specifically tomake services better, faster and cheaper. Proposed investmentsthat produce the highest return in service quality or cost savingsshould take precedence over those that produce a lower return.

9. Target subsidies. Some public spending really involves trans-fers of resources from one set of taxpayers to another. Subsidiesexist when those who benefit from a service or activity are notthose who pay for it. Sometimes this is done directly throughassistance payments or tax credits. Other transfers are indirect,like the way most states subsidize college students by subsidizingthe schools they attend. In both cases, however, these subsidies areoften not targeted on those who truly need them (nor are they tar-geted on results). By limiting subsidies to those who need them,we can save money and make sure that the money we do spend isfocused on results we care about.

Conclusion

For government leaders the past year has been very uncomfort-

able. Many have patched together budget balancing plans that cutservices, raise taxes, and/or resort to accounting gimmicks to“shrink” the problem . But gimmicks don’t solve problems – andhoping won’t make them go away.There is a third alternative: taking the opportunity this challengepresents to remake our public services as if the public really mat-tered. Doing so requires a combination of courage, creativity andgood ideas. We have described a range of creative strategiesabove. That they have already been used and have worked in manyjurisdictions should en”courage” our public leaders to act.

Editor’s Note: This paper was prepared by The PublicStrategies Group based on its partners’ experience with fiscal cri-sis in the public sector over the last two decades. The PublicStrategies Group (www.psgrp.com) specializes in designing cre-ative solutions for those public organizations that want to delighttheir customers with outstanding service at reasonable prices. Thefirm consists of a small group of some of this country's mostadvanced thinkers and practitioners of post-bureaucratic govern-ment. For more information about how to implement these twelvesteps, see The Reinventor’s Fieldbook, by David Osborne andPeter Plastrik, and go to www.psgrp.com.

Reference SourcesMichael Barzelay and Babak Armajani. Breaking Through

Bureaucracy. Berkeley and Los Angeles: University of California Press,1992.

Canadian Treasury Board Secretariat. Quality & Affordable Service forCanadians: Establishing Service Standards in the Federal Government;Service Standards: A Guide to the Initiative; and A Guide to CostingService Delivery for Service Standards. Ottawa: Treasury Board ofCanada Secretariat, 1996.

City of Indianapolis. The Indianapolis Experience: A SmallGovernment Prescription for Big City Problems. Indianapolis: EnterpriseDevelopment. Contact Enterprise Development, City-County Building,Suite 2460, 200 East Washington Street, Indianapolis, IN 46204.

Andrea F. Cowan. Performance Review: Streamlining GovernmentOperations and Management. Austin, Texas: Sheshunoff Information

David Osborne is the author or co-author of four books: TheReinventor's Fieldbook: Tools for Transforming Your Government(2000), Banishing Bureaucracy: The Five Strategies ForReinventing Government (1997), Reinventing Government (1992),and Laboratories of Democracy (1988). He is a managing partnerof The Public Strategies Group (PSG), whose mission is to be thebest resource in the world for transforming governance. 25 BelcherSt., Essex, MA 01929. (978) 768-3244. [email protected].

Peter Hutchinson is President of the Public Strategies Group. He hasserved as a commissioner of finance in Minnesota, superintendent ofschools in Minneapolis, and deputy mayor in Minneapolis. He has alsoserved as a vice president of the Dayton-Hudson Corporation and chair ofthe Dayton-Hudson Foundation. 275 E. 4th St., Suite 710, St. Paul, MN55101. (651) 227-9774. [email protected].

Bios

(Continued on page 34)


Jim Geringer

F O R E S I G H T & E M E R G I N G T R E N D S : NATURAL RESOURCES

ast spring, rainsreturned to Wyoming’seastern plains, offeringhope that a nearly four-year drought might beending. However, muchof Wyoming and the

Rocky Mountain region remain extremelydry. The short-term relief brought byspring rains was a welcome sight, butreservoir storage remains at 30-year lowsand the average soil moisture profilereflects a 100-year low. Rick Burkett whofarms near Hillsdale, Wyoming planted900 acres of oats in the spring of 2002. Hesaid, “I never cut a kernel. The plants gotabout two inches high then dried up.”

Forest fires in Alaska, Arizona,Colorado, Montana, Oregon, Utah andWyoming that dominated the news in theyears 2000 and 2002 were all the morefierce because of the dryness of fuels thatfed the large fires. Live trees stressed bythe low soil moisture profile were fallingvictim to pine and spruce beetles, addingto the fuel load.

While drought is most often associatedwith the impact on farmers and ranchers,city-dwellers feel the pinch as well. Thewater basins that feed municipal waterdemands have been hit hard, causing citymanagers to ration water usage and, insome instances, ban outside irrigationcompletely. Also, the shortage of snow-pack in the Pacific Northwest and Canadain 1999 led to shortages of water to gener-ate hydroelectric power which had anaggravating impact on the power crisis of2000-2001. Is this drought as bad as ever experi-

enced? For several parts of the RockyMountains, average stream flow at timesin 2002 was the lowest since the U. S.Geological Survey began keeping streamflow records in 1895. Within the NationalOceanic and Atmospheric Administration(NOAA), the National Climatic DataCenter (NCDC) uses a comparator calledthe Palmer Index to provide relative com-parisons to historical normal precipitationpatterns. The drought cate-gories in simple form are:D0–Abnormally Dry D1–Drought Moderate D2–Drought Severe D3–Drought Extreme D4–Drought Exceptional

Using these indices,NCDC estimates thatabout 30 percent of thecontiguous U.S. fell in themoderate to extremedrought categories (basedon the Palmer DroughtIndex) at the end ofMarch, 2003. Severe toextreme drought affectedabout 16 percent of thecontiguous United Statesas of the end of March2003; this percentagereflected a slight decrease.By comparison, for theperiod November 1999 tothe present, the national-scale drought peaked inAugust 2000 at about 36percent of the contiguousU.S. (in the severe toextreme categories); this

was as extensive as the major droughts ofthe last 40 years, but not as large as the"dust bowl" droughts of the 1930’s and1950’s.

The National Drought Monitor is main-tained at the University of Nebraska atLincoln and is updated every Thursday.The following figures depict a snapshot ofthe situational drought in the United Statesduring the past two springs. The drought

The Future of DroughtManagement in the States

During recent drought years, a variety of risk management tools and plans have beendeveloped by several public and private agencies. Water shortfalls are fundamentally localand regional issues but too often, the federal government is expected to provide after-the-fact drought relief and mitigation whereas properly anticipated measures that wouldreduce the impact of drought would be a much better alternative.

Jim Geringer, Former Governor of Wyoming

LLFigure 1 U.S. Drought Monitor

Figure 2 U.S. Drought Monitor


in the eastern U. S. has shifted Southwestsince 2002 while the eastern seaboard hasdramatically reduced its drought.

Although various parts of the U.S. haveexperienced unusually wet conditions dur-ing the last 41 months, little changeoccurred in the aggregate national wetnesspicture during much of this period.

For four years, some parts of theNorthern Hemisphere have had as little ashalf their normal winter and spring rainfallresulting in dried up farms and forests,drained reservoirs and lowered thegroundwater table. Some areas are begin-ning to recover; others, including thesouthwestern United States, are still farbehind in annual precipitation.

The drought is not new. History recordsdroughts of varying impacts worldwide.But while drought is not new, other factorsare emerging that challenge our thinkingabout how we ride this one out. The WorldFuture Society in its special report issuedin May 2003 cites trends and forecasts forthe next 25 years. Two of the Society’spredictions deal with water. One forecastpredicts that hydrogen is poised to matchthe effectiveness of fossil fuels in power-ing cars, planes and ships. Hydrogen is themost abundant element on planet Earthand it produces water vapor when burnedto generate power in an engine. Anotherprediction is that water shortages willbecome severe in most major cities in thedeveloping world over the next twodecades. The Society predicts that by theyear 2040, 3.5 billion people will runshort of water, almost 10 times as manyas in 1995.

What is Drought?

Drought is a normal, recurrent featureof climate. While drought occurs every-where in the world, the definition is morerelative than absolute. It depends on dif-ferences in regions, needs and how wateris customarily used. We might definedrought in Libya as occurring when annu-al rainfall is less than seven inches, but inBali, drought might be considered to occurafter a period of only six days withoutrain! In the most general sense, droughtoriginates from a deficiency of expectedhistorical precipitation over an extendedperiod of time, resulting in a water short-

age for some activity, group or environ-mental sector.

Drought is a normal part of the cli-mate for virtually all regions of theUnited States, but it is of particular con-cern in the West, where any extendedinterruption of the region's already limit-ed water supplies can produce devastat-ing impacts. Records indicate thatdrought occurs somewhere in the Westalmost every year. However, multi-yeardrought events are of the greatest con-cern to water planners, natural resourcemanagers and government policymakers.

