A Sea of Change Coming: The 2010 Elections in the States

Robert N. Campbell

I have followed state politics since I was a student leader and member of the first graduating class of the LBJ School of Public Affairs in the early 1970s. With all that I have witnessed, I believe we are now facing the most far-reaching set of state elections in our generation — with the prospect for the most impactful changes.

For reasons of term limits, aspirations, and a few failures, we are going to see 37 contested governors’ races this fall, and as many as 25 and conceivably 30 new governors nationwide. This degree of change is unprecedented.

Based on discussions held at a number of the national state conferences this summer — including the National Governor’s Association, National Council of State Legislatures, and National Association of State Auditors, Comptrollers, and Treasurers — the issues being debated among Congressional and gubernatorial candidates on the campaign trail are some of the most significant and vexing issues of our generation as well. Not surprisingly, many of the big issues facing the states are the same challenges facing the country as a whole. There are, however, some important, yet subtle differences:

  • Deficits and Debt – Controlling spending is a daunting issue, federally and in the states. Fiscal year 2011 promises to be the most financially challenging for the states, with shortfalls estimated at close to $200 billion. In many cases, states used funding from the American Recovery and Reinvestment Act to address shortfalls in their budget for the current fiscal year, in essence deferring major budgetary issues to future years. And unlike the federal government, most states are constitutionally bound to balance their budgets. As a result, tough decisions still loom on the horizon in fiscal year 2011 or beyond.  Furthermore, when the federal government acts to address the growing and daunting national debt, there could be unintended consequences at the state level in the form of cut funding.
  • Healthcare Reform Implementation – Although the federal legislation has been passed and signed, there is significant design detail that will play out in the states. So far, state reactions have seemed to follow party lines in accordance with the support or lack thereof the federal legislation. The areas of most urgent impact on states around health reform are: (1) management of increased enrollment in CHIP and Medicaid programs in advance; (2) evaluation and planning for creation of health exchanges by 2014; (3) acceleration of health information exchange activities statewide to facilitate administrative simplification, fraud detection and e-prescribing applications; (4) evaluation of medical management policies and programs for the dual eligible population; (5) evaluation of connectivity between public health programs and local delivery systems; and (6) analysis of statewide healthcare workforce issues and opportunities. Additionally, states must assess health benefits for their employees and dependents and determine long-term plans regarding benefits and retiree contributions.
  • Energy policy and sustainability – Depending on future Congressional considerations, regarding a national energy policy, states will need to determine their appropriate role in energy policy and sustainability.
  • Immigration policy – This has emerged as a vitriolic issue, particularly in our border states

And these are just the highly publicized issues as we approach the state gubernatorial elections. There are countless other issues which, in my view, do not seem to be receiving the attention they warrant.

Given the daunting challenges facing the states and the huge sea of change coming, Deloitte has developed the 2010 Election Issues Briefing Guide, which was provided to almost all leading gubernatorial candidates at the Republican and Democratic Governor’s Associations. It provides insights and best practices in challenging areas, including education performance, healthcare reform implementation, state pensions and infrastructure finance, among other issues. I urge you to review it.

We are currently developing a follow-up to the 2010 New Governor’s Playbook, to lend guidance and support to those candidates who prevail in the November elections.  We will also be producing a podcast immediately after the elections, with the perspectives of former Pennsylvania Gov. Tom Ridge and me on the effects of the elections vis-a-vis the many issues we’ve discussed here.

The challenges facing the states are momentous and they cannot be scaled alone. We need the public and private sectors to work as one to make use of the great minds on both sides of the line, and in some cases help bridge the gap between varying political views with hard facts. The opportunity to lead is noteworthy. But as Ridge often reminds us, “You run to win, but you win to govern.”

I speak to political leaders and my industry colleagues alike when I say the gauntlet is down.

Robert N. Campbell III, vice chairman, Deloitte LLP and U.S. state government leader, is based in Austin, Texas.

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