Plenary Session Transcripts

Governors Attending:

Guests:

Discussion Subjects:

• Economic Development and Commerce (EDC) – rural economic development
• Human Resources (HR) – strategies for turning around low performing schools; and the role of music education in reforming low performing schools
• Natural Resources (NR) – agriculture and the Farm Bill
• Other Governors' Sessions – Growth and Quality of Life Task Force; and E-Governance Task Force
• Plenary Session Discussion Subjects - Federal priorities; education; and smart growth

Points of Interest:

The meeting opened with the introduction of two former Governors newly-appointed to the federal cabinet. New EPA Administrator and former New Jersey Governor Christine Todd Whitman pledged her commitment to work closely with states, in recognition that state officials knew better than did Washington bureaucrats how to solve their environmental problems. New Secretary of Health and Human Services and former Wisconsin Governor Tommy Thompson addressed a broad range of projects on which he planned to focus, including ensuring access by seniors and the disabled to affordable prescription drugs and developing a patients' bill of rights that recognized the pre-existence of such protections at the state level. Thompson also noted that in response to the concerns of states, he was acting to delay implementation of regulations on Medicaid managed care and on the State Children's Health Insurance Program (SCHIP) pending further consultation with Governors and other stakeholders.

White House Chief of Staff Andrew Card told Governors that President Bush was preparing to introduce a budget proposal that would reduce the rate of federal budget growth from an average of six percent to roughly four percent. Of the $5.6 trillion budget surplus, the President proposed setasides of $2.6 trillion for Social Security and $1.4 trillion to meet contingencies and domestic discretionary priorities, leaving $1.6 trillion for tax relief. Among the President's tax reform proposals was to lower the cutoff rate for the Earned Income Tax Credit from 15 percent to 10 percent.

Card also told Governors that education was the President's top priority, and a proposed budget increase for the Department of Education would be the largest for any federal department. Education Department Secretary Rod Paige lamented that nearly a quarter century after a commission examining the state of our nation's schools issued the report A Nation at Risk, nearly 70 percent of inner-city fourth-graders were still unable to read at basic levels, high-school seniors trailed their counterparts in nearly every industrialized nation in math, and one-third of college freshmen had to take remedial courses before beginning their college-level studies. Paige said that the time for "reform" was over, and "bold change" was now needed. He asked for the support of Governors in shifting from categorical to systemwide strategies that reached down to the very culture of the education system and returned to fundamentals such as high expectations, assessment of results, and accountability, while expanding parental choice.

U.S. Senate Democratic Leader Tom Daschle opened his address by stressing the challenges that faced a Senate now evenly split between Democrats and Republicans. He recalled that in the past 30 years, 31 states had been guided through a similar legislative split with the help of Governors. And he said that the Senate would be looking to the Governors for guidance with respect to how the federal budget surplus should be used.

Daschle disagreed with the President's proposal to use $1.6 trillion of the budget surplus for tax relief, arguing that cost add-ons associated with such relief—including increased interest on the national debt—would in fact raise the cut to $2.6 trillion, leaving only $100 billion over 10 years for debt reduction, prescription drug coverage, education, defense, and other existing priorities, not to mention unexpected emergencies. And he said that if $100 billion sounded sufficient, the public should know that $106 billion had been spent on emergencies alone in the previous 10 years.

Daschle also argued that the President's plan to freeze discretionary spending to pay for his tax cut did not leave room for demographic changes, and he anticipated that spending cuts would have to be made in nearly every area but defense.

Daschle went on to describe the Democrats' plan, which sought to take Social Security and Medicare off the table and divide the remaining surplus in thirds, using $900 billion for tax cuts, $900 billion for critical priorities such as prescription drugs, education, and defense, and $900 billion for paying down the national debt. The Senator said that Democrats were prepared to seek compromise with the President as long as two principles were upheld: (1) the outcome must be fair; and (2) the outcome must be part of a responsible budget that continued to pay down the debt while protecting entitlements such as Social Security and Medicare and investing in critical priorities such as education. As it stood, however, the President's plan failed both tests, according to Daschle. On the first count, 43 percent of the proposed tax cut was designed to benefit the wealthiest 1 percent of Americans. And on the second count, he reminded Governors that the last time the nation gambled on a similar tax relief plan—1981—the result was quadrupling of the national debt over 12 years, and a reduction in federal aid as a share of state and local outlays from 26 to 17 percent.