Water scarcity continually defines andredefines the West. The steady growththat has been characteristic for much ofthe West today creates increaseddemands for agricultural, municipal andindustrial water supplies. Competingdemands, such as economic and environ-mental objectives, create water supplymanagement challenges even in times ofnormal precipitation. Drought exasper-ates the competition.

To illustrate variability even in a smallregion, precipitation within SantaBarbara County in California variesgreatly from season to season and loca-tion. Average annual precipitation rangesfrom a minimum of about eight inches inthe Cuyama Valley to about 36 inches atthe apex of the San Rafael Mountains.Climate studies show that drought periodsin Santa Barbara County occur regularlyand may last as long as a decade. Onerecent drought lasted from 1986 to 1991,during which water storage in the coun-ty's major reservoirs was nearly depleted,challenging priorities for water usage.

The drought that gripped the UnitedStates, southern Europe and SouthwestAsia between 1998 and 2002 was attrib-uted to ocean temperature variations in thetropical Pacific and Indian oceans, accord-ing to research by Martin Hoerling of theClimate Diagnostics Center in Boulder,Colorado and Arun Kumar of NOAA'sNational Center for EnvironmentalPrediction in Camp Springs, Maryland(Science, 299, 691 - 694, 2003). Oceantemperatures in the tropical Pacific under-went a rather unique twist during thosedrought years according to Hoerling andKumar. Waters in the eastern tropicalPacific were a few degrees cooler thannormal, at around 23˚ C, because of a LaNiña event (El Niño's other, cooler half).Meanwhile, waters in the western Pacificand Indian Ocean were warmer thanaverage - around 30˚ C. This contrastlasted during most of the four yeardrought. The researchers suggest thatthese unusual conditions shifted thewinds known as the jet stream towardsthe North Pole, pushing storms thatwould normally track at 35 degrees lati-tude to around 40 degrees latitude.

"It's a kind of paradox that what goes onin semi-arid regions is driven by the wetparts of the planet," says climatologistKelly Redmond of the Desert ResearchInstitute in Reno, Nevada. "This is a rein-forcement of the connectedness of the cli-mate system over great distances and longtime scales."

Scientists debate whether the warmingof the western Pacific is due to theincrease in greenhouse-gas emissions inthe past 50 years; but predicting drought is

Table 1 Interesting Facts About Rain • The driest state is Nevada, which has an annual rain-

fall of 8.8 inches.

• The wettest state is Louisiana, which has an averageannual rainfall of 55.11 inches.

• Earth's average yearly rainfall is 32 inches. If all thisrain fell at once, the world would be covered withthree feet of water.

• Heaviest rainfall in the United States was recordedin 1921 at Thrall, Texas, where 38.2 inches fell in a24-hour period.

• Most rain in less than an hour is attributed to Holt,Montana when12 inches of rain fell in only 42 min-utes, on the 22nd June 1947.

• The wettest place in the world is considered to beMount Wai-'ale-'ale in Hawaii. Rain falls on average335 days per year, and adds up to an impressive 451inches per year. Cherrapungi in the foothills of theHimalayas once recorded an incredible 1,042 inch-es in one year! (01 Aug.1860 to 31 July 1861.)

• The heaviest rainfall for a 24-hour period was 46inches at Baguio City, Luzon, in the Philippines inJuly, 1911.

• The lowest annual rainfall in the United States isDeath Valley, California, which records an annualrainfall of 1.66 inches.

• The lowest average precipitation in the World isconsidered to be Arica, in northern Chile where theannual average, taken over a 43-year period, wasonly .02 of an inch. Nearby at Iquique, in northernChile, no rain fell for 14 years during one dry spell.


trickier than predicting climate. "Severalthings have to gang up for drought to hap-pen," Redmond argues. Other ocean fac-tors are probably at work, including adecades-long northern Pacific oscillationthat has only recently been recognized."

During the year 2001, a federal judgeseverely limited water diverted for irriga-tion in the lower Klamath Basin, Oregon.Snowpacks were at one-third their normallevels, and the judge ruled that threethreatened or endangered fish took prece-dence over the needs of farmers. TheEndangered Species Act, perhaps the mostcontroversial and contentious environ-mental law today, is at the heart of thedecision by the federal judge. Two speciesof sucker (called C'wam and Qupto bylocal native Americans) and the cohosalmon, which migrate up the KlamathRiver as far as the Iron Gate Dam in north-ern California were at issue.

At a protest rally that drew more than15,000 farmers and their supporters toKlamath Falls, one rancher said, "Thesaddest thing is my relationships withpeople - family, employees, clients." HisLost River Ranch in Bonanza, Oregonwould not be able to support the usualcrops. The number of cows the ranchwould support would have to be cut from1,200 down to 500.

Another part of the regional economybrings a different view among water uses.Some 250 miles downstream, where theKlamath River empties into the Pacific,fishing-dependent communities along theOregon and California coasts have seentheir livelihood decline due to the irriga-tion diversions, as well as logging, miningand cattle grazing that can affect waterquantity and quality in the river.

This human drama demonstrates howconflicting federal policies going back acentury can have widespread economic,social and political impact. How the issuesare finally resolved, for better or forworse, will set the tone for other con-tentious debates involving property andnatural resource impacts, particularly asboth the federal government and the statespush for more locally controlled and eco-nomically driven policies.

"Whiskey's for drinking, and water'sfor fighting," Mark Twain once wrote

about the constant battle over water outbeyond the 100th meridian, where rain-fall is scarce. The Klamath Basin story isa classic Western water-war saga. In themidst of all the political speeches andharsh words on both sides of the issue,one clergyman at the Klamath Falls rallyprayed: "Show us a way to protect boththe farmer and the fish."

How do we obtain fresh waterresources? Where does fresh water comefrom? The explanation comes in the con-cept referred to as the Hydrologic Cycle.Given that 93 percent of the earth’s wateris contained in its oceans, how and when itfalls to earth in the form of rain or snowrelies on a cycle that has five parts: evapo-ration, condensation, precipitation, infil-tration, and runoff. Water that evaporatesfrom any body of water, principally fromthe oceans, travels as water vapor until cli-matic conditions cause it to condense andfall in the form of rain or snow. At the timeof precipitation or during a snow-melt, aportion of the condensation infiltrates thesoil and replenishes the ground water sup-ply. The balance migrates as runoff withsome evaporation.

Water in a groundwater formation isequivalent to that in a giant reservoir, with

typically a very slow migration intoknown aquifers, such as the WesternOglalla that underlies the Midwest statesfrom the Dakotas to Texas. Water that isstored in the form of snowpack tends tomelt and run off quickly unless there issome sort of diversion into irrigation activ-ities or impoundment in natural or man-made reservoirs for a variety of uses.Reservoirs and diversions are intended toapportion the snowmelt or runoff over alonger period of time. Commonly in theWest, at least half of the water that isdiverted for high meadow irrigation isreturned to downstream drainages eitherthrough direct runoff or from the groundreleasing some of its stored infiltratedwater later in the season than would other-wise happen without irrigation. The building of dams to retain water toavoid the flood or famine cycles typical ofnon-controlled drainages and the resultantimpoundment of water became an essen-tial part of the settlement of the Westunder the reclamation projects initiated byfederal law in the last century. Todaymuch of the water originally impoundedfor agricultural usage has been convertedto municipal and industrial use. Urbanbeneficiaries include the fast growing

States with plans emphasizing response

States with plans emphasizing mitigation

States developing long-term plans

States delegating drought planning to local authorities

States without drought plans

As of April 2003

Figure 3 Status of State Drought Planning


population areas of Arizona, Californiaand Nevada.

Wyoming is typical of the Westernstates with its water laws based upon thedoctrine of prior appropriation to allocatewater rights. Over time, Wyoming waterlaw has evolved to accommodate chang-ing needs and values, but the basic schemeestablished by the first state legislature forallocating water rights remains intact. Soinnovative was Wyoming’s water alloca-tion system when first proposed byElwood Mead that it was soon emulatedby other western states.

In most western states, a water right isestablished through an appropriation ofwater that is applied to a beneficial use.The essential elements of an appropriationare the diversion of water and its applica-tion to a beneficial use. A diversion ismade simply by removing water from itsnatural course or location, or by control-ling water that remains in its naturalcourse. The requirement of application tobeneficial use is satisfied by irrigation,mining and industrial application, stockwatering, domestic and municipal use, andother non-wasteful economic and environ-mental activities. The doctrine of priorappropriation stated simply is: “first intime, first in right.” The older appropria-tion takes precedence over a more recentone in times of tight supply.

