As Congress Dawdles, States Take Policy Lead

Minimum wage, same-sex marriage, pension reform, marijuana and food safety are on the agenda in state capitals.

With Congress paralyzed by partisanship and legislative peace unlikely to break out anytime soon, states are aggressively setting public policy at a pace last seen in the late 1950s and early 1960s, when states took an early interest on both sides of civil rights legislation.

Civil rights issues are at the forefront again. But states will also take the lead on economic and social matters, even environmental concerns. And they’ll do so for years to come. Now, as in the Civil Rights era, U.S. lawmakers and judges will be slow to catch up.

The minimum wage fight offers a clear example of states taking the lead. Already, 21 states exceed the federal minimum of $7.25 an hour. At least five others -- Arkansas, Hawaii, Idaho, South Dakota and West Virginia -- are weighing legislation to top the federal rates. And a handful of states that already pay more than Uncle Sam requires -- Alaska, California, Illinois, Massachusetts and Rhode Island -- are considering going even higher. Meanwhile, legislation to boost the federal minimum to more than $10, in stages, is stalled in the Republican-led House.

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Another example: Federal land use challenges, backed mostly by Republicans in the West. The federal government controls about half of all land west of the Rocky Mountains, a throwback to when the federal government owned the territories. Utah and other states want to manage forests and expand business uses on the land, including exploring for natural gas and oil. States also want to collect property taxes on tax-exempt acres.

Look for states to prevail at some point down the line, with help from the right-leaning Supreme Court.

States are taking the lead on scaling back the costs of public pensions, too. They’re on the hook for a combined $757 billion in pension liabilities at a time when their budgets are already lean and federal funds are hard to come by.

Wisconsin Gov. Scott Walker (R) is ahead of the pack. His pension fight has put him near the top of many short lists of potential Republican presidential nominees for 2016. Other states have made cuts as well, and more will follow, mostly by reducing or eliminating defined benefit programs for new public workers.

Down the road, look for more state and local initiatives. Among them:

  • Efforts to legalize and tax the sale of marijuana. It’s one tax that has broad support.
  • A push to crack down on an industrial chemical used to produce plastic water bottles, sippy cups for toddlers and other consumer products. Federal regulation may follow, but it will take years, giving states plenty of time to take the lead.
  • Proposed regulations on food, including curbs on genetically altered crops and trans fats.

States don’t have free rein, of course. They can’t pass immigration laws that are tougher than the federal statutes. They can’t alter or eliminate the federal tax system. They can’t ratify their own trade treaties with foreign powers.

And states won’t always win in courts, especially if personal rights are in play. Sometime in the not-distant future, the Supreme Court will rule on same-sex marriages, likely allowing them. States are divided on the question, though public backing of such marriages is growing.

The pendulum will swing toward federal power again at some point.

Until then, governors and state lawmakers will embrace their starring roles.

Kenneth R. Bazinet
Associate Editor, The Kiplinger Letter