Plenary Session Transcripts

Governors Attending:

Guests:

Discussion Subjects:

• Agriculture and Rural Development—joint meeting with the Task Force on Rural Development (AG) – federal-state summit on rural affairs
• Criminal Justice and Public Protection (CJ) – the impact of AIDS on the criminal justice system; consent decrees; and interim report on the National Guard
• Economic Development and Technological Innovation (ED) – investments in human capital—maintaining a skilled workforce; new national housing policy; and report of the Lead Governor on Science and Technology
• Energy and Environment (EE) – ozone; and national energy policy issues
• Executive Committee (Exec) – the federal deficit and its impact on the economy
• Human Resources (HR) – infant mortality; New Jersey’s project REACH; public-private partnerships in day care; and education and employment and training subcommittee reports
• International Trade and Foreign Relations (ITFR) – the state-federal partnership in trade promotion; report of the tourism subcommittee; and U.S.-Canada Free Trade Agreement
• Telecommunications Subcommittee – (discussion subjects not given)
• Tourism Subcommittee – international tourism; current opportunities; state initiatives to promote America; and visa waiver implementation
• Transportation, Commerce, and Communications (TCC) – air safety and air service; report of the telecommunications subcommittee; and report of the Lead Governor on Transportation Finance
• Plenary Session Discussion Subjects - Federalism; and regulatory reform proposals

Points of Interest:

Three experts on federalism made presentations to Governors on the history and current status of state-federal relations. There was consensus that the states had been party to the increase in federal power in times of crisis—during the Depression and the civil rights era, for example. But Dr. Dick Howard of the University of Virginia Law School pointed out that in the past quarter century, states were becoming healthier entities and state officials were proving their leadership ability. And he and other panelists agreed that states were the sources of creativity in government and that a better balance among various levels of government was crucial to the protection of civil liberties, to public participation in government, and to the preservation of regional differences.

Dr. Robert Freilich, a member of the advisory committee of the State-Local Law Center, argued that Congress should pass legislation delineating the parameters of authority and power for the federal government and for state and local governments. Among the provisions of the legislation should be: (1) a guarantee that no federal law should preempt state and local authority to act in the same field without demonstration of an overriding national need; (2) protection of state and local government power to issue instruments of indebtedness, free from federal taxation; (3) a prohibition against any federal programs imposing regulations on state and local governments that were not directly related to the program funded; and (4) the establishment of committees on state and local government in both the U.S. House and Senate.

Former Governor George Busbee of Georgia reminded Governors that the early 1980s had witnessed a grand experiment under which state executive and legislative officials had agreed on a reform agenda to clarify the division of responsibilities among levels of government, to provide flexibility and accountability in government, and to build principles of federalism into the daily routine of Congress and the Administration. He noted that President Ronald Reagan had proposed to increase federal responsibility for indigent health care in exchange for state and local assumption of other responsibilities. But the proposal had failed, he said, because the Administration had not been truly committed to federalizing income maintenance programs, and the end result was for state and local governments to return to the practice of vying for federal dollars. However, in the face of the federal budget crisis, states were now forced to assume a greater share of the burden of domestic programs without sufficient revenue, and Busbee urged that now was the time to fight once more on behalf of a sound federalist system. He argued in favor of a constitutional convention to sort out federal, state, and local responsibilities. He conceded that one obstacle to such a convention was the potential difficulty of controlling what issues were taken up in a constitutional convention. But he felt that the problem could be resolved by state legislatures agreeing to pass identically worded petitions seeking to amend Article VI of the Constitution to allow for limited-purpose conventions.

James Miller, Director of the Office of Management and Budget (OMB), told Governors that President Reagan had made good on his promise for a federalist revolution, beginning with enactment of the Omnibus Budget Reconciliation Act of 1981, which had established nine new block grants consolidating 57 categorical grant programs. The President had also issued an executive order requiring federal agencies to either accommodate the recommendations of state and local governments regarding proposed federal actions that affected them or to explain why they could not.

Miller went on to describe two new circulars that would benefit state government. The First, Circular 102, had been triggered by the actions of state and local governments to pursue streamlining of grant management. NGA and the National Association of State Budget Officers had surveyed all states and submitted their recommendations to OMB, which resulted in the issuance of a Circular 102 update that authorized states to follow state laws and procedures with respect to federal grants and permitted states the freedom to manage federal pass-through grants to local entities.

Federal Circular A-87 defined allowable costs for federal assistance programs and set forth procedures to recover them. Miller said that the circular was still being fine-tuned, with states seeking greater power to rely on their own accounting and auditing practices. He also reported that in response to abuses that had occurred in the transfer of funds both from the federal government to the states and from the states to recipients, a joint state-federal task force was devising a system to require that states be charged interest on federal funds from the time they were received until they cleared recipients’ banks, and that the federal government be charged interest when state funds had to be used to cover federal assistance programs.