By contrast, eastern U.S. water rightsrely on riparian water rights where there isa geographical limitation as to place ofuse. Ownership of land bordering a water-course carries with it the right to the use ofany flowing water adjacent to or enclosedwithin the land, without consideration ofdate of first use, or in the terms of theWest, a date of prior appropriation.

Even though diversions and dams wereconsidered good public policy, especiallyto mitigate drought effects, the operationand maintenance of dams on westernrivers and streams came under fire bySecretary of the Interior Bruce Babbitt inthe late 1990’s. Babbitt noted while inoffice that during the 1930’s, PresidentFranklin Roosevelt and his InteriorSecretary, Harold Ickes, toured the Westdedicating dams before large, enthusiasticcrowds. At the end of the century, Babbitttook pride in touring the country with a

different message — it was time to un-dedicate some of those dams by removingthem and letting the rivers run free.Considering how valuable stored water isand has been in the West, Babbitt’s pro-posal drew mixed support.

One of the West’s principal river sys-tems, the Colorado River, was specifi-cally cited by Babbitt as having damsthat were inappropriate either as topurpose or location. The ColoradoRiver is governed by a seven-statecompact that apportions annual wateryield according to established alloca-tions between and among the states.The Compact allocates to the upperColorado River states separately fromthe lower river states. Without the damsand reservoirs on the Colorado River,allocation would be inefficient and vir-tually impossible.

In 2002, Secretary of the Interior, GaleNorton, declared that she would enforcethe “law of the river,” if California didnot live up to its part of a non-partisan,seven-state agreement to reduce its useof Colorado River water by 2015. If spe-cific California agencies choose not toadopt agreements necessary for the grad-ual, voluntary reductions contemplatedunder the plan developed by the sevenColorado River Basin states, Californiawill lose access to extra Colorado Riverwater. California agreed to and helpedcraft the historic agreement on ColoradoRiver water use, which was approved byformer Interior Secretary Bruce Babbitt;the agreement allowed for the continuedmaintenance of dams he had earlier tout-ed for removal.

The principal issue in crafting theagreement was how to achieve certaintyconcerning whether California wouldactually reduce its overuse of theColorado River. Cities in SouthernCalifornia would bear the immediateshortfall, potentially losing as much ashalf of the Colorado River water theycurrently receive. Because theMetropolitan Water District in SouthernCalifornia has developed alternativewater supplies, people there will contin-ue to see water flow from their taps. Butover time, the drought’s effect on reduc-tion in Colorado River water could have

very real impacts on all water users inSouthern California.

California agreed in 1929 to limit itsannual use of water from the ColoradoRiver to 4.4 million acre-feet. Over theyears, California has grown accustomedto using more than 5 million acre-feetof water per year. Due to times of boun-tiful precipitation and the fact that otherBasin states were not using their fullallocation, California perhaps becamecomplacent about continuing surpluses.The seriousness of the situation becameapparent when the Central ArizonaProject came on line late in the last cen-tury. Water that was allocated toArizona was being used by Californiauntil Arizona had developed its capabil-ity to use its share.

The 1929 agreement was updated inwhat is known as the Interim SurplusGuidelines, which implement the Lawof the Colorado River and an order ofthe United States Supreme Court. Aftercareful review when she took office,Secretary Norton endorsed the agree-ment. "We are at a turning point in thehistory of the Colorado River," Nortonsaid in her remarks to the ColoradoRiver Water Users Association in LasVegas. "Our common future is shapedby record drought and populationgrowth within the Colorado RiverBasin. These factors herald a new era oflimits on Colorado River water use--limits that shape the decisions that willguide the future course of the river.While drought and population growthare causing change, what must notchange is our commitment to honortreaties, compacts, decrees and agree-ments. Otherwise the legal foundationupon which this river is administeredwill be at risk," Norton said.

Under the multi-state agreement,California can continue to have enhancedaccess to surplus water by taking specificactions to reduce its Colorado River wateruse to 4.4 million acre-feet by the year2015. The Law of the River will surelycontinue to be challenged as demandsshift and policies are re-evaluated.Nonetheless, having a system based onlaw and reason provides a means of arbi-tration in dry times.


Risk Management is Preferred OverCrisis Response in Drought Years

During recent drought years, a varietyof risk management tools and plans havebeen developed by several public and pri-vate agencies. Water shortfalls are funda-mentally local and regional issues but toooften, the federal government is expectedto provide after-the-fact drought relief andmitigation whereas properly anticipatedmeasures that would reduce the impact ofdrought would be a much better alterna-tive. According to the National DroughtMitigation Center, states can take thelead in devising ways to reduce long-term vulnerability to drought. As of April2003, 35 states had drought plans, twostates delegated planning to local author-ities instead of having a single state-levelplan, and four states were in the processof developing a plan. Only nine statesdid not have formal drought plans. TheNational Drought Policy Commission’sreport to Congress and the president,Preparing for Drought in the 21stCentury, emphasizes the need fordrought planning at the state, local, fed-eral, and tribal levels of government.

The Drought Planning Process

Drought preparedness plans containthree critical components: (1) a compre-hensive early warning system; (2) riskand impact assessment procedures; and(3) mitigation and response. A 10-stepprocess promoted by Donald Wilhite in1991 for developing drought prepared-ness plans emphasizes the strengtheningof existing institutions rather than devel-oping new ones.

Drought preparedness plans shouldpromote a more preventive, risk manage-ment approach to drought management.By reducing vulnerability to drought anddependence on emergency assistancefrom the government, the emphasis isshifted to individual risk management andadvance mitigation actions at the localgovernment level. By identifying vulnera-ble areas, population groups, and eco-nomic and environmental activities, theplans should improve coordination withinand among levels of government, provideprocedures for monitoring, assessing, andresponding to water shortages, insure

information flow to primary users andprovide the opportunity for efficiency ofscarce resource allocation. With such aprocess, the plans should reduce watershortage impacts, personal hardships, andconflicts among water and other naturalresource users.

The ten steps proposed by Wilhite,Hayes, Knutson and Smith outlined herewere first published in 1990, as part of aresearch project funded by the NationalScience Foundation. Successful imple-mentation of the ten steps should placeemphasis on mitigation and prepared-ness. Methodology for conducting riskanalysis should be incorporated into anysuccessful plan.

1. Appoint a drought task force2. State the purpose and objectives of

the drought plan3. Seek stakeholder participation and

resolve conflict4. Inventory resources and identify

groups at risk5. Develop organizational structure

and prepare drought plan6. Integrate science and policy, close

institutional gaps7. Publicize the proposed plan, solicit

reaction8. Implement the plan9. Develop education programs

10. Conduct post-drought evaluationLater in 1998, the Western Drought

Coordination Council proposed a planentitled “How to Reduce Drought Risk”declaring that in drought management,making the transition from crisis to riskmanagement is difficult because little hadbeen done to understand and address therisks associated with drought. To promoteits plan, the Western DroughtCoordination Council constructed a guideto assist individuals and organizationsthrough a process of identifying specificactions that can be taken to reduce short-and long-term drought risks.

Unlike previous approaches, the guidefocused on identifying and ranking thepriority of relevant drought impacts,examining the underlying environmental,economic, and social causes of theseimpacts, and then helping participantschoose actions that would address the

underlying causes. What made the guidedifferent and more helpful than previousmethodologies was that it addressed the“whys” behind drought impacts, whichare the true causes of vulnerability, ratherthan the specific impacts. Almost all pre-vious drought responses had been reac-tions to the impacts.

Technology and Information

Key to any effective planning, whetheras government or individual water user, istimely availability of data to inform riskmanagement. From space, remote sensingsystems take the pulse of the Earth’s sur-face by absorbing the electromagneticwaves that are emitted or reflected by theobjects being sensed, including land mass-es and bodies of water. A licensed satelliteremote sensing system receives and storesthese data. NOAA provides regularupdates to plant and vegetation stress thatallow people to spot areas of concern.

Droughts and natural disasters are notnew. Dealing with the effects has becomea challenge for researchers and policy-makers alike. The extraordinary availabil-ity of new technologies, analysis tools andbetter planning processes all provide uswith better abilities than ever to anticipatethe effects of drought and to manage riskaccordingly.

When I was back on the farm, we hadone particularly tough summer with notenough rain when I thought it should beavailable. I commented to my neighborthat we could sure use some moisture.Everett’s reply was “Well, Jim, every dayis one day closer to rain.” Yep. And withnewer tools and planning processes, I andothers can work to manage the risks ofnature within acceptable levels.

John Geringer, former Governor ofWyoming, has been a national leader indeveloping energy policies for the UnitedStates and the Americas. He is a formerchairman of the Western GovernorsAssociation and the Interstate Oil and GasConservation Commission. 190 Preut Rd.,Wheatland, WY 82201. (307) [email protected].

