Policies Under the Jurisdiction of the NCSL
Standing Committee on Labor and Economic Development
2009 - 2010
Labor and Economic Development Committee Staff Contacts
Policies:
Affirming and Strengthening President Obama's Recent Order On Safeguarding Federalism In Trade Policy
NCSL thanks President Obama for his commitment to respecting state sovereignty and improving federal-state relations as evidenced by his instructions to Heads of Executive Departments and Agencies to avoid preempting states in their rule-making. This White House order is an important step towards fostering the type of vibrant federalism NCSL seeks.
The U.S. Constitution grants the federal legislative branch authority to set our nation’s trade policy, and the Tenth Amendment of the U.S. Constitution empowers states to protect the public interest, including but not limited to public health, safety, and morals. With respect to our international trade commitments, additional steps to safeguard federalism are needed.
Many current international trade agreements constrain the use of particular product and food safety standards; dictate procurement policies and the scope of permitted service sector regulations, and these rules have the effect of pre-empting vital policy space that our federal system of government provides to states to protect the public interest.
Although international trade and investment tribunals cannot directly preempt state laws and policies as a matter of U.S. law, the federal government does have an obligation under these trade agreements, enforced by the threat of trade sanctions, to compel state and local compliance. Thus, trade agreement challenges and threats of challenges of state and local laws with awards of money, damages, and retaliatory tariffs and related sanctions at stake have a pre-emptive effect. As a result, state legislative regulatory authority and policy space is compromised and the rights of states in our constitutional system are reduced.
Therefore, the President’s executive order should apply whenever such international agreements or treaties can result in challenges to state laws and policies before international tribunals—particularly in light of the fact that these rules can be enforced by retaliatory trade sanctions or awards of money damages.
NCSL requests that the White House communicate to the Office of the United States Trade Representative (USTR) in the Executive Office of the President that the President’s instructions with respect to preemption in rule-making apply to trade agreement negotiations and implementation.
NCSL requests that the President by executive order clarify that trade and investment agreements and bi-lateral investment treaties negotiated by the USTR should avoid conflicts with state governing authority, under the same terms as the executive order on preemption.
NCSL requests that the President establish, by executive order, a more effective federal-state consultation system that includes greater involvement and notification of state legislatures. Meaningful and early involvement by state and local officials in the trade agreement policymaking and negotiating process can help avoid the effective preemption of state and local policy by trade pacts.
August 2012
Arts, Culture and Economic Development
Arts and culture can influence an array of policy goals, including economic development, rural development, urban revitalization, revenue generation, tourism, accessibility and participation, diversity, education, and youth development. For many of these areas, states and the federal government are partnered. Support for the production, distribution, and infrastructure of the arts is critical to success in tourism, attracting business interests, economic development, and quality of life issues. Further, the arts are a core academic subject in our schools. Strong and sequential arts education through primary and secondary school contributes to student success and workforce development. In our education systems, the study of the arts should remain vibrant. NCSL encourages a better and stronger understanding of this partnership as well as a reasoned study and understanding of the inputs and benefits.
Tourism
Tourism is a vital element of state economic development, diversification, and rural development programs, as well as a leading services sector employer. NCSL encourages Congress and the Administration to open and maintain consultative processes with state governments, and state legislatures in particular, to ensure that state and federal policies and programs encourage the continued vitality of this important sector of the economy. Further, federal economic development and disaster recovery programs should include tourism among the activities eligible for support.
National Heritage Areas
The National Park Service defines a National Heritage Area as a place designated by the United States Congress where natural, cultural, historic, and recreational resources combine to form a cohesive, nationally distinctive landscape arising from patterns of human activity shaped by geography. Recognizing these areas as viable drivers for historic preservation and cultural tourism, the National Park Service and the Congress should consult state legislators, as both state policymakers and community leaders, to identify ways of maximizing the National Heritage Area designation to the benefit of their communities and their states.
Collaboration and Coordination
The National Endowment for the Arts, the National Endowment for the Humanities, the National Trust for Historic Preservation, the White House Preserve America initiative, offices within USDA Rural Development, the National Park Service, the Smithsonian Institution, the U.S. Department of Education, and many others are engaged in promoting various aspects of culture, the arts, heritage preservation, and tourism. NCSL encourages collaboration and coordination among these disparate agencies and budgetary line-items with state legislatures to ensure that the policy and program outcomes meet the needs and goals identified by state policymakers. Further, this collaboration and coordination should improve the identification and sharing of best practices from and among the states and the federal government.
August 2010
Coordination of Social Security and Workers' Compensation Benefits
The Social Security Act currently limits the total sum that a permanently, totally disabled worker may receive in federal Social Security disability benefits and state workers’ compensation benefits combined to 80% of the worker’s pre-injury income.
That act as amended in 1981 (U.S.C. 424 a(a)) requires that if the sum of Social Security disability benefits and worker’s compensation exceeds that 80% cap, the Social Security benefits must be reduced by the excess amount. The stated purpose of these amendments was to prevent disabled workers from collecting the full amount of both Social Security disability benefits and workers’ compensations, which in some cases resulted in the workers receiving benefits of substantially greater value than the value of their previous wages.
Rather than just preventing the combined total of Social Security and workers’ compensation benefits for the disabled from exceeding the value of previous wages, the amendments, because they do not adjust the 80% cap for inflation, have instead had the effect, over time, of steadily reducing the real value of the combined Social Security and workers’ compensation benefits to those injured workers.
With sustained, substantial inflation causing the Consumer Price Index to increase more than 30% during the last 10 years and more than 100% in the last 20 years, the failure to adjust the 80% cap often has a devastating impact on the real value of the benefits on which many disabled workers depend.
The fact that the Social Security Act provides for the annual adjustment of Social Security benefits, including disability benefits, suggests that an historic goal of the act is to prevent inflation from eroding the value of benefits. This goal is undermined by the failure of the 1981 amendments to provide for an inflationary adjustment of the 80% cap for beneficiaries receiving both Social Security and workers’ compensation benefits.
The National Conference of State Legislatures therefore urges Congress to amend the Social Security Act to provide that the calculation of the 80% limit on total combined Social Security and workers’ compensation benefits for permanently and totally disabled workers defined under the act be based, not on the pre-injury earnings of the workers, but on those earnings adjusted for inflation occurring after the injury.
August 2011
Employment Security System Funding
The nation's legislators recognize the many challenges facing the nation as the labor force and workplace change. In the states, differing circumstances reflect a changing economic base, unique demographic trends, and limitations on available resources. State employment security, unemployment and labor market information systems must figure prominently in efforts to serve the workers and businesses of a 21st century economy.
Under the framework of the system outlined in the Federal Unemployment Tax Act (FUTA), states collect a state payroll tax to finance unemployment benefits and the IRS collects a federal payroll tax to provide funds for administration of both the federal and the state systems. The federal treasury holds the collected taxes in 'trust' accounts. The amount being collected is more than adequate to fund administrative costs, but the amount returned to the states for administration has been shrinking because these funds are included in the federal unified budget and are subject to the appropriations process every year. In recent years, states have received an average of a 50-cent return on every dollar collected. State legislators in many states have been forced to add a surtax to employer taxes or to appropriate general fund revenues, or do both, to replace the $3.998 billion confiscated by the Congress in FY06. The remaining accumulated 'trust' funds serve as a "paper" offset to deficits or as an enhancement to federal budget surpluses.
Program flexibility has also been reduced by restrictions on Reed Act funds, which can only be used for administering the unemployment compensation law. These funds should be distributed to the states pursuant to the original intent of the Reed Act with maximum flexibility to also support the Employment Security System.
Legislators are concerned that the percentage of unemployed workers receiving unemployment insurance benefits has dropped dramatically, and that state unemployment insurance agencies have experienced reduced funding appropriated by Congress in recent years. NCSL therefore supports legislation recently introduced in Congress that will strengthen the unemployment insurance system by using $7 billion in revenue from the federal unemployment insurance surtax to provide reimbursements to states that modernize their programs by improving benefits for unemployed workers who have fallen through the cracks of the unemployment insurance system. The legislation also provides $500 million shared by all states for additional unemployment insurance administrative funding.
NCSL therefore urges the following reforms:
- Moving the dedicated FUTA trust fund from the discretionary side to the mandatory side of the federal budget.
- Adequate funds for state administrative functions.
- Use the 'temporary' surcharge for benefit improvements for unemployed workers.
- Adherence to the provisions of the Reed Act that guarantee that surplus funds be returned to the states.
- A continuation of the state legislative role in the appropriation of administrative funds.
Further, legislation enacted in more than forty states imposes new penalties on employers that seek to avoid paying their fair share of unemployment tax in order to eliminate the practice called SUTA dumping (standing for “state unemployment tax avoidance”). NCSL believes that SUTA dumping negatively impacts state unemployment insurance trust funds and shifts the tax burden to law-abiding employers who then pay more than their fair share when SUTA dumping is not addressed under current law. In keeping with the shared nature of the national unemployment insurance program, NCSL believes the states and federal government should continue to act collaboratively to curb these abuses.
August 2010
Export Promotion
Exports are vital to the well-being of the entire American economy because they provide for jobs and economic development and help buttress the nation's balance of payments. Both the states and the federal government have a role in export promotion, particularly to help small- and medium-sized businesses who may find it difficult to obtain financing or insurance for their goods.
Export Finance
State legislators play a vital role in export finance, working with government agencies to facilitate the export process for small- and medium-sized businesses through export finance programs. This should be a shared mission: the federal government must help by improving its coordination of and cooperation with state programs and by providing adequate federal financing.
Many U.S. businesses are not aware of export opportunities or the existence of federal programs that could enable them to export their products. NCSL urges more funding for federal export programs such as the U.S. Commercial Service (USCS) of the Department of Commerce, which would permit it to properly staff overseas posts and reopen vital offices that have been closed in recent years. Funding for the Export-Import Bank's direct and guaranteed loan programs should also be maintained, and NCSL particularly supports a constant level of funding for the Bank's City/State Program.
To improve state-federal cooperation, the USCS should enhance its domestic operations to better leverage state trade development programs that could supplement their own efforts. Many states have highly effective trade programs, but the USCS generally fails to develop working relationships with them which could free up USCS budgets and personnel for overseas export promotion efforts.
U.S. businesses should also retain the ability to coordinate their own offshore sales efforts in order to reach foreign markets they might not be able to access individually. Congress should therefore ensure the preservation of permanent statutory safe harbors for such activity in Federal antitrust law (i.e. the Webb-Pomerene Act and the Export Trading Company Act).
Trade Data
The federal government is best placed to collect trade data on U.S. exports and imports. However, geographically-specific data is currently lacking on items such as services imports and exports, goods imports, and in-bound foreign investment. The federal government should improve the information available so that state trade agencies may more effectively assist their exporters.
Exports Through Trade Agreements
The United States and its trading partners should seek agreements that increase U.S. exports by reducing and eventually eliminating the reliance on protectionist trade policies and practices. Tariffs and other barriers to trade such as export subsidies prevent U.S. companies from being able to export effectively. NCSL particularly supports the federal government’s efforts to work through multilateral negotiations to open markets that are currently closed to U.S. products and to reduce the use of trade-distorting subsidies. In this connection, negotiations should be pursued in accordance with the federalism and policy principles outlined in NCSL’s Free Trade & Federalism and World Trade Organization Negotiations policies, and NCSL supports the President’s ability to do so according to principles outlined in NCSL’s Presidential Trade Promotion Authority policy.
State legislators recognize that some U.S. trading partners view some current U.S. regulations and programs as trade-distorting, which can result in retaliation on U.S. exports. Congress and the Administration must protect U.S. companies’ ability to export by promoting openness and fair trade practices in their legislation and rule-making. In particular, NCSL encourages the Congress and the Administration to work where practical and in consultation with state governments to convert farm and other supports to non-trade distorting support programs that generate opportunities for America’s farm communities and industries to adapt.
If exporters truly are to benefit from agreements, the large number of agreements that the U.S. is party to will require considerable attention to enforcement of agreement terms. NCSL supports increasing capacity at the Office of the United States Trade Representative (USTR) to work with state governments and ensure that our trading partners are adhering to the terms of our agreements.
Agriculture
Given the importance of farm exports to the financial health of the American economy, the Secretary of Agriculture and other federal & state officials representing agricultural interests should be included as full and equal partners in the formulation of United States policies affecting foreign trade. The U.S. Department of Agriculture should in turn cooperate with state agricultural trade officials in a coordinated effort to promote agricultural exports. State legislatures, both directly and through NCSL, should be consulted on the development of trade policies and kept abreast of evaluations of their efficacy and economic impact. In particular, NCSL supports the appointment of one or more state legislators to the USTR’s Agriculture Policy Advisory Committee (APAC).
Expanded international trade in agricultural products as a result of new trade agreements has major economic benefits, but it also creates new burdens for both federal and state agriculture inspection and quarantine services. NCSL calls upon the federal government to support training for inspection professionals and the development of new technologies to secure the health and safety of imported foods and agricultural products.
Market Development
Congress and the Administration should support an aggressive market development effort to increase demand for U.S. exports, including the use of export credits for agricultural products. Emphasis should be placed on developing markets for high-value products. Food aid can be a valuable tool in market development, but programs should be directed to encourage, rather than to discourage, the development of local food security in nations facing food shortages.
Trade Embargoes
In order to recapture and maintain foreign markets, the United States must demonstrate that it is a reliable supplier. To ensure that past mistakes in the use of foreign trade embargoes are not repeated, NCSL opposes any embargo of food and medicinal products, unless that embargo includes all trade with the target country.
Export Controls
America must maintain strong export controls to protect our national security. But, as the rest of the world catches up to the United States in high-technology fields, we must ensure that our control system protects our security without hurting our economic interests.
August 2012
Free Trade and Federalism
The National Conference of State Legislatures (NCSL) believes that trade has the potential to improve the livelihoods of Americans and thus supports efforts to expand U.S. exports through well-crafted international trade agreements. However, NCSL also believes that these agreements must be harmonized with traditional American values of constitutional federalism. In particular, reservations can be made to trade and investment agreements that limit preemption of state law and that preserve the authority of state legislatures. Further, implementing legislation for trade and investment agreements can and should be crafted to include protections for our constitutional system of federalism. These measures, among others, are necessary to ensure that international trade agreements do not adversely impact state budgets or constrain state regulatory authority. Without them, NCSL will be unable to support such trade and investment agreements.
Trade that Protects State Sovereignty
The states are committed and prepared to treat foreign firms that do business within their borders in a nondiscriminatory fashion, under a standard based on the broad protection afforded by the Commerce Clause and the Foreign Commerce Clause of the U.S. Constitution. What the states are not prepared to accept, however, is a challenge to their sovereignty and to state authority based on arbitrary and unreasonable standards of discrimination against foreign commerce, similar to that employed by the GATT panel in the so-called Beer II decision. In order to better safeguard state sovereignty, the USTR should be guided by the following recommendations in all trade negotiations.
First, reservations must be made to trade and investment agreements to “carve out” state laws that might otherwise be subject to challenge. Particular care must be exercised to ensure that state tax laws and revenue systems are not subject to unjustified challenge under international agreements. Provisions must also be made in federal implementing legislation that commit the federal government to protect state lawmaking authority when it is exercised in conformity with accepted U.S. constitutional principles of nondiscrimination against foreign commerce.
Second, NCSL encourages the Office of the United States Trade Representative (USTR) to utilize the “positive list” approach for making services, procurement, and investment commitments in trade agreements. This approach allows states to know more precisely the areas of the economy and state authority implicated in a trade agreement and would avoid the kind of serious problems we now face in the area of internet gambling. A “negative list” approach commits the United States to implement trade disciplines on all covered sectors unless areas or state laws are specifically exempted in the annexes of the agreement. USTR should acquiesce to a “negative list” approach only as a last resort. If the federal government agrees to a “negative list” approach, then the annexes listing exemptions should retain the unbound sectors and the limits of U.S. commitments that exempt state laws.
Following appropriate consultations with USTR, the states must be able to set and adjust their commitments – a right the states have and which USTR has repeatedly recognized. USTR should therefore make clear to trade negotiating partners that U.S. states retain the ability to make adjustments to commitments regarding state-level services, procurement, and investment policies.
Finally, NCSL encourages USTR and its trade negotiation colleagues in the federal government to develop economic and non-economic impact statements for agreements under negotiation. These could resemble the state and local analyses conducted by the Congressional Budget Office. NCSL recognizes that such analyses could be politically sensitive and could affect negotiation strategies employed by other countries; therefore, it would be understandable if such analyses were shared exclusively with the Intergovernmental Policy Advisory Group (IGPAC). It is important that state officials have access to such information before determining whether they can support an agreement.
Private Rights of Action and Investor-State Disputes
Following the passage of the North American Free Trade Agreement (NAFTA) in the 1990s, several foreign investors have used the “investor-state” provisions of that agreement to attack state laws and state court decisions before an international tribunal. By providing access to international investment arbitration by foreign investors, NAFTA and various related Free Trade Agreements (FTAs) provide greater procedural rights for review of claims against U.S. law and policy than would be provided to a U.S. investor under similar circumstances. Consequently, the decisions of these tribunals have had an adverse impact on state sovereignty and federalism. Unfortunately, the “no greater rights” language in the 2002 Trade Promotion Authority (TPA) has been interpreted to cover only substantive rights. The ability of foreign investors to bring claims in front of an international investment tribunal, as opposed to through the U.S. courts, is clearly a greater procedural right than that enjoyed by U.S. investors; and NCSL is concerned that these tribunals, because they are frequently unfamiliar with U.S. federalism and jurisprudence, would in any case provide foreign investors with greater substantive rights. At present such language is not inserted into the operational text of investment chapters of these trade agreements, but rather, is only found in the preamble. NCSL will only support a grant of presidential trade negotiating authority if such a grant of authority includes a “no greater procedural or substantive rights” mandate. NCSL is committed to working with USTR and other federal agencies as they interpret and apply “no greater procedural or substantive rights” language to trade agreement negotiations.
Trade agreement implementing language must include provisions that deny any new private right of action in U.S. courts or before international dispute resolution panels based on international trade or investment agreements. Implementing legislation must also include provisions stating that neither the decisions of international dispute resolution panels nor international trade and investment agreements themselves are binding on the states as a matter of U.S. law. Implementing legislation for any agreement must include provisions that promote effective and meaningful consultation between the states and the federal government related to any dispute involving state law or any dispute that could prompt retaliation against states. These provisions should include a timetable for prompt notice to states of a potential state issue, as well as the right of attorneys for the state to participate as part of the “team” defending a state law before international tribunals. States must also be given the right to file amicus briefs before international dispute resolution panels, both independently and collectively through state organizations such as NCSL. It is imperative that when state laws are under challenge in international proceedings, the federal government defend state laws as vigorously as it defends federal law.
The federal government retains the power to sue a state to enforce international trade agreements. However, NCSL urges the federal government to assure states that the federal government will not seek to preempt state law as a means of enforcing compliance with an international agreement unless Congress has expressed clear intent to preempt state law in implementing legislation or other law. Likewise, the federal government must not withhold federal funds otherwise appropriated by Congress to a state as a means of enforcing compliance with provisions of an international agreement. Specifically, the federal government must indemnify the states for costs incurred relating to trade challenges and ensure that the federal government will not seek to use administrative measures (such as withholding of payments) to compel compliance or to pay a damage award.
