December 15, 2022

ECONOMY, BUDGET, TAXES, & REVENUE

CONGRESS MOVING AHEAD ON NEW STATE AND LOCAL GOVERNMENT FINANCIAL REPORTING RULES: State and local governments could face time-consuming and costly new requirements around how they share financial information with the public under a provision that congressional negotiators attached to annual defense legislation. To the disappointment of state and local officials, language included in the National Defense Authorization Act would require the Securities and Exchange Commission to set new standards in the next two years for how states and localities release financial data. While the primary purpose of the overall defense bill is to set military policy and spending levels, lawmakers often seek to attach other unrelated legislation to the must-pass measure.

STATES CONSIDER MILEAGE TAX AS NATION SHIFTS TOWARDS EVS: Congress should issue nationwide guidelines for state taxation of remote sales following the South Dakota v. Wayfair ruling, the US Government Accountability Office said. Some states and cooperative organizations have pursued ways to condense and streamline sales tax payments, but multistate complexity remains the rule for sellers. A new GAO report recommends that Congress consider working with states to set “national parameters” for state taxation of remote sales. The standardized guidelines should balance state interests and help address “existing uncertainties” regarding the scope of taxes in states and localities.

HEALTHCARE, EDUCATION, & WORKFORCE

HEALTH OFFICIALS SEEK CONGRESSIONAL AID TO PREPARE FOR COVID EMERGENCY’S END: State health officials are looking to Congress for help, as millions of people are in jeopardy of losing Medicaid coverage when the federal government declares an end to the COVID public health emergency. It has been extended 11 times since the declaration was first made in January 2020. States expect another extension, keeping it in place until at least April, but they have been left guessing as they strive to plan for its conclusion. At issue are provisions in the first COVID relief package passed by Congress in March 2020 that prevented states from removing recipients from Medicaid rolls and provided extra federal money until the virus was brought under control.

THE ANTI-ABORTION ROADMAP FOR 2023: RESTRICTIONS AND TAX CUTS: Republicans racked up big wins in more than a dozen state legislatures this fall — and now they’re planning to use their expanded power to crack down on abortions come January. With sweeping abortion legislation having little chance in a divided Congress, conservative state legislators are stepping into the void, proposing to limit when the procedure can take place, enact new regulations on abortion pills and strengthen penalties for doctors who break the law. Taken together, the legislation could make it harder for tens of millions of people to obtain abortions — particularly in Southern states that still permit most abortions, like Florida, North Carolina, and Virginia, which have become havens for access since the Supreme Court overturned Roe v. Wade.

MEDICAID DIRECTORS ASK CONGRESS FOR CERTAINTY ON PHE REQUIREMENTS: Medicaid directors say uncertainty on the public health emergency’s end date is no longer tenable, and they are retooling their campaign that had focused on the Biden administration to now ask congressional leadership to set in statute the date that Medicaid renewals will begin, phase out the enhanced federal Medicaid matching funds over 12 months and prohibit CMS from changing Medicaid eligibility rules during the redetermination period.

BACKLASH OVER NEW ‘BUY AMERICA’ RULES FOR INFRASTRUCTURE PROJECTS: The Biden administration is pushing state transportation departments and their contractors to use more U.S.-made materials as they build new infrastructure, but many industry groups worry the federal government is rolling out the changes too quickly. “AASHTO is still concerned that the quick implementation of Buy America requirements for such a broad range of materials will cause delays in project delivery while states, contractors, manufacturers, and suppliers continue working to determine how best to track and verify these materials,” wrote Roger Millar, Washington state’s secretary of transportation and the president of the American Association of State Highway and Transportation Officials, in a letter to federal officials.

ENERGY, INFRASTRUCTURE, & THE ENVIRONMENT

THE STATES LEADING ON ENERGY EFFICIENCY POLICY: For the second year in a row, California leads the country in energy efficiency policies and programs, according to a new report. The Golden State is far from alone in its major efforts to cut emissions and reduce greenhouse gases, but many states are falling behind, and all can do more in these areas to advance equity initiatives. California is one of the best when it comes to energy codes for buildings, vehicle emissions, and energy efficiency in the utility sector, according to the American Council for an Energy-Efficient Economy, a research nonprofit that develops energy efficiency policies.