Bio


eginning in the mid-1970s, a round ofcampaign financereforms hit all 50states, enabling us tohave a 50-state recordof how much money

has been spent in gubernatorial elec-tions. By converting the actual dollarsspent each year into the equivalent 2002dollars, we show how the cost of theseelections has increased over time. In the54 elections held between 1977 and1980, the total expenditures were $471.6million. In the 52 elections held between1999 and 2002 - just over two decadeslater - the total expenditures were morethan one billion dollars, an increase of117 percent (Table 1; Figure 1).

These increases reflect the new styleof campaigning for governor - with thecandidates developing their own per-sonal party by using outside consult-ants, opinion polls, media ads and buys,and extensive fundraising efforts to payfor everything. This style has nowreached into most every state. Fewstates will be surprised by a high-price,high-tech campaign - they are common-place now. The "air-war" campaignshave replaced the "ground-war" cam-paigns across the states.

Another factor has been the increasingnumber of candidates who are eitherwealthy or who have access to wealth andare willing to spend some of this money tobecome governor. For some, spending alot of money leads to winning the gover-nor's chair. In 2002, Gov. Gray Davisspent $64.2 million in his successful bid

for reelection in California, while Gov.George Pataki spent $44.2 million to winhis third term in New York.

However, spending a lot of moneydoesn't always lead to a win. For exam-

ple, in the 2002 New York election,Thomas Golisano spent $76.3 million inhis unsuccessful campaign for governoras an independent candidate. In Texas,Tony Sanchez also spent $76.3 millionas the unsuccessful Democratic candi-date. Georgia incumbent Gov. RoyBarnes (D) outspent his challengerSonny Perdue (R), $20 million to $3.7million, yet Perdue won the race with51 percent of the vote. In California's1998 gubernatorial election, three can-didates spent more than $34 million

each in equivalent 2002 dollars in theircampaigns. Two of these candidateswon their party's nomination and facedoff in November, with Gray Davisbecoming the winner. The largestspender at $42.7 million, Al Checci (D),wasn't even able to win the Democraticnomination. So it still does take morethan a lot of money to win an election insome situations.

Finally, we should note there are stillsome states in which the most recentgubernatorial races did not involve a lotof money being spent by the winners.In the 2002 elections, there were sevenof the 36 states in which the winnerspent less than $1.8 million. Obviouslythese races were in smaller states popu-lation wise - Alaska, Idaho, Maine,Nebraska, South Dakota, Vermont andWyoming. These races either involvedincumbents winning reelection - Idaho,Nebraska - or an open seat.

Thad Beyle is a Pearsall Professor ofPolitical Science at the University ofNorth Carolina at Chapel Hill. He spent ayear in the North Carolina Governor’sOffice in the mid-1960s and worked withthe National Governors Association inseveral capacities on gubernatorial transi-tions. University of North Carolina,Chapel Hill, 361 Hamilton Hall,CB#3265, Chapel Hill, NC 27599-3265.(919) 962-3041. [email protected].

The Rising Costs of GubernatorialElections, 1977-2002Thad Beyle, University of North Carolina at Chapel Hill

Editor’s Note: This article contains a corrected version of Table B: The Total Cost ofGubernatorial Elections: 1977-2002, The Book of the States, 2003, page 178.

BBThad Beyle

F O R E S I G H T & E M E R G I N G T R E N D S : ELECTIONS

“For some,spending a lot ofmoney leads to

winning the governor’s chair.”

“However,spending a lot ofmoney doesn’t

always lead to a win.”

Bio


Figure 1 Trends in Gubernatorial Elections Expenditures1980–2002

Table 11977-2002 Gubernatorial Elections Expenditures

Years Actual Expenditures ($) 2002 $ Expenditures ($) Last 4-yrs Total ($)

1977 $12,312,383 $36,535,261

1978 98,537,610 272,203,343

1979 32,743,675 81,048,700

1980 35,622,531 77,778,451 $467,565,755

1981 24,648,169 48,808,255 479,838,749

1982 181,305,951 338,257,371 545,892,777

1983 39,965,761 72,140,362 536,984,439

1984 47,155,773 81,584,382 540,790,370

1985 18,858,546 31,536,030 523,518,145

1986 270,383,448 443,979,389 629,240,163

1987 40,211,797 63,727,095 620,826,896

1988 52,160,874 79,271,844 618,514,358

1989 47,902,262 69,524,328 656,502,656

1990 345,551,402 475,311,420 687,834,687

1991 34,612,476 45,723,217 669,830,809

1992 60,268,231 77,266,962 667,825,927

1993 35,966,249 44,789,849 643,091,448

1994 417,848,930 507,098,216 674,878,244

1995 35,692,417 42,139,807 671,294,834

1996 68,603,328 80,050,557 674,078,429

1997 44,822,933 49,969,824 679,258,404

1998 539,969,464 592,721,695 764,881,883

1999 16,275,689 17,576,338 740,318,414

2000 97,097,343 101,460,129 761,727,986

2001 70,400,180 71,544,898 783,303,060

2002 833,364,490 833,364,490 1,023,945,855

Source: Thad BeyleNote: For more detail on gubernatorial campaigns over the past 3-plus decades, visit Thad Beyle’swebsite: www.unc.edu/~beyle.


Alfred P. Carlton

n 1955, a young state repre-sentative from Chicagointroduced a constitutionalamendment in the IllinoisGeneral Assembly thatcalled for merit selection ofjudges. That lawmaker,

Abner J. Mikva, went on to become oneof the few people in America to holdhigh ranking positions in all threebranches of government: member ofCongress; chief judge of the UnitedStates Court of Appeals for theWashington, D.C., Circuit; and WhiteHouse Counsel. For the past year Mikvahas served as honorary co-chair of theAmerican Bar Association Commissionon the 21st Century Judiciary withWilliam S. Sessions of Texas, formerdirector of the FBI and former U.S.District Judge. Mikva says of thatreform measure introduced nearly ahalf-century ago: “It hasn’t passed yet.Don’t you think it’s time to try some-thing new on judicial reform?”

Indeed it is time for new ideas toimprove our judicial systems – no statehas adopted merit selection in over adecade. Although there is renewedmomentum toward appointive systems inPennsylvania, South Dakota and Texas,constitutional changes are most difficultto achieve. The ABA commission onwhich Mikva and Sessions served isadvocating an appointive system as its“preferred method” of judicial selection– one that consists of judges serving asingle, lengthy term of at least 15 yearsor until a specified age, and not being

subject to a reselection process.At the same time, the commission

faced political reality in formulating itsrecommendations. The ABA’s latest pub-lic opinion survey on this topic showsthat three of four Americans prefer toelect their judges.1 In the same survey,people agreed that something has to bedone about the escalating partisanshipand influence of money.

The commission goes beyond meritselection and breaks the “appointment v.election” deadlock to recommend alter-native methods to improve judicial selec-tion. Its report, Justice in Jeopardy, is ablueprint for states to follow on improv-ing state judicial systems. It is a land-mark study that we believe will beinvaluable to state legislators, judges,elected officials, bar leaders and otherpersons interested in preserving theAmerican judicial system as the best inthe world.

Although America's legal system isthe envy of emerging democraciesaround the globe, our state courts are atrisk. A confluence of circumstances nearthe turn of the century has driven manystates to the brink of a crisis. These cir-cumstances include:• The corrosive effect of money on judi-

cial election campaigns. Lawyers, liti-gants and business and other interestsare pouring massive amounts ofmoney into judicial campaigns, somuch money that a majority of thesurvey respondents think that justicecan be bought;2

• Increasingly partisan campaigns. As

more and more states have developeda competitive two-party system, partyleaders have increasingly treated thejudiciary as an extension of the parti-san legislative and executive branches;

• The worst state government budgetcrises since the Depression. Althoughthe courts represent only a very smallpercentage of state government spend-ing, the judiciaries in many states arestruggling to preserve their essentialcore functions;

• A more diverse society. State courtsmust reflect our nation’s increasinglydiverse society or risk losing the pub-lic’s trust and confidence in ournation’s administration of justice.3The uncertainty surrounding the con-

stitutionality of ethical limits on judicialcampaign speech has further complicat-ed judicial campaigns. The 2002 deci-sion by the U.S. Supreme Court inRepublican Party of Minnesota v.White,4 which allows judicial candidatesto announce their views on issues thatmay come before them in court, is caus-ing many states to review their codes ofjudicial conduct.

There is no simple, “one size fits all”solution to these problems. Our statecourts are a patchwork of selection sys-tems. For example, the selection methodused for the highest courts of the 50states (usually called the “SupremeCourt” of the state) is appointment withlife tenure or reappointment in 12 states.Seventeen states have uncontested reten-tion elections after initial appointment.Fifteen states have nonpartisan elections

New Strategies for State Court ReformAlfred P. Carlton Jr., President, American Bar Association

The judicial systems of the United States remain unparalleled in their capacity to deliverfair and impartial justice, but they face serious challenges. This article summarizes how theAmerican Bar Association has focused on the need for state judicial improvements andhighlights recommendations of the association commission that studied the issue.