Because the federal government retains the power to sue a state to enforce international agreements, federal legislation implementing any new trade or investment accord must include appropriate protections for the states related to rules of procedure, evidence, and remedies in such litigation. The federal government must bear the burden of proof in court showing that state law is inconsistent with an international agreement, regardless of the finding of an international dispute resolution panel. The President must be required, at least 30 days before the Justice Department files suit against a state, to file a report with Congress justifying its proposed action. In the event of an unfavorable judgment, states must be protected from financial liability. If the federal government agrees to allow foreign firms to collect money damages for “harm” caused by a state law, then the federal government must bear the burden of any such award by international tribunals and not seek to shift the cost to states in any manner.
Additionally, state Offices of Attorney General must be fairly compensated by the federal government for the time and expense associated with defending against a foreign investor claim. The absence of such a requirement has led to a kind of “unfunded mandate,” such as was experienced by the California Department of Justice during its preparations for defense in the NAFTA “Methanex” case.
Consultation
The President, the U.S. Trade Representative, and other federal agencies involved in negotiating trade agreements must remain cognizant of the intimate role that state legislators play in crafting state laws, policies, and programs directly affected by today’s international commercial agreements. It is imperative that the USTR and other agencies consult with state legislators and NCSL prior to the outset of trade negotiations in order to ensure that both the negotiators and state legislators are aware of any state laws, policies, or programs that may be impacted by a negotiated agreement.
In general, NCSL remains very concerned about the manner in which the federal government consults with states on trade issues. NCSL applauds efforts by the U.S. Trade Representative to work with IGPAC and looks forward to full and active participation in this body. We are also encouraged by USTR’s move away from solely relying on the Single Point of Contact (SPOC) system for collecting information from states and for relaying important information to states. NCSL encourages USTR and other federal agencies involved in trade negotiations to develop effective systems of communication with state and local officials that respect the fact that many public policy decisions require approval or action by both legislative and executive governmental institutions, that incorporate all branches of government and that, as appropriate, rely on state and local officials’ national associations for information collection and dissemination. Such information collection and dissemination efforts must respect both the needs and time frames of negotiations, but also the many demands on the time and attention of state policymakers by allowing enough time for sufficient study and appropriate response.
NCSL notes that a number of states have created oversight committees or state commissions that study the impact of international trade agreements on the state’s economy and regulatory authority. It is appropriate for USTR to consult with these state-level bodies.
NCSL also notes the proposal put forward by IGPAC in August 2004 for the creation of a standing federal-state commission on international trade. IGPAC also proposed: 1) trade policy capacity with resources relevant to state level concerns; 2) information sharing between USTR and states and trade policy dialogue between states; 3) improvement of trade data and analysis; 4) discussion of procurement from the state perspective; 5) improvement in the state/federal trade development partnership; and 6) assessment of the costs and benefits assessment of the costs and benefits of federal trade development funding allocated to agriculture, industries, services and technologies. NCSL strongly supports the content of this proposal, the outline of which has been included in recent IGPAC reports to USTR regarding new free trade agreements. NCSL requests that USTR provide a statement of its position on the IGPAC proposal or a written response detailing USTR concerns regarding aspects of the standing commission proposal. It is unfortunate that this good-faith effort by IGPAC to model possible new approaches to federal-state consultation has been ignored.
Procurement
The United States is party to the World Trade Organization’s Agreement on Government Procure-ment (GPA). When negotiating the GPA, USTR solicited the state governors for permission to include state procurement and to bind state procurement processes to the GPA. USTR asserts that 37 states were voluntarily bound through this process to the GPA. In September 2003, USTR requested governors to make similar commitments to several FTAs being negotiated at the time.
State procurement policy and practices often are set in state law and are sometimes designed to serve social or economic purposes beyond the mere provision of goods and services for state government use. Unfortunately, current FTAs could prohibit state and local governments from passing new laws favoring local suppliers in government contracts for goods and services and bar governments from imposing technical specifications in its public contracts if those specifications pose an “unnecessary” barrier to trade. The agreements’ national treatment rules will prohibit governments from favoring local suppliers, even when there are good social and economic development reasons to do so. The agreements’ rules on technical specifications and supplier qualifications could allow foreign companies to ask their home government to challenge procurement rules designed to achieve social or development goals, such as incorporating living wage provisions and environmental quality standards into the production of goods and services, assistance to minority-owned firms, and local purchasing preferences. NCSL encourages USTR to ensure that states can retain the ability to use procurement policy to promote these public interests while negotiating any modifications to GPA or procurement chapters in FTAs.
It is unacceptable that state legislatures are not being consulted regarding GPA and other procurement-related issues. Under most state constitutions, the legislature has substantial power to enact spending measures and to set procurement policies. NCSL demands that USTR consult with state legislatures about state procurement practices. USTR should only be able to bind a state to an international procurement agreement following formal consent from the state legislature. We are particularly troubled by the recently negotiated U.S.-Korea FTA, which by reference binds all GPA states to the additional provisions negotiated under the procurement chapter of that agreement.
Services
Services constitute an important and growing segment of the American and global economies. NCSL concurs that it is critical that the United States remain competitive in services sectors. However, international competition in service industries cannot compromise state constitutional or traditional authority or in any way impinge upon states’ ability to protect the public interest. Prior, during, and after service sector-related negotiations, USTR must undertake consultations with state legislatures, where policies about government-provided services, regulation of monopolies, provision of essential services (such as energy, water, health, education, transportation, or public safety), or privatization are set. Consultation with state legislatures is absolutely necessary prior to, during, and after a General Agreement on Trade in Services (GATS) round or the negotiation of an FTA including services provisions. NCSL applauds the consultations that have been undertaken related to electric utility services and encourages USTR to devote substantially the same attention and effort, potentially through similar mechanisms, to consultations related to other sectors. We are particularly concerned about the inclusion of higher education, which the United States has proposed to subject to WTO jurisdiction in the context of the Doha Round. This proposal may have consequences for state higher education subsidies and other state regulatory policies related to higher education that should be carefully examined before the sector is committed. The WTO gambling suit illustrates the dangers of committing service sectors without a thorough vetting by appropriate state officials.
Regulation of gaming interests ranging from lotteries to horseracing has long been a prerogative of the states, and state policymakers have chosen vastly different approaches as they balance varying public morals, revenue, land-use, and other considerations. As the World Trade Organization Dispute Resolution Body has ruled that the United States did make a commitment covering gambling under “other recreational services,” that the United States is in violation of that commitment, and that the United States has failed to comply with its ruling, NCSL appreciates USTR’s invocation of GATS article XXI to withdraw the U.S. commitment and calls on USTR to consult effectively, meaningfully, and timely with the states as USTR negotiates compensatory concessions to our trading partners. Further, NCSL endorses the use of article XXI to withdraw other commitments under GATS that may run counter to state policy, regulatory, or police authority.
Adjusting to Free Trade
NCSL acknowledges that trade can bolster economies and increase standards of living. However, there are many who may suffer as states, localities, manufacturing or service industries, small farms, and communities adjust to the new realities of open markets. NCSL supports federal efforts to provide meaningful Trade Adjustment Assistance (TAA) to affected workers. NCSL encourages Congress and the implementing federal agencies:
- to ensure that the funding for TAA programs is sufficient to meet current and future needs;
- to expand benefits eligibility to service-sector and agricultural workers impacted by trade;
- to work with NCSL and state legislatures to ensure that TAA programs are flexible to suit different states’ needs;
- to engage in aggressive outreach to ensure that workers, employers, and communities are informed of the benefits of the TAA program and are able to effectively utilize the program;
- to ensure that adversely affected workers are provided the full income support, training, reemployment services and other services and benefits to which they are entitled, and that claims for such benefits are reviewed expeditiously and objectively;
- to simplify procedures for determining TAA eligibility; and
- to refrain from modifying TAA in any way that would jeopardize the program’s mandate to help trade-affected workers who have lost their jobs as a result of increased imports or shifts in production out of the United States.
In general, the federal government should work with the states and the private sector to develop lifetime educational and workforce training opportunities that prepare Americans to compete successfully in a changing global economy.
Building Capacity in Trading Partners
NSCL recognizes that many developing countries do not have the institutions or capacity to implement and enforce the numerous obligations assumed under an FTA. NCSL supports federal efforts to fund programs to assist in building the trade capacity and trade agreement compliance of developing countries. Moreover, NCSL recognizes that developing countries need additional assistance to help them take advantage of opportunities created by trade in order to alleviate poverty. We therefore support federal funding for infrastructure and rural development so that any benefits of trade may be more broadly shared. Funds should also be directed to ensure that laws and institutions related to labor and the environment are improved and strengthened.
Support for Trade Negotiating Representation
NCSL recognizes that the negotiation of trade agreements – whether bilateral, multilateral, or global – on such a range of goods, services, and investment opportunities as America’s trillion-dollar economy demands is a monumental undertaking. NCSL supports the authorization and appropriation of adequate resources so that USTR is best equipped to fully consult with state legislatures in order to represent their interests and the American public in trade negotiations while protecting and preserving American constitutional principles.
August 2010
Maintaining the Solvency of Social Security
The National Conference of State Legislatures (NCSL) strongly believes that the federal government must preserve the financial integrity of the Social Security system and assure the long-term solvency of the program. State legislatures believe that Social Security must ensure a safety net for low-income older retirees as well as provide survivor benefits and disability insurance. It is critical that all workers paying into the system have confidence that Social Security will continue to be available to them at retirement or to provide for their survivors after their death. NCSL believes that efforts to assure solvency should strengthen the existing program upon which so many beneficiaries and their families rely. Social Security reform should continue to encourage private savings and employer-provided pension plans as important components of retirement savings.
While Social Security currently has a surplus, the Social Security Board of Trustees report of 2008 predicts that in 2020 2017 trust fund expenditures will begin to exceed payroll tax revenues and interest on accumulated assets will need to be drawn down to pay benefits. By 2041, the trust funds will be exhausted.
The Administration and Congress face difficult choices in maintaining the solvency of Social Security. As Congress considers alternatives to maintain Social Security solvency, it must analyze and understand the impact of these proposals on states, taxpayers, state budgets, and state laws. Social Security reform will have major impacts on state employees, teachers, local government, private employers and taxpayers. State legislators oppose reform proposals that finance this shortfall by shifting federal costs to state budgets. If Social Security does not continue to provide a stable form of assistance to the elderly, state low-income programs and state budgets would be severely impacted. NCSL strongly opposes any efforts to reform Social Security that create unfunded mandates for the states or preempt state laws and authority.
NCSL encourages federal policymakers to consider the following concerns when deliberating Social Security reform proposals:
Mandatory Social Security Coverage of State and Local Government Employees
NCSL has long opposed further involvement of the federal government in the administration of public retirement plans including the expansion of mandated Social Security coverage to state and local employees not currently covered under the system. NCSL maintains that state and local governments should be allowed to affiliate their retirement plans voluntarily with Social Security, as was the case before passage of the Omnibus Budget Reconciliation Act of 1990. The imposition of mandatory coverage on state and local employees who are not currently required to contribute to the system constitutes a direct cost shift to states and will have a detrimental effect on state budgets, state retirement plans and the retirement savings of state and local employees. The extension of mandatory coverage to new categories of state and local employees does not solve the insolvency problem and creates new obligations for the system. NCSL's policy, "Mandatory Social Security Coverage of State and Local Government Employees," continues to oppose this mandate.
Increasing the Return on Social Security Investments
States and local retirement system choices provide models for federal reform of Social Security. We encourage Congress and the Administration to review state laws, funding choices and programs, whether they choose to create individual private accounts, authorize public investment in private markets, or pursue other options for reform. The return on Social Security has historically been far below the return on public and private pension plan investments in the market. NCSL believes that Congress and the Administration must act to increase the return on Social Security investments. NCSL believes that the best means to increase the return on Social Security investments is through some level of investment in the private markets. NCSL maintains that this investment must:
- Be administered through an independent board well insulated from political interference;
- Include Social Security beneficiaries on the board;
- Be invested for the exclusive benefit of Social Security beneficiaries as in state pension law;
- Guarantee the current level of Social Security benefits;
- Be protected from steep administrative costs;
- Be used solely for retirement, survivor benefits and disability; and
- Not preempt state laws governing securities fraud;
General revenue from sources other than FICA should not be used to finance changes to the existing system that would allow market investment or private accounts and changes to the existing system should not increase the federal deficit, compromise funding of state-federal partnerships or require more borrowing that would add to the federal debt.
A strong public education program must accompany reform that would create individual accounts or provide for market investment so that beneficiaries will have the knowledge necessary to make good investment decisions.
Guarding Against Fraud and Abuse
NCSL strongly opposes any proposal that would preempt state authority to regulate securities or give sole authority to regulate investment fraud to the Securities and Exchange Commission (SEC). States traditionally have been the protectors of individual and small investors and should maintain this role without federal intervention or preemption.
Many states have created special laws and consumer protection programs to prevent white-collar crimes, particularly against the elderly. These laws are critical to the protection of senior citizens. NCSL strongly opposes any effort to preempt state authority to regulate crimes against the elderly. Individuals must be protected from fraud through the strong enforcement of laws governing securities fraud.
NCSL is very concerned about identity theft and fraudulent uses of identity documents. While NCSL strongly supports efforts to protect the integrity of Social Security numbers (SSNs), such efforts cannot be achieved through unfunded federal mandates on state and local government. Many states have implemented or are considering statutes to protect the integrity and restrict certain usages of SSNs.
The SSN was originally created to administer the Social Security program. However, it is extensively used by state, local and tribal governments for both record keeping and identification. The federal government often requires states to use SSNs in program management and data matching, especially in the delivery of health and human services programs. SSNs are used in vital records, paternity and divorce case documents, Motor Vehicle/Drivers License documentation, child support enforcement and administration, state retirement systems and to prevent fraudulent access to benefits and services.
Numerous pieces of Congressional legislation have been introduced in recent years that would require states to restrict the display, purchase or sale of Social Security numbers. The Congressional Budget Office found on several occasions that the cost of such provisions to state, local and tribal governments is likely to exceed the threshold amount for an intergovernmental mandate in at least one of the first five years following the date the mandates go into effect. These provisions would apply to a wide range of state and local agencies and would entail time-consuming efforts for state agencies to comply. States would have to make systemic changes to alter their document maintenance and retrieval systems. Some potential areas of cost include changes in information technology to ensure that systems only display SSNs in instances where access is permissible and labor costs to screen government documents for SSNs and then redact them before allowing citizens to access them. In many cases, especially death certificates, such redaction would have to be done by hand.
NCSL calls upon the federal government to abide by the provisions of the Unfunded Mandate Reform Act of 1995 and abandon efforts to put burdensome, unrealistic and costly mandates on state and local governments. NCSL supports a federal role in providing technical support, highlighting successful models, facilitating discussion on this issue and providing necessary funding for changes made at the discretion of the states. NCSL calls upon the federal government to begin by addressing flaws in the issuance of SSNs and to examine other ways to safeguard individual privacy, including consideration of password protection of SSNs. NCSL encourages the federal government to work with the states to develop joint recommendations on Social Security number usage.
Raising the Retirement Age
Prior Social Security reform efforts, to adjust for longer life expectancies, included a gradual increase in the "full retirement age". In 2002, the full retirement age, the age at which beneficiaries are eligible to receive unreduced Social Security benefits, began to rise gradually from 65 to 67. Contemporary solvency proposals that would increase the full retirement age even higher raise serious concerns for beneficiaries. While Americans are living longer, many workers are choosing to retire earlier than before. Conversely, some workers may be unable to continue working due to physical limitations, age discrimination or other limitations. Still other workers with shorter than average life expectancies, particularly African Americans, may experience little return from Social Security for themselves and their survivors if the full retirement age is increased.
Currently, public safety employees of state and local government are exempt from actuarial reductions to their public pension benefits. Efforts to raise the full retirement age disproportionately harm both private sector employees and non-public safety state and local employees who do not contribute to Social Security. Under current law, the age at which a more highly paid beneficiary may receive an unreduced private pension benefit is tied to the Social Security full retirement age. Due to this coupling, relatively highly compensated long-term private pension beneficiaries who choose to retire before age 65 receive an actuarially reduced benefit for life even if their employer deems them eligible to receive a full private pension benefit prior to age 65. The age at which public employees, excluding public safety employees, may receive an unreduced public pension benefit is not tied to the Social Security full retirement age but is instead defined in federal Internal Revenue Code policy, which sets the age at 62. In recognition of public safety concerns, public safety workers, like police and fire, are exempt from these actuarial reductions. More highly-compensated long-term non-public safety state and local employees who do not contribute to Social Security rely on their public pensions for the bulk of their retirement security. Actuarial reductions to public pension benefits disproportionately burden these employees. NCSL believes that public employers should be allowed to provide full pension benefits to all of their employees without the imposition of these Internal Revenue Code limits. Further, for purposes of consistency, NCSL supports the uncoupling of private sector benefit limits from the Social Security full retirement age.
NCSL encourages Congress and the Administration to consider the impact that raising the retirement age may have on various groups of workers. NCSL opposes further increases of the full retirement age.
Raising the Payroll Tax Rate
Raising the payroll tax rate constitutes a direct cost shift to employers and employees for the cost of Social Security solvency. States, as employers, would bear increased costs if the payroll tax rate were increased. As well, the payroll tax is regressive and an increase would disproportionately affect workers making less than the wage base. An increase in the payroll tax rate may also provide disincentives to employer-provided pension benefits. NCSL opposes an increase in the payroll tax rate.
Maintaining Benefits for the Poor Elderly and Survivors
Social Security prevents massive poverty among the elderly. Among elderly Social Security beneficiaries, 52% of married couples and 72% of unmarried persons receive 50% or more of their income from Social Security; 20% of married couples and about 41% of unmarried persons rely on Social Security for 90% or more of their income. Without Social Security, over half of all women 65 or older (married and nonmarried) and 40% of all older men would be poor.
Similarly, Social Security replaces lost income for workers and their spouses and children when a worker becomes disabled, dies or retires. For a young family, Social Security provides the equivalent of a $443,000 life insurance policy and a $413,000 disability insurance policy. Retired workers and their dependents account for 69% of total benefits paid. Disabled workers and their dependents account for 18% of total benefits paid. Survivors of deceased workers account for 13% of total benefits paid. Almost half (48%) of families with a disabled worker rely on Social Security benefits for half or more of their family income. 18% rely on benefits for nearly all of their income and about 6% have no other income besides Social Security.
Almost 50 million Americans—nearly one in four households—receive monthly Social Security checks. In addition to the over 31 million retirees who collect Social Security, the program is the nation’s largest children’s program. Social Security supports 5 million American children, between 7% and 8% of all American children. In contrast, about 3 million children receive family income through TANF. The role Social Security benefits play in alleviating and preventing childhood poverty should not be lost in efforts to restore solvency or reform Social Security. Similarly, Social security provides lifetime income support to about 777,000 disabled adult children based on a parent’s work record.
Modification of the Earnings Limit
NCSL has long supported increasing the earnings test for older workers, especially those who provide essential child care services. Under current law, beneficiaries under the full retirement age may earn up to $12,000 annually without reducing the amount of benefits they receive from Social Security, after that amount Social Security benefits are reduced by $1 for every $2 of earnings. Beneficiaries who retire at their full retirement age may earn up to $31,800 in the year that they retire without receiving a reduced benefit. In the year that beneficiaries reach full retirement age earnings above the annual limit reduce benefits by $1 for every $3 of earnings.
