More Stuff to Bore You With
BROADBAND TELE-PRESENCE.
Arizona House Speaker Jim Weiers told how he discovered that the Arizona House was spending $21,000 on answer and call only telephone rental service. CISCO was called in and showed how the House could take control of their problem, purchase their own phone system, and update to new phone technologies for far less cost.
Carolyn Purcell, a Managing Director of CISCO, noted there are one billion people with access to the Internet. Today's young are growing up using these technologies and they are embracing technology changes. One example of how things are changing is how adults spend about equal times using their computers and watching TV whereas many 18 to 24 year old uses computers more extensively and don't even own televisions. Many foreign locations are adapting to more rapid Internet access, and doing so far more quickly than we are. It can happen in America, but there will be costs. One of the challenges to adapting to new technologies will be teaching teachers how to use and teach students how to use these improved technologies.
A telepresence presentation was shown. People in four different cities could see and talk to each other while viewing each with a high definition life size screen of 2 million pixel resolution. This allows people to see body language, which can be important in many business and negotiation settings. This is saving businesses travel costs and staff time traveling when they can meet via telepresence. This can be applied to many state government functions. The meetings can be encrypted for security. Many major universities have telepresence. A telepresence system costs about $15,000 per month.
Telehealth is an important use of these new technologies. Physicians can examine patients at remote locations and health care professional can speak to each other, especially in emergency situations. There are critical care doctors that can evaluate patients using telehealth. The doctor who made this presentation stated her services are free and that not only does insurance not cover it but insurance hasn't even created a billing code for telehealth.
Innovations in technology made different telecommunications for public safety use interoperable. The technology exists to achieve this, as any system with a microphone and speaker can be made to operate with another. The difficulties in achieving this are often those of politics, people being unable to agree, lack of education about how this can be achieved, etc. Many public safety communications are purchased with the mindset that the purchases are meant to last three decades. This no longer is appropriate, as people now change their telecommunications system on average every 18 months. Public safety systems are often outdated and have difficulty communicating with other branches of public safety. The network exists to enable these systems to interoperate.
REAPING THE BENEFITS OF TRADE
Kathy Hill, International Manager for the Iowa Economic Development Department is critical that trade policies are central decisions controlled by the White House whereas public trade promotion is left to states. The result is American trade promotion is a conglomeration of uncoordinated efforts that may confuse foreign companies. Kathy Hill noted that state government trade offices collectively employ over 1,000 more trade professionals than does the U.S. State Department. States have about 200 trade offices throughout the world. States have a vital role in trade. Most state trade professionals are primarily concerned with trade promotion and very relatively little to do with trade agreements. The state professionals help companies, especially small companies that are unable to handle these efforts on their own, engage in promoting their products to foreign purchasers. These professionals also seek products that their companies in their states may wish to purchase.
The U.S. spends $236 million annually on product promotion. Canada and most European countries spend as much as 20 times more than this on promoting their products. The U.S. would need to spend an additional $1.5 billion promoting its products just to reach the worldwide average. This promotion has benefits, as Kathy Hill claimed countries receive $40 for ever $1 spent on product promotion.
John Lichson, Contract Manager for Armor Works, stated his private company has found it difficult to deal with the State Department in promoting his company's products. The attention of the State Department is not focused upon product promotion.
Laki Kondylas, District Manager for the Australian Trade Commission observes how Australia actively promotes free trade with the United States. A trade agreement reached between the US and Australia removed over 50 tariffs. He told how Australia has 19 trade offices throughout the United States as well as 119 locations in 62 countries. His commission provides "coaching" to Australian businesses on how to promote their product and tailor their services to business needs. His office offers Export Marketing Development Grants for export financing. His commission helps in researching how to select markets and create market entry strategies for Australian products. They will attempt to identify buyers and business partners worldwide and seek to identify new export opportunities. Australia's two way business deals total $32.8 billion. U.S. companies are benefiting from this increased trade as Australia is the second largest market for American construction machinery and farm equipment. The U.S. is the major market for Australian foreign investment. A 2005 trade agreement between the U.S. and Australia removed 99% of tariff lines between the two nations. He notes that American interest in developing Australian liquid natural gas, which is important as Australia could supply current world demand for liquid natural gas for 300 years, has fallen apart but that China has agreed to invest in such development.
Patrick Kilbride, Director of Intergovernmental Affairs for the U.S. Trade Representative Office notes that the multinational involvement of the World Trade Organization often makes it hard for the various countries to reach a single agreement. He states there are advantages to states making regional trade agreements that involve fewer countries and thus are easier to obtain mutual agreements. He noted that trade increases our national income by $1 trillion per year. Every state has increased its exports since 2001. He complimented the increasing number of Governors and state legislators who have gone on trade promotion missions
State Rep. Steve Conway (Wa.) noted that Australia's Federal government funds its trade offices and he urged our Federal government to do more to assist state trade promotion efforts.
NAFTA AND “LESSONS LEARNED” ON LABOR AND ENVIRONMENT
Joseph Freedman, a Senior Attorney for the U.S. Environmental Protection Agency, stated that the EPA is concerned that NAFTA does not create "pollution havens", but that a study indicates there has not been any pollution havens created. He told how the WTO did uphold a ban on asbestos products yet dolphin free tuna and shrimp-turtle concerns in trade have been a problem. He also observed that the Federal government works to see that no state laws can be challenged by NAFTA agreements. A problem is any private investor may file for damages and that often these suits seek to leverage negotiations with the government in which the dispute exists.
These are several pending cases that may have major impacts on laws. One is a mining company that seeks to develop within a mile of sacred Native American ground. He stated he believes NAFTA can positively engage more citizen activism on environmental issues and increase government accountability on environmental matters.
Albert Louie of the Ontario Ministry of Economic Development and Trade is critical of trade with China. Chinese production operates with little regard to environmental standards and protects piracy of goods as good for their own economy without regard for the economies of other countries. He stated that Ontario is the most trade intensive Canadian province. One fourth of Ontario jobs depend upon trade. He noted there is much two way trade and that many products are partially made in both the U.S. and Canada before a final product is produced.
There are many disputes over environmental issues, Mr. Louie stated, because there are many new inventions that did not exist a few years ago and environmental standards are often new and volatile.
Mark Shuman, Nevada State Coordinator for the International Brotherhood of Teamsters, stated that NAFTA has lowered standards for workers and for the environment. He noted that supporters of NAFTA claimed it would produce 170,000 new jobs but instead the U.S. has lost three million manufacturing jobs. 1 in 6 high wage manufacturing jobs have been replaced by jobs that pay 25% or less than the jobs they replaced. He noted NAFTA has created problems for Mexico as well as subsidized U.S. agricultural products caused the loss of 1.5 million Mexican farm jobs and helped push the minimum wage in Mexico which is earned by a quarter of Mexican workers to be reduced by 20%. This has been a major reason why Mexican emigration to the U.S. increased by 60% as well as there being a sharp increase in illegal immigration. NAFTA also is hurting union organizing within the U.S. and that 90% of threats of plant closings and moving to another country occur during union organizing campaigns.