II

P O L I C Y O P T I O N S : JUSTICE


(two of the 15, Ohio and Michigan, havenonpartisan general elections, but politi-cal parties are involved with the nomina-tion of candidates, who frequently runwith party endorsements). Six stateshave partisan elections. Because of themyriad systems, ABA CommissionChair Edward W. Madeira Jr. ofPhiladelphia repeatedly warned mem-bers as they attempted to craft solutionsto specific problems: “It is inappropriateto generalize.”

At the heart of this call for reform arecommitments to the importance of judi-cial independence and the premise thatjudges – even if elected – are differentbecause they are required to perform dif-ferent functions than other elected offi-cials. Unlike other public servants, ajudge is beholden only to the law. Ajudge must be fair and impartial. In con-trast, our representative democracy ispremised on the notion that legislatorsand executives are advocates with agen-das supported by constituencies. Votersmay turn out of office that legislator orexecutive official who strays from cam-paign promises or positions, or makespolitically unpopular decisions. It is thejob of judges to make decisions, evenunpopular decisions, based on the lawand not on political expediency.

Approximately 80 percent ofAmerican judges run on a ballot at somepoint in their career and many formfund-raising committees for their elec-tion, re-election or retention campaigns.As a result, far too many Americans –three of four – believe that campaign5

money influences judicial decisions.Incredibly, one in four judges agree.6

The commission report identifieseight enduring principles that shouldapply to the judiciary regardless of howjudges are selected. Judges and the judi-ciary should:• Uphold the law.• Be independent.• Be impartial.• Possess the appropriate temperament

and character.• Possess the appropriate capabilities

and credentials.• Instill public confidence.• Be racially diverse, reflecting of the

society they serve.• Perform their duties in a manner that

justifies public faith and confidence inthe courts.The report recommends specific alter-

natives for states to adopt regardless ofthe method of selection:• Establish credible, neutral, non-parti-

san and diverse deliberative bodies toassess the qualifications of all judicialaspirants, so as to limit the candidatepool to those who are well qualified;

• Diversify nominating commissions toevaluate the qualifications of judicialaspirants;

• Create opportunities for regular meet-ings to promote inter-branch commu-nication among representatives fromall three branches of government, toavoid unnecessary confrontations onsuch issues as court funding, judicialsalaries and structural court reform.In a sense, many of the recommenda-

tions in Justice in Jeopardy are six yearsor longer in the making. Sessions wasappointed in 1997 as the first chair of theABA Special Committee on JudicialIndependence, and there were severalother committee variations before thisABA presidential initiative.

This is important to recall becauseArthur T. Vanderbilt, chief justice of theNew Jersey Supreme Court and presi-dent of the ABA in 1937-38, pointed out:“Judicial reform is not a sport for theshort-winded.” As commission memberThomas W. Ross Sr. of North Carolinasaid, “This is not just another committeereport that is going to gather dust on ashelf. We are going to be using thisreport as the basis for discussions withstate legislators for 10 years or longer!"

History is important in analyzing judi-cial reform. Many of us, both in the legalprofession and in government, are famil-iar with John Adams, who authored the1780 Massachusetts constitution thatcreated the judiciary as an independentand co-equal branch of government. His

foresight on the importance of judicialindependence was crucial in the success-ful development of our nation’s democ-racy. Under his leadership, the UnitedStates Constitution specified theappointment of judges. Not as wellknown is Roscoe Pound, the dean of theNebraska Law School who, in 1906,delivered a stirring speech before anassembly of the American BarAssociation – a speech that was the gen-esis of the merit selection movement inthe states. “Our administration of justiceis not decadent,” he said. “It is simplybehind the times . . . . we may look for-ward to a near future when our courtswill be swift and certain agents of jus-tice, whose decisions will be acquiescedin and respected by all.”7

It is my hope that this report by theABA Commission on the 21st CenturyJudiciary will inspire judicial reform inthe states. Its recommendations do notreflect the official positions or policies ofthe American Bar Association, thoughthey will be presented for adoption aspolicy by the ABA House of Delegates atits 2003 Annual Meeting in August.

The Commission and Its Work

The commission held public hearingsin Detroit, Philadelphia, Portland, Ore.,and Austin. A consistent theme in thetestimony emerged with far-reachingimplications – the tension between theFirst Amendment rights of judicial can-didates and the states’ interest in regulat-ing judicial campaigns. For example,Chief Justice Thomas J. Moyer of Ohiosaid the White ruling created a “treacher-ous” situation for candidates because thedecision invalidated a rule that prohibit-ed judicial candidates from taking posi-tions on issues likely to come beforethem, but did not address the validity ofa related rule that prohibits candidatesfrom promising to decide those issues incertain ways. In an attempt to clarify therules for judicial candidates, other casesare now being litigated.8

Several members of the commissionare experienced in matters of state gov-ernment. In the mid-1990s, Sessions


served on the Texas Commission onJudicial Efficiency, an experience thatproved invaluable in helping guide theABA commission. “That Texas commis-sion was requested by the legislature,and the members, once appointed,grabbed the bull by the horns,” he said.“We recommended an upgrade on infor-mation technology, appropriate compen-sation levels for judges, performancemeasures for state courts and incentivesto diversify staff by establishing annualreports on race and gender statistics.Nearly half of the recommendationspassed the next session. But we dead-locked on a judicial selection recommen-dation.” Rep. Peter Gallego of Texas, whoserved on that earlier state commissionwith Sessions, is serving his seventh termin the Texas House of Representatives.Stephen N. Zack once served as specialcounsel (with judicial selection assign-ments) to former Florida Gov. BobGraham. Barbara Roberts, who is not alawyer, appointed nearly 100 judgeswhen she served as governor of Oregon.Two other members are currently chiefjustices, Thomas R. Phillips of Texas andMargaret Marshall of Massachusetts.

Texas and Massachusetts offer quite acontrast in judicial selection. ChiefJustice Phillips has been elected and re-elected in partisan elections in a stateknown for political brawls. Chief JusticeMarshall served as general counsel ofHarvard prior to her appointment to theSupreme Judicial Court. Yet both arevery articulate on the need for judicialbranch independence as well as the inde-pendence of individual judges.

In addition to Chief Justice Moyer,two other chief justices testified beforethe commission. Chief Justice PatricioSerna of New Mexico discussed theimportance of diversity in the courts, andChief Justice Gerry Alexander ofWashington explained his state’s uniquemethod of establishing judicial compen-sation. Chief Justices E. Norman Veaseyof Delaware and Harry Lee Anstead ofFlorida joined Sessions, Chief JusticeMarshall and me to unveil this report.Chief Justice Veasey held his state up asa model for intergovernmental coopera-tion and Chief Justice Anstead called for

more state governors to show leadershipon judicial issues, citing former FloridaGov. Reuben Askew as a model.

In addition, the commission conduct-ed a national colloquium in Raleigh thatattracted more than 150 judges, lawmak-ers, lawyers, journalists, law and socialscience scholars and interested citizensto discuss possible solutions to the prob-lems identified. Furthermore, five whitepapers from academic experts were com-missioned to analyze the impact of judi-cial selection on our criminal and civilcourts. They will be published and avail-able with the final report at a later date.

These are the recommendations of thecommission:

Recommendations on JudicialSelection

The commission recommends, as thepreferred system of state court judicialselection, a commission–based appointivesystem, with three components.• The governor should appoint judges

from a pool of judicial aspirantswhose qualifications have beenreviewed and approved by a credible,neutral, nonpartisan, diverse delibera-tive body or commission;

• Appointees should serve single,lengthy terms of at least 15 years oruntil a specified age, and not be sub-ject to a reselection process. Judges soappointed should be entitled to retire-ment benefits upon completion ofjudicial service;

• Judges not subject to reselectionnonetheless should remain subject toregular judicial performance evalua-tions, and disciplinary processes thatinclude removal for misconduct.The commission goes beyond merit

selection with these alternative recom-mendations on judicial selection:• For states that cannot abandon reselec-

tion processes altogether, judgesshould be subject to reappointment bya credible, neutral, non–partisan,diverse deliberative body;

• For states that cannot abandon judicialelections altogether, elections shouldbe employed only at the point of ini-tial election;

• For states that retain judicial electionsas a means of reselection, judgesshould stand for retention election,rather than run in contested elections;

• For states that retain contested judicialelections as a means to select or rese-lect judges, all such elections shouldbe non–partisan and conducted in anon–partisan manner;

• For states that continue to employjudicial elections as a means of judi-cial reselection, judicial terms shouldbe as long as possible;

• For states that use elections to select orreselect judges, states should providethe electorate with voter guides on thecandidate(s);

• For states that use elections to select orreselect judges, state bars or otherappropriate entities should initiate adialogue among affected interests inan effort to de-escalate the contribu-tions arms race in judicial campaigns.