WITH FEDERAL AID ON THE TABLE, UTILITIES SHIFT TO EMBRACE CLIMATE GOALS: Just two years ago, DTE Energy, a Michigan-based electric utility, was still enmeshed in a court fight with federal regulators over emissions from a coal-burning power plant on the western shore of Lake Erie that ranks as one of the nation’s largest sources of climate-changing air pollution. But in September, Gerard M. Anderson, who led DTE for the last decade, was on the South Lawn of the White House alongside hundreds of other supporters of President Biden, giving a standing ovation to the president for his success in pushing a climate change package through Congress — a law that will help accelerate the closure of the very same coal-burning behemoth, known as DTE Monroe, that his company had been fighting to protect.

CALIFORNIA STRENGTHENS BUILDING PERFORMANCE STANDARDS: On December 7, California officials announced the state has joined the National Building Performance Standards Coalition, a White House-led initiative to accelerate building performance standards across the country. President Joe Biden launched the coalition in January, establishing a partnership of more than 30 state and local governments that will share results and best practices for delivering cleaner, healthier, and more affordable buildings while creating jobs, lowering costs, and prioritizing frontline communities. The announcement was made during a White House press call to unveil the first-ever Federal Building Performance Standard, which will cut energy use and electrify equipment and appliances in 30 percent of the country’s 300,000 existing federal buildings by 2030.

NEW YORK, CALIFORNIA ATTORNEYS GENERAL PUSH CONGRESS TO BACK ESG: Democratic attorneys general from New York, California, and other states are urging congressional leaders to defend environmental, social and governance investing as their Republican counterparts take aim at ESG. Climate change, diversity, and other ESG factors are important to investors, a group of 17 attorneys general said in a letter to the top Democrats and Republicans on the House Financial Services and Senate Banking committees. The missive came after Republican attorneys general from West Virginia, Texas, and other states sent letters to BlackRock Inc., the Securities and Exchange Commission, and others in recent months about their concerns with ESG investing.

NEW YORK STATE SENATOR PROPOSES ‘CLIMATE NEGLIGENCE’ BILL BASED ON TEXAS ABORTION LAW: A Democratic state senator is taking a page from Texas’ abortion playbook and proposing the creation of a private cause of action for individuals to sue fossil fuel companies for climate damages. The bill introduced by Sen. Zellnor Myrie seeks to establish a new legal avenue of attack in New York courts on companies responsible for greenhouse gas emissions that have contributed to climate change. Many lawsuits by states and cities against fossil fuel companies have been bogged down in jurisdictional challenges, with defendants arguing they should be transferred to federal courts.

KANSAS GOV. LAURA KELLY PLEDGES FOCUS ON WATER: While eastern Kansas can be susceptible to flooding, streams and rivers in western Kansas have largely dried up. The western part of the state gets its water from underground aquifers — the Ogallala and the High Plains. The Ogallala Aquifer stretches from South Dakota to Texas and is among the world’s largest underground water supplies. But for decades, western Kansas has been using more water from the Ogallala each year than the aquifer can recharge. That imbalance means the water supply has been depleting for more than half a century. Parts of western Kansas supplied by the Ogallala have just ten years of water left. And if it dries up, as one legislator said this spring, communities that lose access to water may fold up and blow away.

TECHNOLOGY & PROCUREMENT

NTIA DELIVERS $67M TO STATES IN BROADBAND PLANNING GRANTS: The National Telecommunications and Information Administration announced another batch of broadband planning grants from the Biden administration’s “Internet for All” program, totaling nearly $67 million for 11 states and Washington, D.C. The announcements were the latest awards to come out of the $45 billion fund, which was created as part of last year’s infrastructure spending law. The NTIA has distributed nearly $150 million to 27 states and D.C. under the program.

FEARS GROW OVER PLAN TO DISTRIBUTE BILLIONS IN BROADBAND DOLLARS: In several states around the country, officials say they are finding major problems with a crucial, new federal map meant to show the adequacy of internet service at the household level. The Federal Communications Commission map is critical in determining how the Biden administration will distribute billions of dollars in federal broadband funding from last year’s infrastructure law around the country. But state and local officials say they’re seeing discrepancies that have them concerned the money will not go to the places where it’s most needed to give Americans improved access to high-speed internet.

