Responses to Change by
State and Local Government:
Contemporary Experiments in the
Laboratories of Democracy
By Ellis Katz
"GOVERNMENT" in the United States includes not only the federal government in Washington, D.C., but also the governments of the 50 American states and the 30,000 governments in cities and other local communities (to say nothing of the governments of the 3,043 counties and nearly 50,000 school and other special districts). Given this vast number of governments-over 87,000 in total-it is not surprising that they are characterized more by their differences than by their similarities.
The American states vary greatly in size. California has nearly 35 million residents, and a gross domestic product of $1.33 million-million. In 2001, California surpassed France as the world's fifth largest economy. On the other hand, North Dakota has a population of less than 650,000 and a gross domestic product of under $20 thousand-million. Some states are growing rapidly. Between 1990 and 2000, the populations of Arizona, Colorado, Georgia, Idaho, Nevada and Utah all grew by more than 25 percent. At the other extreme, the populations of Connecticut, Maine, North Dakota, Ohio, Pennsylvania, Rhode Island and West Virginia increased by less than 5 percent during the same period.
Similarly, there is great variation among America's cities and other local communities. In 2000, there were nine cities with populations of over 1 million, led by New York City with a population of over 8 million. Some cities are growing rapidly, such as Austin, Texas, which grew by 41 percent between 1990 and 2000, while other large cities, such as Baltimore, Maryland, and Detroit, Michigan, actually lost population during the same period.
The one constant among American state and local governments has been their political, governmental and fiscal modernization as they all attempt to respond to the challenges of the 21st century.
The Modernization of State and Local Government
Constitutional Modernization. Under the U.S. Constitution, the states are free to write their own constitutions. In recent years, the states have used this constitutional authority to modernize their legislative, executive and judicial institutions.
During the first half of the 20th century, state legislatures generally met every other year for a limited number of legislative days. Individual legislators were poorly paid and had little or no staff support. Since the 1960s, however, many states have provided for annual legislative sessions, increased legislative pay, added professional staff support, and created more streamlined legislative procedure.
Two changes, both adopted in response to popular pressure, are especially noteworthy. First, many states adopted the "ballot initiative," a system under which voters, by collecting signatures on a petition, can place an issue directly on a ballot to be voted upon by the citizenry in the next election. At least 21 states have some system of direct legislation, and many important laws are enacted in this manner. Second, 17 states now have "term limits," under which the number of years an individual can serve in the legislature is strictly limited, usually to eight years. Sixteen of these 17 systems of term limits were enacted by the ballot initiative process.
States have also used their constitutional authority to modernize and strengthen their chief executives, the governors. The earliest state constitutions were wary of executive authority and created very weak governors. Beginning about 1965, most states strengthened their chief executives to enable them to provide public and legislative leadership. Governors were given four-year terms, their veto powers were strengthened, their powers of appointment were increased and their control over the state budget was strengthened.
Using their new constitutional authority, state governors have become policy leaders, and have taken the initiative in formulating new programs in education, welfare, economic development, criminal justice and even foreign trade. For example, when he was governor of Texas, President George W. Bush made education a high priority, and successfully advocated an increase in teacher salaries to attract more qualified people into teaching, and a new reading program which led to significant increases in reading scores. Former Governors Lamar Alexander of Tennessee, Wallace Wilkinson of Kentucky and James B. Hunt of North Carolina played similar leadership roles in education reform in their states. In Wisconsin, former Governor Tommy Thompson led the fight for major reform of his state's welfare system. Much of the federal Family Support Act of 1988 borrowed heavily from the Wisconsin experience.
The states have also modernized their judiciaries. Historically, state court systems were a hodge-podge of local courts created and financed by local governments. Many states did not have intermediate appellate courts and state supreme courts were often overwhelmed by thousands of appeals. During the 1970s and 1980s, many states streamlined the structure of their court systems, developed state-wide personnel systems, increased state funding, created administrative offices for the courts under the control of the state supreme court and centralized rule-making authority in that court. State supreme courts were given more control over the cases they heard, enabling them to decide only the most important cases that arose under state constitutions or state law. Many state supreme courts have been very active in protecting individual rights and liberties, often holding that their state constitutions protect rights that go beyond those protected by the U.S. Constitution.
Local governments have also been modernized and reformed. Legally, local governments are created and empowered by the states, and can exercise only those powers clearly given to them by the state legislature. About half the states, however, have adopted "home-rule" provisions for local government. Under home rule, local governments can exercise all powers not prohibited to them. This has given cities a great deal more flexibility in meeting present-day challenges. In addition, many smaller cities have hired professional city managers to run the day-to-day operations of government on a nonpartisan basis.
By the end of the 1990s, most state and local governments had at least the institutional capacity to respond to the challenges of the 21st century. How effectively they could respond, however, would depend on the modernization of their political and fiscal resources in pace with their constitutional modernization.