• For states that use elections to select orreselect judges, state bars or otherappropriate entities should reach outto candidates and affected interests inan effort to establish voluntary guide-lines on judicial campaign conduct.• States that do not abandon contest-

ed elections at the point of initialselection or reselection should cre-ate systems of public financing forappellate court elections.

• States that retain contested judicialelections and do not adopt systemsof public financing should limitcontributions to judicial campaigns.

Regarding judicial selection, myhome state of North Carolina becamethe epicenter of judicial reform forenacting the Judicial Campaign ReformAct of 2002. In addition to publicfinancing of judicial campaigns, the lawchanged future appellate elections frompartisan to nonpartisan elections.Before the change, though, my statealso was an example of excessive parti-sanship. We came to a point where pureparty politics - and nothing but partypolitics - resulted in high profile filingsof Judicial Conduct Complaints againsttwo opposing candidates for the NorthCarolina Supreme Court. Attempts to


voluntarily minimize “independentexpenditures” showed some signs of suc-cess. Ohio had a particularly negativecampaign for a Supreme Court seat in2000, fueled in part by television attackads paid for by the U.S. Chamber ofCommerce. I have met with Chamberleaders on several occasions, and theyhave met with representatives of theAssociation of Trial Lawyers of America,and it seems as though some progress isbeing made toward de-escalation. InMichigan, for example, former DetroitMayor Dennis Archer proposed in 2002 a“Statement of Principles RegardingMichigan Judicial Campaigns.” Archer isa former justice of the Michigan SupremeCourt and is President-elect of the ABA.Several other states have established vol-untary campaign conduct committees inrecent years.

Recommendations to PromoteIntergovernmental Cooperation

Citing the importance of the judicialbranch working effectively with thepolitical branches of government, thecommission recommends:• Establishing standards for minimum

funding of judicial systems;• Segregating the judiciary's budget

from those of the political branches,and presenting it to the legislature forapproval with a minimum of non–transferable line–itemization;

• Creating independent commissions toestablish judicial salaries;

• States should create opportunities forregular meetings among representa-tives from all three branches of gov-ernment to promote inter–branchcommunication as a means to avoidunnecessary confrontations on suchissues as court funding, judicialsalaries, and structural reform ofcourts. With state governments facing their

worst fiscal crises since the Depression,the commission urges that adequatefunding be provided to preserve essen-tial core functions of the judiciary.Almost all state judiciaries are facingfiscal problems of one kind or another,with Oregon having to take the drastic

measure of closing its courthouse doorson Fridays to save money.

Recommendations on JudicialAccountability

Americans prefer to elect their judges,at least in part because they want to holdjudges accountable. Various recommen-dations to enhance appropriate judicialaccountability include:• States should develop judicial evalua-

tion programs to assess the perform-ance of all sitting judges;

• States should actively enforce codes ofjudicial conduct;

• The judicial branch should take pri-mary responsibility for providing con-tinuing judicial education, requiredfor all judges, and sufficient statefunding should be provided for con-tinuing judicial education.

Recommendations on Diversity

In examining this issue, the commis-sion heard testimony from a range ofwitnesses and gathered the latestresearch on judicial selection methodsand diversity of the bench. The commis-sion found that there is no consensus -indeed, there is significant disagreement- about which system of judicial selec-tion does the best job of promoting adiverse judiciary.

In some jurisdictions, such as NewYork and Chicago, elections appear tohave resulted in a more diverse benchover the last decade. In other jurisdic-tions, such as Alabama, Maryland andNorth Carolina, judges and judicial can-didates of color have fared poorly inrecent elections.

Meanwhile, states such as Missouriand New Mexico that use a form of meritselection have seen substantial progresstoward the goal of a diverse and inclu-sive judiciary. In the end, the commis-sion concluded that the persistent andgrowing threats to judicial independenceposed by contested elections of judgescalled for the recommendation of a pre-ferred method of selection that is basedon appointment to a single, lengthy term.

The commission makes several rec-ommendations regarding diversification

of the justice system, includingenhanced recruitment and mentoringprograms for law students and attorneysof color, greater diversity on judicialnominating and evaluation commissionsand among non-judicial court staff, andimproved jury pool representation.

Recommendations on CommunityRelations

Noting the changing role of courts insociety, the commission recommendsthat courts:• Take steps to promote public under-

standing of and confidence in thecourts among jurors, witnesses and lit-igants;

• Engage and collaborate with the com-munities of which they are a part, byhosting trips to courthouses and byjudges and court administrators speak-ing in schools and other communitysettings;

• Encourage the continuation of prob-lem–solving courts as a means to pro-mote public confidence in the courts.

Conclusion

I believe this report on the future ofour state judiciaries provides a bridgebetween academic legal theory and theapplication of the law to broad socialchange. Every state can benefit from atleast one of the recommendations inJustice in Jeopardy. I encourage all pub-lic officials, all members of the legal pro-fession and all Americans concernedwith the future of our justice system toredouble efforts to ensure that our courtsremain independent, fair and impartial inperception as well as fact. I believe thisreport can lead the way to a better legalprofession, a better judicial system and abetter America.

Endnotes1Results of the Harris Interactive‹TM› sur-vey: By a margin of 75 percent to 18 percentrespondents thought judges who are electedare more fair and impartial than appointedjudges; by a margin of 63 to 24 respondentssaid they have more confidence in a judgeelected without political affiliation than a


judge elected with party affiliation; and 72percent said they are extremely, very orsomewhat concerned that the impartiality ofjudges is compromised by their need to raisecampaign money. The survey was released bythe American Bar Association Aug. 12, 2002.Details can be found on the ABA’s Web site,www.abanet.org.2Survey conducted on behalf of Justice atStake by Greenburg Quinlan RosnerResearch and released Feb. 14, 2002.3Perceptions of the U.S. Justice System,“Whites tend to be more positive than non-whites” about the justice system, page 75,published by the ABA, February 1999, basedon a public opinion survey conducted byM/A/R/C Research.4See Republican Party of Minnesota v. White,536 US 765 (2002)5Justice at Stake survey, 2002.6ibid.

7Reports of the American Bar Association,Volume XXIX,1906, 416-17.8See, Weaver v. Bonner, 309 F.3d 1312 (11thCir. 2002); Spargo v. New York StateCommission on Judicial Conduct, 244 F.Supp.2d 72 (N.D.N.Y. 2003).

Alfred P. Carlton Jr. of North Carolina,President of the American Bar Association, isa partner with Kilpatrick Stockton LLP, 3737Glenwood Ave., Raleigh, NC 27612. Prior toand during his term as president he champi-oned improvements in state judicial systemsbecause of the importance of a fair andimpartial judiciary in America. The ABAheadquarters is located at 750 N. Lake ShoreDr., Chicago, IL 60611. (312)[email protected].

Bio

their legislatures regarding the fiscal condi-tion of their state, commonwealth or territo-ry. Governors often use their address to layout their policy and budget agendas for theirupcoming or continuing administration. The2003 state of the state addresses wereaccessed from January through March 2003at the National Governors Association Web site at http://www.nga.org/nga/legislativeUpdate/1,1169,C_ISSUE_BRIEF^D_4796,00.html.

All quotes and data presented here arefrom these addresses, unless otherwise noted.Data for states for which addresses wereunavailable at this Web site by March 10,2003 (Illinois, Louisiana and Tennessee) areculled from press release material and guber-natorial reports available via these states’

Katherine G. Willoughby(Continued from page 17)

David Osborne(Continued from page 22)

Services, 2000. National Performance Review. Putting

Customers First: Standards for Serving theAmerican People. Washington, D.C.: NationalPerformance Review, October 1997. Available athttp://govinfo.library.unt.edu/npr/default.html.

David Osborne and Peter Plastrik.Banishing Bureaucracy: The Five Strategiesfor Reinventing Government. Reading, Ma.:Addison-Wesley, 1997.

David Osborne and Peter Plastrik. TheReinventor’s Fieldbook: Tools forTransforming Your Government. San

homepages or Web portals. 8Alabama State of the State Address, March4, 2003, Accessed on March 10, 2003 athttp://www.stateline.org/story.do?sto-ryld=292328; and Tennessee State of theState Address, “Address to the GeneralAssembly – The Family Budget,” March 10,2003, Accessed on March 11, 2003 athttp://www.state.tn.us/governor/newsroom/speeches/03-10-03%20budget%20address.htm.9National Governors Association “The StateFiscal Crisis.” February 22, 2003 ContactChristine LaPaille, Office of Public Affairs.Accessed on February 25 athttp://www.nga.org/nga/legislativeUpdate/1,1169,C_ISSUE_BRIEF^D_5080,00.html.10National Governors Association/NationalAssociation of State Budget Officers, 10.

