As the Great Recession finally vanished in the rear-view mirror, states realized a return to fiscal stability in 2013. But many states also found 2013 to be a year of living dangerously as they struggled with increased pension debts of their own making and unresolved issues dumped in their laps by the federal government. Forty-three states modestly increased spending and payrolls during the fiscal year, which for all but four states ends June 30, 2014. A report from the National Association of Budget Officers summarized: "In contrast to the dramatic state budget declines during and immediately following the Great Recession, budgets have stabilized and significant fiscal distress continues to subside for most states." But states were stressed on other fronts. When the year began, it was widely assumed that the federal government might act on issues that have long eluded bipartisan agreement, among them immigration, gun control and the minimum wage. The optimism about immigration reform stemmed from the Republican Party's dismal performance among minority voters in the 2012 elections. Reacting to this, GOP senators led by Marco Rubio of Florida joined President Obama in calling for an overhaul of immigration law with a view toward providing a path to citizenship for an estimated 11 million U.S. residents who originally came to this country illegally. Meanwhile, in the wake of the mass shooting at Sandy Hook Elementary School in Newtown, Conn., gun-control advocates hoped that Congress would impose meaningful restrictions on firearms. Neither expectation was realized. Immigration legislation passed the U.S. Senate with bipartisan backing but ran aground in the Republican-controlled House. Opponents of gun control prevailed in both houses of Congress, blocking expansion of background checks on gun-buyers for which polls showed public support. With divided government preventing legislative action in the nation's capital, states were left to fend for themselves. Fend they did, but partisanship carried states in opposite directions. On gun control, some 1,500 bills were introduced in state legislatures, and 109 were enacted. Although New York, Connecticut and Colorado passed significant gun-control legislation, the overall result was disappointing to family members of the 26 children and educators murdered at Sandy Hook Elementary. Two-thirds of the enacted measures actually loosened gun restrictions — or expanded the rights of gun owners. In the wake of Sandy Hook, Obama urged Congress to make access to mental health care "as easy as access to a gun." Here again Congress did nothing, leaving states to fill the vacuum, as they partially did. Thirty-six states increased funding for mental health services. A dozen states passed laws expanding court-ordered treatment for severe mental illness. The Supreme Court has held that immigration is primarily a federal responsibility. States can't grant citizenship or improve border security. But states can and did ease burdens on undocumented immigrants. Eight state passed laws allowing non-citizens to receive driver's licenses or special driving certificates, bringing to 11 the number of states in which undocumenteds can legally drive. Colorado, Minnesota, and Oregon passed laws allowing these immigrants access to in-state college tuition, bringing to 16 the number of states that do so. These actions mark a shift away from state laws that sought to punish or stigmatize illegals. The most draconian was a 2011 Alabama law enacted with the avowed purpose of ridding the state of illegal immigrants. The statute's scariest provision required school children to inform on the immigration status of their parents. Challenged by civil liberties groups, the law bit the dust in 2013. After a federal court struck down the law and the Supreme Court declined to review it, the U.S. Justice Department reached a settlement with Alabama officials that removed seven objectionable provisions. States and local governments also took the initiative on raising the minimum wage, which Obama vainly urged Congress to boost above its current level of $7.25 an hour, set in 2009. Five states — California, New York, New Jersey, Connecticut and Rhode Island — and four local governments raised the minimum wage. Twenty-one states now have a higher floor for wages than the federal government. States were able to make headway precisely because so many of them do NOT have divided government. One party controls the governorship and both houses of the legislature in 37 states. In these states, 23 held by Republicans and 14 by Democrats, the party in power often was able to advance its agenda. This was most evident on social issues. Democratic-controlled legislators in Hawaii and Illinois authorized same-sex marriage, becoming the 15th and 16th states to do so. (New Jersey and Pennsylvania, with Republican governors, joined this list earlier in 2013 because of court decisions.) Arkansas, Michigan, North Dakota, South Dakota and Texas — all with GOP-held legislatures and all but Arkansas with a Republican governor — extended restrictions on abortion. The strictest restrictions are in North Dakota, which bans abortions after six weeks of pregnancy. This ban and many restrictions in other states face legal challenges. State actions on the environmental cause celeb of the year — hydraulic fracturing, or fracking — also followed partisan lines except in Wyoming. Fracking blasts a pressurized cocktail of chemicals and water underground to dislodge gas trapped in rock formations. Energy companies tout the technology as a way to reduce dependency on foreign oil; environmentalists contend that its impact on underground waters make it a public health hazard. The most significant laws to regulate fracking were passed by California and Illinois, both Democratic bastions. But Republican-controlled Wyoming also got into the act, thanks to a GOP governor who appreciates both arguments. Wyoming, which in 2010 became the first state to require identification of chemicals used in fracking, this year imposed regulations to control fracking that the New York Times called among the nation's strongest. "I am not going to accept the question of do you want a clean environment or do you want energy," said Gov. Matthew H. Mead. "The fact is that in Wyoming, we want and need both." On this issue Wyoming is a happy reminder that ideology doesn't explain everything that happens in the states — and Wyoming is not alone. Who, for instance, would have predicted that Oklahoma would provide a national example in early education, considered a key to breaking the cycle of poverty? Influenced by the contributions and contentions of George Kaiser, a Tulsa billionaire and proponent of early education, Oklahoma now provides every 4-year-old a year of high-quality pre-kindergarten. Younger children from disadvantaged homes have access to year-round nursery schools. Sentencing reform is another issue in which ideology increasingly is taking a back seat to policy. The United States, with more than 2 million people behind bars, has 5 percent of the world's population and 25 percent of its prison inmates. Launching a drive last summer to reduce the federal prison population, U.S. Attorney General Eric Holder said, "Too many Americans go to prison for far too long, and for no truly good law-enforcement reason." The Economist, reform minded on prison issues, praised Holder but noted he was echoing the words of Republican Gov. Rick Perry of Texas, who long ago reached a similar conclusion. In 2007 Texas turned its back on a proposal to spend $2 billion on new prison beds and instead put money into alternatives for non-violent prisoners, including drug courts, mental health treatment and probation. Crime decreased. More than a score of states, the majority Republican-controlled, have emulated Texas, as sentencing reform surprisingly became a conservative cause. Several states have replaced mandatory sentences with discretionary sentencing that allows judges to use probation, home arrest or other alternatives to prison. West Virginia in 2013 became the latest to do so with legislation that permits early release of non-violent inmates and the extension of drug court programs to reduce addiction. In contrast, California — in the forefront of change on many issues — has resisted reducing its overcrowded prisons, and is doing so reluctantly under persistent pressure from the federal courts. But California distinguished itself in other ways. Under Gov. Jerry Brown (D), who persuaded voters to approve a tax increase in 2012, the Golden State has achieved financial stability after years of fiscal dysfunction. Covered California, the state's health care exchange set up under Obamacare, has signed up more people for low-cost health insurance than any other state. Illinois, another mega-state with a history of dysfunction, also came through in 2013. In addition to the fracking bill and legalization of same-sex marriage, the Illinois legislature at the behest of Gov. Pat Quinn (D) finally passed a measure that seeks to reduce the state's massive pension debt by cutting cost-of-living increases and phasing in later retirement. What happened this year in the states reaffirms the value of the U.S. system of federalism under which states, to paraphrase Justice Louis Brandeis, serve as laboratories of democracy "and try novel social and economic experiments without risk to the rest of the country." At a time when divided government prevents Washington from functioning effectively, these experiments are particularly essential.
— By Lou Cannon
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