HOW WILL THE CHINESE TELECOMS BAN IMPACT STATE AND LOCAL GOV?: The FCC’s recent restrictions on five Chinese telecoms’ technologies — adopted on Nov. 25 — could impact state and local governments in ways previous bans haven’t. “Up until now … the federal agencies have been prohibited from buying this kind of technology, but it's still been widely available to state and local governments, to private companies, individuals,” Jack Corrigan, research analyst at Georgetown’s Center for Security and Emerging Technology (CSET), told Government Technology*.

GOP GOVERNORS ORDER TIKTOK BANS AMID SECURITY CONCERNS: Republican governors in at least four states are taking steps to ban the use of TikTok, a popular Chinese-owned video-sharing app, on state-owned networks and devices. The crackdown comes in reaction to growing concerns about cyber vulnerabilities and possible interference from the Chinese government. It mirrors action taken in 2020 by Nebraska Gov. Pete Ricketts (R). Alabama and Utah joined other U.S. states prohibiting the use of Chinese-owned short-video sharing app TikTok on state government devices and computer networks due to national security concerns. Other U.S. states that have banned TikTok on state devices include Texas, Maryland, and South Dakota.

15 ATTORNEYS GENERAL DEMAND APPLE, GOOGLE FIX TIKTOK AGE RATING: A coalition of 15 Republican state attorneys general sent letters to executives at Apple and Google demanding the tech companies correct their age ratings for the Beijing-based video app TikTok. The app, which has been likened to “digital fentanyl” by congressional lawmakers for its addictive qualities as it afflicts users with harmful content, is currently advertised to users 12 and up on the Apple App Store and 13 and up on the Google Play Store. The attorneys general demand that both tech companies change their ratings to 17-plus for “mature” audiences.

TEXAS BILL WOULD BAN SOCIAL MEDIA FOR EVERYONE UNDER 18: A Texas state representative wants to ban everyone under the age of 18 from accessing social media sites like TikTok, Twitter, and Facebook. Republican State House Representative Jared Patterson cited concerns over mental health and self-harm among minors as the motivation behind the proposed bill when introducing it. Patterson's bill comes amid a series of moves by Texas Republicans that aim to scrutinize and reign in the power of certain Big Tech companies.

CYBERSECURITY TOPS NASCIO PRIORITIES FOR 10TH STRAIGHT YEAR: For the 10th consecutive year, cybersecurity and risk management topped state chief information officers’ top priorities, according to the annual list published by the National Association of State CIOs. Digital government services remained in a familiar No. 2 spot, for the fourth straight year, but the rest of NASCIO’s list showed that its members are shuffling their priorities heading into 2023, as concerns about the future of state IT take hold. Workforce issues ranked third, with state CIOs focused on hiring new employees and redefining how government tech jobs are designed.

THE METAVERSE HOLDS BIG OPPORTUNITIES FOR THE PUBLIC SECTOR: State and local government agencies are starting to take notice of the potential benefits of the metaverse—a continuum, representing a spectrum of digitally enhanced worlds and realities—for operations and service delivery. When the Covid-19 pandemic triggered a rapid move to remote work, technologies associated with the metaverse, such as virtual reality, augmented reality, artificial intelligence, blockchain, computer vision, natural language processing, and edge computing, all supported this transformation. Organizations adapted quickly, and practices such as virtual meetings and document sharing became commonplace. The big question now facing state and local governments is what priorities should organizations set as the metaverse begins to transform and expand opportunities for information sharing, learning, and communication?

GOVERNORS

DEMOCRATS ELECTED A BIG CLASS OF YOUNG GOVERNORS: The future of the Democratic Party was formed over the weekend in a New Orleans hotel ballroom. At least that’s what the donors, operatives, and state executives who attended the Democratic Governors Association’s annual winter confab here think. The party last month successfully defended all but one of its incumbents and flipped three open seats, introducing or elevating a new group of chief executives onto the national stage. This midterm class of Democrats is young and diverse, and some of its members are likely to be the next leaders of the party — or make a run at the White House sometime soon, even if it’s not in 2024.