NCSL supports the elimination of or an increase in the earnings limit on wages earned by Social Security beneficiaries. As the worker-to-beneficiary ratio continues to fall, older workers may become increasingly important to productivity. This penalty severely inhibits seniors who would prefer to and continue to be able to work.
Means-Testing of Beneficiaries
Social Security benefits are calculated based on earnings and time in the workforce. Although workers contribute the same percentage of payroll taxes to the system, a combined employer-employee contribution of 12.4% of payroll up to $90,000, lower-income workers receive a higher proportion of their contributions in benefits than to higher-income workers. NCSL opposes proposals to means-test eligibility to receive Social Security. Such proposals may reduce overall public support for Social Security and are not necessary to achieve Social Security solvency.
August 2011
Mine Safety
The Mine Improvement and New Emergency Response Act of 2006 (MINER Act) revised the safety, inspection, rescue and emergency standards iterated under the Federal Mine Safety and Health Act of 1977. The MINER Act was the most comprehensive and significant federal mine safety legislation passed in decades. The National Conference of State Legislatures (NCSL) strongly supports the efforts of the federal government to improve mine safety. However, NCSL strongly encourages the Congress and the Administration to support flexibility and state discretion in mine safety programs. Mine safety is a joint federal and state effort, and federal action should not preclude states from pursuing stricter and stronger approaches.
Recent events have raised new concerns about the safety of the nation’s mines, the implementation of the MINER Act and the method of mining known as ”room and pillar and “barrier retreat mining.” ”Room and pillar” involves excavating a chamber or room in an underground mine and leaving pillars of material as support. When the area has been completely mined, the pillars are then removed in a retreating pattern back towards the mine’s entrance causing an intentional collapse and the remaining material or deposits are removed. “Barrier pillar” refers to the method of mining where longwall panels are constructed to either support the roof, other longwall areas and the mains, or between new and old workings. Questions have been raised about the safety of retreat mining, particularly in regards to barrier pillar mining, and whether it is sufficiently regulated.
The nation’s legislators strongly support the need to continue to evaluate the safety of the nation’s mines and have been pioneers in establishing strong mine safety policy and laws. The National Conference of State Legislatures urges the federal government to supplement and not supplant current state efforts to improve mine safety, and to work in conjunction with states to ensure the safety of the nation’s mines. NCSL congratulates the Congress in directing the Government Accountability Office (GAO) to study whether the MINER Act is being fully implemented and if additional safety, inspection, rescue and emergency standards are needed to ensure the safety of the nation’s mines and those who work in them, and continue to support further studies. NCSL strongly encourages the Mine Safety and Health Administration (MSHA) and the National Institutes of Occupational Safety and Health (NIOSH) to further study the practice of retreat mining and the conditions in which it is considered to be a safe practice.
August 2011
NCSL Supports Travel Promotion and Tourism
WHEREAS, travel and tourism is a powerful economic generator in all 50 states, accounting for $740 billion in expenditures, $110 billion in local, state and federal taxes and 7.5 million jobs in 2007; and
WHEREAS, travel is America’s leading service sector export, generating $142 billion in 2008 from international travelers; and
WHEREAS, travel and tourism creates one of the nation’s only balance of trade surpluses (valued at $8.3 billion in 2007); and
WHEREAS, the world travel market is expanding, but the U.S. share has declined 35 percent over the past 15 years; and
WHEREAS, travel to the United States from overseas destinations has yet to rebound to pre-9/11 levels; and
WHEREAS, since 9/11 the United States is often perceived to no longer be a friendly and welcoming destination, which has cost America $150 billion in lost visitor spending and 250,000 American jobs – losses that affect every state in the country; and
WHEREAS, international travelers are 74 percent more likely to have a favorable opinion of America and Americans after having visited; and
WHEREAS, legislatures in all 50 states appreciate the value of travel and tourism and currently operate programs to promote their states to travelers domestically and internationally; and
WHEREAS, all major industrialized nations except the United States have national tourism policies and spend significant funds on promoting their destinations overseas, and, in turn, see substantial returns on their investments; and
WHEREAS, the facilitation of secure, yet efficient, travel across American borders must be a priority of the federal government; and
WHEREAS, the National Conference of State Legislatures (NCSL) policy on Arts, Culture and Economic Development recognizes the importance of tourism to state economic development and service sector employment and encourages the federal government to work collaboratively with the states to ensure the vitality of this sector of the economy; and
WHEREAS, the NCSL policy on The Western Hemisphere Travel Initiative reiterates the importance of tourism to states' economies and acknowledges the dramatic effects that restrictions and impediments to cross-border travel can have on America's domestic tourism industry; and
WHEREAS, U.S. Senator Dorgan of North Dakota and U.S. Representative Delahunt of Massachusetts have introduced companion bills in Congress each entitled the Travel Promotion Act of 2009, which creates a public-private partnership to educate travelers about U.S. travel policies and promote the United States as a destination of choice; and
WHEREAS, the Travel Promotion Act of 2009 will benefit every state, create jobs, enhance national security, contribute to a favorable balance of trade for the U.S. economy, and improve our national image around the world; and
NOW, THEREFORE, BE IT RESOLVED, that the National Conference of State Legislatures now calls upon the U.S. Congress to promptly pass the Travel Promotion Act of 2009 ( S. 1023/H.R. 2935) and thus create a public-private partnership that will restore the U.S. to its place as the world's premier international visitor destination; and
BE IT FURTHER RESOLVED, that NCSL believes that it is imperative for a state legislator to sit on the Corporation for Travel Promotion Board of Directors because state travel and tourism promotion programs operate under authority granted by and with funding provided by state legislatures.
BE IT FURTHER RESOLVED, that NCSL calls upon Congress and the federal government to ensure that federal travel and tourism promotion efforts work in concert and collaboratively with state trade and tourism promotion efforts to prevent duplication, confusion, and preemption; and
BE IT FURTHER RESOLVED, that NCSL urges the federal government to implement reasonable visa and WHTI policy reforms -- including but not limited to the reduction of interview wait times, the use of advanced technology for visa interviews and the strengthening and expansion of the Visa Waiver Program -- so that potential tourists are not needlessly discouraged from visiting the United States while simultaneously ensuring homeland security.
August 2010
Presidential Trade Promotion Authority
The National Conference of State Legislatures (NCSL) supports efforts to negotiate trade agreements that secure free and open access to overseas markets for American products. In negotiating new agreements, adequate federalism protections must be included. NCSL has sought to work closely with the United States Trade Representative (USTR) and Congress to ensure that these concerns are taken into account in recent trade and investment agreements and their implementing legislation. During the 2002 renewal of Presidential Trade Promotion Authority (TPA), NCSL worked with the U.S. Congress and other national state and local government organizations to ensure that necessary protections for state and local authority were understood and appreciated.
Implementing legislation for the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) reflects a partnership between USTR, Congress and NCSL in providing federalism protections while at the same time opening overseas markets to American products. NCSL supports continued cooperation and opportunities to build on this relationship as future trade agreements are negotiated. However, NCSL is concerned that investment chapters containing investor-state dispute resolution provisions similar to Chapter 11 of the North American Free Trade Agreement (NAFTA), services chapters, and procurement chapters could threaten basic state policy and regulatory authority and practices. NCSL believes that federalism protections similar to those provided in implementing legislation for the GATT and consistent with NCSL's "Free Trade and Federalism" policy must be incorporated into any new trade or investment agreement and its implementing legislation.
With earnest caveats for strong mandates that future trade agreements grant “no greater rights” to foreign investors than those granted to U.S. citizens, NCSL supported TPA as adopted in 2002. However, NCSL fears that the Central American Free Trade Agreement (CAFTA), signed in May 2004 and put into effect by Congress in the summer of 2005, does not fully enshrine the principle of “no greater rights” as it was intended. In particular, NCSL is concerned that investment provisions in CAFTA may have opened new and troubling opportunities for challenges to the sovereign states’ policymaking and regulatory authority. Further, NCSL is concerned about the inadequate mechanisms for state notification and consultation utilized by USTR, as evidenced by USTR’s rejection of suggestions made by the Intergovernmental Policy Advisory Committee (IGPAC) for improving consultation and, in particular, the suggestion that USTR carbon copy requests made of state governors to that state’s legislative leaders.
NCSL continues to support the “no greater rights” doctrine and enjoins trade negotiators to interpret TPA’s “no greater rights” in the broadest sense possible for the protection of state sovereignty and American federalism in negotiations for both goods and services. NCSL believes that this interpretation should incorporate substantive considerations as well as principles of takings as interpreted by the U.S. Supreme Court and procedural matters consistent with U.S. constitutional due process. NCSL is committed to working with USTR and other federal agencies as they interpret and apply TPA’s “no greater rights” language to trade agreement negotiations.
NCSL supports the negotiation of free trade agreements that also safeguard the U.S. system of federalism and looks forward to working with the Congress to devise a trade promotion authority bill that contains adequate protections for state sovereignty. In particular, NCSL will support TPA legislation that requires any agreement negotiated under that authority:
- grant “no greater rights,” both substantively and procedurally, to foreign investors than granted to U.S. citizens;
- respect state sovereignty and state governmental functions;
- protect state police and regulatory authorities when exercised in conformity with accepted U.S. constitutional principles of nondiscrimination against foreign commerce;
- “grandfather” existing state laws;
- utilize an “opt in” or “positive list” process for making commitments relative to state-level authorities or interests;
- fully indemnify the states for any monetary claims brought against the United States under an agreement as a result of state action;
- require express congressional action to legitimize preemption of a state law to comply with a trade agreement;
- promote effective and meaningful consultation between the states and the federal government related to any dispute involving state law or any dispute that could prompt retaliation against states;
- require federal or other reimbursement of state expenses incurred in trade disputes;
- include enforceable labor and environmental standards; and
- be briefed to the IGPAC as the first round of negotiations concludes.
August 2011
Public Pensions
There are approximately 2,600 public employee pension plans in the United States covering 18.5 million state and local government workers. In June, 2008, these plans held nearly $3 trillion in assets for the benefit of plan participants and their beneficiaries. State and local governments have been responsible partners in providing retirement savings vehicles to virtually all full-time state and local employees. They also have a strong commitment to the retirement security of their employees and retirees by providing sound, secure benefits in retirement.
Additionally, state and local public pension plans are backed by their respective state or local governments, which are permanent institutions that have a strong moral, contractual, and, in some cases, constitutional commitment to back their pension liabilities. This strong commitment assures state and local employees and retirees that they will receive the benefits to which they are entitled.
Generally, public plans adhere to the following:
- They are administered through boards of trustees, which, unlike private plans, generally include representatives of retiree and active members.
- Boards act for the exclusive benefit of members of the pension system, as required under state trust law.
- Plan fiduciaries include both individuals responsible for the operation of the plans in accordance with applicable laws.
- Fiduciaries are subject to strict fiduciary and trust law that governs their conduct on behalf of the plan, including the investment of the plan's assets. Breaches of fiduciary trust laws result in civil or criminal penalties.
- In addition to fiduciary law, public pension plan boards and administrators are subject to codes of ethics, conflicts of interest laws, and criminal laws. Violators may be punished by imprisonment, fines, or both.
- Routinely provide comprehensive disclosure, investment education and benefit statements to plan participants.
The National Conference of State Legislatures (NCSL) is concerned that efforts by the federal government to intrude into the administration and regulation of these plans will result in preemptive, redundant, costly and administratively burdensome requirements. NCSL firmly opposes federal legislative and regulatory proposals that would burden public sector pension plans with requirements intended to address private sector pension concerns. NCSL maintains that any additional federal regulation of state and local pension plans, systems and assets is a violation of the sovereign power of state governments, and urges that current regulations that impose excessive and unnecessary administrative costs on states and localities be simplified or eliminated.
Federal Reductions to Social Security Benefits
Under some circumstances, the Social Security Administration reduces benefits to state and local employees who earn government pensions through work not covered by Social Security. Since 1983, the Social Security Administration has reduced worker and spousal benefits through two provisions called the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP). There have been numerous proposals before Congress to repeal or to limit the application of the GPO and the WEP. The National Conference of State Legislatures supports efforts by Congress and the Administration to address the inequities and unintended consequences to state and local government retirees caused by federal reductions of Social Security benefits. NCSL urges Congress to enact legislation that will reduce or eliminate the impact of the GPO and WEP on state and local government retirees, particularly those who have earned lower uncovered government pension benefits or partial benefits.
Finally, NCSL opposes any federal efforts to shift responsibility and costs for determining to whom these offsets should apply to state and local government employers and pension systems.
Mandatory Medicare and Social Security Coverage
On June 28, 1991, the U.S. Department of the Treasury and the Internal Revenue Service released final regulations and a revenue procedure under a new requirement included in the Omnibus Budget Reconciliation Act of 1990 (OBRA 1990). The law mandates full Social Security coverage, including Medicare, for public sector employees who are not members of a retirement system.
The National Conference of State Legislatures opposes expansion of mandatory Social Security and Medicare Coverage to public employees of state and local governments who are not already covered. NCSL believes that state and local governments should be allowed to affiliate their plans with Social Security and Medicare on a voluntary basis.
Taxation and Regulation
Public pension plans have been repeatedly targeted as a revenue source by the federal government. Both Congress and the Administration have considered taxing public plans through a direct tax on investments, penalties, or excise taxes under the U.S. Internal Revenue Code. The National Conference of State Legislatures believes that taxation of public pension plans violates a long-standing and sound component of federal tax policy, which exempts state plans from taxation. Therefore, NCSL calls upon Congress and the Administration to oppose taxation and excessive regulation of state pension and benefits plans. All states and many local governments sponsor a supplemental defined contribution plan in addition to the general retirement plan to allow participants to voluntarily to defer an additional portion of their salary in anticipation of retirement needs. Some states provide limited matching contributions to encourage supplemental plan participation. Federal legislation enacted over the past decade has simplified participation in, and the administration of, these supplemental arrangements. The National Conference of State Legislatures supports further efforts to improve existing arrangements and to provide simplification and flexibility to supplemental defined contribution plans when directed by state and local governments. However, NCSL opposes federal efforts aimed at increasing federal regulation, diminishing the plans' unique features and characteristics, and providing mandates that replace existing plans with methods designed for the private sector.
NCSL maintains that primary regulation for supplemental plans should remain with the states, and states should have the authority to tailor the design of the plans to the needs of the public sector workforce. Further we oppose efforts to supplant rather than supplement current savings, and efforts that could result in additional cost and complexity for state and local governments as well as for plan participants.
Finally, NCSL encourages federal policymakers and regulators to continue to recognize the distinctive characteristics of state and local governments and their supplemental retirement arrangements and keep these in mind when promulgating regulations or further legislative changes to these plans.
August 2012
Responsible Housing
Adequate and affordable housing is a necessary ingredient for community, education, workforce, and economic development. State legislators support the integration and coordination of public and private resources to make effective, affordable housing services available as means to preventing homelessness, to encouraging self-sufficiency, to promoting economic opportunity, or to promoting homeownership. NCSL encourages the Congress and the Administration to support flexibility and state discretion in housing programs and to avoid legislatively mandated set-asides in programs such as the HOME Investment Partnerships (HOME) program and the Low-Income Housing Tax Credit. NCSL encourages efforts to promote a greater state role in administering federal housing programs, subject to sufficient funding and flexibility.
Regulatory Impacts
NCSL is encouraged by the efforts of the Congress to review and reduce regulatory burden at the federal level. We request Congress and the Administration to fully review and examine the impact on housing affordability of relevant federal laws and regulations. It is imperative that state and local governments make land use decisions based on the unique needs of their jurisdiction without interference from the federal government.
Housing Choices
America's population and housing needs and preferences have become more diverse. NCSL recognizes that adequate and affordable housing can take many forms, including apartment dwellings, condominiums, cooperatives, single-family homes and manufactured housing. Federal housing policy must provide ample flexibility that allows state legislators the ability to fully utilize this entire range of possibilities as they craft affordable housing policy to meet the needs of their constituents.
Distressed Communities, Urban Sprawl, and Smart Growth
As the inner-cities core spread to the suburban corridors and as businesses and builders develop what may have been once green spaces, the desire by some for either limited or no growth may further impact the availability of affordable homes. Some states and localities have considered smart growth plans to ease the impacts of urban sprawl. Several localities have chosen to limit urban sprawl by preserving already affordable homes and apartments inside their boundaries.
While the National Conference of State Legislatures does not take a position as to whether a state or locality should consider or adopt any smart growth initiatives, NCSL opposes any federal mandate requiring states and/or local communities to adopt such long-term comprehensive plans. Rather, NCSL calls upon the Congress and the Administration to work with states and our cities in the development and redevelopment of infill sites in many of our older cities and inner suburbs. Many infill sites are brownfields; abandoned industrial sites with some kind of contaminant that could be a barrier to any redevelopment. To make these brownfields available for housing, Congress needs to give states flexibility to immunize project providers from future federal cleanup liability and provide the necessary funding to assist states in the clean-up of these sites.
Housing Counseling
The National Conference of State Legislatures endorses efforts both by the federal government and the private sector to make the dream of homeownership a reality for more Americans. NCSL is pleased to be a partner with our federal colleagues and the private sector in this endeavor and supports programs that help people determine the best housing option for them, promote financial literacy, as well as homeownership preparedness.
NCSL applauds efforts by the federal government to recognize this dilemma and to respond with housing counseling. These efforts should respond to a need and not simply become a federal mandate, should build upon and not replace state and local counseling programs, should provide complete flexibility for states to use any federal assistance to improve or establish counseling services, should recognize the variety of housing options available to U.S. residents and not endorse a single option, and should include adequate outreach components to reach those populations in most need of counseling and assistance. Federal housing counseling efforts should not siphon funds from proven and successful programs and should be separately and adequately funded.
Financing
States have developed an array of innovative housing affordability policies and are responding to the homeownership problem by issuing mortgage revenue bonds and establishing housing trust funds to expand homeownership opportunities for moderate-income families. NCSL is encouraged and supportive of public private partnership programs and initiatives that cut home buying transaction costs, reduce down payment and mortgage carrying costs, and increase the availability of financing.
NCSL encourages the federal government to consult state legislators and other state officials as voucher program reforms are designed to ensure that they will meet state needs, provide the flexibility we desire, avoid cost shifts to states, and continue with ample federal funding for program and administrative costs. Additionally, we urge the Congress to sustain funding levels sufficient to maintain existing vouchers and already committed project based Section 8 subsidies.
The HOME Investment Partnership program is a successful and proven model of a state-federal partnership that should be used in other housing and development areas. HOME was designed as a federal-state-local program, with states receiving a substantial share of the funding, having the flexibility to fit HOME funds into the full range of housing services, including homebuyer education and counseling, and having the authority to spend funds anywhere within a state rather than only in rural areas. NCSL encourages statutory and regulatory changes that further streamline and simplify HOME so that it is more responsive to state-identified needs. NCSL also supports effective federal programs and adequate funding to address the affordable housing and community development needs of rural America.
The Low-Income Housing Tax Credit is a vital tool in producing new, affordable housing. NCSL supports the Housing Credit Program as well as the creation of a state-administered homeownership tax credit to stimulate the production of homes for low-income families as long as it does not undermine investor interest in the Housing Credit.
Department of Housing and Urban Development
The National Conference of State Legislatures is supportive of efforts to revitalize the Department of Housing and Urban Development (HUD) and to reinvent its services delivery. State legislators are well aware of the promises of federal housing and development assistance for distressed communities within their states, only to see those resources tied up in the bureaucratic maze of HUD headquarters in Washington. NCSL stands ready to work with the Administration and Congress to reinvent HUD into a community development department which would work in partnership with state and local governments and the private sector to provide the tools and flexibility for empowering those Americans within distressed communities to become part of this nation's economic mainstream.