Two public opinion experts also presented Governors with survey results on Americans’ views of various levels of government. Although one expert was selected to represent the Democratic perspective and the other, the Republican perspective, they both revealed rising public confidence in, and appreciation of, state and local government. Harrison Hickman, representing the Democratic perspective, said that when asked what level of government they received the most money from, as well as the most from their money, respondents had ranked state government ahead of the federal government in only one of the past 20 years. However, the Watergate scandal had reduced public confidence in the federal government, and people were increasingly looking to state government for action. Richard Wirthlin, representing the Republican perspective, told Governors that in 1936, 56 percent of Americans said they favored concentration of power in the federal government, but by 1987, that number had dropped to 35 percent, with 65 percent answering state government. Wirthlin went on to say that opinion had shifted in the light of what many viewed to be the failure of the federal government’s Great Society programs of the 1960s. Other statistics offered by Wirthlin included:

• 89 percent of Americans favored shifting resources and decisionmaking from the federal government to state governments.
• Only 36 percent of voters knew the names of their U.S. Senators, while 91 percent knew their Governor’s name and 81 knew their Governor’s party affiliation.
• A 1982 survey revealed the public’s view that 42 cents of every dollar spent by the federal government was wasted, while only 29 cents was wasted at the state level.
• When asked what level of government should administer welfare programs, 45 percent of respondents to a Wirthlin poll identified the states, 30 percent the federal government, and 21 percent local government.
• Only 16 percent of respondents to the Wirthlin poll said that the federal government was most responsive to their needs, while 26 percent said it was state government and 50 percent said it was local government.

U.S. Senator Pete Domenici from New Mexico talked to the Governors about the federal budget, noting that pursuant to an economic summit, agreement had been reached to reduce the defense budget by $33.5 billion and to cut discretionary domestic spending by such methods as reducing subsidies to the states for mass transit and eliminating the subsidy for the Postal Service. President Bush was also recommending a 20-percent increase in education spending, including $900 million for a new program of adult worker retraining.

At the same time, discretionary programs that were being recommended for increase would not be able to continue to rise if the Gramm-Rudman-Hollings budget deficit cap [see 1986 Winter Meeting points of interest] was to be adhered to.

Senator Domenici was asked by Governors about the possibilities of limiting growth in entitlements and raising taxes as means of reducing the deficit. The Senator responded that both were politically volatile options.

During a discussion of a policy position to support the General Agreement on Tariffs and Trade (GATT), some Governors felt strongly that they could not endorse an expansion of international trade that had the potential to negatively impact industries in their states, while others argued that no agreement could ever be reached if parties were not willing to compromise and accept some sacrifice.

Memorable Quotes:

During a discussion of trade with Canada in which Governors talked about the problems of Canadian competition with industries in their states, Governor James Thompson of Illinois said: "…after nearly 12 years of listening to debates and resolutions and votes in plenary session in this extraordinary association, I think it’s fair to say that nothing that we do that is important is without controversy and nothing that we do that is important is without question or fear or debate. It is on those occasions when Governors can set the example, by putting aside partisanship which we almost always do, and by putting aside some of the parochial fears that arise from our states that we would normally be politically responsive to back home for the greater good of the country, that we are at our most effective. When we fall by the wayside in this regard, our position on the Hill on issues like the budget deficit, welfare reform and other key matters where we expect Congress to show leadership, courage and resolution, and to put aside parochial or partisan or ideological considerations, is diminished."

Selected Policy Positions Adopted:
(1) Recommending that dairy programs be adjusted to account for regional differences; (2) calling for tightening up of tolerances of pesticide residue on imported food to make them consistent with tolerances on domestic-produced food; (3) requesting acceleration of the timetable for establishing maximum contaminant levels in drinking water; (4) requesting states to collect information on truck accidents using uniform data elements and definitions; (5) urging establishment of a committee to develop a model-based state agreement for administering state operating and authority requirements for interstate and motor carriers; (6) encouraging continuation and improvement of the U.S. space program; (7) supporting federal funding of mandated requirements for states to assist local and regional emergency response agencies; (8) urging that Congress direct the U.S. Environmental Protection Agency (EPA) to establish a minimum national standard for incinerator emissions, a management scheme for incinerator ash, and a state-based tracking system for biomedical waste, and that it facilitate waste reduction and recycling; (9) requesting that the Consumer Product Safety Commission develop a national product guideline and that EPA establish a research effort and share comprehensive information for consumers, industry, and the states on indoor air pollution; (10) asking Congress to appoint a national ocean policies commission to develop a comprehensive marine policy; (11) calling for federal funds to be automatically available under the national contingency plan for major or multistate petroleum and hazardous waste spills; and (12) supporting the free trade agreement with Canada.