Surpluses, Social Issues Mark 2006--Awash in Revenue, States Made Progress in Areas Where the Feds Feared to Tread

Statehouses awash in surpluses ventured into new projects in 2006, from first-in-the-nation preschool for all 3-year-olds in Illinois to a space pad in New Mexico. States also made strides on issues that stymied Congress, including health care, immigration, the minimum wage and global warming.

Most in vogue in the 44 states that held regular legislative sessions were measures to hike the minimum wage, condone use of deadly force in self-defense and restrict local government's power to condemn private property. Legislatures in more than half the states also hustled through a ban on anti-gay picketers stalking U.S. soldiers' funerals.

But some of the headlines from state capitols didn't center on policy-making. In an election year that heightened the usual partisan tensions, ethics issues were raised about governors in Illinois, Kentucky and Wisconsin, and the FBI raided legislative offices in Juneau, Alaska.

All but a few states faced the happy dilemma of how to spend unexpected sums of money as a healthier U.S. economy pumped up revenues to their highest level in six years.

Utah, Washington state and Wyoming grappled with projected surpluses of at least $1 billion.

With extra money in their coffers:

• Florida slashed taxes by nearly $300 million.
• Illinois spent $135 million to create the nation's first statewide preschool program for both 3- and 4-year-olds.
• Minnesota approved measures to build a $522 million baseball stadium for the Minnesota Twins and a $248 million football stadium for the University of Minnesota.
• New Mexico earmarked $762 million for construction projects, including $100 million to build a commercial spaceport that one day could offer space tourism.
• New York agreed to nearly $1 billion in grants and tax breaks for a computer chip manufacturing plant in the northeastern part of the state.
• Wyoming cut $100 million in taxes by eliminating the sales tax on groceries and approved $2.1 billion in new education funding - a 24 percent increase that could boost it to first or second in the nation in per-pupil spending.

Where Congress Gridlocked

While Congress failed to raise the minimum wage above the $5.15 hourly rate set in 1997, 11 legislatures and voters in six states in 2006 boosted wage floors above the federal minimum. Twenty-nine states now require businesses to pay workers more than $5.15 an hour. The new Democratic leadership in Congress has pledged to raise the minimum wage in the rest of the country.

With the number of Americans without health insurance nearing 47 million, states also took groundbreaking steps to address the nation's broken health care system.

Moving toward universal coverage, Massachusetts became the first state to require residents to buy insurance and threatened companies with fines of $295 for each worker not offered coverage. Vermont followed with a plan requiring private insurers to offer health coverage for primary and preventive care under the oversight of a state commission.

California Gov. Arnold Schwarzenegger (R) vetoed what would have been the nation's first publicly financed universal health care system but vowed to make covering the uninsured a major priority in his second term.

In a state-led backlash to illegal immigration, 33 states enacted a record 78 immigration-related laws, according to the National Conference of State Legislatures (NCSL). Arizona, Colorado and Georgia passed the toughest measures while Congress shelved President Bush's proposal to overhaul U.S. immigration policy and instead opted to build a 700-mile fence on the U.S.-Mexico border.

Georgia cut off illegal immigrants' access to public services and will impose strict sanctions on employers who hire illegal aliens in 2008. In a special session on immigration, Colorado legislators voted to require proof of residency for state services and to target employers who hire illegal aliens. Colorado voters approved two additional anti-immigration measures on Election Day.

In Arizona, which sees the largest volume of illegal crossings from Mexico, Gov. Janet Napolitano (D) vetoed a host of anti-immigration bills. But the Republican-controlled Legislature retaliated by placing four measures on the November ballot; all were approved. The most controversial builds on a 2004 voter-approved law cutting off state social services for illegal aliens, additionally barring day-care funding and in-state college tuition.

Nebraska lawmakers, however, went the other direction and, over the objections of Gov. Dave Heineman (R), became the 10th state to allow illegal immigrants to pay in-state college tuition rates.

On the environment, California took the nation's lead in fighting global warming with a plan to force industries to cut greenhouse gas emissions, including carbon dioxide, 25 percent by 2020. Seven Northeastern states also have a pact to curb pollutants blamed for global warming, aiming to cut power-plant emissions 10 percent by 2019. The Bush administration has resisted mandatory reductions of gases blamed for climate change.

View the full report at the Stateline.org Web site.

The preceding article was excerpted from State of the States 2007, Stateline.org's annual report on significant state policy developments and trends.