August 2010
Retiree and Employee Health Care Costs
Many state and local governments provide current and retired employees with access to group health care coverage, through their retirement systems or by some other mechanism. Some of these government employers cover all or part of the health care expenses for these retired plan members. Health care costs continue to rise at rates that threaten the ability of government employers to continue to provide these benefits, and out-of-pocket health care costs consume a growing percentage of retirement income for retired government employees.
State efforts to provide health care for retirees have also been challenged by Governmental Accounting Standards Board (GASB) accounting changes requiring states to report the full cost of these benefits. These requirements have caused many state and local governmental entities to consider greater funding of these benefits, plan design changes and increased contributions from current employees and retirees in the financing of these benefits. NCSL encourages GASB to provide an open dialogue with states as they continue to examine their current employee and retiree health care benefits and explore their options to meet these accounting requirements and funding obligations in the future.
Federal retiree health efforts represent a variety of solutions for state employees.
The National Conference of State Legislatures (NCSL) supports federal efforts that allow public sector retirees to deduct health care premium costs and/or additional medical expenses from their taxable income, as well as federal efforts to allow retirees to save for health care costs through tax preferred vehicles.
August 2012
The Western Hemisphere Travel Initiative (WHTI)
On April 5, 2005, the Departments of Homeland Security and State announced the Western Hemisphere Travel Initiative (WHTI), which would require all travelers to and from the United States to have a passport (or other approved documents) to enter or re-enter the United States. The federal government asserts that this initiative will increase the safety measures at the borders. WHTI was based on the Intelligence Reform and Terrorism Prevention Act of 2004 (IRTP).
On September 1, 2005, the U.S. government published in the Federal Register an Advanced Notice of Proposed Rulemaking (ANPR) on the plan to implement the WHTI, and set proposed implementation dates, stating that the rules will apply to all individuals traveling to the United States by air and by sea beginning December 31, 2006, and would apply to all individuals entering or re-entering the U.S. via its land border crossings as of December 31, 2007. However, subsequent federal legislation delayed full implementation for WHTI land border crossing requirements until June of 2009 or later. The Final Rules for WHTI were subsequently published in April of 2008. In addition to focusing on citizenship and identity as required by the IRTP of 2004, it would appear that the Final Rules also call for the use of RFID technology for travel documents to meet DHS approval.
Impacts on Trade and Tourism
The WHTI will be a deterrent to travel and negatively impact the total number of border crossings, having significant implications for the economies of the United States, Canada, and Mexico.
The Canada–United States border relationship has more than 300,000 business people, tourists, and regular commuters traveling between Canada and the United States every day. On average $1.1-billion in goods crosses the Canada-United States Border every day. It is estimated that fifty-six percent (56%) of same-day travelers from the United States, forty percent (40%) of same-day travelers from Canada, fifty percent (50%) of overnight travelers from the United States, and thirty percent (30%) of overnight travelers from Canada do not possess a passport, primarily due to cost.
A recent report prepared by Conference Board of Canada for the Canadian Tourism Commission estimates that this passport requirement would result in 3.5 million fewer trips into the United States from Canada by 2008 with a related loss of $785 million in potential tourism revenue. Likewise, the report estimates 7.7 million fewer trips by U.S. citizens into Canada and $1.7 billion in lost revenues.
NCSL also acknowledges the importance of the cultural, economic and trade issues unique to the border between the United States and Mexico, and hereby expresses concern about the potential economic impact of the WHTI policy on the states which border Mexico.
Core Solutions and Alternative Measures to the WHTI
NCSL applauds efforts by the U.S. Departments of Homeland Security and State to further secure America’s borders and protect the well-being of U.S. residents and their property. However, NCSL strongly encourages the federal government to do so in a manner that addresses the root problems associated with an increased usage of passport documents, the core intent of the IRTP, and the sovereignty of state documents.
In addition, NCSL also encourages the federal government to fully explore federal frequent border-crossing programs – such as NEXUS, FAST, CANPASS and other proposed federal passport substitutes – that recognize the benefits of the trade and tourism traffic that economically helps the people and nations on both sides of the border.
This is particularly important given the high price of traditional passports, whose prices have more than doubled over the past 10 years and now cost more than $100. While these alternatives represent important options under WHTI, they also carry limitations.
An example is the new PASSport Card, a ‘passport lite’ federal identity document that is considerably less expensive at $45. It is of limited utility however in that it is only approved for ground border crossings, and not air travel. It also incorporates the use of RFID technology in a manner different than traditional passports that some have found controversial. How much the card will be get used, and thus help to alleviate WHTI border concerns, is debatable. NCSL therefore asserts that it would be preferential to instead make fully utilizable traditional passports available at a lower end cost to taxpayers, a document that can be used for both air and ground travel, and that employs more traditional RFID technology. NCSL therefore supports the US Congress implementing a fully refundable federal income tax credit, that allows for a credit equal to 50% of the price of a passport, to reduce its end cost to consumers to a price level similar to the proposed Passport Cards.
Likewise, another alternative presented under WHTI by DHS is the creation of Enhanced Drivers Licenses (EDLs), which merge state driver’s licenses with federal procedures and RFID technology to create a DHS approved WHTI travel document. These cards have been controversial as they affect the sovereignty of a state document, creating a new hybrid or an unknown legal nature, and have met with resistance in some states because the DHS has mandated that the cards must use unencrypted, long range vicinity read RFID technology. In consideration of the fact that the WHTI as passed by Congress only mandates proof of identity and citizenship, and not technology, it is the policy of NCSL to work with Congress and the DHS to develop an acceptable EDL that has its core requirements concerns over matters of identity and citizenship, and that is not predicated on states having to accept the use of RFID or other remote technology in their driver’s licenses. This is particularly important considering that many other RFID enabled document options already exist, and would give states and their citizens’ flexibility that respects their sovereignty and desire for alternatives that do not compromise identity or proof of citizenship.
Conclusion
The NCSL implores the federal government – the U.S. Congress, the President, and the U.S. Departments of Homeland Security and State – to fully and effectively consult with NCSL and state legislatures to ensure that these and other state interests and concerns are factored into the WHTI and other border security programs. Programs that are not acceptable to the states or its citizens will ultimately not be extensively employed or used, compounding the negative economic impacts of the WHTI. The NCSL also asks for Congressional oversight over the implementation of the WHTI program, to make sure that it meets the core needs of identity and proof of citizenship, while not mandating a one size fits all approach to technology, biometrics, or other mandates that force the states to evaluate their participation in the program in a cookie cutter manner outside of the original intent of the WHTI.
NCSL also advocates and supports the US Congress implementing a fully refundable federal income tax credit, that allows for a credit equal to 50% of the price of a passport, to reduce its end cost to consumers to a price level similar to the proposed Passport Cards.
NCSL looks forward to working with the appropriate federal officials as they work to guarantee American security while sustaining American freedoms, quality of life and commerce.
August 2011
Urging The Federal Government To Provide Authoritative Information To U.S. Public Sector Investors
Recent concerns regarding public fund investments in companies doing business in Iran and Sudan have resulted in state legislation regarding pension fund investments. The National Conference of State Legislatures encourages the federal government’s efforts to limit or deny access to the U.S. capital marketplace to firms that are identified as violating U.S. laws, rules, policies or any other decree by providing support to terrorism or engaging in genocide.
Currently, several firms and not-for-profit organizations provide state and local investors with information about specific firms and their business interests in certain countries. However, this information is not authoritative and lacks the imprimatur of the federal government’s authority regarding whether actions by certain firms in a country are in line with foreign policy goals or run counter to these goals. Thus, investors do not have reliable or pertinent information regarding potential threats certain companies may pose.
The federal government's intelligence, military, diplomatic and financial regulatory communities are best positioned to identify, monitor and report on foreign and domestic companies that may be engaging in activities with countries that are potentially threatening to our national security, supporting terrorism, and/or engaging in genocide.
The National Conference of State Legislatures strongly supports efforts by the federal government to provide authoritative information to investors, including state and local public pension plans, about foreign and domestic firms and their financial and investment activities in specific countries, such as Sudan and Iran.
August 2010
Workforce Investment Act Reauthorization and Funding
The Workforce Investment Act (WIA) has been up for reauthorization since 2003. The current economic downturn and rising unemployment highlight the need for states to have a 21st century workforce system in place that can provide workers with the necessary training and employers with the highly skilled employees they need. In its current form, WIA is not ready to meet these challenges. Outdated, overly focused on process and administratively burdensome with a myriad of reporting requirements and performance standards, WIA has become a barrier to innovation in the states.
The National Conference of State Legislatures (NCSL) recognizes that U.S. prosperity and long-term economic security depend on training and maintaining a highly skilled workforce. State legislators play a critical role in addressing the economic challenges facing the nation as we strive to recover from the economic downturn and maintain our position in the global economy.
NCSL recognizes that a comprehensive, seamless and flexible national workforce development system must encompass workforce agencies, education, human services, and economic development programs and ensure the attention and investment of all levels of government, the private sector, and community- and non-profit service providers. State legislators further maintain that this system must produce a highly skilled workforce that strengthens America’s businesses and the economy while providing training and supports that enable unemployed workers, job seekers and incumbent workers to attain economic self-sufficiency and educational and career advancement.
Enactment of WIA in 1998 marked the first significant attempt to retool the nation's workforce development programs since the early 1980s. WIA was not a revolutionary departure from existing law and maintains many of the structures inherent to predecessor programs. NCSL strongly encourages Congress and the Administration to evaluate the relevance and effectiveness of a workforce system designed decades ago. NCSL believes reauthorization of WIA should reflect the future and not be a piecemeal update of existing law that maintains and reinforces the status quo.
Reauthorization of WIA presents an important opportunity to support state and local innovation, to enhance the federal-state-local workforce system and to enhance those aspects of WIA that have been successfully implemented and to radically redefine or eliminate those aspects of the Act that are administratively burdensome, ineffective or cost prohibitive. To address these challenges, state legislatures support efforts to comprehensively reform the system and provide the following recommendations to guide actions by the Administration and Congress in reauthorizing the Workforce Investment Act and in appropriating a consistent level of funding for WIA activities on an annual basis.
Maintain State Legislative Authority to Appropriate Workforce Investment Funds
Reauthorization must maintain the authority of state legislatures to appropriate workforce development funds under the WIA Section 191. The Act currently reinforces the legislatures’ fundamental role in appropriating training dollars coming into the states from the federal treasury cementing the role of the legislature to establish statewide workforce and economic development priorities and in influencing the implementation of programs and services by the local delivery system.
Enhance State Flexibility
NCSL believes that states should be given flexibility to meet the broad goals set out in the Workforce Investment Act and that state discretion to establish and administer workforce development services should be maintained. Reauthorization should not include inflexible federal mandates and restrictions on how funds can be used by states and the localities which deliver these services.
An integral component of state flexibility is the permissibility of state waivers to address state specific problems with program requirements. NCSL believes that states need flexibility for further innovation and strongly maintains that states must be able to continue current federal workforce investment act waivers. The elimination of current state waivers would substantially undermine existing state authority and local service delivery. NCSL strongly believes that the waiver process must also be conducted in a manner that is transparent and consistent among the states.
Funding
In order for the Workforce Investment Act to be effective, its activities must be fully funded. NCSL believes that the components of the integrated WIA system should be adequately supported through full annual appropriation and funded in reauthorization. NCSL urges Congress to fully fund the Act on an annual basis and to ensure that such funding be consistent with the goals, requirements and performance standards in current law and future iterations. Current law allows states three years to spend down workforce funds. This should be maintained in reauthorization. States have been judicious in spending funds for training and need the flexibility to reserve contingency funds in order to respond to mass-layoffs and other unpredictable events.
Youth Services
Youth services should also be fully funded and services for both in- and out-of-school youth should be maintained in reauthorization, allowing states and localities the flexibility to determine how best to allocate funds to address, local, regional and state goals for youth employment, skills development and educational opportunities. Furthermore, linkages between WIA Youth Services and Career and Technical Education programs provided for under the Carl D. Perkins Career and Technical Education Improvement Act of 2006 should be maximized to improve student performance and career opportunities while supporting innovative, high quality and effective programs. Full funding for these programs should be maintained.
Consolidation of WIA and Other Activities
Congress has repeatedly proposed to consolidate funding for adult, dislocated worker and state Employment Services (ES) authorized through the Wagner-Peyser Act in efforts to reauthorize WIA. NCSL believes that any consolidation of these programs, if considered, should be made consistent with NCSL’s Policy on Federal Grants and Programs, which outlines principles for maintaining existing financial commitments to state-federal partnership programs and current and proposed block grants. In particular, proposals to place authority over a consolidated block grant with Governors, negates the legislatures' authority and role in setting program goals, appropriating funds and oversight. Similarly, reauthorization proposals that would consolidate funding streams of WIA adult, dislocated worker and ES activities currently authorized and funded through the Wagner-Peyser Act would reduce overall federal financial support for these activities and would reduce the amount of federal dollars flowing from the Federal Unemployment Trust Fund (FUTF) to states.
Fully Fund and Support the Infrastructure Costs of the One-Stop Centers
Infrastructure funding for the One-Stops should be central to WIA reauthorization. A primary criticism of WIA is that funding for infrastructure under the current framework is limited. NCSL supports efforts to provide a separate line of funding in reauthorization to fully fund the One-Stop Centers infrastructure and to avoid the need to siphon limited resources from training and partner programs to support infrastructure needs.
Encourage Voluntary Coordination of TANF and Child Support
NCSL opposes changes to federal law that would require TANF and Child Support to participate as mandatory partners with WIA. NCSL also opposes changes to federal law that would require limited TANF administrative and Child Support funds to be used in support of infrastructure funding for One Stops. NCSL does support efforts to lift federal barriers to collaboration between TANF, Child Support and WIA and to allow states the flexibility to maximize these partnerships on a voluntary basis.
Streamline Reporting and Performance Standards
Federal workforce development program reporting should be further streamlined to eliminate barriers to effective service delivery caused by inconsistent and administratively burdensome definitions, planning and reporting requirements, and accountability measures.
Streamlined performance measures should be developed at the state level in cooperation with localities and the federal government. These streamlined measures should determine common and broad performance and accountability standards for the workforce investment and training system rather than many sets of standards for various funding streams that are overly burdensome, inconsistent and increasingly difficult and costly with which to comply. Measures should be simple and direct, readily illustrating the value that the workforce development system provides to workers, businesses and communities. Further, results quantified by performance measures should be circulated widely as a tool for the timely continuous improvement of the system.
Fully Engage America’s Businesses in the Workforce System
Two primary customer groups utilize the services provided by the workforce system—workers, both current and future, and businesses. While WIA has been successful in engaging workers, more work remains to ensure that businesses are fully engaged in the workforce system. State efforts to fully engage business in state workforce investment activities should be enhanced by WIA reauthorization and federal policy should support strong public/private partnerships and provide states with continued authority to build and enhance these partnerships.
Workforce Investment Boards
The current governance structure of state and local workforce investment boards limits their effectiveness. NCSL supports flexibility in the composition of state and local workforce boards to streamline their work, improve their efficiency in order to meet the unique workforce needs of the areas they serve.
Career Pathways
Reauthorization of the Workforce Investment Act must strengthen connections between education and training. NCSL supports efforts to provide career pathways with multiple entry points into the workforce system in order to meet the training and employment needs of the 21st century. This requires employing career pathways programs in high schools, career and technical schools, apprenticeship programs, and postsecondary institutions. NCSL further supports efforts to allow for the seamless transfer between programs to ensure opportunities for career-long learning.
August 2012
World Trade Organization Negotiations
The National Conference of State Legislatures (NCSL) recognizes the benefits of international trade in creating jobs, raising living standards and stimulating growth in the United States.
In general, NCSL recognizes and supports U.S. efforts to increase the transparency, accessibility and accountability of the World Trade Organization (WTO). NCSL also supports broadening participation in the WTO and addressing environmental and labor matters. To achieve these ends, NCSL endorses the call within the WTO to further reduce trade barriers in manufactured products, agriculture and services. NCSL believes that any round of negotiations within the WTO must be designed to achieve these ends and be fully consistent with NCSL’s policy on Free Trade and Federalism.
In particular, NCSL will not support trade or investment agreements that do not include reservations that limit the unnecessary preemption of state law or that do not preserve the authority of state legislatures. Implementing legislation for trade and investment agreements must also be crafted to include protections for our constitutional system of federalism. Reservations must be made to trade and investment agreements to “grandfather” existing state laws that might otherwise be subject to challenge and so far as possible commit the federal government to protecting state authority when it is exercised in conformity with accepted U.S. constitutional principles of non-discrimination against foreign commerce. Particular care must be exercised to ensure that state tax laws and revenue systems are not subject to unjustified challenge under international agreements, and they generally should be “carved out” of such agreements. In addition, provisions must be made to deny any private right of action in U.S. courts or before international dispute resolution panels based on international trade or investment agreements.
General Agreement on Trade in Services
The United States is a signatory to the World Trade Organization’s General Agreement on Trade in Services (GATS). As GATS attempts to apply trade rules to and regulate tariffs for industries beyond the production and shipment of tangible goods, GATS touches upon many sectors regulated by states and of interest to state legislators.
Services constitute an important and growing segment of the American and the global economies. NCSL concurs that it is critical that the United States remain competitive in services sectors. However, international competition in service industries cannot compromise state constitutional or traditional authority or in any way impinge upon states’ ability to protect the public interest. Services negotiations in particular must incorporate a concerted effort to consult with state legislatures, where policies about government-provided services, regulation of monopolies, provision of essential services (such as energy, water, health, education, or public safety), powers of public utility commissions, or privatization are set. Consultation with state legislators is absolutely necessary prior to, during, and after negotiations conducted under GATS.
NCSL is particularly interested in and concerned about negotiations underway, through the Working Party on Domestic Regulation (WPDR), to define and implement GATS Article VI:4, "Disciplines on Domestic Regulation." As the principles negotiated through the WPDR will affect all current and future commitments made under the GATS, it is critically important that U.S. negotiators fully understand and take into account states' interests. These interests include:
Maximum latitude for state policymakers to establish regulatory frameworks that protect the public interest as defined through the state legislative process;
Full recognition of the legitimacy and appropriateness of and protection for subnational regulatory regimes; and
Support for fully transparent regulatory processes that are respectful of, and not burdensome to, state and local governments, as determined through open, public governmental deliberation, and administered in a just and fair manner.
U.S. negotiators must consult regularly with the Intergovernmental Policy Advisory Committee as well as other state policy and regulatory bodies to ensure that the U.S. position incorporates and protects state interests.
In particular, NCSL is concerned about GATS negotiations relative to energy and electricity sectors. Trade rules of GATS apply to more than cross-border trade and cover state regulation of a domestic market, such as electricity where multinational companies have a commercial presence. GATS negotiations on energy and electricity on services related to transmission, distribution, and access of energy traders to the grid could conflict with state energy policy and alter the balance of domestic authority between states and the Federal Energy Regulatory Commission (FERC). NCSL has led efforts to create a working group of state and local policymakers, regulators, and other officials to examine and discuss energy and trade policy. This working group has held mutually beneficial meetings with USTR to promote dialogue and information exchange and has undertaken an exhaustive study of GATS implications for state and local authority over electricity policy. NCSL encourages USTR to remain engaged with the working group as it continues to study these issues.