NAFTA AND THE SECURITY AND PROSPERITY PARTNERSHIP
The Security and Prosperity Partnership of North America is an agreement reached in 2005 between the US, Canada, and Mexico to coordinate policies on technology, energy, intellectual property, regulatory cooperation, and pandemic flu responses. This agreement seeks to encourage greater free trade between these countries.
Brigit Matthiesen, a Commercial Officer for the Canadian Embassy, notes that many auto parts and electronics enterprises involve both U.S. and Canadian manufacturing before a finished product results. The threat of terrorism has increased business security concerns. Border compliance costs are increased, and she warned that this should not allow the gains of NAFTA to be eroded. She urged for progress on North American trade to continue, noting the increased competition coming from China, which is securing trade agreements with its neighbors.
State Sen. Randy Brogdon (Ok.) warned that NAFTA is a threat to American sovereignty and freedom. This violates the U.S. Constitution as Congress has never approved the Security and Prosperity Partnership agreement. He believes NAFTA may lead to a common North
American currency and to to the creation of a superhighway through the U.S. that will not be subject to American highway patrol but will ultimately give China unfettered access to U.S. highways.
Dale Furnish, Professor Emeritus at Arizona State University College of Law, argued that NAFTA does not affect U.S. sovereignty. He stated Mexico is experiencing rapid economic growth due to NAFTA. Further, he argued that Mexico, through exposure from NAFTA, is moving towards greater democracy. He believes the reason why there are increasingly more disputes is because the closer countries become, their increased interactions create more reasons to raise arguments. He stated Mexicans are becoming more interested in American law and predicted that American law school will soon operate in Mexico for Mexicans seeking to practice law in the U.S.
GOVERNMENT ACCOUNTING STANDARDS BOARD: PAST, PRESENT, AND FUTURE
Robert Attmore, Chairman of the Government Accounting Standards Board (GASB), observes that unfunded post-employment benefits for state and local government employees may be $1 trillion. There is movement within the Government Finance Officers Association to have the Financial Accounting Standards Board standards be used instead of GASB standards He noted that the needs for accounting information does differ significantly between private sector companies as opposed to state and local governments. Private sector business decisions can be made instantaneously by a business leader yet government decisions require government operations to approve such decisions. Private sector operational decisions seek to make a profit while business operational decisions seek to provide public goods. He rejects the argument that the same accounting principles should apply. The GASB has recommendations for voluntary performance results to be conducted by state government audits, yet he believes each state needs to create its own standards.
Jeffrey Esser, Executive Director of the Government Finance Officers Association, noted the Securities and Exchange Commission wishes to increase regulations of the municipal bond market. He observed that this is a market with a very low default rate of 0.5%.
TEACHERS PENSIONS: UNFUNDED LIABILITY STRAINS STATE BUDGETS
Ron Snell, a Director with NCSL, observed that while there are claims that state and teacher pension funds face major difficulties, these worries are wrong. Except for a few states, such as Illinois, West Virginia, Oklahoma, and a few other pension funds, most public employee pension funds are in solid positions. Teacher pension funds on average are funded at about 85% of ultimate liability, which is good as these liabilities will be paid out over time. He noted that Governors and state legislatures generally have reacted quickly when pension funds developed problems and resolved any difficulties. There has been a trend against increasing pension benefits and increasing contribution rates when needed. Kansas passed a law requiring both employers and employees to make same rate contributions into public employee pension funds.
Michael Rubenstein, a Principal Policy Analyst for the Maryland General Assembly, noted that Maryland's state pension system fell from being 101% funded in 2000 to 76% funded in 2007. Maryland suffered from weak investment returns, pension benefit increases, and actuarial changes that had unforeseen consequences. Maryland's pension system is recovering with a 17.6% return last year compared to a 9.4% loss in 2001. Maryland passed a law that requires employer contribution rates to increase if the fund falls from one year to the next. The fund is now designed to become fully funded.
David Bohyer, Director of the Montana Legislative Office of Research and Policy Analysis, told how Montana had a problem of unfunded liability for teacher pensions. They increased employer contribution rates and are now at 80% funded ratio.
GENDER-SPECIFIC MEDICINE
Marianne Legato, Professor of Clinical Medicine at Columbia University, told how our genes, hormones, and environment determine who we are. Men and women have different organs, brains, and tissue and men and women in general have different responses to health difficulties. At all ages, men die more frequently than do women. Women, on average, live about seven years longer than men. Murder as well as suicide are the most common causes of male deaths through age 40 whereupon heart disease becomes the main cause of death. In older men, cancer replaces heart disease as the leading cause of death.
Researchers are only recently discovering that men and women have different health responses. This is because after learning of the atrocities of Nazi health experiments, there was a general agreement that women and prisoners needed to be protected from medical experiments. Most medical research before 1990 was conducted only on men.
Males on average are six weeks developmentally behind women at birth. This makes male babies more susceptible to infections and respiratory problems. Males have a 23% higher infant mortality rate than females.
Male brains have evolved to mark and defend territory. Men are more capable at understanding spatial relationships, are better able to suppress pain, and have less of a memory of unpleasant experiences. This is probably related to the history that men were the hunters of food.
Men focus more on a specific goal at a time whereas women are better at multitasking. Men are harder to distract. Sports are seen as a substitute for war, and men's testosterone levels increase when their team wins a game they watch and decreases when their team loses.
Men are more vulnerable to violent death by homicide, suicide, or accident. Men are more prone to infectious diseases, most of which are obtained through sex.
Adolescent males tend to have brains that are less capable of controlling their behavior and emotions. Men tend to develop symptoms of coronary heart disease 15 years before women. Men with coronary heart disease tend to die by age 65. She recommended that research examine the toll on men that work causes. Men tend to seek power and salary at work and are more driven and more prone to heart diseases. Women tend to engage in teamwork. Women who are unmarried and work at jobs they love tend to have the longest lives.
Sports damages men. 85% of sudden cardiac death occurs while playing sports. Concussions are often underestimated. A second concussion can be fatal. Anabolic steroids are very harmful to the body.
Men tend to work in dangerous jobs, such as firefighters (where long periods of inactivity are interrupted by intense demands that strain the heart), police (where stress leads to cancer and high risks of alcoholism and suicide), construction workers (who have high risks of accidents and fatalities), and merchant seamen (who work away from access to medial care.)
Men's testosterone lowers 1% per year after age 30, and men over age 40 are more apt to have children with schizophrenia and developmental difficulties. Over age 30, men tend to increase fat mass which can lead to depression and irritability.
As women share more experiences with men, serving in the military, becoming business leaders, etc., female and male brains tend to become more similar.
STEERING COMMITTEE OF THE STANDING COMMITTEES
There was a recommendation that NCSL consider changing the threshold for placing a resolution on the debate calendar instead of the consent calendar. At present, one negative vote on a committee automatically places a resolution on the debate calendar. It was suggested that more negative votes be needed in order to move a resolution to the debate calendar.