REPUBLICAN GOVERNORS ASSOCIATION NAMES IOWA'S KIM REYNOLDS NEW CHAIR: The Republican Governors Association has elected Iowa Gov. Kim Reynolds to serve as chair and Tennessee Gov. Bill Lee to serve as vice chair for the 2023 cycle, Axios has learned. Reynolds and Lee, who both cruised to re-election in the midterms, will assume control of the organization at a critical moment for the direction of the Republican Party. Both governors were endorsed by former President Trump, whose role as the GOP's de facto leader is being strongly questioned as he launches his 2024 comeback bid.

ONE RISING GOP SENATOR IS TAPPING OUT FOR A GOVERNOR'S RACE: Senators often flirt with running for governor but rarely go through with it. Mike Braun is taking the leap. The Indiana Republican became the first sitting senator in seven years to seek a governorship, giving up a safely red seat for the opportunity to become the chief executive of his state. The decision came with no shortage of drama for Braun, whose term ends in 2024 — the same year as the governor race. Indiana Lt. Gov. Suzanne Crouch also just announced her campaign for governor.

RON DESANTIS: RUNNING FLORIDA OR RUNNING FOR PRESIDENT? When late-season storm Hurricane Nicole followed its predecessor Ian along Florida’s northeastern coast and pummeled the shoreline in early November, Gov. Ron DeSantis wasted no time in springing into action. The two-term governor, who ran up an impressive 20-point reelection victory just days before Nicole hit, won national approval for his attempts to buck mandates from Washington during COVID-19 and especially his efforts to keep schools open. Now, DeSantis is moving with alacrity on a couple of other fronts to position himself further for the national stage, that most political observers believe are leading to his seeking the highest office in the land.

FIVE RACES TO WATCH IN 2023: All eyes might be shifting to the Senate and presidential races in 2024, but there are a host of other contests taking place up and down the ballot in 2023’s off-year elections. In Kentucky, Gov. Andy Beshear (D) is slated to defend the governor’s mansion in the red state, while Democrats will seek to keep the governor’s mansion blue in deep-red Louisiana as incumbent Gov. John Bel Edwards (D) is term-limited. And in Virginia and New Jersey, Republicans and Democrats are set to race for control of the state legislatures. Here are five races to watch in 2023.

ATTORNEYS GENERAL, OTHER STATEWIDE OFFICIALS, & STATE LEGISLATORS

DEMOCRATS MAKE QUIET HISTORY WITH STATE-LEVEL GAINS: Overlooked amid frantic punditry about the "red ripple" in Congress: Democrats quietly won and defended majorities in state legislatures across the country, weakening GOP power on issues at the heart of the national political debate. State legislative races are on pace to be the highlight of the Democratic ballot. If Democrats hold on to Nevada, this will be the first time the party in power hasn't lost a single chamber in a midterms year since 1934, according to the Democratic Legislative Campaign Committee.

PENNSYLVANIA HAS TWO SELF-PROCLAIMED HOUSE MAJORITY LEADERS: The House of Representatives leadership situation at the Capitol in Harrisburg is becoming increasingly awkward. Credentialed members of the press were invited to the Capitol for a swearing in for state Rep. Bryan Cutler (R-Lancaster). The event took place less than a week after state Rep. Joanna McClinton (D-Delaware/Philadelphia) held a similar ceremony to declare herself the House majority leader in Pennsylvania. Cutler — who served as House majority leader for the previous legislative session — and fellow Republicans are challenging McClinton's authority in court and calling for the dismissal of the chamber's chief clerk.

LOCAL OFFICIALS

AUSTIN MAYOR’S RACE: In Austin's mayoral runoff election, Kirk Watson held off a late surge from Celia Israel to narrowly win the race to be the city's next mayor. Watson topped Israel by 886 votes, according to final Travis County, Williamson County and Hays County elections officials. The results are unofficial. Israel has conceded the race to Watson, according to Rich Thuma, her campaign manager, and will not pursue a recount. The term is for two years, not the usual four, after Austin voters approved a change last year to align mayoral elections with presidential elections.