NCSL applauds the consultations that have been undertaken thus far related to renewable energy and electric utility services and encourages USTR to devote substantially the same attention and effort, potentially through similar working groups such as the Intergovernmental Policy Advisory Committee’s services and investor-state working groups, to consultations related to other sectors.
NCSL recognizes that sections 2103 and 2106 of the Presidential Trade Promotion Act of 2002 now require that the President notify the Congress as new rounds of GATS negotiations begin and that the Congress approve the results of those negotiations before implementation. NCSL applauds the Congress for instituting this modification to the GATS process and looks forward to working with the U.S. Trade Representative (USTR) and the Congress as negotiations continue.
Agreement on Government Procurement
The United States is party to the World Trade Organization’s Agreement on Government Procurement (GPA). When negotiating the GPA, USTR solicited the state governors for permission to include state procurement and to bind state procurement processes to the GPA. USTR asserts that 37 states were voluntarily bound through this process to the GPA. In September 2003, USTR requested state governors to make similar commitments to several free trade agreements (FTAs) being negotiated at the time. NCSL recognizes that consultation with a limited number of governors is simpler than communicating with 7,500 legislators and that USTR has increasingly made these letters available publicly on the Internet. Nonetheless, the federal government must work with state legislatures to ensure that decisions about state procurement practices are made with their consent.
NCSL is concerned that USTR’s policy of communicating only with governors on procurement issues does not adequately provide for consultation with state legislatures or consider a need to change state law to adjust and obligate state procurement policy. State procurement policy and practices often are set in state law and are sometimes designed to serve social or economic purposes beyond the mere provision of goods and services for state government use. NCSL encourages USTR to insure that states can retain the ability to use procurement policy to promote these public interests while negotiating any modifications to GPA or procurement chapters in FTAs.
USTR has indicated to NCSL that there is some movement within the WTO to open and renegotiate sections of the GPA. Recognizing the value of state purchasing power to international agreements including procurement provisions and the role of state legislatures in setting state procurement policies, NCSL urges USTR to consult regularly and meaningfully with NCSL during any renegotiations.
August 2011
NCSL Staff contacts:
Diana Hinton, Committee Director
Jeanne Mejeur, Program Director
Robert Strange, Policy Associate
Last updated July 28, 2009
Policies Under the Jurisdiction of the NCSL
Standing Committee on Labor and Economic Development
2009 - 2010
Labor and Economic Development Committee Staff Contacts
Policies:
Affirming and Strengthening President Obama's Recent Order On Safeguarding Federalism In Trade Policy
NCSL thanks President Obama for his commitment to respecting state sovereignty and improving federal-state relations as evidenced by his instructions to Heads of Executive Departments and Agencies to avoid preempting states in their rule-making. This White House order is an important step towards fostering the type of vibrant federalism NCSL seeks.
The U.S. Constitution grants the federal legislative branch authority to set our nation’s trade policy, and the Tenth Amendment of the U.S. Constitution empowers states to protect the public interest, including but not limited to public health, safety, and morals. With respect to our international trade commitments, additional steps to safeguard federalism are needed.
Many current international trade agreements constrain the use of particular product and food safety standards; dictate procurement policies and the scope of permitted service sector regulations, and these rules have the effect of pre-empting vital policy space that our federal system of government provides to states to protect the public interest.
Although international trade and investment tribunals cannot directly preempt state laws and policies as a matter of U.S. law, the federal government does have an obligation under these trade agreements, enforced by the threat of trade sanctions, to compel state and local compliance. Thus, trade agreement challenges and threats of challenges of state and local laws with awards of money, damages, and retaliatory tariffs and related sanctions at stake have a pre-emptive effect. As a result, state legislative regulatory authority and policy space is compromised and the rights of states in our constitutional system are reduced.
Therefore, the President’s executive order should apply whenever such international agreements or treaties can result in challenges to state laws and policies before international tribunals—particularly in light of the fact that these rules can be enforced by retaliatory trade sanctions or awards of money damages.
NCSL requests that the White House communicate to the Office of the United States Trade Representative (USTR) in the Executive Office of the President that the President’s instructions with respect to preemption in rule-making apply to trade agreement negotiations and implementation.
NCSL requests that the President by executive order clarify that trade and investment agreements and bi-lateral investment treaties negotiated by the USTR should avoid conflicts with state governing authority, under the same terms as the executive order on preemption.
NCSL requests that the President establish, by executive order, a more effective federal-state consultation system that includes greater involvement and notification of state legislatures. Meaningful and early involvement by state and local officials in the trade agreement policymaking and negotiating process can help avoid the effective preemption of state and local policy by trade pacts.
August 2012
Arts, Culture and Economic Development
Arts and culture can influence an array of policy goals, including economic development, rural development, urban revitalization, revenue generation, tourism, accessibility and participation, diversity, education, and youth development. For many of these areas, states and the federal government are partnered. Support for the production, distribution, and infrastructure of the arts is critical to success in tourism, attracting business interests, economic development, and quality of life issues. Further, the arts are a core academic subject in our schools. Strong and sequential arts education through primary and secondary school contributes to student success and workforce development. In our education systems, the study of the arts should remain vibrant. NCSL encourages a better and stronger understanding of this partnership as well as a reasoned study and understanding of the inputs and benefits.
Tourism
Tourism is a vital element of state economic development, diversification, and rural development programs, as well as a leading services sector employer. NCSL encourages Congress and the Administration to open and maintain consultative processes with state governments, and state legislatures in particular, to ensure that state and federal policies and programs encourage the continued vitality of this important sector of the economy. Further, federal economic development and disaster recovery programs should include tourism among the activities eligible for support.
National Heritage Areas
The National Park Service defines a National Heritage Area as a place designated by the United States Congress where natural, cultural, historic, and recreational resources combine to form a cohesive, nationally distinctive landscape arising from patterns of human activity shaped by geography. Recognizing these areas as viable drivers for historic preservation and cultural tourism, the National Park Service and the Congress should consult state legislators, as both state policymakers and community leaders, to identify ways of maximizing the National Heritage Area designation to the benefit of their communities and their states.
Collaboration and Coordination
The National Endowment for the Arts, the National Endowment for the Humanities, the National Trust for Historic Preservation, the White House Preserve America initiative, offices within USDA Rural Development, the National Park Service, the Smithsonian Institution, the U.S. Department of Education, and many others are engaged in promoting various aspects of culture, the arts, heritage preservation, and tourism. NCSL encourages collaboration and coordination among these disparate agencies and budgetary line-items with state legislatures to ensure that the policy and program outcomes meet the needs and goals identified by state policymakers. Further, this collaboration and coordination should improve the identification and sharing of best practices from and among the states and the federal government.
August 2010
Coordination of Social Security and Workers' Compensation Benefits
The Social Security Act currently limits the total sum that a permanently, totally disabled worker may receive in federal Social Security disability benefits and state workers’ compensation benefits combined to 80% of the worker’s pre-injury income.
That act as amended in 1981 (U.S.C. 424 a(a)) requires that if the sum of Social Security disability benefits and worker’s compensation exceeds that 80% cap, the Social Security benefits must be reduced by the excess amount. The stated purpose of these amendments was to prevent disabled workers from collecting the full amount of both Social Security disability benefits and workers’ compensations, which in some cases resulted in the workers receiving benefits of substantially greater value than the value of their previous wages.
Rather than just preventing the combined total of Social Security and workers’ compensation benefits for the disabled from exceeding the value of previous wages, the amendments, because they do not adjust the 80% cap for inflation, have instead had the effect, over time, of steadily reducing the real value of the combined Social Security and workers’ compensation benefits to those injured workers.
With sustained, substantial inflation causing the Consumer Price Index to increase more than 30% during the last 10 years and more than 100% in the last 20 years, the failure to adjust the 80% cap often has a devastating impact on the real value of the benefits on which many disabled workers depend.
The fact that the Social Security Act provides for the annual adjustment of Social Security benefits, including disability benefits, suggests that an historic goal of the act is to prevent inflation from eroding the value of benefits. This goal is undermined by the failure of the 1981 amendments to provide for an inflationary adjustment of the 80% cap for beneficiaries receiving both Social Security and workers’ compensation benefits.
The National Conference of State Legislatures therefore urges Congress to amend the Social Security Act to provide that the calculation of the 80% limit on total combined Social Security and workers’ compensation benefits for permanently and totally disabled workers defined under the act be based, not on the pre-injury earnings of the workers, but on those earnings adjusted for inflation occurring after the injury.
August 2011
Employment Security System Funding
The nation's legislators recognize the many challenges facing the nation as the labor force and workplace change. In the states, differing circumstances reflect a changing economic base, unique demographic trends, and limitations on available resources. State employment security, unemployment and labor market information systems must figure prominently in efforts to serve the workers and businesses of a 21st century economy.
Under the framework of the system outlined in the Federal Unemployment Tax Act (FUTA), states collect a state payroll tax to finance unemployment benefits and the IRS collects a federal payroll tax to provide funds for administration of both the federal and the state systems. The federal treasury holds the collected taxes in 'trust' accounts. The amount being collected is more than adequate to fund administrative costs, but the amount returned to the states for administration has been shrinking because these funds are included in the federal unified budget and are subject to the appropriations process every year. In recent years, states have received an average of a 50-cent return on every dollar collected. State legislators in many states have been forced to add a surtax to employer taxes or to appropriate general fund revenues, or do both, to replace the $3.998 billion confiscated by the Congress in FY06. The remaining accumulated 'trust' funds serve as a "paper" offset to deficits or as an enhancement to federal budget surpluses.
Program flexibility has also been reduced by restrictions on Reed Act funds, which can only be used for administering the unemployment compensation law. These funds should be distributed to the states pursuant to the original intent of the Reed Act with maximum flexibility to also support the Employment Security System.
Legislators are concerned that the percentage of unemployed workers receiving unemployment insurance benefits has dropped dramatically, and that state unemployment insurance agencies have experienced reduced funding appropriated by Congress in recent years. NCSL therefore supports legislation recently introduced in Congress that will strengthen the unemployment insurance system by using $7 billion in revenue from the federal unemployment insurance surtax to provide reimbursements to states that modernize their programs by improving benefits for unemployed workers who have fallen through the cracks of the unemployment insurance system. The legislation also provides $500 million shared by all states for additional unemployment insurance administrative funding.
NCSL therefore urges the following reforms:
- Moving the dedicated FUTA trust fund from the discretionary side to the mandatory side of the federal budget.
- Adequate funds for state administrative functions.
- Use the 'temporary' surcharge for benefit improvements for unemployed workers.
- Adherence to the provisions of the Reed Act that guarantee that surplus funds be returned to the states.
- A continuation of the state legislative role in the appropriation of administrative funds.
Further, legislation enacted in more than forty states imposes new penalties on employers that seek to avoid paying their fair share of unemployment tax in order to eliminate the practice called SUTA dumping (standing for “state unemployment tax avoidance”). NCSL believes that SUTA dumping negatively impacts state unemployment insurance trust funds and shifts the tax burden to law-abiding employers who then pay more than their fair share when SUTA dumping is not addressed under current law. In keeping with the shared nature of the national unemployment insurance program, NCSL believes the states and federal government should continue to act collaboratively to curb these abuses.
August 2010
Export Promotion
Exports are vital to the well-being of the entire American economy because they provide for jobs and economic development and help buttress the nation's balance of payments. Both the states and the federal government have a role in export promotion, particularly to help small- and medium-sized businesses who may find it difficult to obtain financing or insurance for their goods.
Export Finance
State legislators play a vital role in export finance, working with government agencies to facilitate the export process for small- and medium-sized businesses through export finance programs. This should be a shared mission: the federal government must help by improving its coordination of and cooperation with state programs and by providing adequate federal financing.
Many U.S. businesses are not aware of export opportunities or the existence of federal programs that could enable them to export their products. NCSL urges more funding for federal export programs such as the U.S. Commercial Service (USCS) of the Department of Commerce, which would permit it to properly staff overseas posts and reopen vital offices that have been closed in recent years. Funding for the Export-Import Bank's direct and guaranteed loan programs should also be maintained, and NCSL particularly supports a constant level of funding for the Bank's City/State Program.
To improve state-federal cooperation, the USCS should enhance its domestic operations to better leverage state trade development programs that could supplement their own efforts. Many states have highly effective trade programs, but the USCS generally fails to develop working relationships with them which could free up USCS budgets and personnel for overseas export promotion efforts.
U.S. businesses should also retain the ability to coordinate their own offshore sales efforts in order to reach foreign markets they might not be able to access individually. Congress should therefore ensure the preservation of permanent statutory safe harbors for such activity in Federal antitrust law (i.e. the Webb-Pomerene Act and the Export Trading Company Act).
Trade Data
The federal government is best placed to collect trade data on U.S. exports and imports. However, geographically-specific data is currently lacking on items such as services imports and exports, goods imports, and in-bound foreign investment. The federal government should improve the information available so that state trade agencies may more effectively assist their exporters.
Exports Through Trade Agreements
The United States and its trading partners should seek agreements that increase U.S. exports by reducing and eventually eliminating the reliance on protectionist trade policies and practices. Tariffs and other barriers to trade such as export subsidies prevent U.S. companies from being able to export effectively. NCSL particularly supports the federal government’s efforts to work through multilateral negotiations to open markets that are currently closed to U.S. products and to reduce the use of trade-distorting subsidies. In this connection, negotiations should be pursued in accordance with the federalism and policy principles outlined in NCSL’s Free Trade & Federalism and World Trade Organization Negotiations policies, and NCSL supports the President’s ability to do so according to principles outlined in NCSL’s Presidential Trade Promotion Authority policy.
State legislators recognize that some U.S. trading partners view some current U.S. regulations and programs as trade-distorting, which can result in retaliation on U.S. exports. Congress and the Administration must protect U.S. companies’ ability to export by promoting openness and fair trade practices in their legislation and rule-making. In particular, NCSL encourages the Congress and the Administration to work where practical and in consultation with state governments to convert farm and other supports to non-trade distorting support programs that generate opportunities for America’s farm communities and industries to adapt.
If exporters truly are to benefit from agreements, the large number of agreements that the U.S. is party to will require considerable attention to enforcement of agreement terms. NCSL supports increasing capacity at the Office of the United States Trade Representative (USTR) to work with state governments and ensure that our trading partners are adhering to the terms of our agreements.
Agriculture
Given the importance of farm exports to the financial health of the American economy, the Secretary of Agriculture and other federal & state officials representing agricultural interests should be included as full and equal partners in the formulation of United States policies affecting foreign trade. The U.S. Department of Agriculture should in turn cooperate with state agricultural trade officials in a coordinated effort to promote agricultural exports. State legislatures, both directly and through NCSL, should be consulted on the development of trade policies and kept abreast of evaluations of their efficacy and economic impact. In particular, NCSL supports the appointment of one or more state legislators to the USTR’s Agriculture Policy Advisory Committee (APAC).
Expanded international trade in agricultural products as a result of new trade agreements has major economic benefits, but it also creates new burdens for both federal and state agriculture inspection and quarantine services. NCSL calls upon the federal government to support training for inspection professionals and the development of new technologies to secure the health and safety of imported foods and agricultural products.
Market Development
Congress and the Administration should support an aggressive market development effort to increase demand for U.S. exports, including the use of export credits for agricultural products. Emphasis should be placed on developing markets for high-value products. Food aid can be a valuable tool in market development, but programs should be directed to encourage, rather than to discourage, the development of local food security in nations facing food shortages.
Trade Embargoes
In order to recapture and maintain foreign markets, the United States must demonstrate that it is a reliable supplier. To ensure that past mistakes in the use of foreign trade embargoes are not repeated, NCSL opposes any embargo of food and medicinal products, unless that embargo includes all trade with the target country.
Export Controls
America must maintain strong export controls to protect our national security. But, as the rest of the world catches up to the United States in high-technology fields, we must ensure that our control system protects our security without hurting our economic interests.
August 2012
Free Trade and Federalism
The National Conference of State Legislatures (NCSL) believes that trade has the potential to improve the livelihoods of Americans and thus supports efforts to expand U.S. exports through well-crafted international trade agreements. However, NCSL also believes that these agreements must be harmonized with traditional American values of constitutional federalism. In particular, reservations can be made to trade and investment agreements that limit preemption of state law and that preserve the authority of state legislatures. Further, implementing legislation for trade and investment agreements can and should be crafted to include protections for our constitutional system of federalism. These measures, among others, are necessary to ensure that international trade agreements do not adversely impact state budgets or constrain state regulatory authority. Without them, NCSL will be unable to support such trade and investment agreements.
Trade that Protects State Sovereignty
The states are committed and prepared to treat foreign firms that do business within their borders in a nondiscriminatory fashion, under a standard based on the broad protection afforded by the Commerce Clause and the Foreign Commerce Clause of the U.S. Constitution. What the states are not prepared to accept, however, is a challenge to their sovereignty and to state authority based on arbitrary and unreasonable standards of discrimination against foreign commerce, similar to that employed by the GATT panel in the so-called Beer II decision. In order to better safeguard state sovereignty, the USTR should be guided by the following recommendations in all trade negotiations.
First, reservations must be made to trade and investment agreements to “carve out” state laws that might otherwise be subject to challenge. Particular care must be exercised to ensure that state tax laws and revenue systems are not subject to unjustified challenge under international agreements. Provisions must also be made in federal implementing legislation that commit the federal government to protect state lawmaking authority when it is exercised in conformity with accepted U.S. constitutional principles of nondiscrimination against foreign commerce.
Second, NCSL encourages the Office of the United States Trade Representative (USTR) to utilize the “positive list” approach for making services, procurement, and investment commitments in trade agreements. This approach allows states to know more precisely the areas of the economy and state authority implicated in a trade agreement and would avoid the kind of serious problems we now face in the area of internet gambling. A “negative list” approach commits the United States to implement trade disciplines on all covered sectors unless areas or state laws are specifically exempted in the annexes of the agreement. USTR should acquiesce to a “negative list” approach only as a last resort. If the federal government agrees to a “negative list” approach, then the annexes listing exemptions should retain the unbound sectors and the limits of U.S. commitments that exempt state laws.
Following appropriate consultations with USTR, the states must be able to set and adjust their commitments – a right the states have and which USTR has repeatedly recognized. USTR should therefore make clear to trade negotiating partners that U.S. states retain the ability to make adjustments to commitments regarding state-level services, procurement, and investment policies.
Finally, NCSL encourages USTR and its trade negotiation colleagues in the federal government to develop economic and non-economic impact statements for agreements under negotiation. These could resemble the state and local analyses conducted by the Congressional Budget Office. NCSL recognizes that such analyses could be politically sensitive and could affect negotiation strategies employed by other countries; therefore, it would be understandable if such analyses were shared exclusively with the Intergovernmental Policy Advisory Group (IGPAC). It is important that state officials have access to such information before determining whether they can support an agreement.