A Task Force is being created to examine the committee structure. Six years ago two sets of committees where merged into one set. Four years ago the number of standing committees was reduced to 11. Some believe there are some further changed requir
GENERAL SESSION
U.S. Transportation Secretary Mary Peters reports that our transportation infrastructure is aging and becoming increasingly congested. These two problems are making the other more difficult. The time spent in congested increasing travel on routes that are becoming more difficult on which to travel is taking away time that could otherwise have boosted our national productivity as well as the amount of time that families can spend together.
According to the Road Information Program, 26% of major urban and suburban roads are burdened with substandard pavement. These bad roads are costing an average vehicle owner using these roads an additional $383 per year in vehicle maintenance costs. This study projects that it would annually cost $15.6 billion to maintain these roads in their current substandard state and that it would annually cost $19.3 billion to improve these roads. At present, $11.2 billion a year is spent on such roads. Secretary Peters believes that the means to improve roads will require greater public sector involvement.
Secretary Peters warned that congestion in all modes of transportation is harming local economies. She called upon bold new ideas to resolve today's transportation difficulties, and stated that many solutions may be found in new public-private partnerships. She believes many new ideas will emerge from state governments and she stated that revolutionary new ideas should be found. The Bush Administration wants states to leverage their transportation funds with private investments.
Secretary Peters told of some difficulties of too much Federal involvement in transportation decisions. She noted that Congressional earmarks, while some provide benefits, may not be the priorities of state governments. Sometimes earmarked funds go to non-transportation items, which she believes is wrong. In addition, millions of Federal transportation funds that could be useful sit unspent because state governments are unable to come up with their share of funds for the projects to move forward. She believes transportation decisions should be made more at local and state levels where decision makers are more aware of what is best for their locations.
Secretary Peters warned that the Highway Trust Fund faces a $4.3 billion shortfall in 2009. This will delay projects and make current transportation problems worse. She noted that many other countries rely on private funds for their transportation systems, even Russia. She notes a California expressway has been constructed with private capital and will use electronic tolls. She called for the increased use of tolls and noted that a pilot program offers to allow the tolling of interstate highways. She claimed that public support for tolling is increasing.
THE PROMISES AND PITFALLS OF INCENTIVE STRATEGIES
State Rep. Phillip Frye (N.C.) noted that state governments are engaged in bidding wars against each other in providing financial incentives to get companies to locate in their states. He stated as long as other states offer incentives, he will support North Carolina offering incentives. Yet, he warns this is destructive behavior that is costing all states funds. Instead, these funds could be better spent on employee training and other areas that could help citizens while also making the state more attractive to employers. If all states would cease offering incentives, these funds would be saved and all states could compete on a more level playing field.
State Rep. Pryor Gibson (N.C.) noted that North Carolina spend $300 million on incentives to lure businesses to locate in North Carolina. This is being done over strong opposition from existing businesses who find it unfair that possible competitors receive assistance that never existed for them. They would prefer that these funds for other purposes that could benefit all employers, such as creating a better skilled workforce.
Joanna Morfessis, President of IO.INC consultants stated that incentives are highly important, especially as states are not only competing with each other but with foreign countries. Ireland offers strong rewards for business locations, Dubai is investing heavily in new business projects and seeks to become the world's next major financial center, Viet Nam is emerging as a major center for new manufacturing, and China, India and Mexico are among the top nations in attracting new businesses. She told of the emergence of the profession of "buffalo hunters", who are professionals skilled at getting incentives for businesses from state governments in return for a percentage of the incentives. She stated businesses most often seek talented people to hire as a prime reason for where businesses choose to locate. The amenities of the location are important, as business leaders wish to locate where there are good schools and a good quality of life. She encourages legislators to invest in education as education is a leading factor in determining where businesses seek to locate.
Kate Wade, Program Evaluation Director for the Wisconsin Legislative Audit Bureau, stated her bureau found there are 152 programs that have economic development as a primary concern in eight state agencies. This is confusing to businesses as they are often uncertain of the value to them of the different programs. There is much repetition among these programs. Much economic development assistance to businesses comes from state universities.
THE ECONOMIC OUTLOOK
Jim Rounds, Senior Economist for Elliot D. Pollack and Company warns that our weakened economy has become more vulnerable to business downturns which could be triggered by such events as higher energy prices and major decreases in homes purchases. Consumer spending has slow from previous levels. He predicted that we are on the verge of a recession and that this recession is unavoidable. He forecasts a 2008 recession that will get worse in 2009. He noted there has been a decrease in the growth of gross domestic product, that consumer debt is too high, mortgages are in overall crises as adjustable rate mortgages are slowing economic growth, oil prices are rising and he warns that could reach $4 per gallon for consumers, the dollar has weakened, that the Federal Reserve Bank has little room to react, home purchases are down and housing prices are falling, and employment has been weakly expanding compared to previous years. On the positive side, business profits are strong and business investments are increasing even though the consumer side of the economy is doing poorly. Still, consumers are expressing confidence in the economy which shows the public psychologically believes the economy is strong even if the data indicates otherwise. For state governments, the likely recession means that sales tax collections will be weak. He warned that tax increases will be unavoidable for many states.
FEDERAL UPDATE
Michael Bird, Senior Federal Affairs Counsel for NCSL, stated that the SCHIP bills in Congress are attempting to provide $35 billion more over five years to allow three million more children into the program and to include dental insurance. The bills will cap maximum eligibility at 250% of the poverty level, thus denying requests of states to offer benefits to people with higher incomes. In addition, no adults other than pregnant women will be allowed to be covered and any state that has an adult covered will have one year to remove them. SCHIP is caught up in partisan infighting over PAYGO and offsetting the increase spending with tobacco tax funds. SCHIP is continuing to be funded at current levels until Congress agrees on a final new level. Meanwhile, 15 states are on the verge of exhausting their SCHIP funds. Congress is battling over citizenship documentation for SCIP. Michael Bird notes that the parties are not far apart but that recent attempts to create a final agreement have failed miserably.
There are 12 appropriation bills that Congress considers. Only the Defense bill has been signed. Bush is threatening to veto nine of the bills in the form that Congress appears to be creating them. He notes that financially the parties are not far apart, as the disagreements of a $2.8 trillion budget are over $22 million in proposed funding. This has turned into a mostly symbolic struggle.
Michael Bird warns that states should expect mostly level funds from the Federal government. States will be required to develop compliance plans for adopting Real ID by May 11, 2008 after regulations are issued in February, 2008. Transportation funds to states will likely be not much more than states received in 2007. States will be required to maintain funding of higher education funding under penalty of losing education funds. Michael Bird wants that the Federal government will be expecting state governments to pick up more of the overall funding slack.