During a plenary session devoted to "smart growth," Governors were addressed by Thomas Hylton, author of Save Our Lands, Save Our Towns, who said that phenomena such as single-use zoning, minimum lot size, and sprawling development had all but destroyed the old-time community where multiple services were readily accessible in one neighborhood and people of differing backgrounds and socioeconomic levels lived in close proximity and readily interacted. At the same time, efforts were under way to create new communities modeled after the old ones, and Hylton referred specifically to the town of Celebration, Florida, built by Disney, which featured: dwellings of all types and sizes built on relatively small lots; closely spaced stores; offices with apartments above them; hidden parking behind buildings; and one public school for grades kindergarten through 12 that was within walking distance for all community residents.

One opportunity that Hylton identified for community rebuilding was through Brownfields—the reclamation and transformation of abandoned industrial sites. He also advocated offering subsidies for the encouragement of downtown development.

Memorable Quotes:

Former Governor Tommy Thompson of Wisconsin, who was the new Secretary of Health and Human Services, told his former gubernatorial colleagues: "…the building of the partnership between the federal, state, and local governments is not complete. We must continue to build bridges from Washington to our state capitals and to the biggest cities and smallest communities throughout our nation. We in Washington must learn from you at the state level, work with you on a daily basis, and we must strive to give you the flexibility you need to solve problems…As William Safire wrote when the nation was trying to select a national flower, no one flower can symbolize this great nation. America is a bouquet. America truly is a bouquet of opportunity, creativity, and yes, complex problems that must not be addressed in a top-down, one-size-fits-all manner."

U.S. Senator and Senate Democratic Leader Tom Daschle of South Dakota said this about the Senate's now even party split: "There was no precedent for a 50-50 Senate. So when it became clear that we were going to have to figure out how we address the challenges we face in this new make-up, we looked to the states for leadership and for guidance. And we discovered that in the last 30 years, 31 states have actually had state legislatures that have dealt creatively with the challenge of evenly divided chambers…in most of those cases, it was the Governors who helped find the solution. The plan I especially liked was the 1992 Florida Senate solution. They agreed to have a Republican…president the first year and a Democratic president the second year. For some reason, [U.S. Republican] Senator Lott wasn't as enthusiastic about that plan as I was."

Senator Daschle also said: "Some of you may remember what the NGA meetings were like nine or ten years ago. I do. It didn't matter if the speakers were Democratic or Republican, if they were from Congress or the Administration. They all seemed to give pretty much the same speech—why Washington can't live up to its end of important federal-state partnerships. That's not what you hear today, by and large. Today, instead of talking about what Washington can't do because of the deficits, we're now talking about what we can and should do with the surplus. Instead of talking about why we have to abandon successful partnerships…we have the opportunity to talk about how we can build on…successes."

Selected Policy Positions Adopted:
(1) Supporting an increase in the statutory limitation on the issuance of tax-exempt small-issue industrial development bonds from $10 million to $20 million; (2) encouraging the U.S. government to ensure a state and territorial role in the development of trade agreements and to support an effective state role in implementation of the General Agreement on Tariffs and Trade (GATT); (3) supporting efforts to coordinate welfare initiatives with affordable housing programs, as well as to promote a greater state role in administering federal housing programs at the option of the state; (4) urging the federal government to increase support for nonregulatory approaches to meeting federal environmental standards; (5) asking the federal government to share with states a meaningful portion of revenues from mineral leasing activities on the Outer Continental Shelf; (6) asking the federal government to make domestic natural gas production a high priority while also promoting a full range of economic and efficient alternative energy sources; (7) urging Congress to consider amending federal law to authorize states to establish safety standards for interstate pipelines that would not conflict with, but might exceed, federal standards; (8) supporting the annual assessment of students in reading and math in grades 3 through 8, and expressing the views that a combination of state and local testing should satisfy federal assessment requirements and that the federal government should bear funding responsibility for the National Assessment of Educational Progress to provide states with comparable state data; (9) recognizing the need for greater coordination of federal domestic terrorism response activities and urging appropriate funding and coordinated service delivery within states and localities; (10) urging support for restored funding and flexibility for the Social Services Block Grant; (11) calling on Congress to reform the Medicaid program both to give states maximum flexibility in managing optional services and optional populations in order to stabilize the program, as well as to give states the tools and incentives to expand coverage broadly to the uninsured; and (12) with respect to anticipated debate on welfare reform reauthorization, setting principles to guide Governors' support for maintenance of funding and flexibility for the Temporary Assistance for Needy Families (TANF) block grant.