Private Rights of Action and Investor-State Disputes
Following the passage of the North American Free Trade Agreement (NAFTA) in the 1990s, several foreign investors have used the “investor-state” provisions of that agreement to attack state laws and state court decisions before an international tribunal. By providing access to international investment arbitration by foreign investors, NAFTA and various related Free Trade Agreements (FTAs) provide greater procedural rights for review of claims against U.S. law and policy than would be provided to a U.S. investor under similar circumstances. Consequently, the decisions of these tribunals have had an adverse impact on state sovereignty and federalism. Unfortunately, the “no greater rights” language in the 2002 Trade Promotion Authority (TPA) has been interpreted to cover only substantive rights. The ability of foreign investors to bring claims in front of an international investment tribunal, as opposed to through the U.S. courts, is clearly a greater procedural right than that enjoyed by U.S. investors; and NCSL is concerned that these tribunals, because they are frequently unfamiliar with U.S. federalism and jurisprudence, would in any case provide foreign investors with greater substantive rights. At present such language is not inserted into the operational text of investment chapters of these trade agreements, but rather, is only found in the preamble. NCSL will only support a grant of presidential trade negotiating authority if such a grant of authority includes a “no greater procedural or substantive rights” mandate. NCSL is committed to working with USTR and other federal agencies as they interpret and apply “no greater procedural or substantive rights” language to trade agreement negotiations.
Trade agreement implementing language must include provisions that deny any new private right of action in U.S. courts or before international dispute resolution panels based on international trade or investment agreements. Implementing legislation must also include provisions stating that neither the decisions of international dispute resolution panels nor international trade and investment agreements themselves are binding on the states as a matter of U.S. law. Implementing legislation for any agreement must include provisions that promote effective and meaningful consultation between the states and the federal government related to any dispute involving state law or any dispute that could prompt retaliation against states. These provisions should include a timetable for prompt notice to states of a potential state issue, as well as the right of attorneys for the state to participate as part of the “team” defending a state law before international tribunals. States must also be given the right to file amicus briefs before international dispute resolution panels, both independently and collectively through state organizations such as NCSL. It is imperative that when state laws are under challenge in international proceedings, the federal government defend state laws as vigorously as it defends federal law.
The federal government retains the power to sue a state to enforce international trade agreements. However, NCSL urges the federal government to assure states that the federal government will not seek to preempt state law as a means of enforcing compliance with an international agreement unless Congress has expressed clear intent to preempt state law in implementing legislation or other law. Likewise, the federal government must not withhold federal funds otherwise appropriated by Congress to a state as a means of enforcing compliance with provisions of an international agreement. Specifically, the federal government must indemnify the states for costs incurred relating to trade challenges and ensure that the federal government will not seek to use administrative measures (such as withholding of payments) to compel compliance or to pay a damage award.
Because the federal government retains the power to sue a state to enforce international agreements, federal legislation implementing any new trade or investment accord must include appropriate protections for the states related to rules of procedure, evidence, and remedies in such litigation. The federal government must bear the burden of proof in court showing that state law is inconsistent with an international agreement, regardless of the finding of an international dispute resolution panel. The President must be required, at least 30 days before the Justice Department files suit against a state, to file a report with Congress justifying its proposed action. In the event of an unfavorable judgment, states must be protected from financial liability. If the federal government agrees to allow foreign firms to collect money damages for “harm” caused by a state law, then the federal government must bear the burden of any such award by international tribunals and not seek to shift the cost to states in any manner.
Additionally, state Offices of Attorney General must be fairly compensated by the federal government for the time and expense associated with defending against a foreign investor claim. The absence of such a requirement has led to a kind of “unfunded mandate,” such as was experienced by the California Department of Justice during its preparations for defense in the NAFTA “Methanex” case.
Consultation
The President, the U.S. Trade Representative, and other federal agencies involved in negotiating trade agreements must remain cognizant of the intimate role that state legislators play in crafting state laws, policies, and programs directly affected by today’s international commercial agreements. It is imperative that the USTR and other agencies consult with state legislators and NCSL prior to the outset of trade negotiations in order to ensure that both the negotiators and state legislators are aware of any state laws, policies, or programs that may be impacted by a negotiated agreement.
In general, NCSL remains very concerned about the manner in which the federal government consults with states on trade issues. NCSL applauds efforts by the U.S. Trade Representative to work with IGPAC and looks forward to full and active participation in this body. We are also encouraged by USTR’s move away from solely relying on the Single Point of Contact (SPOC) system for collecting information from states and for relaying important information to states. NCSL encourages USTR and other federal agencies involved in trade negotiations to develop effective systems of communication with state and local officials that respect the fact that many public policy decisions require approval or action by both legislative and executive governmental institutions, that incorporate all branches of government and that, as appropriate, rely on state and local officials’ national associations for information collection and dissemination. Such information collection and dissemination efforts must respect both the needs and time frames of negotiations, but also the many demands on the time and attention of state policymakers by allowing enough time for sufficient study and appropriate response.
NCSL notes that a number of states have created oversight committees or state commissions that study the impact of international trade agreements on the state’s economy and regulatory authority. It is appropriate for USTR to consult with these state-level bodies.
NCSL also notes the proposal put forward by IGPAC in August 2004 for the creation of a standing federal-state commission on international trade. IGPAC also proposed: 1) trade policy capacity with resources relevant to state level concerns; 2) information sharing between USTR and states and trade policy dialogue between states; 3) improvement of trade data and analysis; 4) discussion of procurement from the state perspective; 5) improvement in the state/federal trade development partnership; and 6) assessment of the costs and benefits assessment of the costs and benefits of federal trade development funding allocated to agriculture, industries, services and technologies. NCSL strongly supports the content of this proposal, the outline of which has been included in recent IGPAC reports to USTR regarding new free trade agreements. NCSL requests that USTR provide a statement of its position on the IGPAC proposal or a written response detailing USTR concerns regarding aspects of the standing commission proposal. It is unfortunate that this good-faith effort by IGPAC to model possible new approaches to federal-state consultation has been ignored.
Procurement
The United States is party to the World Trade Organization’s Agreement on Government Procure-ment (GPA). When negotiating the GPA, USTR solicited the state governors for permission to include state procurement and to bind state procurement processes to the GPA. USTR asserts that 37 states were voluntarily bound through this process to the GPA. In September 2003, USTR requested governors to make similar commitments to several FTAs being negotiated at the time.
State procurement policy and practices often are set in state law and are sometimes designed to serve social or economic purposes beyond the mere provision of goods and services for state government use. Unfortunately, current FTAs could prohibit state and local governments from passing new laws favoring local suppliers in government contracts for goods and services and bar governments from imposing technical specifications in its public contracts if those specifications pose an “unnecessary” barrier to trade. The agreements’ national treatment rules will prohibit governments from favoring local suppliers, even when there are good social and economic development reasons to do so. The agreements’ rules on technical specifications and supplier qualifications could allow foreign companies to ask their home government to challenge procurement rules designed to achieve social or development goals, such as incorporating living wage provisions and environmental quality standards into the production of goods and services, assistance to minority-owned firms, and local purchasing preferences. NCSL encourages USTR to ensure that states can retain the ability to use procurement policy to promote these public interests while negotiating any modifications to GPA or procurement chapters in FTAs.
It is unacceptable that state legislatures are not being consulted regarding GPA and other procurement-related issues. Under most state constitutions, the legislature has substantial power to enact spending measures and to set procurement policies. NCSL demands that USTR consult with state legislatures about state procurement practices. USTR should only be able to bind a state to an international procurement agreement following formal consent from the state legislature. We are particularly troubled by the recently negotiated U.S.-Korea FTA, which by reference binds all GPA states to the additional provisions negotiated under the procurement chapter of that agreement.
Services
Services constitute an important and growing segment of the American and global economies. NCSL concurs that it is critical that the United States remain competitive in services sectors. However, international competition in service industries cannot compromise state constitutional or traditional authority or in any way impinge upon states’ ability to protect the public interest. Prior, during, and after service sector-related negotiations, USTR must undertake consultations with state legislatures, where policies about government-provided services, regulation of monopolies, provision of essential services (such as energy, water, health, education, transportation, or public safety), or privatization are set. Consultation with state legislatures is absolutely necessary prior to, during, and after a General Agreement on Trade in Services (GATS) round or the negotiation of an FTA including services provisions. NCSL applauds the consultations that have been undertaken related to electric utility services and encourages USTR to devote substantially the same attention and effort, potentially through similar mechanisms, to consultations related to other sectors. We are particularly concerned about the inclusion of higher education, which the United States has proposed to subject to WTO jurisdiction in the context of the Doha Round. This proposal may have consequences for state higher education subsidies and other state regulatory policies related to higher education that should be carefully examined before the sector is committed. The WTO gambling suit illustrates the dangers of committing service sectors without a thorough vetting by appropriate state officials.
Regulation of gaming interests ranging from lotteries to horseracing has long been a prerogative of the states, and state policymakers have chosen vastly different approaches as they balance varying public morals, revenue, land-use, and other considerations. As the World Trade Organization Dispute Resolution Body has ruled that the United States did make a commitment covering gambling under “other recreational services,” that the United States is in violation of that commitment, and that the United States has failed to comply with its ruling, NCSL appreciates USTR’s invocation of GATS article XXI to withdraw the U.S. commitment and calls on USTR to consult effectively, meaningfully, and timely with the states as USTR negotiates compensatory concessions to our trading partners. Further, NCSL endorses the use of article XXI to withdraw other commitments under GATS that may run counter to state policy, regulatory, or police authority.
Adjusting to Free Trade
NCSL acknowledges that trade can bolster economies and increase standards of living. However, there are many who may suffer as states, localities, manufacturing or service industries, small farms, and communities adjust to the new realities of open markets. NCSL supports federal efforts to provide meaningful Trade Adjustment Assistance (TAA) to affected workers. NCSL encourages Congress and the implementing federal agencies:
- to ensure that the funding for TAA programs is sufficient to meet current and future needs;
- to expand benefits eligibility to service-sector and agricultural workers impacted by trade;
- to work with NCSL and state legislatures to ensure that TAA programs are flexible to suit different states’ needs;
- to engage in aggressive outreach to ensure that workers, employers, and communities are informed of the benefits of the TAA program and are able to effectively utilize the program;
- to ensure that adversely affected workers are provided the full income support, training, reemployment services and other services and benefits to which they are entitled, and that claims for such benefits are reviewed expeditiously and objectively;
- to simplify procedures for determining TAA eligibility; and
- to refrain from modifying TAA in any way that would jeopardize the program’s mandate to help trade-affected workers who have lost their jobs as a result of increased imports or shifts in production out of the United States.
In general, the federal government should work with the states and the private sector to develop lifetime educational and workforce training opportunities that prepare Americans to compete successfully in a changing global economy.
Building Capacity in Trading Partners
NSCL recognizes that many developing countries do not have the institutions or capacity to implement and enforce the numerous obligations assumed under an FTA. NCSL supports federal efforts to fund programs to assist in building the trade capacity and trade agreement compliance of developing countries. Moreover, NCSL recognizes that developing countries need additional assistance to help them take advantage of opportunities created by trade in order to alleviate poverty. We therefore support federal funding for infrastructure and rural development so that any benefits of trade may be more broadly shared. Funds should also be directed to ensure that laws and institutions related to labor and the environment are improved and strengthened.
Support for Trade Negotiating Representation
NCSL recognizes that the negotiation of trade agreements – whether bilateral, multilateral, or global – on such a range of goods, services, and investment opportunities as America’s trillion-dollar economy demands is a monumental undertaking. NCSL supports the authorization and appropriation of adequate resources so that USTR is best equipped to fully consult with state legislatures in order to represent their interests and the American public in trade negotiations while protecting and preserving American constitutional principles.
August 2010
Maintaining the Solvency of Social Security
The National Conference of State Legislatures (NCSL) strongly believes that the federal government must preserve the financial integrity of the Social Security system and assure the long-term solvency of the program. State legislatures believe that Social Security must ensure a safety net for low-income older retirees as well as provide survivor benefits and disability insurance. It is critical that all workers paying into the system have confidence that Social Security will continue to be available to them at retirement or to provide for their survivors after their death. NCSL believes that efforts to assure solvency should strengthen the existing program upon which so many beneficiaries and their families rely. Social Security reform should continue to encourage private savings and employer-provided pension plans as important components of retirement savings.
While Social Security currently has a surplus, the Social Security Board of Trustees report of 2008 predicts that in 2020 2017 trust fund expenditures will begin to exceed payroll tax revenues and interest on accumulated assets will need to be drawn down to pay benefits. By 2041, the trust funds will be exhausted.
The Administration and Congress face difficult choices in maintaining the solvency of Social Security. As Congress considers alternatives to maintain Social Security solvency, it must analyze and understand the impact of these proposals on states, taxpayers, state budgets, and state laws. Social Security reform will have major impacts on state employees, teachers, local government, private employers and taxpayers. State legislators oppose reform proposals that finance this shortfall by shifting federal costs to state budgets. If Social Security does not continue to provide a stable form of assistance to the elderly, state low-income programs and state budgets would be severely impacted. NCSL strongly opposes any efforts to reform Social Security that create unfunded mandates for the states or preempt state laws and authority.
NCSL encourages federal policymakers to consider the following concerns when deliberating Social Security reform proposals:
Mandatory Social Security Coverage of State and Local Government Employees
NCSL has long opposed further involvement of the federal government in the administration of public retirement plans including the expansion of mandated Social Security coverage to state and local employees not currently covered under the system. NCSL maintains that state and local governments should be allowed to affiliate their retirement plans voluntarily with Social Security, as was the case before passage of the Omnibus Budget Reconciliation Act of 1990. The imposition of mandatory coverage on state and local employees who are not currently required to contribute to the system constitutes a direct cost shift to states and will have a detrimental effect on state budgets, state retirement plans and the retirement savings of state and local employees. The extension of mandatory coverage to new categories of state and local employees does not solve the insolvency problem and creates new obligations for the system. NCSL's policy, "Mandatory Social Security Coverage of State and Local Government Employees," continues to oppose this mandate.
Increasing the Return on Social Security Investments
States and local retirement system choices provide models for federal reform of Social Security. We encourage Congress and the Administration to review state laws, funding choices and programs, whether they choose to create individual private accounts, authorize public investment in private markets, or pursue other options for reform. The return on Social Security has historically been far below the return on public and private pension plan investments in the market. NCSL believes that Congress and the Administration must act to increase the return on Social Security investments. NCSL believes that the best means to increase the return on Social Security investments is through some level of investment in the private markets. NCSL maintains that this investment must:
- Be administered through an independent board well insulated from political interference;
- Include Social Security beneficiaries on the board;
- Be invested for the exclusive benefit of Social Security beneficiaries as in state pension law;
- Guarantee the current level of Social Security benefits;
- Be protected from steep administrative costs;
- Be used solely for retirement, survivor benefits and disability; and
- Not preempt state laws governing securities fraud;
General revenue from sources other than FICA should not be used to finance changes to the existing system that would allow market investment or private accounts and changes to the existing system should not increase the federal deficit, compromise funding of state-federal partnerships or require more borrowing that would add to the federal debt.
A strong public education program must accompany reform that would create individual accounts or provide for market investment so that beneficiaries will have the knowledge necessary to make good investment decisions.
Guarding Against Fraud and Abuse
NCSL strongly opposes any proposal that would preempt state authority to regulate securities or give sole authority to regulate investment fraud to the Securities and Exchange Commission (SEC). States traditionally have been the protectors of individual and small investors and should maintain this role without federal intervention or preemption.
Many states have created special laws and consumer protection programs to prevent white-collar crimes, particularly against the elderly. These laws are critical to the protection of senior citizens. NCSL strongly opposes any effort to preempt state authority to regulate crimes against the elderly. Individuals must be protected from fraud through the strong enforcement of laws governing securities fraud.
NCSL is very concerned about identity theft and fraudulent uses of identity documents. While NCSL strongly supports efforts to protect the integrity of Social Security numbers (SSNs), such efforts cannot be achieved through unfunded federal mandates on state and local government. Many states have implemented or are considering statutes to protect the integrity and restrict certain usages of SSNs.
The SSN was originally created to administer the Social Security program. However, it is extensively used by state, local and tribal governments for both record keeping and identification. The federal government often requires states to use SSNs in program management and data matching, especially in the delivery of health and human services programs. SSNs are used in vital records, paternity and divorce case documents, Motor Vehicle/Drivers License documentation, child support enforcement and administration, state retirement systems and to prevent fraudulent access to benefits and services.
Numerous pieces of Congressional legislation have been introduced in recent years that would require states to restrict the display, purchase or sale of Social Security numbers. The Congressional Budget Office found on several occasions that the cost of such provisions to state, local and tribal governments is likely to exceed the threshold amount for an intergovernmental mandate in at least one of the first five years following the date the mandates go into effect. These provisions would apply to a wide range of state and local agencies and would entail time-consuming efforts for state agencies to comply. States would have to make systemic changes to alter their document maintenance and retrieval systems. Some potential areas of cost include changes in information technology to ensure that systems only display SSNs in instances where access is permissible and labor costs to screen government documents for SSNs and then redact them before allowing citizens to access them. In many cases, especially death certificates, such redaction would have to be done by hand.
NCSL calls upon the federal government to abide by the provisions of the Unfunded Mandate Reform Act of 1995 and abandon efforts to put burdensome, unrealistic and costly mandates on state and local governments. NCSL supports a federal role in providing technical support, highlighting successful models, facilitating discussion on this issue and providing necessary funding for changes made at the discretion of the states. NCSL calls upon the federal government to begin by addressing flaws in the issuance of SSNs and to examine other ways to safeguard individual privacy, including consideration of password protection of SSNs. NCSL encourages the federal government to work with the states to develop joint recommendations on Social Security number usage.
Raising the Retirement Age
Prior Social Security reform efforts, to adjust for longer life expectancies, included a gradual increase in the "full retirement age". In 2002, the full retirement age, the age at which beneficiaries are eligible to receive unreduced Social Security benefits, began to rise gradually from 65 to 67. Contemporary solvency proposals that would increase the full retirement age even higher raise serious concerns for beneficiaries. While Americans are living longer, many workers are choosing to retire earlier than before. Conversely, some workers may be unable to continue working due to physical limitations, age discrimination or other limitations. Still other workers with shorter than average life expectancies, particularly African Americans, may experience little return from Social Security for themselves and their survivors if the full retirement age is increased.
Currently, public safety employees of state and local government are exempt from actuarial reductions to their public pension benefits. Efforts to raise the full retirement age disproportionately harm both private sector employees and non-public safety state and local employees who do not contribute to Social Security. Under current law, the age at which a more highly paid beneficiary may receive an unreduced private pension benefit is tied to the Social Security full retirement age. Due to this coupling, relatively highly compensated long-term private pension beneficiaries who choose to retire before age 65 receive an actuarially reduced benefit for life even if their employer deems them eligible to receive a full private pension benefit prior to age 65. The age at which public employees, excluding public safety employees, may receive an unreduced public pension benefit is not tied to the Social Security full retirement age but is instead defined in federal Internal Revenue Code policy, which sets the age at 62. In recognition of public safety concerns, public safety workers, like police and fire, are exempt from these actuarial reductions. More highly-compensated long-term non-public safety state and local employees who do not contribute to Social Security rely on their public pensions for the bulk of their retirement security. Actuarial reductions to public pension benefits disproportionately burden these employees. NCSL believes that public employers should be allowed to provide full pension benefits to all of their employees without the imposition of these Internal Revenue Code limits. Further, for purposes of consistency, NCSL supports the uncoupling of private sector benefit limits from the Social Security full retirement age.
NCSL encourages Congress and the Administration to consider the impact that raising the retirement age may have on various groups of workers. NCSL opposes further increases of the full retirement age.
Raising the Payroll Tax Rate
Raising the payroll tax rate constitutes a direct cost shift to employers and employees for the cost of Social Security solvency. States, as employers, would bear increased costs if the payroll tax rate were increased. As well, the payroll tax is regressive and an increase would disproportionately affect workers making less than the wage base. An increase in the payroll tax rate may also provide disincentives to employer-provided pension benefits. NCSL opposes an increase in the payroll tax rate.