11National Governors Association/NationalAssociation of State Budget Officers, Figure2, “Enacted State Revenue Changes FiscalYears 1991 to 2003,” page 2 of Tables andFigures Section.12Robert Tannenwald, “Are State and LocalRevenue Systems Becoming Obsolete?”Government Finance Review 19, no. 1(February 2003): 21-24.

Francisco: Jossey-Bass, 2000.E.S. Savas. Privatization and Public-

Private Partnerships. Chatham, New Jersey:Chatham House/Seven Bridges Press, 1999.

E.S. Savas. Privatization: The Key to BetterGovernment. Chatham, N.J.: Chatham HousePublishers, 1987.

Allen Schick. Modern Budgeting. Paris:Organization for Economic Cooperation andDevelopment, 1998.

United Kingdom Audit Commission.Realising the Benefits of Competition: TheClient Role for Contracted Services. LocalGovernment Report No. 4, 1993. London: Her

Majesty’s Stationery Office, 1993. Performance-Based Program Budgeting in

Context: History and Comparison.Tallahassee, Fla.: Office of Program PolicyAnalysis and Government Accountability,April, 1997.

United Kingdom Cabinet Office. Guidanceon Agency Reviews. London: Cabinet Office,December 1995.

Performance Budgeting. St. Paul, Minn.:Office of the Legislative Auditor, State ofMinnesota, February 1994.


Ballot Design:How to Improve Life at the Ballot BoxRichard G. Niemi, University of Rochester and Paul S. Herrnson, University of Maryland

Contemporary American ballots contain significant shortcomings. In addition to providing examples of flawed designs, we offer a set of principles for election officials to follow when designing ballots. We hope these guidelines are useful as officials plan for the 2004 elections.

P O L I C Y O P T I O N S : ELECTIONS

Richard Niemi Paul Herrnson

Figure 1 Instructions for Voting a Straight Ticket withException in New hampshire (on left) and Pennsylvania

ow Americans vote—not simply whom theyvote for—matters.That was clearlydemonstrated in thelast presidential elec-tion, where the out-

come hinged on the well-intentionedbut flawed design of a ballot in a singlecounty.1 The 2000 election raised someimportant questions: What kinds of gen-eral principles should election officialsadhere to when designing ballots? Howdo contemporary ballots stack upagainst these principles? We addressthese questions using examples fromballots used in 1998 and 2000 elections.We hope that election officials will findthe simple guidelines we develop usefulas they plan for the 2004 elections.

Principles

Perhaps the most important considera-tion in ballot design is simplicity. Votersof all ages, levels of education, intelli-gence and demographic backgrounds,including non-native English speakers,should be able to recognize immediatelywhat their options are and how to pur-sue them. They should not have tospend an inordinate amount of time fig-uring out how to register their votingdecisions on a ballot. Complicated bal-lots that cause confusion at the interfacewhere votes are cast—whether an ATMstyle voting machine, optical scan sys-tem, lever machine or punch card sys-

HHtem—can lead to voterfrustration, increasederror rates, long lines atpolling places and lessconfidence in an elec-tion outcome and gov-ernment in general.

Related to simplicityis the nature of theinstructions. Clarity andbrevity should be theorder of the day. Lengthyand convoluted instruc-tions are hallmarks of apoorly designed ballot.Voters should be able toread, decipher and fol-low instructions quickly.We have in mind instruc-tions that resemble thosefor an electric pencilsharpener, not a VCR.

Consistency is anotherimportant principle inballot design. Each bal-lot should be as internal-ly consistent as possiblein terms of how candi-dates are listed, optionsfor write-in candidates,the display of proposi-tions and, if offered,options for straight-tick-et voting. Ballots shouldalso be as consistent aspossible across an indi-vidual county or state.


have in the polling place. Voters whocome away from the polling place con-fused or frustrated because of a poorlydesigned ballot or an unnecessarily com-plex set of instructions are less likely tobelieve an election was conducted fairly.The same can be said for those who feelthat the ballot (or election technology)they cast their votes on was somehowinferior to that used in a neighboringjurisdiction or that the ballot wasdesigned to the advantage of certain can-didates. They also are likely to be lessconfident that their ballot was properlycounted. As feedback from voters fol-lowing the 2000 elections debacle indi-cates, such reactions can have racial oreconomic overtones. African Americansand individuals living in poorer jurisdic-tions complained that they were forcedto vote on substandard equipment com-pared to that used by whites and wealth-ier individuals.

Shortcomings in ContemporaryBallots

Simplicity

The design of the U.S. Constitution,some state constitutions, ballot accessrules and other voting laws introduceboth warranted and not so warrantedcomplexities into ballots. This is mostvisible in presidential elections, wherethe Constitution specifies that we for-mally vote for electors rather than direct-ly for candidates. States determine

which names appear on their ballots andmost simply list the names of the candi-dates, ignoring the electors altogether.This approach reflects the fact that theposition of elector has become littlemore than an honorific title. Other statespay homage to the constitutional roles ofelectors. The ballot in Rhode Island usesthe heading “Presidential Electors For,”with candidates’ names below. TheMississippi ballot uses the same wordingbut repeats it in large capital lettersbefore each pair of candidates. Arizona,Louisiana, North Dakota and SouthDakota also list elector’s names, andGeorgia uses larger print for the namesof electors than for candidates.Pennsylvania and Tennessee allow votersto write in names for individual presi-dential electors, which not only addscomplexity but serves no discernablepurpose insofar as we can tell.

Another source of confusion in presi-dential elections concerns the candidatesand their parties. First, not all votershave the opportunity to vote for everycandidate because candidates qualify forthe ballot in each state separately. Thismay leave some voters searching forcandidates whose names are not listed; italso raises issues of candidate equity,which we discuss later. Second, quirks instate ballot access laws occasionallyresult in candidates qualifying to run forthe presidency under different partylabels in different states. For example, in2000, Patrick Buchanan was on the

They should have similar layouts,instructions and symbols. Voters inmany localities receive images of theballot in mailings from candidates, can-didate slates, party committees and localboards of elections. Additionally, ballotimages often appear in local newspa-pers. Because the boundaries of elec-tion precincts rarely match electoralconstituencies or media markets, confu-sion can best be avoided by making bal-lots as comparable as possible, evenwhen they do not contain the sameexact candidates. Analogous reasoningapplies to ballots used across the UnitedStates, though federalism necessarilylimits this possibility.

Another principle of ballot designinvolves the notion of equity. Similarcandidates should be treated the same tothe extent possible. The fact that ballotsroutinely list more than one candidatefor most offices immediately causessome “positional” advantages. One ormore candidates may be listed above orto the left of another out of necessity,making that candidate’s name the firstone a voter encounters.2 Arguments canbe made for giving major parties betterballot positions than minor parties, butother unnecessary advantages should beavoided. These include the use of titles,such as “Dr.,” or printing the candidates’names in ways that draw more attentionto one than the other.

All of these principles have seriousimplications for the experience voters

Figure 2 Instructions for Straight-Ticket and Split-Ticket Voting in Iowa


Reform Party line in most states but onthe “Independence” line in NewHampshire. Third, the very same candi-date can be listed in multiple ways. In2000, voters cast ballots for DickCheney, Richard B. Cheney, “Dick”Cheney, Cheney, and blank (only Bush’sname appeared).3

A third source of confusion in con-temporary ballots has to do with the con-stitutional design of some state legisla-tive bodies. Most districts for theMaryland House of Delegates, for exam-ple, elect three legislators, while someelect only one or two. Districts in the400-member lower chamber of NewHampshire’s General Court electbetween one and 11 legislators.Multimember districts can cause misun-derstandings over the number of candi-dates a voter can cast a ballot for, but in-state variations can create additionaluncertainties.

Similarly, judicial candidates in somestates, including Maryland and NewYork, are elected in what amounts tomultimember free-for-all districts. Inother states, candidates are paired oreach one runs alone and voters areasked whether the candidate should beelected to or retained in office. Whenpaired, states typically distinguish thepairs by lining up one candidate direct-ly opposite the other—as in NorthCarolina—or by numbering them (e.g.,District 1, no. 1; District 1, no. 2, etc.).In Ohio, however, one pair is listed ascompeting for the judicial positionbeginning on January 1, 1999, anotheras competing for the judicial positionbeginning on January 2, 1999. Thisserves to distinguish the pairs, but onecan only wonder how many peopleunderstand why the judgeships start aday apart or how the pairings weredetermined.

