Financial Pressures May Table Republicans’ Bold Initiatives

Republicans haven’t had this much power at the state level in almost a century. But budget constraints may temper their appetite for extreme policies in 2015.
by | January 2015
Texas state Rep. Phil King
“Making sure that government tightens its belt will be a -- if not the -- priority of the session," said Texas state Rep. Phil King, the national chair of the conservative American Legislative Exchange Council. Office of Rep. Phil King

At the tender age of 18, Saira Blair has a chance to put her principles into practice. She spent the fall dividing her time between freshman studies at West Virginia University and what turned out to be a successful campaign for the state House of Representatives. “I like to multitask and keep myself busy,” she says. With the session starting, she’s going to take a break from school, joining her dad, state Sen. Craig Blair, as part of the first Republican majority in the West Virginia Legislature in more than 80 years.

Both Blairs believe in conservative principles that West Virginia Republicans complain have been frustrated for decades by a Democratic Party dominated by unions and trial lawyers. A change is coming to Charleston now, though. In the weeks following the election, Republican legislators talked about thinning the state’s education bureaucracy, imposing tighter ceilings on awards in tort cases and making the tax code friendlier to businesses. West Virginia has a short session this year, but incoming Senate President Bill Cole says priority bills will move fast to allow time to override any vetoes from Democratic Gov. Earl Ray Tomblin, which legislators there can do with a simple majority. “Our state government needs to act more like a partner to business than an impediment, and I can promise you right now it’s been more of an impediment,” Cole says.

Incoming legislative leaders in much of the country are sounding quite a bit like Bill Cole right now. Having won their largest number of seats since 1920, Republicans now control 68 of the nation’s 99 legislative chambers, with supermajorities in more than 20. They also have effective control of nominally nonpartisan Nebraska, as well as states such as Missouri and West Virginia, where GOP majorities are big enough to turn back gubernatorial vetoes. That means that fully half the states -- and half the nation’s population -- will be under total Republican control.

By contrast, Democrats hold both the governorship and legislature in just seven states, which is their lowest point since before the Civil War (when there were far fewer states). In several states that Democrats have controlled in recent years, such as Colorado, Minnesota and New York, Republicans were able to grab a majority in one of the two chambers, which means they will be able to checkmate most of the more liberal legislation Democrats in those places come up with. “Business interests now have a backstop in several states which had formerly been under Democratic control,” says Joe Crosby, a lobbyist with MultiState Associates. “New Republican governors in Illinois, Maryland and Massachusetts, and Republican-controlled legislative chambers in states like Minnesota and Washington, will moderate the impact of the populist assertion that businesses -- and the wealthy -- are not paying their ‘fair share’ of taxes.”

Some Republicans and those who observe them are talking about 2015 as a moment when the GOP will feel pressure to push bold new initiatives while its heavy majorities remain intact. “The last few cycles have created a psychology that ‘we need to get it done now,’” says Paul Nolette, a political scientist at Marquette University. These Republicans, Nolette suggests, are saying, “We have unified control of government, but this might not last. It will last in Idaho, but maybe not Nevada, so we have to make what we can of it now. This is the best state-level election for the party since 1920, so take advantage at all levels and in all states.”

Many of the most experienced GOP legislators, however, argue that 2015 is unlikely to go down as a year of bold experiment in state government. And the early evidence suggests that they are right.

Republican legislators are talking a lot less than in the last couple of cycles about the social issues that have been so controversial in recent years. They will be offering new bills restricting abortion and protecting the rights of gun owners, but nothing like the flurry that followed the elections of 2010 and 2012. Most of the states that would be interested in imposing voter identification restrictions have done so already. “There’s been a pretty aggressive agenda in the last two sessions,” says Steve Kestell, the outgoing chair of the Wisconsin House Education Committee. “The low-hanging fruit has been picked. Now the policy initiatives will become a little more complex and a little more difficult to achieve, I think.”