DYNAMIC FORECASTING
Dynamic forecasting attempts to analyze anticipated changes in revenues due to changes in tax policies by considering how the tax changes may impact other factors in revenue collections and how these totals may change over time. Hans Olafsson, Chief Economist for the Arizona Joint Legislative Budget Committee, explained how dynamic revenue forecasting consider how tax policies affect business and consumer behavior that may present a more realistic forecast of how tax policies will affect state revenues. Most other states use static revenue estimates that assume that percent changes will lead to direct percent changes in existing numbers. Hans Olafsson noted it is important to understand has tax policies operate as public behavior often works counter to what the policy sought. Dynamic forecasting also considers that these patterns will change over time. Massachusetts built the first dynamic forecasting model in the early 1990s. They are now used in about half of all states. They cost about $100,000 to $300,000 to construct, require updating data, and need personnel who know how to operate and understand the models. Some states have been stuck when with unusable models when key personnel left. It also needs to be understood the forecasts are not an exact science.
Ben Page of the Congressional Budget Office told how Congress uses dynamic forecasting. He stated the best results occur when they consider specific policies, but that they can be used in analyzing multiple policy changes such as the entire proposed Presidential budget.
INFRASTRUCTURE FINANCING
Jack Basso, Chief Operating Officer of the American Association of State Highway and Transportation Officials predicts that our highest needs will require over $189 billion expenditures in 2015. It may be necessary to increase gas taxes to achieve this. If there is no action, the trust fund will have to be reduced by $16 billion in 2009. He stated that revenues for transportation are the Aviation Trust Fund (which is 90% supported by aviation users), the Highway Trust Fund (where all highway funds are from users and transit from 80% Federal General Funds), and Homeland Security funds. All these areas are experiencing shortfalls for needed investments. Budget constrains makes it difficult for more funds to come from the General Fund. He stated there is movement to look at "out of the box" funding concepts such as state infrastructure banks, national infrastructure banks, Federal bonds, and public-private partnerships. More revenues may be required from a range of proposals from higher motor fuel taxes, excise taxes, vehicle user fees, tolling, impact fees, tax credit bonds, distance based fees, and non-transportation taxes. He stated he believes that Highway Trust Fund is still viable even though its purchasing power has been eroded. The Fund is headed towards a deficit in 2009 and a correction is necessary to prevent this, or else several highway commitments will need to be withdrawn. He believes vision is what is most lacking and noted that two Commissions are studying these issues.
Steve Brown, Executive Director of the Environmental Council of the States, notes that states are receiving the same environmental funding levels as last year even though there are 200 new environmental rules that need to be followed. This is increasing workloads at the same time financial support for environmental operations is declining. He noted water, drinking and waste, is an important concern and that $1 trillion in operating and maintaining water systems will be required over the next two decades. He also noted that construction costs are rising above what has already been approved. There are not enough funds for these projects although private activity bonds could help meet this shortfall.
RAIL SECURITY
Our passenger rail system is very vulnerable to a terrorist attack. The rail industry appears prepared for hazardous materials security risks but lacks plans for several other types of emergency situations. The Government Accountability Office (GAO) recommends the industry develop security plans. Chris Ferencik, a Senior Analyst with the GAO, stated his office is conducting a review of rail security. They seek the input of state government leaders and state legislators on their concerns of rail freight security, from possible terrorist targets to emergency responses to derailments and hazardous material spills. Since these rails are privately owned, government is generally uninvolved in rail security issues until there is an emergency. Three states have expressed concerns about these issues and have proposed within their state legislators that rail freight Tennessee, Texas, and New York go around and avoid urban areas. None of these bills have passed. There have also been security recommendations that rail freight should be directed away from Washington, D.C., Philadelphia, and Chicago.
THE 21ST CENTURY BELONGS TO CHINA
Ted Fishman, an author, noted that when American public officials visit China it often is Governors, state officials, and state legislators. He notes that what happens in China often impacts state and local governments. What happens in China at least indirectly affects much state legislation. He also noted recent news items of China refusing to allow American warships seeking shelter from storms to dock in China. While our government is complaining about this refusal to follow international sea laws, he notes that from the Chinese perspective, they are upset at us for forcing a Chinese plane to land which killed their pilot, for the bombing of one of the embassies, and for our continuing to supply arms to Taiwan.
China is an emerging world power. The margin of error in China's estimate of their population is larger than our total population. Europe, which has a trade surplus, has a $252 million trade deficit with China. The intermodal freight movement of Chinese goods within the U.S. is a rapidly growing American industry. The U.S. conducts $300 billion of business with China.
Chinese cities are rapidly growing who two cities reaching 17 million people and many cities of over a million people found throughout the country. The movement of Chinese rural residents to cities has been the largest migration in world history. Chinese farms are small sub-acre family farms such that Chinese agricultural areas more resemble our suburbs. There is no homeless problem in China as there are jobs for these urban dwellers. Considering that the Chinese government owned everything just 13 years ago, the emergence of 85 million Chinese businesses is the largest entrepreneurial boom in world history. China has seen amazing growth from a country that had more people die from internal turmoil during the 20th century than died in both world wars.
Ted Fishman notes that 80% of Chinese market goods are locally made. What this means is the world is seeing only a small portion of China's economic might. If these local economic goods were to move to foreign trade, they would swamp the world markets.
A problem that China has is their education is moving backwards. Illiteracy is growing. China triages its educational system and concentrate on its brightest students. China has the world's largest university system that graduates ten times more scientists and engineers than American colleges produce. In addition, 720 American universities have meaningful ties to China which is providing China with low cost technology transfers.
A big problem with China is that its government is a one party brutal totalitarian government. Its government leaders are corrupt and have enriched themselves and their families. The average wage in China is 65 cents an hour which, in constant dollar terms, means that American slaves in the 1850s earned five times more than the modern Chinese employee.
IMPLEMENTATION OF REAL ID
Richard Barth, Assistant Secretary of Homeland Security, stated he believes we need to move to real ID drivers licenses for security reasons. He noted two states do not have residency requirements in order to get a drivers license and noted another state issues a drivers license that could be obtained at age 16 that would be good until age 65. He spoke to dispel myths about real ID. He stated that real ID will not prevent people from buying guns, despite rumors otherwise. He stated even a U.S. Senator incorrectly believed that real ID information would be shared with the United Nations. He further dispelled rumors that real ID will have chips that will monitor one's every movement, but did explain that real IDs with chips will be available for people who wish them to be used for express lines for frequent travelers across common borders. He stated rumors that the Federal government could access real ID information at any time, stating that their access would be the same as it is now as in cases where criminal fraud of obtaining a license is suspected. He also argued that identity theft annually is an $18 billion problem and that real ID will help fight this problem.
BUSINESS MEETING
40 states were present. Rep. Carole Rubley represented Pennsylvania. A motion to move a resolution on broadband communications was moved from the consent calendar to the debate calendar at the request of three states. State Rep. Bob Hasegawa (Wa.) argued that deregulation broadband could be abused by communications companies. Several argued in favor of the resolution in favor of deregulating and preserving state jurisdictions of broadband services, including State Rep. Donna Stone (De.), NCSL President. A divided voice vote was taken yet it was clear that more than two-thirds were voting affirmatively and the resolution passed.
An action calendar on Real ID urging the Federal government to repair, fund, or repeal Real ID passed by unanimous voice vote.