The election of judges in Michigan iseven more mystifying. First, a distinctionis made between “incumbent” positions,“nonincumbent” positions and positionswith neither of these labels (presumably“open seats”). On the ballot we exam-ined, the incumbent positions had onlyincumbents running—exactly the num-ber to be elected; however, unlike when

voters are asked whether a judge shouldbe retained in office, it is not clear whathappens if one of these judges wins onlya few votes. Moreover, not all currentjudges run for incumbent positions.

Instructional Clarity

Most ballots provide reasonably clearinstructions, but some are confusing andcould lead to errors. Provisions forstraight-ticket voting often exemplifythis problem, especially when voters areallowed to use a straight-ticket device

and then vote for one or more candidatesof another party (which we dub“straight-ticket with exception”). In NewHampshire, for example, the ballotdirects voters to make a single cross tovote for all candidates of one party. Theinstructions then describe what to do “ifyou vote a straight ticket, but wish tovote for one or more individual candi-dates” (Figure 1). The seemingly convo-luted instructions make sense when onerealizes that New Hampshire has multi-member districts in the lower house of itsstate legislature; yet while logically cor-rect, the instruction is complicated.Pennsylvania’s instruction for voting a“straight ticket with exception” is on apar with New Hampshire’s. However, it

was included even when there was nomultimember office (Figure 1).4Moreover, instruction #3 suggests theneed to vote in the straight-party columnin order to vote a split ticket.

The presence of nonpartisan contestsor propositions on a ballot that includesa straight-ticket device often leads tocontradictory instructions. In Indiana,for example, voters are first instructedthat to cast a straight ticket they shouldmark the appropriate circle and “notmake any other marks on this ballot.”They are then reminded that if they wishto vote for a candidate for a nonpartisanoffice or on a public question they “mustmake another voting mark on the appro-priate place on this ballot.” In Iowa, vot-ers who read only the instruction forstraight-ticket voting might not evenrealize that there were nonpartisanoffices and propositions on the ballot, asthe only mention of nonpartisanoffices—other than for retention ofjudges—comes under the heading “split-ticket voting” (Figure 2). In NorthCarolina, there are separate ballots forfederal and state offices, and separatestraight-ticket devices for each level ofoffice. In Oklahoma, one has to make asmany as four straight-ticket marks(Figure 3) even though the ticket cannotbe split for president/vice-president, asingle state office or for Congress whenthere is only a House member to bevoted on.

States that permit write-in candidatestypically have simple instructions, suchas “write in the name of the person andblacken the oval to the left of the per-son’s name.” However, the simplicity ofthese directions hides a major potentialpitfall: There is no indication as to whatconstitutes a legal write-in vote. The2002 election for mayor of Mount Airy,Maryland demonstrates how this canbecome a problem. James Holtappeared to have defeated GeraldJohnson, yet Johnson was declared thevictor after the town board invalidated259 of Holt’s write-in votes. The votesdid not match the variations of Holt’sname that had been agreed upon prior tothe election. A court overturned thedecision on the grounds that in this

“The presenceof nonpartisan

contests orpropositions on

a ballot thatincludes a

straight-ticketdevice often

leads to contra-dictory instruc-

tions.”


small town it was unlikely that write-incandidate Holt would be confused withany other Holt.

Consistency

The nature of the presidential electionand the use of multimember districts ofnecessity result in some inconsistenciesin how individuals cast votes. The use ofstraight-ticket devices on ballots thatcontain both nonpartisan candidates andpropositions produces a similar result.Some of these inconsistencies occur onballots both within and across states.

The use of party labels and symbolsresults in another set of discrepancies onballots in different states. States almostalways list candidates’ party affiliations(for partisan offices). Virginia, however,did not include the party affiliations ofits U.S. Senate and House candidates onits 1998 and 2000 ballots.5 About adozen states use emblems to identifypolitical parties, but surprisingly, onlyLouisiana and Utah pair the familiardonkey and elephant. In other states, aneagle may vie with a star (New York,Rhode Island) or a rooster (Indiana) orthere are dueling busts of party notables(Michigan). A given symbol is not theexclusive property of one party. Thesame symbol (though depicted different-ly) may even be used twice on one bal-lot—once to identify a major party andonce to denote a minor party. At onepoint in history, symbols may have sim-plified the voting decisions of a largelyilliterate population. With contemporarylevels of literacy and geographic mobili-ty, an array of divergent, unfamiliar,overlapping symbols serves only to pro-mote bewilderment among voters.

Equity

What candidates do for a living couldinfluence whether some voters choose tosupport them. The same is true of wherecandidates reside. A candidate’s office-holding experience—a variant is incum-bency, which bestows numerous advan-tages—could also influence individuals’voting decisions. Is it fair to the candidatesto place occupations or other candidate-related information on the ballot? Decision

Figure 3 Multiple Straight-Ticket Votes in Oklahoma


makers in several states clearly think so.Ballots in California list a candidate’soccupation while ballots in Arkansas list acandidate’s current public office. Ballots inMassachusetts, Maine and South Dakotalist the candidate's hometown, whereasMaryland lists the county of residence.

Conclusion

Voting in the United States is muchmore complicated than raising a hand,dropping a black or white stone in a jug,writing an “X” on a sheet of paper or anyof the other methods that individualshave historically used to cast a ballot.Florida’s now infamous butterfly ballotdemonstrated the confusion, uncertaintyand anger a flawed ballot can produce,but there are other aspects of contempo-rary ballots that might lead voters astray.We have offered a few simple principlesthat election officials should consider inthe course of preparing ballots alongwith some examples of where these rulesof thumb have been ignored or violated.By hewing close to the principles of sim-plicity, clarity, consistency and equity,those who design and approve ballotscan avoid some of the shortcomingsassociated with previous ballots.

Improving how Americans vote is aserious matter. Flawed ballot designs canlead voters to misinterpret what they seeand misunderstand the instructions theyare given. This could result in their cast-ing a ballot for a candidate they had notintended to support, failing to cast a bal-lot for an office for which they intendedto vote or more generally spoiling theirballots. Well-educated, habitual voterswho take their time in the voting boothare less likely than others to be trippedup by the flaws we have discussed. Butchoosing elected leaders is the one fromof political input that all citizens are enti-tled to share equally, and ballots need tobe designed with all in mind. Theyshould allow first-time voters, voterswho lack much formal education, whodo not have a perfect command of theEnglish language or have little interest inpolitics to easily cast a ballot as they hadintended. No one who exercises the rightto vote should walk away from the

polling place feeling confused, frustrat-ed or wondering whether his or her votewas cast properly or will actually becounted. Among other things, the legiti-macy of our election system depends onballot designers doing their job right.

Endnotes1The probable errors caused by the now infa-mous “butterfly” ballot were enough toswing the outcome in the state of Floridaand in the Electoral College from one can-didate to another. For a simple description,see Henry Brady et al., “Law and Data: TheButterfly Episode,” PS: Political Science &Politics, Vol. 34, (2001): 59-69; for a full-blown statistical analysis, see JonathanWand et al., “The Butterfly Did It: TheAberrant Vote for Buchanan in Palm BeachCounty, Florida.” American PoliticalScience Review, Vol. 95 (2001): 793-810.2This situation can be avoided on computer-ized voting machines by rotating the candi-dates’ names. However, this creates a newsource of confusion because voters wouldnot find the candidates’ names printed in theorder as shown in mailings and advertising.3Other differences involve whether each statehas the same presidential and vice-presidentialcandidate for a given party, how parties arelisted and whether each party is given a sepa-rate column. See Richard G. Niemi and PaulS. Herrnson, “Beyond the Butterfly: TheComplexity of U.S. Ballots,” PoliticalPerspectives, Vol. 1, (2003): 317-26.4An election official in Pennsylvaniainformed us that primary elections includean office that has multiple members.Evidently the instruction for voting astraight ticket with exception is carried overto the general election even though it isinapplicable.5The office of the Virginia Electoral Boardtold us that the lack of party labels was com-mon practice until changed in 2002.

Richard G. Niemi is Watson Professor ofPolitical Science at the University ofRochester. He has written extensively on vot-ing, term limits, legislative districting andcivic education, and is presently involved inwork on voting technologies and ballotdesign. Department of Political Science,University of Rochester, Box 270146,Rochester, NY 14627-0146. (585) [email protected].

Paul S. Herrnson is director of the Centerfor American Politics and Citizenship and pro-fessor of Government and Politics at theUniversity of Maryland. He has written exten-sively on campaigns and elections, money andpolitics, and political parties, and is currentlyresearching voting technologies and ballotdesign. Center for American Politics andCitizenship, 1108 Tawes Hall, University ofMaryland, College Park, MD 20742. (301)405-4123. [email protected].

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