Statehouse Turnover, Transit Modernization, Net Neutrality and Other Issues to Watch
Welcome to our first Governing Market Insights newsletter for 2018. This month we’re looking at issues that will shape public policy and drive state and local spending throughout the year.
States are still assessing the impact of the GOP’s massive tax code overhaul. The legislation, signed into law by President Trump on Dec. 22, is expected to pump more money into state coffers by eliminating several popular tax deductions. The extra cash could set off battles in state legislatures over how to spend the surprise windfall. Or there may be no windfall at all. Several governors already are talking about how to avoid collecting more revenue from state taxpayers. Check out Governing staff writer Dan Vock’s coverage here.
On the other hand, the tax changes could increase state and local government borrowing costs. For instance, debt payments could go up on money state and local agencies already have borrowed directly from banks. That’s because loan contracts often have language that lets banks increase interest rates on these loans in the event of a corporate tax cut. Going forward, the lower corporate tax rate also could make it more expensive for governments to issue municipal bonds because the new rate makes other types of investments more attractive. Governing finance writer Liz Farmer breaks down the potential impact of the tax law on state and local borrowing here.
The new tax code isn’t the only issue to watch in 2018. State leaders — and their industry partners — will grapple with a full slate of challenges this year, including potential Medicaid changes, revenue volatility, election security and the continuing opioid abuse crisis. Our January issue offers a roundup of these and other matters that will demand attention in the nation’s statehouses. It’s important coverage for anyone serving the state government market.
The FCC’s recent Net Neutrality ruling adds another dimension to a simmering debate over who controls broadband service and related infrastructure. Cities already are chafing at state-level rules that limit their ability to charge private telecom providers for locating network equipment on city-owned light poles and buildings. That issue heated up as telcos began deploying 5G service, which requires many more cell tower locations than previous generations of technology. Now comes the FCC’s Dec. 15 repeal of Net Neutrality, which also forbids states and localities from enacting their own Net Neutrality rules. Some are speculating that the FCC ruling will prompt more cities to launch their own broadband service as a move to preserve digital equity. But that’s another area where states have passed laws limiting local activities. All of this will drive public policy debates over the coming year — it’s another area to watch.
There’ll be plenty of turnover in state capitals this year, driving new priorities, policies and purchasing. Thirty-nine states and territories will hold gubernatorial elections in November, with new administrations guaranteed in nearly half of them. Incumbent governors are term-limited or not running for reelection in 18 states or territories, including Florida, California, Michigan and Ohio. We’ll provide coverage and analysis of these races throughout the year to help you prepare for the changes.
Cities are spending big money to modernize how they collect transit fares. Responding to citizen demands, some of the nation’s biggest cities are implementing technology that lets riders pay transit fares by phone or with a unified fare card. For instance, Philadelphia is replacing a mix of tokens, transfers and swipe passes with a single electronic card for the subway, buses and commuter rail. And New York City recently announced it will spend more than a half billion dollars to replace its MetroCard fare cards with technology that lets transit riders pay by phone or with the swipe of a credit card. Governing staff writer Dan Vock recently took an in-depth look at what’s driving this trend, some of the technologies behind it and challenges cities face in upgrading these systems.
Infrastructure investment is among the toughest and most important issues facing state and local leaders. Since 1998, the American Society of Civil Engineers’ (ASCE) annual report card has given the nation a failing grade for maintaining and improving roads, bridges, ports, water systems and other critical structures. Deteriorating infrastructure impacts both public safety and economic activity, making it a growing concern for government officials. The ASCE says failure to invest adequately could cost more than $7 trillion in lost business revenue and eliminate 2.5 million jobs by 2025. We’ll tackle this urgent issue in a special report and summit later this year covering prioritization strategies, financing methods, effective asset management, smart technologies and other topics. Contact me now if you’d like to be a part of this exciting program.