Arizona House Speaker Jim Weiers told how he discovered that the Arizona House was spending $21,000 on answer and call only telephone rental service. CISCO was called in and showed how the House could take control of their problem, purchase their own phone system, and update to new phone technologies for far less cost.
Carolyn Purcell, a Managing Director of CISCO, noted there are one billion people with access to the Internet. Today's young are growing up using these technologies and they are embracing technology changes. One example of how things are changing is how adults spend about equal times using their computers and watching TV whereas many 18 to 24 year old uses computers more extensively and don't even own televisions. Many foreign locations are adapting to more rapid Internet access, and doing so far more quickly than we are. It can happen in America, but there will be costs. One of the challenges to adapting to new technologies will be teaching teachers how to use and teach students how to use these improved technologies.
A telepresence presentation was shown. People in four different cities could see and talk to each other while viewing each with a high definition life size screen of 2 million pixel resolution. This allows people to see body language, which can be important in many business and negotiation settings. This is saving businesses travel costs and staff time traveling when they can meet via telepresence. This can be applied to many state government functions. The meetings can be encrypted for security. Many major universities have telepresence. A telepresence system costs about $15,000 per month.
Telehealth is an important use of these new technologies. Physicians can examine patients at remote locations and health care professional can speak to each other, especially in emergency situations. There are critical care doctors that can evaluate patients using telehealth. The doctor who made this presentation stated her services are free and that not only does insurance not cover it but insurance hasn't even created a billing code for telehealth.
Innovations in technology made different telecommunications for public safety use interoperable. The technology exists to achieve this, as any system with a microphone and speaker can be made to operate with another. The difficulties in achieving this are often those of politics, people being unable to agree, lack of education about how this can be achieved, etc. Many public safety communications are purchased with the mindset that the purchases are meant to last three decades. This no longer is appropriate, as people now change their telecommunications system on average every 18 months. Public safety systems are often outdated and have difficulty communicating with other branches of public safety. The network exists to enable these systems to interoperate.
REAPING THE BENEFITS OF TRADE
Kathy Hill, International Manager for the Iowa Economic Development Department is critical that trade policies are central decisions controlled by the White House whereas public trade promotion is left to states. The result is American trade promotion is a conglomeration of uncoordinated efforts that may confuse foreign companies. Kathy Hill noted that state government trade offices collectively employ over 1,000 more trade professionals than does the U.S. State Department. States have about 200 trade offices throughout the world. States have a vital role in trade. Most state trade professionals are primarily concerned with trade promotion and very relatively little to do with trade agreements. The state professionals help companies, especially small companies that are unable to handle these efforts on their own, engage in promoting their products to foreign purchasers. These professionals also seek products that their companies in their states may wish to purchase.
The U.S. spends $236 million annually on product promotion. Canada and most European countries spend as much as 20 times more than this on promoting their products. The U.S. would need to spend an additional $1.5 billion promoting its products just to reach the worldwide average. This promotion has benefits, as Kathy Hill claimed countries receive $40 for ever $1 spent on product promotion.
John Lichson, Contract Manager for Armor Works, stated his private company has found it difficult to deal with the State Department in promoting his company's products. The attention of the State Department is not focused upon product promotion.
Laki Kondylas, District Manager for the Australian Trade Commission observes how Australia actively promotes free trade with the United States. A trade agreement reached between the US and Australia removed over 50 tariffs. He told how Australia has 19 trade offices throughout the United States as well as 119 locations in 62 countries. His commission provides "coaching" to Australian businesses on how to promote their product and tailor their services to business needs. His office offers Export Marketing Development Grants for export financing. His commission helps in researching how to select markets and create market entry strategies for Australian products. They will attempt to identify buyers and business partners worldwide and seek to identify new export opportunities. Australia's two way business deals total $32.8 billion. U.S. companies are benefiting from this increased trade as Australia is the second largest market for American construction machinery and farm equipment. The U.S. is the major market for Australian foreign investment. A 2005 trade agreement between the U.S. and Australia removed 99% of tariff lines between the two nations. He notes that American interest in developing Australian liquid natural gas, which is important as Australia could supply current world demand for liquid natural gas for 300 years, has fallen apart but that China has agreed to invest in such development.
Patrick Kilbride, Director of Intergovernmental Affairs for the U.S. Trade Representative Office notes that the multinational involvement of the World Trade Organization often makes it hard for the various countries to reach a single agreement. He states there are advantages to states making regional trade agreements that involve fewer countries and thus are easier to obtain mutual agreements. He noted that trade increases our national income by $1 trillion per year. Every state has increased its exports since 2001. He complimented the increasing number of Governors and state legislators who have gone on trade promotion missions
State Rep. Steve Conway (Wa.) noted that Australia's Federal government funds its trade offices and he urged our Federal government to do more to assist state trade promotion efforts.
NAFTA AND “LESSONS LEARNED” ON LABOR AND ENVIRONMENT
Joseph Freedman, a Senior Attorney for the U.S. Environmental Protection Agency, stated that the EPA is concerned that NAFTA does not create "pollution havens", but that a study indicates there has not been any pollution havens created. He told how the WTO did uphold a ban on asbestos products yet dolphin free tuna and shrimp-turtle concerns in trade have been a problem. He also observed that the Federal government works to see that no state laws can be challenged by NAFTA agreements. A problem is any private investor may file for damages and that often these suits seek to leverage negotiations with the government in which the dispute exists.
These are several pending cases that may have major impacts on laws. One is a mining company that seeks to develop within a mile of sacred Native American ground. He stated he believes NAFTA can positively engage more citizen activism on environmental issues and increase government accountability on environmental matters.
Albert Louie of the Ontario Ministry of Economic Development and Trade is critical of trade with China. Chinese production operates with little regard to environmental standards and protects piracy of goods as good for their own economy without regard for the economies of other countries. He stated that Ontario is the most trade intensive Canadian province. One fourth of Ontario jobs depend upon trade. He noted there is much two way trade and that many products are partially made in both the U.S. and Canada before a final product is produced.
There are many disputes over environmental issues, Mr. Louie stated, because there are many new inventions that did not exist a few years ago and environmental standards are often new and volatile.
Mark Shuman, Nevada State Coordinator for the International Brotherhood of Teamsters, stated that NAFTA has lowered standards for workers and for the environment. He noted that supporters of NAFTA claimed it would produce 170,000 new jobs but instead the U.S. has lost three million manufacturing jobs. 1 in 6 high wage manufacturing jobs have been replaced by jobs that pay 25% or less than the jobs they replaced. He noted NAFTA has created problems for Mexico as well as subsidized U.S. agricultural products caused the loss of 1.5 million Mexican farm jobs and helped push the minimum wage in Mexico which is earned by a quarter of Mexican workers to be reduced by 20%. This has been a major reason why Mexican emigration to the U.S. increased by 60% as well as there being a sharp increase in illegal immigration. NAFTA also is hurting union organizing within the U.S. and that 90% of threats of plant closings and moving to another country occur during union organizing campaigns.