The North Carolina legislature, having already focused on social issues in the last few sessions, will likely switch to economic issues for 2015. (David Kidd)

A widespread desire to cut taxes, particularly on businesses and on personal income, still exists in nearly all the Republican-majority states. But given that a sizable number of states have yet to see their revenues pick back up to pre-recession levels -- and the fact that Congress, under GOP control, is likely to be stingy about turning money over to the states -- hopes of shrinking government further will be tempered in many places by recognition of the need to build roads and pay for schools. “Making sure that government tightens its belt will be a -- if not the -- priority of the session,” says Phil King, national chair of the conservative American Legislative Exchange Council. “We are already looking at ways to do that, but we have to do so in a way that preserves vital services.”

King is a Republican in the Texas House, which is now well into its second decade of unbroken GOP control. The state has $8 billion piling up in its rainy day fund and, thanks to economic growth and oil revenues, legislators will be playing with a surplus. Not surprisingly, with a new batch of conservative Republicans elected to the state Senate last fall, there’s much interest in cutting taxes. Greg Abbott, the incoming governor, has expressed support for modifying or eliminating the business franchise tax, which accounts for 10 percent of the state’s revenues. “The question is, can we afford to get rid of it?” says state Sen. Craig Estes. “We’re crunching the numbers and I think the answer is yes.”

Maybe so, but there’s competition for those dollars, even among tax-cut true believers. Lt. Gov. Dan Patrick, who presides over the state Senate, is more interested in reducing the burden on property taxpayers than on businesses. Some mix of tax cuts is all but certain, but leading business groups in Austin, such as the Texas Association of Manufacturers and the Texas Future Business Alliance, have put out warnings against cutting taxes precipitately, given the state’s need for roads and water infrastructure in light of its astonishing recent growth.

In November, Texas voters approved a measure that will redirect a share of the state’s energy revenues from its rainy day fund, devoting them to roads instead. That is expected to increase the state’s infrastructure budget by $1.7 billion in 2015 alone. But given increasing demands, “that gets us only halfway, at best, to where we need to be,” says King. “We’re probably still at least a couple billion a year short on transportation funding, and that’s a conservative estimate.”

Similar arguments are already taking place in other states. Shortly after the election, Wisconsin Transportation Secretary Mark Gottlieb unveiled a proposal to raise taxes and fees by $751 million over the next two years to pay for roadwork. It was not immediately clear how that would go over with the expanded GOP majorities in the legislature -- or even Gottlieb’s boss, Gov. Scott Walker, who is positioning himself for a presidential run and needs to pay attention to the militantly antitax Republican conservative base.

Pressures to spend more on infrastructure have also shown up next door, in GOP-controlled Michigan. In a lame-duck session the week after the election, the state Senate approved a billion dollar a year increase in the gas tax -- one of Gov. Rick Snyder’s priorities -- but the House has balked. “We’re receptive to spending more on roads,” says Dan Lauwers, who heads the agenda-setting Policy Development Workgroup in the Michigan House. “Where we differ is the House passed a package without a substantial tax increase. We really believe we can grow our way [economically] to the $1.2 billion the governor is asking for. I think that’s a healthier way to do it.”

That same sort of tension -- the desire to avoid tax increases versus pressure to spend more on priority programs -- will be playing out in a number of states, with GOP House members seeking to press their partisan advantage at least a little harder than their Senate counterparts. In Kansas, which has arguably had the most ambitious tax-cutting agenda in the country in recent years, the shortfall in the budget has steadily grown. That has prompted talk among top Senate leaders to think about adding back some revenues, perhaps delaying or tweaking further tax cuts that are already baked into state law. “Everything has to be on the table,” says state Sen. Jeff King. “When you make the kind of historic tax reforms that we’ve made, we know there will have to be some changes made along the way.” House leaders, however, from Speaker Ray Merrick on down, have said there’s no way they’ll consider any such idea. 

Kansas state Senate Vice President Jeff King: “When you make the kind of historic tax reforms that we’ve made, we know there will have to be some changes made along the way.” (AP/John Milburn)

Governors have historically served as a moderating force in state politics, attempting to keep legislative majorities from pulling too far to the left or to the right. That’s been less true in recent years. Even governors who have sought to tamp down a bit on conservative legislatures, such as Republicans Bill Haslam of Tennessee and Pat McCrory of North Carolina, have done so with limited effect.