Political Modernization. Before 1962, many state legislatures were dominated by rural interests and a network of white, male citizens. This was because state legislative districts were apportioned in such a way as to favor rural constituencies and under-represent urban and suburban ones. In 1962, the U.S. Supreme Court ruled that this sort of malapportionment violated the Equal Protection Clause of the Fourteenth Amendment to the U.S. Constitution, and held that state legislative districts had to be equal in population-the principle of "one person, one vote."
Compliance with the Supreme Court's decision brought about a fundamental change in state politics. Urban and suburban voters were now better represented in state legislatures, and the states were forced to address the problems of urban and suburban life. Reapportionment also brought a new breed of political activists into state politics. Legislators were younger and better educated, and the proportion of women, African Americans and Hispanics increased significantly. In 2000, of the 7,424 members of the 50 state legislatures, almost 1,500 were women, 520 were African American and 150 were Hispanic.
The second important political change since the 1960s has been the increase in competition between the Democratic and Republican parties in almost all of the states. For the better part of 100 years-from the 1860s to the 1960s-the political parties each had a regional political base: the Democrats in the South, and the Republicans in New England and the Midwest. The states of these regions were so dominated by their respective parties that they were, in fact, one-party states, and the opposition party had no real chance of winning elections. Reapportionment, however, increased party competition, so that by the year 2000, either party had an almost equal chance of winning any given election. The closeness of the 2000 presidential election in Florida is an example of this increased party competition.
Reapportionment is not the only reason for increased party competition in the states. The federal Voting Rights Act of 1965 brought about increased voter turnout by African American and Hispanic voters, and their increased participation has led to an increase in the number of minority candidates winning elections. By 1992, for example, 4,557 African Americans and 1,908 Hispanics were serving in elected city council and county offices throughout the country. Women also were elected to local offices in increasing number. In 1975, there were only 35 female mayors in America's larger cities; by 1995, that number had increased to 178.
Increased party competition has brought new issues to the forefront, as the two major political parties are forced to compete for the votes of nonpartisan, independent voters. Such issues as environmental protection, and honesty and transparency in government, were rarely raised in the old one-party systems that existed prior to the 1960s.
Big-city politics have also changed. Historically, political bosses and political machines ran local politics by giving out jobs and government contracts in return for political support. Gradually, the political bosses were replaced by reform-minded leaders who successfully battled against political corruption, and replaced the old-style political machines with nonpartisanship and civil service. The last great political machines, located in Chicago, Illinois, and Albany, New York, disintegrated after the deaths of their leaders, Chicago Mayor Richard J. Daley in 1976 and Albany Mayor Erastus Corning in 1983.
Fiscal Modernization. During the 19th and early 20th centuries, state and local governments relied upon property taxes for most of their revenues. As citizen demand for public services increased, most states adopted broad-based sales and income taxes. By the 1990s, sales taxes and income taxes represented over 70 percent of state tax revenue. Taxes on sales and income have the advantage of automatically increasing with economic growth. As the economy expands, sales and personal income increase, so that state tax revenues expand accordingly. On the other hand, in bad economic times, such as the early 2000s, many states suffer budget deficits. For example, the mega-state of California is facing a $35 thousand-million deficit for 2003. The problem is widespread: 47 of the 50 states anticipate deficits for fiscal year 2003.
Local government in the United States remains heavily dependent on property taxes, deriving approximately 75 percent of its tax revenue from property taxes. The fiscal capacity of local government has been undermined by property tax limitations, often mandated by constitutional amendments enacted through the ballot initiative process during the 1980s and 1990s. The resulting challenge to local budgets has been met in three ways. First, so long as state tax revenues were increasing, the states were able to increase their aid to local governments. Second, several states allowed local governments to enact new taxes. Pennsylvania, for example, empowered the city of Philadelphia to enact a one-percent sales tax and a limited wage tax on its citizens. By far, however, the most important response to local budget challenges has been innovation and cost saving in service delivery. In the name of "reinventing government," many local services were privatized, new labor agreements were negotiated and fees for governmental services were increased to meet the real costs of the service.
The adoption of broad-based state systems of taxation and the fiscal stress of local government have affected how public services are delivered in the United States. For example, in California, when a popularly enacted initiative reduced local property taxes, affecting the capacity of local communities to support public schools, the state increased its contribution to public education. As a consequence, in a matter of only a few years, the funding of public education in California changed from approximately 70 percent local and 30 percent state to about 70 percent state and 30 percent local. Local fiscal stress has forced local governments to become innovative. When Edward Rendell was elected mayor of Philadelphia, Pennsylvania, the city faced a budget deficit of $250 million. Rendell turned to local private sector executives for cost-cutting ideas, and within two years the budget was back in balance, due in part to the business-orientated recommendations from the private sector. Boston, Massachusetts, has also had similar success in adopting business-like practices from the private sector.
State and Local Government Innovations in Public Policy
Education. Public education is a good case study of how the states are playing an increased role in public policy. On average, U.S. states devote almost 30 percent of their budgets to education, the largest single item in most state budgets. As state spending for education has increased, the states began to play a larger role in education, holding local school districts accountable to state standards. Most states now require periodic testing of students to mark the progress of learning. When students fall below state standards, the states require special remedial programs, and, if all else fails, the state can even take over the actual day-to-day operations of an under-performing school district. Many states also require the testing of teachers. Historically, teachers were certified to teach by completing state-approved programs of study in universities. In response to a public perception that there were too many incompetent teachers, many states now require that prospective teachers demonstrate their competency through testing before they can be certified to teach. Several states go further and require that teachers undertake programs of in-service training and continuing education in order to maintain their certification.