NAFTA AND THE SECURITY AND PROSPERITY PARTNERSHIP
The Security and Prosperity Partnership of North America is an agreement reached in 2005 between the US, Canada, and Mexico to coordinate policies on technology, energy, intellectual property, regulatory cooperation, and pandemic flu responses. This agreement seeks to encourage greater free trade between these countries.
Brigit Matthiesen, a Commercial Officer for the Canadian Embassy, notes that many auto parts and electronics enterprises involve both U.S. and Canadian manufacturing before a finished product results. The threat of terrorism has increased business security concerns. Border compliance costs are increased, and she warned that this should not allow the gains of NAFTA to be eroded. She urged for progress on North American trade to continue, noting the increased competition coming from China, which is securing trade agreements with its neighbors.
State Sen. Randy Brogdon (Ok.) warned that NAFTA is a threat to American sovereignty and freedom. This violates the U.S. Constitution as Congress has never approved the Security and Prosperity Partnership agreement. He believes NAFTA may lead to a common North
American currency and to to the creation of a superhighway through the U.S. that will not be subject to American highway patrol but will ultimately give China unfettered access to U.S. highways.
Dale Furnish, Professor Emeritus at Arizona State University College of Law, argued that NAFTA does not affect U.S. sovereignty. He stated Mexico is experiencing rapid economic growth due to NAFTA. Further, he argued that Mexico, through exposure from NAFTA, is moving towards greater democracy. He believes the reason why there are increasingly more disputes is because the closer countries become, their increased interactions create more reasons to raise arguments. He stated Mexicans are becoming more interested in American law and predicted that American law school will soon operate in Mexico for Mexicans seeking to practice law in the U.S.
GOVERNMENT ACCOUNTING STANDARDS BOARD: PAST, PRESENT, AND FUTURE
Robert Attmore, Chairman of the Government Accounting Standards Board (GASB), observes that unfunded post-employment benefits for state and local government employees may be $1 trillion. There is movement within the Government Finance Officers Association to have the Financial Accounting Standards Board standards be used instead of GASB standards He noted that the needs for accounting information does differ significantly between private sector companies as opposed to state and local governments. Private sector business decisions can be made instantaneously by a business leader yet government decisions require government operations to approve such decisions. Private sector operational decisions seek to make a profit while business operational decisions seek to provide public goods. He rejects the argument that the same accounting principles should apply. The GASB has recommendations for voluntary performance results to be conducted by state government audits, yet he believes each state needs to create its own standards.
Jeffrey Esser, Executive Director of the Government Finance Officers Association, noted the Securities and Exchange Commission wishes to increase regulations of the municipal bond market. He observed that this is a market with a very low default rate of 0.5%.
TEACHERS PENSIONS: UNFUNDED LIABILITY STRAINS STATE BUDGETS
Ron Snell, a Director with NCSL, observed that while there are claims that state and teacher pension funds face major difficulties, these worries are wrong. Except for a few states, such as Illinois, West Virginia, Oklahoma, and a few other pension funds, most public employee pension funds are in solid positions. Teacher pension funds on average are funded at about 85% of ultimate liability, which is good as these liabilities will be paid out over time. He noted that Governors and state legislatures generally have reacted quickly when pension funds developed problems and resolved any difficulties. There has been a trend against increasing pension benefits and increasing contribution rates when needed. Kansas passed a law requiring both employers and employees to make same rate contributions into public employee pension funds.
Michael Rubenstein, a Principal Policy Analyst for the Maryland General Assembly, noted that Maryland's state pension system fell from being 101% funded in 2000 to 76% funded in 2007. Maryland suffered from weak investment returns, pension benefit increases, and actuarial changes that had unforeseen consequences. Maryland's pension system is recovering with a 17.6% return last year compared to a 9.4% loss in 2001. Maryland passed a law that requires employer contribution rates to increase if the fund falls from one year to the next. The fund is now designed to become fully funded.
David Bohyer, Director of the Montana Legislative Office of Research and Policy Analysis, told how Montana had a problem of unfunded liability for teacher pensions. They increased employer contribution rates and are now at 80% funded ratio.
GENDER-SPECIFIC MEDICINE
Marianne Legato, Professor of Clinical Medicine at Columbia University, told how our genes, hormones, and environment determine who we are. Men and women have different organs, brains, and tissue and men and women in general have different responses to health difficulties. At all ages, men die more frequently than do women. Women, on average, live about seven years longer than men. Murder as well as suicide are the most common causes of male deaths through age 40 whereupon heart disease becomes the main cause of death. In older men, cancer replaces heart disease as the leading cause of death.
Researchers are only recently discovering that men and women have different health responses. This is because after learning of the atrocities of Nazi health experiments, there was a general agreement that women and prisoners needed to be protected from medical experiments. Most medical research before 1990 was conducted only on men.
Males on average are six weeks developmentally behind women at birth. This makes male babies more susceptible to infections and respiratory problems. Males have a 23% higher infant mortality rate than females.
Male brains have evolved to mark and defend territory. Men are more capable at understanding spatial relationships, are better able to suppress pain, and have less of a memory of unpleasant experiences. This is probably related to the history that men were the hunters of food.
Men focus more on a specific goal at a time whereas women are better at multitasking. Men are harder to distract. Sports are seen as a substitute for war, and men's testosterone levels increase when their team wins a game they watch and decreases when their team loses.
Men are more vulnerable to violent death by homicide, suicide, or accident. Men are more prone to infectious diseases, most of which are obtained through sex.
Adolescent males tend to have brains that are less capable of controlling their behavior and emotions. Men tend to develop symptoms of coronary heart disease 15 years before women. Men with coronary heart disease tend to die by age 65. She recommended that research examine the toll on men that work causes. Men tend to seek power and salary at work and are more driven and more prone to heart diseases. Women tend to engage in teamwork. Women who are unmarried and work at jobs they love tend to have the longest lives.
Sports damages men. 85% of sudden cardiac death occurs while playing sports. Concussions are often underestimated. A second concussion can be fatal. Anabolic steroids are very harmful to the body.
Men tend to work in dangerous jobs, such as firefighters (where long periods of inactivity are interrupted by intense demands that strain the heart), police (where stress leads to cancer and high risks of alcoholism and suicide), construction workers (who have high risks of accidents and fatalities), and merchant seamen (who work away from access to medial care.)
Men's testosterone lowers 1% per year after age 30, and men over age 40 are more apt to have children with schizophrenia and developmental difficulties. Over age 30, men tend to increase fat mass which can lead to depression and irritability.
As women share more experiences with men, serving in the military, becoming business leaders, etc., female and male brains tend to become more similar.
STEERING COMMITTEE OF THE STANDING COMMITTEES
There was a recommendation that NCSL consider changing the threshold for placing a resolution on the debate calendar instead of the consent calendar. At present, one negative vote on a committee automatically places a resolution on the debate calendar. It was suggested that more negative votes be needed in order to move a resolution to the debate calendar.