Maintaining Benefits for the Poor Elderly and Survivors
Social Security prevents massive poverty among the elderly. Among elderly Social Security beneficiaries, 52% of married couples and 72% of unmarried persons receive 50% or more of their income from Social Security; 20% of married couples and about 41% of unmarried persons rely on Social Security for 90% or more of their income. Without Social Security, over half of all women 65 or older (married and nonmarried) and 40% of all older men would be poor.
Similarly, Social Security replaces lost income for workers and their spouses and children when a worker becomes disabled, dies or retires. For a young family, Social Security provides the equivalent of a $443,000 life insurance policy and a $413,000 disability insurance policy. Retired workers and their dependents account for 69% of total benefits paid. Disabled workers and their dependents account for 18% of total benefits paid. Survivors of deceased workers account for 13% of total benefits paid. Almost half (48%) of families with a disabled worker rely on Social Security benefits for half or more of their family income. 18% rely on benefits for nearly all of their income and about 6% have no other income besides Social Security.
Almost 50 million Americans—nearly one in four households—receive monthly Social Security checks. In addition to the over 31 million retirees who collect Social Security, the program is the nation’s largest children’s program. Social Security supports 5 million American children, between 7% and 8% of all American children. In contrast, about 3 million children receive family income through TANF. The role Social Security benefits play in alleviating and preventing childhood poverty should not be lost in efforts to restore solvency or reform Social Security. Similarly, Social security provides lifetime income support to about 777,000 disabled adult children based on a parent’s work record.
Modification of the Earnings Limit
NCSL has long supported increasing the earnings test for older workers, especially those who provide essential child care services. Under current law, beneficiaries under the full retirement age may earn up to $12,000 annually without reducing the amount of benefits they receive from Social Security, after that amount Social Security benefits are reduced by $1 for every $2 of earnings. Beneficiaries who retire at their full retirement age may earn up to $31,800 in the year that they retire without receiving a reduced benefit. In the year that beneficiaries reach full retirement age earnings above the annual limit reduce benefits by $1 for every $3 of earnings.
NCSL supports the elimination of or an increase in the earnings limit on wages earned by Social Security beneficiaries. As the worker-to-beneficiary ratio continues to fall, older workers may become increasingly important to productivity. This penalty severely inhibits seniors who would prefer to and continue to be able to work.
Means-Testing of Beneficiaries
Social Security benefits are calculated based on earnings and time in the workforce. Although workers contribute the same percentage of payroll taxes to the system, a combined employer-employee contribution of 12.4% of payroll up to $90,000, lower-income workers receive a higher proportion of their contributions in benefits than to higher-income workers. NCSL opposes proposals to means-test eligibility to receive Social Security. Such proposals may reduce overall public support for Social Security and are not necessary to achieve Social Security solvency.
August 2011
Mine Safety
The Mine Improvement and New Emergency Response Act of 2006 (MINER Act) revised the safety, inspection, rescue and emergency standards iterated under the Federal Mine Safety and Health Act of 1977. The MINER Act was the most comprehensive and significant federal mine safety legislation passed in decades. The National Conference of State Legislatures (NCSL) strongly supports the efforts of the federal government to improve mine safety. However, NCSL strongly encourages the Congress and the Administration to support flexibility and state discretion in mine safety programs. Mine safety is a joint federal and state effort, and federal action should not preclude states from pursuing stricter and stronger approaches.
Recent events have raised new concerns about the safety of the nation’s mines, the implementation of the MINER Act and the method of mining known as ”room and pillar and “barrier retreat mining.” ”Room and pillar” involves excavating a chamber or room in an underground mine and leaving pillars of material as support. When the area has been completely mined, the pillars are then removed in a retreating pattern back towards the mine’s entrance causing an intentional collapse and the remaining material or deposits are removed. “Barrier pillar” refers to the method of mining where longwall panels are constructed to either support the roof, other longwall areas and the mains, or between new and old workings. Questions have been raised about the safety of retreat mining, particularly in regards to barrier pillar mining, and whether it is sufficiently regulated.
The nation’s legislators strongly support the need to continue to evaluate the safety of the nation’s mines and have been pioneers in establishing strong mine safety policy and laws. The National Conference of State Legislatures urges the federal government to supplement and not supplant current state efforts to improve mine safety, and to work in conjunction with states to ensure the safety of the nation’s mines. NCSL congratulates the Congress in directing the Government Accountability Office (GAO) to study whether the MINER Act is being fully implemented and if additional safety, inspection, rescue and emergency standards are needed to ensure the safety of the nation’s mines and those who work in them, and continue to support further studies. NCSL strongly encourages the Mine Safety and Health Administration (MSHA) and the National Institutes of Occupational Safety and Health (NIOSH) to further study the practice of retreat mining and the conditions in which it is considered to be a safe practice.
August 2011
NCSL Supports Travel Promotion and Tourism
WHEREAS, travel and tourism is a powerful economic generator in all 50 states, accounting for $740 billion in expenditures, $110 billion in local, state and federal taxes and 7.5 million jobs in 2007; and
WHEREAS, travel is America’s leading service sector export, generating $142 billion in 2008 from international travelers; and
WHEREAS, travel and tourism creates one of the nation’s only balance of trade surpluses (valued at $8.3 billion in 2007); and
WHEREAS, the world travel market is expanding, but the U.S. share has declined 35 percent over the past 15 years; and
WHEREAS, travel to the United States from overseas destinations has yet to rebound to pre-9/11 levels; and
WHEREAS, since 9/11 the United States is often perceived to no longer be a friendly and welcoming destination, which has cost America $150 billion in lost visitor spending and 250,000 American jobs – losses that affect every state in the country; and
WHEREAS, international travelers are 74 percent more likely to have a favorable opinion of America and Americans after having visited; and
WHEREAS, legislatures in all 50 states appreciate the value of travel and tourism and currently operate programs to promote their states to travelers domestically and internationally; and
WHEREAS, all major industrialized nations except the United States have national tourism policies and spend significant funds on promoting their destinations overseas, and, in turn, see substantial returns on their investments; and
WHEREAS, the facilitation of secure, yet efficient, travel across American borders must be a priority of the federal government; and
WHEREAS, the National Conference of State Legislatures (NCSL) policy on Arts, Culture and Economic Development recognizes the importance of tourism to state economic development and service sector employment and encourages the federal government to work collaboratively with the states to ensure the vitality of this sector of the economy; and
WHEREAS, the NCSL policy on The Western Hemisphere Travel Initiative reiterates the importance of tourism to states' economies and acknowledges the dramatic effects that restrictions and impediments to cross-border travel can have on America's domestic tourism industry; and
WHEREAS, U.S. Senator Dorgan of North Dakota and U.S. Representative Delahunt of Massachusetts have introduced companion bills in Congress each entitled the Travel Promotion Act of 2009, which creates a public-private partnership to educate travelers about U.S. travel policies and promote the United States as a destination of choice; and
WHEREAS, the Travel Promotion Act of 2009 will benefit every state, create jobs, enhance national security, contribute to a favorable balance of trade for the U.S. economy, and improve our national image around the world; and
NOW, THEREFORE, BE IT RESOLVED, that the National Conference of State Legislatures now calls upon the U.S. Congress to promptly pass the Travel Promotion Act of 2009 ( S. 1023/H.R. 2935) and thus create a public-private partnership that will restore the U.S. to its place as the world's premier international visitor destination; and
BE IT FURTHER RESOLVED, that NCSL believes that it is imperative for a state legislator to sit on the Corporation for Travel Promotion Board of Directors because state travel and tourism promotion programs operate under authority granted by and with funding provided by state legislatures.
BE IT FURTHER RESOLVED, that NCSL calls upon Congress and the federal government to ensure that federal travel and tourism promotion efforts work in concert and collaboratively with state trade and tourism promotion efforts to prevent duplication, confusion, and preemption; and
BE IT FURTHER RESOLVED, that NCSL urges the federal government to implement reasonable visa and WHTI policy reforms -- including but not limited to the reduction of interview wait times, the use of advanced technology for visa interviews and the strengthening and expansion of the Visa Waiver Program -- so that potential tourists are not needlessly discouraged from visiting the United States while simultaneously ensuring homeland security.
August 2010
Presidential Trade Promotion Authority
The National Conference of State Legislatures (NCSL) supports efforts to negotiate trade agreements that secure free and open access to overseas markets for American products. In negotiating new agreements, adequate federalism protections must be included. NCSL has sought to work closely with the United States Trade Representative (USTR) and Congress to ensure that these concerns are taken into account in recent trade and investment agreements and their implementing legislation. During the 2002 renewal of Presidential Trade Promotion Authority (TPA), NCSL worked with the U.S. Congress and other national state and local government organizations to ensure that necessary protections for state and local authority were understood and appreciated.
Implementing legislation for the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) reflects a partnership between USTR, Congress and NCSL in providing federalism protections while at the same time opening overseas markets to American products. NCSL supports continued cooperation and opportunities to build on this relationship as future trade agreements are negotiated. However, NCSL is concerned that investment chapters containing investor-state dispute resolution provisions similar to Chapter 11 of the North American Free Trade Agreement (NAFTA), services chapters, and procurement chapters could threaten basic state policy and regulatory authority and practices. NCSL believes that federalism protections similar to those provided in implementing legislation for the GATT and consistent with NCSL's "Free Trade and Federalism" policy must be incorporated into any new trade or investment agreement and its implementing legislation.
With earnest caveats for strong mandates that future trade agreements grant “no greater rights” to foreign investors than those granted to U.S. citizens, NCSL supported TPA as adopted in 2002. However, NCSL fears that the Central American Free Trade Agreement (CAFTA), signed in May 2004 and put into effect by Congress in the summer of 2005, does not fully enshrine the principle of “no greater rights” as it was intended. In particular, NCSL is concerned that investment provisions in CAFTA may have opened new and troubling opportunities for challenges to the sovereign states’ policymaking and regulatory authority. Further, NCSL is concerned about the inadequate mechanisms for state notification and consultation utilized by USTR, as evidenced by USTR’s rejection of suggestions made by the Intergovernmental Policy Advisory Committee (IGPAC) for improving consultation and, in particular, the suggestion that USTR carbon copy requests made of state governors to that state’s legislative leaders.
NCSL continues to support the “no greater rights” doctrine and enjoins trade negotiators to interpret TPA’s “no greater rights” in the broadest sense possible for the protection of state sovereignty and American federalism in negotiations for both goods and services. NCSL believes that this interpretation should incorporate substantive considerations as well as principles of takings as interpreted by the U.S. Supreme Court and procedural matters consistent with U.S. constitutional due process. NCSL is committed to working with USTR and other federal agencies as they interpret and apply TPA’s “no greater rights” language to trade agreement negotiations.
NCSL supports the negotiation of free trade agreements that also safeguard the U.S. system of federalism and looks forward to working with the Congress to devise a trade promotion authority bill that contains adequate protections for state sovereignty. In particular, NCSL will support TPA legislation that requires any agreement negotiated under that authority:
- grant “no greater rights,” both substantively and procedurally, to foreign investors than granted to U.S. citizens;
- respect state sovereignty and state governmental functions;
- protect state police and regulatory authorities when exercised in conformity with accepted U.S. constitutional principles of nondiscrimination against foreign commerce;
- “grandfather” existing state laws;
- utilize an “opt in” or “positive list” process for making commitments relative to state-level authorities or interests;
- fully indemnify the states for any monetary claims brought against the United States under an agreement as a result of state action;
- require express congressional action to legitimize preemption of a state law to comply with a trade agreement;
- promote effective and meaningful consultation between the states and the federal government related to any dispute involving state law or any dispute that could prompt retaliation against states;
- require federal or other reimbursement of state expenses incurred in trade disputes;
- include enforceable labor and environmental standards; and
- be briefed to the IGPAC as the first round of negotiations concludes.
August 2011
Public Pensions
There are approximately 2,600 public employee pension plans in the United States covering 18.5 million state and local government workers. In June, 2008, these plans held nearly $3 trillion in assets for the benefit of plan participants and their beneficiaries. State and local governments have been responsible partners in providing retirement savings vehicles to virtually all full-time state and local employees. They also have a strong commitment to the retirement security of their employees and retirees by providing sound, secure benefits in retirement.
Additionally, state and local public pension plans are backed by their respective state or local governments, which are permanent institutions that have a strong moral, contractual, and, in some cases, constitutional commitment to back their pension liabilities. This strong commitment assures state and local employees and retirees that they will receive the benefits to which they are entitled.
Generally, public plans adhere to the following:
- They are administered through boards of trustees, which, unlike private plans, generally include representatives of retiree and active members.
- Boards act for the exclusive benefit of members of the pension system, as required under state trust law.
- Plan fiduciaries include both individuals responsible for the operation of the plans in accordance with applicable laws.
- Fiduciaries are subject to strict fiduciary and trust law that governs their conduct on behalf of the plan, including the investment of the plan's assets. Breaches of fiduciary trust laws result in civil or criminal penalties.
- In addition to fiduciary law, public pension plan boards and administrators are subject to codes of ethics, conflicts of interest laws, and criminal laws. Violators may be punished by imprisonment, fines, or both.
- Routinely provide comprehensive disclosure, investment education and benefit statements to plan participants.
The National Conference of State Legislatures (NCSL) is concerned that efforts by the federal government to intrude into the administration and regulation of these plans will result in preemptive, redundant, costly and administratively burdensome requirements. NCSL firmly opposes federal legislative and regulatory proposals that would burden public sector pension plans with requirements intended to address private sector pension concerns. NCSL maintains that any additional federal regulation of state and local pension plans, systems and assets is a violation of the sovereign power of state governments, and urges that current regulations that impose excessive and unnecessary administrative costs on states and localities be simplified or eliminated.
Federal Reductions to Social Security Benefits
Under some circumstances, the Social Security Administration reduces benefits to state and local employees who earn government pensions through work not covered by Social Security. Since 1983, the Social Security Administration has reduced worker and spousal benefits through two provisions called the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP). There have been numerous proposals before Congress to repeal or to limit the application of the GPO and the WEP. The National Conference of State Legislatures supports efforts by Congress and the Administration to address the inequities and unintended consequences to state and local government retirees caused by federal reductions of Social Security benefits. NCSL urges Congress to enact legislation that will reduce or eliminate the impact of the GPO and WEP on state and local government retirees, particularly those who have earned lower uncovered government pension benefits or partial benefits.
Finally, NCSL opposes any federal efforts to shift responsibility and costs for determining to whom these offsets should apply to state and local government employers and pension systems.
Mandatory Medicare and Social Security Coverage
On June 28, 1991, the U.S. Department of the Treasury and the Internal Revenue Service released final regulations and a revenue procedure under a new requirement included in the Omnibus Budget Reconciliation Act of 1990 (OBRA 1990). The law mandates full Social Security coverage, including Medicare, for public sector employees who are not members of a retirement system.
The National Conference of State Legislatures opposes expansion of mandatory Social Security and Medicare Coverage to public employees of state and local governments who are not already covered. NCSL believes that state and local governments should be allowed to affiliate their plans with Social Security and Medicare on a voluntary basis.
Taxation and Regulation
Public pension plans have been repeatedly targeted as a revenue source by the federal government. Both Congress and the Administration have considered taxing public plans through a direct tax on investments, penalties, or excise taxes under the U.S. Internal Revenue Code. The National Conference of State Legislatures believes that taxation of public pension plans violates a long-standing and sound component of federal tax policy, which exempts state plans from taxation. Therefore, NCSL calls upon Congress and the Administration to oppose taxation and excessive regulation of state pension and benefits plans. All states and many local governments sponsor a supplemental defined contribution plan in addition to the general retirement plan to allow participants to voluntarily to defer an additional portion of their salary in anticipation of retirement needs. Some states provide limited matching contributions to encourage supplemental plan participation. Federal legislation enacted over the past decade has simplified participation in, and the administration of, these supplemental arrangements. The National Conference of State Legislatures supports further efforts to improve existing arrangements and to provide simplification and flexibility to supplemental defined contribution plans when directed by state and local governments. However, NCSL opposes federal efforts aimed at increasing federal regulation, diminishing the plans' unique features and characteristics, and providing mandates that replace existing plans with methods designed for the private sector.
NCSL maintains that primary regulation for supplemental plans should remain with the states, and states should have the authority to tailor the design of the plans to the needs of the public sector workforce. Further we oppose efforts to supplant rather than supplement current savings, and efforts that could result in additional cost and complexity for state and local governments as well as for plan participants.
Finally, NCSL encourages federal policymakers and regulators to continue to recognize the distinctive characteristics of state and local governments and their supplemental retirement arrangements and keep these in mind when promulgating regulations or further legislative changes to these plans.
August 2012
Responsible Housing
Adequate and affordable housing is a necessary ingredient for community, education, workforce, and economic development. State legislators support the integration and coordination of public and private resources to make effective, affordable housing services available as means to preventing homelessness, to encouraging self-sufficiency, to promoting economic opportunity, or to promoting homeownership. NCSL encourages the Congress and the Administration to support flexibility and state discretion in housing programs and to avoid legislatively mandated set-asides in programs such as the HOME Investment Partnerships (HOME) program and the Low-Income Housing Tax Credit. NCSL encourages efforts to promote a greater state role in administering federal housing programs, subject to sufficient funding and flexibility.
Regulatory Impacts
NCSL is encouraged by the efforts of the Congress to review and reduce regulatory burden at the federal level. We request Congress and the Administration to fully review and examine the impact on housing affordability of relevant federal laws and regulations. It is imperative that state and local governments make land use decisions based on the unique needs of their jurisdiction without interference from the federal government.
Housing Choices
America's population and housing needs and preferences have become more diverse. NCSL recognizes that adequate and affordable housing can take many forms, including apartment dwellings, condominiums, cooperatives, single-family homes and manufactured housing. Federal housing policy must provide ample flexibility that allows state legislators the ability to fully utilize this entire range of possibilities as they craft affordable housing policy to meet the needs of their constituents.
Distressed Communities, Urban Sprawl, and Smart Growth
As the inner-cities core spread to the suburban corridors and as businesses and builders develop what may have been once green spaces, the desire by some for either limited or no growth may further impact the availability of affordable homes. Some states and localities have considered smart growth plans to ease the impacts of urban sprawl. Several localities have chosen to limit urban sprawl by preserving already affordable homes and apartments inside their boundaries.
While the National Conference of State Legislatures does not take a position as to whether a state or locality should consider or adopt any smart growth initiatives, NCSL opposes any federal mandate requiring states and/or local communities to adopt such long-term comprehensive plans. Rather, NCSL calls upon the Congress and the Administration to work with states and our cities in the development and redevelopment of infill sites in many of our older cities and inner suburbs. Many infill sites are brownfields; abandoned industrial sites with some kind of contaminant that could be a barrier to any redevelopment. To make these brownfields available for housing, Congress needs to give states flexibility to immunize project providers from future federal cleanup liability and provide the necessary funding to assist states in the clean-up of these sites.
Housing Counseling
The National Conference of State Legislatures endorses efforts both by the federal government and the private sector to make the dream of homeownership a reality for more Americans. NCSL is pleased to be a partner with our federal colleagues and the private sector in this endeavor and supports programs that help people determine the best housing option for them, promote financial literacy, as well as homeownership preparedness.