Testing is not the only state innovation to improve education. Many states are experimenting with limited privatization in the provision of education services. Several states, for example, provide tuition vouchers or tax deductions to enable students to study at non-public, private schools. For instance, in Pennsylvania, a limited number of public schools in Philadelphia are now operated by outside, private agencies. Many states have also authorized "charter schools," schools operated by parents' groups and others within the framework of the public school system. However, the results of these experiments in privatization have yet to be fully evaluated.
The states have initiated many other innovations in education, such as governance issues. For example, Kentucky has mandated parent-teacher councils attached to every school building. These councils have significant authority over budget and curriculum decisions. Other reforms attempt to improve the quality of education in specific disciplines. North Carolina, for example, in an attempt to improve science education, provides opportunities for the most gifted students to study science at local colleges and universities. To bring practical experience into classrooms, the state of New Jersey permits individuals retired from the military, business and government to teach in the public schools without going through the normal teacher certification process. Several states have adopted systems of "merit pay," basing teacher salary increases on performance rather than on longevity.
The perceived crisis in education has brought about new "public-private partnerships" in many communities. Most of these partnerships involve local businesses and neighborhood schools. For example, the Birmingham, Alabama, law firm, Bradley Arant, has partnered with the Powell Elementary School and provides tutoring to under-performing students, purchases some school supplies and materials, and makes its copying facilities available to teachers to duplicate school materials. In Erie, Pennsylvania, the Erie Insurance Group works with the Pfeiffer-Burliegh Elementary School, provides one-on-one tutoring and field trips for students, and has purchased books and computers for the school library. Similar relationships exist between Lippman's Furniture and Interiors Company and the Woodruff High School in Peoria, Illinois, and the local gas and utility company, Ameren-CILCO, and schools in both Springfield and Peoria.
Large national and even international companies are also involved in "adopt-a-school" programs. Verizon Communications, the large telecommunications company, has adopted over 100 schools in Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Virginia and Washington, D.C. The chemical company, Rohm and Haas, has adopted schools in California, Pennsylvania and Texas. One estimate is that American businesses spend over $225 million in 140,000 such programs throughout the United States.
Services. Local governments have also been major innovators in how services are provided in the United States. Cities and other units of local government deliver most of the services that Americans have come to expect from police and fire protection, to trash collection, to water supply, to health care and welfare. Roughly six out of every 10 public employees in the United States work for local government, and are usually directly involved in the delivery of public services.
Innovations in service delivery by local government were stimulated by the budget shortfalls of the 1980s and later shaped by the influential book by David Osborne and Ted Gaebler, Reinventing Government. Local governments throughout the country began to re-examine the way they served "clients" and began to think of those who used public services as "customers." Governments became more enterprising, mission driven, outcome oriented, focused on their customers needs, and generally did "more with less." Privatization and outsourcing came to replace large public bureaucracies in many cities.
A Final Word
The governmental, political and fiscal modernization that has come to characterize American state and local government has brought about changes not only in the way in which public services are delivered, but in the very ways that these governments operate. They have become much more representative of the communities they serve, more transparent in their deliberations, more responsive to their constituencies and more accessible to ordinary citizens.
For example, most state and local governments operate under "sunshine laws," which require that meetings of public officials be open to the press and the public. Many governments also operate under "sunset laws," which means that once a law or regulation expires, public meetings must be held before the law or regulation is renewed. Most states have enacted laws regulating campaign finance, requiring candidates to report the amount and source of their campaign contributions. In some states, these reports are available on-line and can be accessed by the press and by ordinary citizens.
State and local governments also now relate to their citizenry on-line. In many states, for example, citizens can renew their vehicle registrations and automobile licenses on-line, using credit cards to pay the fees. Generally, citizens can obtain information about all their state and local government agencies and operations on-line. Most agencies make various forms available to download onto computers. Arizona goes so far as to allow its citizens to vote in primary elections via their computers. "E-government," as it is called, is just beginning, and the states and their communities are at the forefront in enabling their citizens access to it.
Writing in the 1932 case of New State Ice Company v. Liebmann, U.S. Supreme Court Justice Louis D. Brandeis commented, "It is one of the happy accidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory, and try novel social and economic experiments without risk to the rest of the society." Brandeis's observation was valid in 1932 and remains valid today. American state and local government is proving flexible, innovative and effective in meeting the challenges, and adapting to change.
Ellis Katz is a professor emeritus of political science at Temple University, and a fellow of the Center for the Study of Federalism of the Robert B. and Helen S. Meyner Center for the Study of State and Local Government at Lafayette College.
The opinions expressed in this article are those of the author and do not necessarily reflect the views or policies of the U.S. government.