A Task Force is being created to examine the committee structure. Six years ago two sets of committees where merged into one set. Four years ago the number of standing committees was reduced to 11. Some believe there are some further changed requir
GENERAL SESSION
U.S. Transportation Secretary Mary Peters reports that our transportation infrastructure is aging and becoming increasingly congested. These two problems are making the other more difficult. The time spent in congested increasing travel on routes that are becoming more difficult on which to travel is taking away time that could otherwise have boosted our national productivity as well as the amount of time that families can spend together.
According to the Road Information Program, 26% of major urban and suburban roads are burdened with substandard pavement. These bad roads are costing an average vehicle owner using these roads an additional $383 per year in vehicle maintenance costs. This study projects that it would annually cost $15.6 billion to maintain these roads in their current substandard state and that it would annually cost $19.3 billion to improve these roads. At present, $11.2 billion a year is spent on such roads. Secretary Peters believes that the means to improve roads will require greater public sector involvement.
Secretary Peters warned that congestion in all modes of transportation is harming local economies. She called upon bold new ideas to resolve today's transportation difficulties, and stated that many solutions may be found in new public-private partnerships. She believes many new ideas will emerge from state governments and she stated that revolutionary new ideas should be found. The Bush Administration wants states to leverage their transportation funds with private investments.
Secretary Peters told of some difficulties of too much Federal involvement in transportation decisions. She noted that Congressional earmarks, while some provide benefits, may not be the priorities of state governments. Sometimes earmarked funds go to non-transportation items, which she believes is wrong. In addition, millions of Federal transportation funds that could be useful sit unspent because state governments are unable to come up with their share of funds for the projects to move forward. She believes transportation decisions should be made more at local and state levels where decision makers are more aware of what is best for their locations.
Secretary Peters warned that the Highway Trust Fund faces a $4.3 billion shortfall in 2009. This will delay projects and make current transportation problems worse. She noted that many other countries rely on private funds for their transportation systems, even Russia. She notes a California expressway has been constructed with private capital and will use electronic tolls. She called for the increased use of tolls and noted that a pilot program offers to allow the tolling of interstate highways. She claimed that public support for tolling is increasing.
THE PROMISES AND PITFALLS OF INCENTIVE STRATEGIES
State Rep. Phillip Frye (N.C.) noted that state governments are engaged in bidding wars against each other in providing financial incentives to get companies to locate in their states. He stated as long as other states offer incentives, he will support North Carolina offering incentives. Yet, he warns this is destructive behavior that is costing all states funds. Instead, these funds could be better spent on employee training and other areas that could help citizens while also making the state more attractive to employers. If all states would cease offering incentives, these funds would be saved and all states could compete on a more level playing field.
State Rep. Pryor Gibson (N.C.) noted that North Carolina spend $300 million on incentives to lure businesses to locate in North Carolina. This is being done over strong opposition from existing businesses who find it unfair that possible competitors receive assistance that never existed for them. They would prefer that these funds for other purposes that could benefit all employers, such as creating a better skilled workforce.
Joanna Morfessis, President of IO.INC consultants stated that incentives are highly important, especially as states are not only competing with each other but with foreign countries. Ireland offers strong rewards for business locations, Dubai is investing heavily in new business projects and seeks to become the world's next major financial center, Viet Nam is emerging as a major center for new manufacturing, and China, India and Mexico are among the top nations in attracting new businesses. She told of the emergence of the profession of "buffalo hunters", who are professionals skilled at getting incentives for businesses from state governments in return for a percentage of the incentives. She stated businesses most often seek talented people to hire as a prime reason for where businesses choose to locate. The amenities of the location are important, as business leaders wish to locate where there are good schools and a good quality of life. She encourages legislators to invest in education as education is a leading factor in determining where businesses seek to locate.
Kate Wade, Program Evaluation Director for the Wisconsin Legislative Audit Bureau, stated her bureau found there are 152 programs that have economic development as a primary concern in eight state agencies. This is confusing to businesses as they are often uncertain of the value to them of the different programs. There is much repetition among these programs. Much economic development assistance to businesses comes from state universities.
THE ECONOMIC OUTLOOK
Jim Rounds, Senior Economist for Elliot D. Pollack and Company warns that our weakened economy has become more vulnerable to business downturns which could be triggered by such events as higher energy prices and major decreases in homes purchases. Consumer spending has slow from previous levels. He predicted that we are on the verge of a recession and that this recession is unavoidable. He forecasts a 2008 recession that will get worse in 2009. He noted there has been a decrease in the growth of gross domestic product, that consumer debt is too high, mortgages are in overall crises as adjustable rate mortgages are slowing economic growth, oil prices are rising and he warns that could reach $4 per gallon for consumers, the dollar has weakened, that the Federal Reserve Bank has little room to react, home purchases are down and housing prices are falling, and employment has been weakly expanding compared to previous years. On the positive side, business profits are strong and business investments are increasing even though the consumer side of the economy is doing poorly. Still, consumers are expressing confidence in the economy which shows the public psychologically believes the economy is strong even if the data indicates otherwise. For state governments, the likely recession means that sales tax collections will be weak. He warned that tax increases will be unavoidable for many states.
FEDERAL UPDATE
Michael Bird, Senior Federal Affairs Counsel for NCSL, stated that the SCHIP bills in Congress are attempting to provide $35 billion more over five years to allow three million more children into the program and to include dental insurance. The bills will cap maximum eligibility at 250% of the poverty level, thus denying requests of states to offer benefits to people with higher incomes. In addition, no adults other than pregnant women will be allowed to be covered and any state that has an adult covered will have one year to remove them. SCHIP is caught up in partisan infighting over PAYGO and offsetting the increase spending with tobacco tax funds. SCHIP is continuing to be funded at current levels until Congress agrees on a final new level. Meanwhile, 15 states are on the verge of exhausting their SCHIP funds. Congress is battling over citizenship documentation for SCIP. Michael Bird notes that the parties are not far apart but that recent attempts to create a final agreement have failed miserably.
There are 12 appropriation bills that Congress considers. Only the Defense bill has been signed. Bush is threatening to veto nine of the bills in the form that Congress appears to be creating them. He notes that financially the parties are not far apart, as the disagreements of a $2.8 trillion budget are over $22 million in proposed funding. This has turned into a mostly symbolic struggle.
Michael Bird warns that states should expect mostly level funds from the Federal government. States will be required to develop compliance plans for adopting Real ID by May 11, 2008 after regulations are issued in February, 2008. Transportation funds to states will likely be not much more than states received in 2007. States will be required to maintain funding of higher education funding under penalty of losing education funds. Michael Bird wants that the Federal government will be expecting state governments to pick up more of the overall funding slack.