Some of the new GOP governors, including Bruce Rauner of Illinois and Larry Hogan of Maryland, have spent their transition periods signaling that they are interested in governing from the center or center-right -- or, at least, to work closely with

Democrats (who, after all, still retain large legislative majorities in those states). Asa Hutchinson’s victory in Arkansas gave Republicans total political control of that state for the first time since 1874. Still, Hutchinson may choose to take a go-slow approach on the most contentious issue there -- rolling back the so-called private option, under which the state is using federal Medicaid dollars to subsidize health coverage through private insurers. Many of the newly elected Republican legislators in Arkansas ran on the idea of ending that program, but Hutchinson picked Michael Lamoureux -- a top sponsor of the private option in the state Senate -- as his chief of staff.

Democratic governors will also likely be seeking the center. In Democratic-dominated California, Gov. Jerry Brown has been seeking to dampen his party’s hopes of spending more on government programs. He suffered a setback in this regard just after the election, however. The University of California Board of Regents, over his strong objection, approved potential tuition increases of up to 28 percent over five years. Legislative leaders have been talking about a range of liberal policy goals as well, including an attempt to overturn the state’s ban on affirmative action in higher education.

Democrats in Oregon, having gained legislative seats in the election, are looking to address a host of environmental and income inequality issues, including the possibility of carbon taxes and a statewide sick leave policy. “Gov. John Kitzhaber has discussed implanting a sales tax -- an idea that has been considered and rejected on more than one occasion,” says Crosby, the lobbyist. “Interestingly, in looking to reduce the state’s reliance on income taxes in favor of consumption taxes, he is pursuing a tax policy that is very familiar to his Republican counterparts.”

One such policy -- tax cuts -- may not be so big for Republicans this year, though. “You’ll see after this election a changed mindset about cutting taxes and what they are accomplishing,” says Matt Walter, president of the Republican State Leadership Committee, which helped fund many state-level campaigns. “Cutting taxes just to cut taxes does not have as much utility as tax cuts designed to stimulate growth.”

Even in the two states where Republicans produced a dramatic change in November by seizing legislative control for the first time in decades, talk of tax cuts is already being tempered by budgetary reality. “We’re not just going to be chopping taxes out of a budget the governor’s going to send us that starts out $260 million in the hole,” says Cole, the West Virginia Senate president. And in Nevada, which faces a budget shortfall, the state’s so-called sunset taxes -- a package of sales taxes, licensing fees and a payroll excise tax that make up 9 percent of the state’s budget -- appear likely to be renewed this session. “The company that I own, we do pay that tax,” says Paul Anderson, the new majority leader in the Nevada Assembly. “It’s not a substantial burden by any means.”

Anderson predicts that his state will act on some ideas that have already passed into law in other places, such as imposing voter ID restrictions and protecting gun owners’ rights. Nevada Republicans want to curb “prevailing wage” requirements for workers on state projects and to direct state funding for education more carefully. But Anderson does not anticipate trying to overturn every law that was passed by Democratic majorities of old. Asked about his top priorities, the first thing he mentions is the state’s construction defect law, a building statute that he says promotes lawsuits and impedes growth of multifamily housing. “Rather than being an opposition party, now we have to learn how to govern very quickly,” he says. “That is going to be a challenge.”

In states where Republicans have already been enjoying majority status, they are likely to continue governing much in the way they have done in recent years. Lots of legislators will be expressing outrage about the Common Core educational standards and many will want to rethink renewable energy mandates that are on the books. Right to work laws will pop up in a few states. But most changes at this point are more likely to be incremental than radical. In many places, Republicans have already accomplished much of what they’ve set out to do. “States like Arkansas and North Carolina, a lot of what they did when they came to power for the first time since Reconstruction was focusing on social issues,” says John Nothdurft, director of government relations at the Heartland Institute, a conservative think tank based in Chicago. “Those are now kind of done. I think now we’re going to switch to the more economic issues.”