DYNAMIC FORECASTING
Dynamic forecasting attempts to analyze anticipated changes in revenues due to changes in tax policies by considering how the tax changes may impact other factors in revenue collections and how these totals may change over time. Hans Olafsson, Chief Economist for the Arizona Joint Legislative Budget Committee, explained how dynamic revenue forecasting consider how tax policies affect business and consumer behavior that may present a more realistic forecast of how tax policies will affect state revenues. Most other states use static revenue estimates that assume that percent changes will lead to direct percent changes in existing numbers. Hans Olafsson noted it is important to understand has tax policies operate as public behavior often works counter to what the policy sought. Dynamic forecasting also considers that these patterns will change over time. Massachusetts built the first dynamic forecasting model in the early 1990s. They are now used in about half of all states. They cost about $100,000 to $300,000 to construct, require updating data, and need personnel who know how to operate and understand the models. Some states have been stuck when with unusable models when key personnel left. It also needs to be understood the forecasts are not an exact science.
Ben Page of the Congressional Budget Office told how Congress uses dynamic forecasting. He stated the best results occur when they consider specific policies, but that they can be used in analyzing multiple policy changes such as the entire proposed Presidential budget.
INFRASTRUCTURE FINANCING
Jack Basso, Chief Operating Officer of the American Association of State Highway and Transportation Officials predicts that our highest needs will require over $189 billion expenditures in 2015. It may be necessary to increase gas taxes to achieve this. If there is no action, the trust fund will have to be reduced by $16 billion in 2009. He stated that revenues for transportation are the Aviation Trust Fund (which is 90% supported by aviation users), the Highway Trust Fund (where all highway funds are from users and transit from 80% Federal General Funds), and Homeland Security funds. All these areas are experiencing shortfalls for needed investments. Budget constrains makes it difficult for more funds to come from the General Fund. He stated there is movement to look at "out of the box" funding concepts such as state infrastructure banks, national infrastructure banks, Federal bonds, and public-private partnerships. More revenues may be required from a range of proposals from higher motor fuel taxes, excise taxes, vehicle user fees, tolling, impact fees, tax credit bonds, distance based fees, and non-transportation taxes. He stated he believes that Highway Trust Fund is still viable even though its purchasing power has been eroded. The Fund is headed towards a deficit in 2009 and a correction is necessary to prevent this, or else several highway commitments will need to be withdrawn. He believes vision is what is most lacking and noted that two Commissions are studying these issues.
Steve Brown, Executive Director of the Environmental Council of the States, notes that states are receiving the same environmental funding levels as last year even though there are 200 new environmental rules that need to be followed. This is increasing workloads at the same time financial support for environmental operations is declining. He noted water, drinking and waste, is an important concern and that $1 trillion in operating and maintaining water systems will be required over the next two decades. He also noted that construction costs are rising above what has already been approved. There are not enough funds for these projects although private activity bonds could help meet this shortfall.
RAIL SECURITY
Our passenger rail system is very vulnerable to a terrorist attack. The rail industry appears prepared for hazardous materials security risks but lacks plans for several other types of emergency situations. The Government Accountability Office (GAO) recommends the industry develop security plans. Chris Ferencik, a Senior Analyst with the GAO, stated his office is conducting a review of rail security. They seek the input of state government leaders and state legislators on their concerns of rail freight security, from possible terrorist targets to emergency responses to derailments and hazardous material spills. Since these rails are privately owned, government is generally uninvolved in rail security issues until there is an emergency. Three states have expressed concerns about these issues and have proposed within their state legislators that rail freight Tennessee, Texas, and New York go around and avoid urban areas. None of these bills have passed. There have also been security recommendations that rail freight should be directed away from Washington, D.C., Philadelphia, and Chicago.
THE 21ST CENTURY BELONGS TO CHINA
Ted Fishman, an author, noted that when American public officials visit China it often is Governors, state officials, and state legislators. He notes that what happens in China often impacts state and local governments. What happens in China at least indirectly affects much state legislation. He also noted recent news items of China refusing to allow American warships seeking shelter from storms to dock in China. While our government is complaining about this refusal to follow international sea laws, he notes that from the Chinese perspective, they are upset at us for forcing a Chinese plane to land which killed their pilot, for the bombing of one of the embassies, and for our continuing to supply arms to Taiwan.
China is an emerging world power. The margin of error in China's estimate of their population is larger than our total population. Europe, which has a trade surplus, has a $252 million trade deficit with China. The intermodal freight movement of Chinese goods within the U.S. is a rapidly growing American industry. The U.S. conducts $300 billion of business with China.
Chinese cities are rapidly growing who two cities reaching 17 million people and many cities of over a million people found throughout the country. The movement of Chinese rural residents to cities has been the largest migration in world history. Chinese farms are small sub-acre family farms such that Chinese agricultural areas more resemble our suburbs. There is no homeless problem in China as there are jobs for these urban dwellers. Considering that the Chinese government owned everything just 13 years ago, the emergence of 85 million Chinese businesses is the largest entrepreneurial boom in world history. China has seen amazing growth from a country that had more people die from internal turmoil during the 20th century than died in both world wars.
Ted Fishman notes that 80% of Chinese market goods are locally made. What this means is the world is seeing only a small portion of China's economic might. If these local economic goods were to move to foreign trade, they would swamp the world markets.
A problem that China has is their education is moving backwards. Illiteracy is growing. China triages its educational system and concentrate on its brightest students. China has the world's largest university system that graduates ten times more scientists and engineers than American colleges produce. In addition, 720 American universities have meaningful ties to China which is providing China with low cost technology transfers.
A big problem with China is that its government is a one party brutal totalitarian government. Its government leaders are corrupt and have enriched themselves and their families. The average wage in China is 65 cents an hour which, in constant dollar terms, means that American slaves in the 1850s earned five times more than the modern Chinese employee.
IMPLEMENTATION OF REAL ID
Richard Barth, Assistant Secretary of Homeland Security, stated he believes we need to move to real ID drivers licenses for security reasons. He noted two states do not have residency requirements in order to get a drivers license and noted another state issues a drivers license that could be obtained at age 16 that would be good until age 65. He spoke to dispel myths about real ID. He stated that real ID will not prevent people from buying guns, despite rumors otherwise. He stated even a U.S. Senator incorrectly believed that real ID information would be shared with the United Nations. He further dispelled rumors that real ID will have chips that will monitor one's every movement, but did explain that real IDs with chips will be available for people who wish them to be used for express lines for frequent travelers across common borders. He stated rumors that the Federal government could access real ID information at any time, stating that their access would be the same as it is now as in cases where criminal fraud of obtaining a license is suspected. He also argued that identity theft annually is an $18 billion problem and that real ID will help fight this problem.
BUSINESS MEETING
40 states were present. Rep. Carole Rubley represented Pennsylvania. A motion to move a resolution on broadband communications was moved from the consent calendar to the debate calendar at the request of three states. State Rep. Bob Hasegawa (Wa.) argued that deregulation broadband could be abused by communications companies. Several argued in favor of the resolution in favor of deregulating and preserving state jurisdictions of broadband services, including State Rep. Donna Stone (De.), NCSL President. A divided voice vote was taken yet it was clear that more than two-thirds were voting affirmatively and the resolution passed.
An action calendar on Real ID urging the Federal government to repair, fund, or repeal Real ID passed by unanimous voice vote.
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