NCSL applauds efforts by the federal government to recognize this dilemma and to respond with housing counseling. These efforts should respond to a need and not simply become a federal mandate, should build upon and not replace state and local counseling programs, should provide complete flexibility for states to use any federal assistance to improve or establish counseling services, should recognize the variety of housing options available to U.S. residents and not endorse a single option, and should include adequate outreach components to reach those populations in most need of counseling and assistance. Federal housing counseling efforts should not siphon funds from proven and successful programs and should be separately and adequately funded.
Financing
States have developed an array of innovative housing affordability policies and are responding to the homeownership problem by issuing mortgage revenue bonds and establishing housing trust funds to expand homeownership opportunities for moderate-income families. NCSL is encouraged and supportive of public private partnership programs and initiatives that cut home buying transaction costs, reduce down payment and mortgage carrying costs, and increase the availability of financing.
NCSL encourages the federal government to consult state legislators and other state officials as voucher program reforms are designed to ensure that they will meet state needs, provide the flexibility we desire, avoid cost shifts to states, and continue with ample federal funding for program and administrative costs. Additionally, we urge the Congress to sustain funding levels sufficient to maintain existing vouchers and already committed project based Section 8 subsidies.
The HOME Investment Partnership program is a successful and proven model of a state-federal partnership that should be used in other housing and development areas. HOME was designed as a federal-state-local program, with states receiving a substantial share of the funding, having the flexibility to fit HOME funds into the full range of housing services, including homebuyer education and counseling, and having the authority to spend funds anywhere within a state rather than only in rural areas. NCSL encourages statutory and regulatory changes that further streamline and simplify HOME so that it is more responsive to state-identified needs. NCSL also supports effective federal programs and adequate funding to address the affordable housing and community development needs of rural America.
The Low-Income Housing Tax Credit is a vital tool in producing new, affordable housing. NCSL supports the Housing Credit Program as well as the creation of a state-administered homeownership tax credit to stimulate the production of homes for low-income families as long as it does not undermine investor interest in the Housing Credit.
Department of Housing and Urban Development
The National Conference of State Legislatures is supportive of efforts to revitalize the Department of Housing and Urban Development (HUD) and to reinvent its services delivery. State legislators are well aware of the promises of federal housing and development assistance for distressed communities within their states, only to see those resources tied up in the bureaucratic maze of HUD headquarters in Washington. NCSL stands ready to work with the Administration and Congress to reinvent HUD into a community development department which would work in partnership with state and local governments and the private sector to provide the tools and flexibility for empowering those Americans within distressed communities to become part of this nation's economic mainstream.
August 2010
Retiree and Employee Health Care Costs
Many state and local governments provide current and retired employees with access to group health care coverage, through their retirement systems or by some other mechanism. Some of these government employers cover all or part of the health care expenses for these retired plan members. Health care costs continue to rise at rates that threaten the ability of government employers to continue to provide these benefits, and out-of-pocket health care costs consume a growing percentage of retirement income for retired government employees.
State efforts to provide health care for retirees have also been challenged by Governmental Accounting Standards Board (GASB) accounting changes requiring states to report the full cost of these benefits. These requirements have caused many state and local governmental entities to consider greater funding of these benefits, plan design changes and increased contributions from current employees and retirees in the financing of these benefits. NCSL encourages GASB to provide an open dialogue with states as they continue to examine their current employee and retiree health care benefits and explore their options to meet these accounting requirements and funding obligations in the future.
Federal retiree health efforts represent a variety of solutions for state employees.
The National Conference of State Legislatures (NCSL) supports federal efforts that allow public sector retirees to deduct health care premium costs and/or additional medical expenses from their taxable income, as well as federal efforts to allow retirees to save for health care costs through tax preferred vehicles.
August 2012
The Western Hemisphere Travel Initiative (WHTI)
On April 5, 2005, the Departments of Homeland Security and State announced the Western Hemisphere Travel Initiative (WHTI), which would require all travelers to and from the United States to have a passport (or other approved documents) to enter or re-enter the United States. The federal government asserts that this initiative will increase the safety measures at the borders. WHTI was based on the Intelligence Reform and Terrorism Prevention Act of 2004 (IRTP).
On September 1, 2005, the U.S. government published in the Federal Register an Advanced Notice of Proposed Rulemaking (ANPR) on the plan to implement the WHTI, and set proposed implementation dates, stating that the rules will apply to all individuals traveling to the United States by air and by sea beginning December 31, 2006, and would apply to all individuals entering or re-entering the U.S. via its land border crossings as of December 31, 2007. However, subsequent federal legislation delayed full implementation for WHTI land border crossing requirements until June of 2009 or later. The Final Rules for WHTI were subsequently published in April of 2008. In addition to focusing on citizenship and identity as required by the IRTP of 2004, it would appear that the Final Rules also call for the use of RFID technology for travel documents to meet DHS approval.
Impacts on Trade and Tourism
The WHTI will be a deterrent to travel and negatively impact the total number of border crossings, having significant implications for the economies of the United States, Canada, and Mexico.
The Canada–United States border relationship has more than 300,000 business people, tourists, and regular commuters traveling between Canada and the United States every day. On average $1.1-billion in goods crosses the Canada-United States Border every day. It is estimated that fifty-six percent (56%) of same-day travelers from the United States, forty percent (40%) of same-day travelers from Canada, fifty percent (50%) of overnight travelers from the United States, and thirty percent (30%) of overnight travelers from Canada do not possess a passport, primarily due to cost.
A recent report prepared by Conference Board of Canada for the Canadian Tourism Commission estimates that this passport requirement would result in 3.5 million fewer trips into the United States from Canada by 2008 with a related loss of $785 million in potential tourism revenue. Likewise, the report estimates 7.7 million fewer trips by U.S. citizens into Canada and $1.7 billion in lost revenues.
NCSL also acknowledges the importance of the cultural, economic and trade issues unique to the border between the United States and Mexico, and hereby expresses concern about the potential economic impact of the WHTI policy on the states which border Mexico.
Core Solutions and Alternative Measures to the WHTI
NCSL applauds efforts by the U.S. Departments of Homeland Security and State to further secure America’s borders and protect the well-being of U.S. residents and their property. However, NCSL strongly encourages the federal government to do so in a manner that addresses the root problems associated with an increased usage of passport documents, the core intent of the IRTP, and the sovereignty of state documents.
In addition, NCSL also encourages the federal government to fully explore federal frequent border-crossing programs – such as NEXUS, FAST, CANPASS and other proposed federal passport substitutes – that recognize the benefits of the trade and tourism traffic that economically helps the people and nations on both sides of the border.
This is particularly important given the high price of traditional passports, whose prices have more than doubled over the past 10 years and now cost more than $100. While these alternatives represent important options under WHTI, they also carry limitations.
An example is the new PASSport Card, a ‘passport lite’ federal identity document that is considerably less expensive at $45. It is of limited utility however in that it is only approved for ground border crossings, and not air travel. It also incorporates the use of RFID technology in a manner different than traditional passports that some have found controversial. How much the card will be get used, and thus help to alleviate WHTI border concerns, is debatable. NCSL therefore asserts that it would be preferential to instead make fully utilizable traditional passports available at a lower end cost to taxpayers, a document that can be used for both air and ground travel, and that employs more traditional RFID technology. NCSL therefore supports the US Congress implementing a fully refundable federal income tax credit, that allows for a credit equal to 50% of the price of a passport, to reduce its end cost to consumers to a price level similar to the proposed Passport Cards.
Likewise, another alternative presented under WHTI by DHS is the creation of Enhanced Drivers Licenses (EDLs), which merge state driver’s licenses with federal procedures and RFID technology to create a DHS approved WHTI travel document. These cards have been controversial as they affect the sovereignty of a state document, creating a new hybrid or an unknown legal nature, and have met with resistance in some states because the DHS has mandated that the cards must use unencrypted, long range vicinity read RFID technology. In consideration of the fact that the WHTI as passed by Congress only mandates proof of identity and citizenship, and not technology, it is the policy of NCSL to work with Congress and the DHS to develop an acceptable EDL that has its core requirements concerns over matters of identity and citizenship, and that is not predicated on states having to accept the use of RFID or other remote technology in their driver’s licenses. This is particularly important considering that many other RFID enabled document options already exist, and would give states and their citizens’ flexibility that respects their sovereignty and desire for alternatives that do not compromise identity or proof of citizenship.
Conclusion
The NCSL implores the federal government – the U.S. Congress, the President, and the U.S. Departments of Homeland Security and State – to fully and effectively consult with NCSL and state legislatures to ensure that these and other state interests and concerns are factored into the WHTI and other border security programs. Programs that are not acceptable to the states or its citizens will ultimately not be extensively employed or used, compounding the negative economic impacts of the WHTI. The NCSL also asks for Congressional oversight over the implementation of the WHTI program, to make sure that it meets the core needs of identity and proof of citizenship, while not mandating a one size fits all approach to technology, biometrics, or other mandates that force the states to evaluate their participation in the program in a cookie cutter manner outside of the original intent of the WHTI.
NCSL also advocates and supports the US Congress implementing a fully refundable federal income tax credit, that allows for a credit equal to 50% of the price of a passport, to reduce its end cost to consumers to a price level similar to the proposed Passport Cards.
NCSL looks forward to working with the appropriate federal officials as they work to guarantee American security while sustaining American freedoms, quality of life and commerce.
August 2011
Urging The Federal Government To Provide Authoritative Information To U.S. Public Sector Investors
Recent concerns regarding public fund investments in companies doing business in Iran and Sudan have resulted in state legislation regarding pension fund investments. The National Conference of State Legislatures encourages the federal government’s efforts to limit or deny access to the U.S. capital marketplace to firms that are identified as violating U.S. laws, rules, policies or any other decree by providing support to terrorism or engaging in genocide.
Currently, several firms and not-for-profit organizations provide state and local investors with information about specific firms and their business interests in certain countries. However, this information is not authoritative and lacks the imprimatur of the federal government’s authority regarding whether actions by certain firms in a country are in line with foreign policy goals or run counter to these goals. Thus, investors do not have reliable or pertinent information regarding potential threats certain companies may pose.
The federal government's intelligence, military, diplomatic and financial regulatory communities are best positioned to identify, monitor and report on foreign and domestic companies that may be engaging in activities with countries that are potentially threatening to our national security, supporting terrorism, and/or engaging in genocide.
The National Conference of State Legislatures strongly supports efforts by the federal government to provide authoritative information to investors, including state and local public pension plans, about foreign and domestic firms and their financial and investment activities in specific countries, such as Sudan and Iran.
August 2010
Workforce Investment Act Reauthorization and Funding
The Workforce Investment Act (WIA) has been up for reauthorization since 2003. The current economic downturn and rising unemployment highlight the need for states to have a 21st century workforce system in place that can provide workers with the necessary training and employers with the highly skilled employees they need. In its current form, WIA is not ready to meet these challenges. Outdated, overly focused on process and administratively burdensome with a myriad of reporting requirements and performance standards, WIA has become a barrier to innovation in the states.
The National Conference of State Legislatures (NCSL) recognizes that U.S. prosperity and long-term economic security depend on training and maintaining a highly skilled workforce. State legislators play a critical role in addressing the economic challenges facing the nation as we strive to recover from the economic downturn and maintain our position in the global economy.
NCSL recognizes that a comprehensive, seamless and flexible national workforce development system must encompass workforce agencies, education, human services, and economic development programs and ensure the attention and investment of all levels of government, the private sector, and community- and non-profit service providers. State legislators further maintain that this system must produce a highly skilled workforce that strengthens America’s businesses and the economy while providing training and supports that enable unemployed workers, job seekers and incumbent workers to attain economic self-sufficiency and educational and career advancement.
Enactment of WIA in 1998 marked the first significant attempt to retool the nation's workforce development programs since the early 1980s. WIA was not a revolutionary departure from existing law and maintains many of the structures inherent to predecessor programs. NCSL strongly encourages Congress and the Administration to evaluate the relevance and effectiveness of a workforce system designed decades ago. NCSL believes reauthorization of WIA should reflect the future and not be a piecemeal update of existing law that maintains and reinforces the status quo.
Reauthorization of WIA presents an important opportunity to support state and local innovation, to enhance the federal-state-local workforce system and to enhance those aspects of WIA that have been successfully implemented and to radically redefine or eliminate those aspects of the Act that are administratively burdensome, ineffective or cost prohibitive. To address these challenges, state legislatures support efforts to comprehensively reform the system and provide the following recommendations to guide actions by the Administration and Congress in reauthorizing the Workforce Investment Act and in appropriating a consistent level of funding for WIA activities on an annual basis.
Maintain State Legislative Authority to Appropriate Workforce Investment Funds
Reauthorization must maintain the authority of state legislatures to appropriate workforce development funds under the WIA Section 191. The Act currently reinforces the legislatures’ fundamental role in appropriating training dollars coming into the states from the federal treasury cementing the role of the legislature to establish statewide workforce and economic development priorities and in influencing the implementation of programs and services by the local delivery system.
Enhance State Flexibility
NCSL believes that states should be given flexibility to meet the broad goals set out in the Workforce Investment Act and that state discretion to establish and administer workforce development services should be maintained. Reauthorization should not include inflexible federal mandates and restrictions on how funds can be used by states and the localities which deliver these services.
An integral component of state flexibility is the permissibility of state waivers to address state specific problems with program requirements. NCSL believes that states need flexibility for further innovation and strongly maintains that states must be able to continue current federal workforce investment act waivers. The elimination of current state waivers would substantially undermine existing state authority and local service delivery. NCSL strongly believes that the waiver process must also be conducted in a manner that is transparent and consistent among the states.
Funding
In order for the Workforce Investment Act to be effective, its activities must be fully funded. NCSL believes that the components of the integrated WIA system should be adequately supported through full annual appropriation and funded in reauthorization. NCSL urges Congress to fully fund the Act on an annual basis and to ensure that such funding be consistent with the goals, requirements and performance standards in current law and future iterations. Current law allows states three years to spend down workforce funds. This should be maintained in reauthorization. States have been judicious in spending funds for training and need the flexibility to reserve contingency funds in order to respond to mass-layoffs and other unpredictable events.
Youth Services
Youth services should also be fully funded and services for both in- and out-of-school youth should be maintained in reauthorization, allowing states and localities the flexibility to determine how best to allocate funds to address, local, regional and state goals for youth employment, skills development and educational opportunities. Furthermore, linkages between WIA Youth Services and Career and Technical Education programs provided for under the Carl D. Perkins Career and Technical Education Improvement Act of 2006 should be maximized to improve student performance and career opportunities while supporting innovative, high quality and effective programs. Full funding for these programs should be maintained.
Consolidation of WIA and Other Activities
Congress has repeatedly proposed to consolidate funding for adult, dislocated worker and state Employment Services (ES) authorized through the Wagner-Peyser Act in efforts to reauthorize WIA. NCSL believes that any consolidation of these programs, if considered, should be made consistent with NCSL’s Policy on Federal Grants and Programs, which outlines principles for maintaining existing financial commitments to state-federal partnership programs and current and proposed block grants. In particular, proposals to place authority over a consolidated block grant with Governors, negates the legislatures' authority and role in setting program goals, appropriating funds and oversight. Similarly, reauthorization proposals that would consolidate funding streams of WIA adult, dislocated worker and ES activities currently authorized and funded through the Wagner-Peyser Act would reduce overall federal financial support for these activities and would reduce the amount of federal dollars flowing from the Federal Unemployment Trust Fund (FUTF) to states.
Fully Fund and Support the Infrastructure Costs of the One-Stop Centers
Infrastructure funding for the One-Stops should be central to WIA reauthorization. A primary criticism of WIA is that funding for infrastructure under the current framework is limited. NCSL supports efforts to provide a separate line of funding in reauthorization to fully fund the One-Stop Centers infrastructure and to avoid the need to siphon limited resources from training and partner programs to support infrastructure needs.
Encourage Voluntary Coordination of TANF and Child Support
NCSL opposes changes to federal law that would require TANF and Child Support to participate as mandatory partners with WIA. NCSL also opposes changes to federal law that would require limited TANF administrative and Child Support funds to be used in support of infrastructure funding for One Stops. NCSL does support efforts to lift federal barriers to collaboration between TANF, Child Support and WIA and to allow states the flexibility to maximize these partnerships on a voluntary basis.
Streamline Reporting and Performance Standards
Federal workforce development program reporting should be further streamlined to eliminate barriers to effective service delivery caused by inconsistent and administratively burdensome definitions, planning and reporting requirements, and accountability measures.
Streamlined performance measures should be developed at the state level in cooperation with localities and the federal government. These streamlined measures should determine common and broad performance and accountability standards for the workforce investment and training system rather than many sets of standards for various funding streams that are overly burdensome, inconsistent and increasingly difficult and costly with which to comply. Measures should be simple and direct, readily illustrating the value that the workforce development system provides to workers, businesses and communities. Further, results quantified by performance measures should be circulated widely as a tool for the timely continuous improvement of the system.
Fully Engage America’s Businesses in the Workforce System
Two primary customer groups utilize the services provided by the workforce system—workers, both current and future, and businesses. While WIA has been successful in engaging workers, more work remains to ensure that businesses are fully engaged in the workforce system. State efforts to fully engage business in state workforce investment activities should be enhanced by WIA reauthorization and federal policy should support strong public/private partnerships and provide states with continued authority to build and enhance these partnerships.
Workforce Investment Boards
The current governance structure of state and local workforce investment boards limits their effectiveness. NCSL supports flexibility in the composition of state and local workforce boards to streamline their work, improve their efficiency in order to meet the unique workforce needs of the areas they serve.
Career Pathways
Reauthorization of the Workforce Investment Act must strengthen connections between education and training. NCSL supports efforts to provide career pathways with multiple entry points into the workforce system in order to meet the training and employment needs of the 21st century. This requires employing career pathways programs in high schools, career and technical schools, apprenticeship programs, and postsecondary institutions. NCSL further supports efforts to allow for the seamless transfer between programs to ensure opportunities for career-long learning.
August 2012
World Trade Organization Negotiations
The National Conference of State Legislatures (NCSL) recognizes the benefits of international trade in creating jobs, raising living standards and stimulating growth in the United States.
In general, NCSL recognizes and supports U.S. efforts to increase the transparency, accessibility and accountability of the World Trade Organization (WTO). NCSL also supports broadening participation in the WTO and addressing environmental and labor matters. To achieve these ends, NCSL endorses the call within the WTO to further reduce trade barriers in manufactured products, agriculture and services. NCSL believes that any round of negotiations within the WTO must be designed to achieve these ends and be fully consistent with NCSL’s policy on Free Trade and Federalism.
In particular, NCSL will not support trade or investment agreements that do not include reservations that limit the unnecessary preemption of state law or that do not preserve the authority of state legislatures. Implementing legislation for trade and investment agreements must also be crafted to include protections for our constitutional system of federalism. Reservations must be made to trade and investment agreements to “grandfather” existing state laws that might otherwise be subject to challenge and so far as possible commit the federal government to protecting state authority when it is exercised in conformity with accepted U.S. constitutional principles of non-discrimination against foreign commerce. Particular care must be exercised to ensure that state tax laws and revenue systems are not subject to unjustified challenge under international agreements, and they generally should be “carved out” of such agreements. In addition, provisions must be made to deny any private right of action in U.S. courts or before international dispute resolution panels based on international trade or investment agreements.
General Agreement on Trade in Services
The United States is a signatory to the World Trade Organization’s General Agreement on Trade in Services (GATS). As GATS attempts to apply trade rules to and regulate tariffs for industries beyond the production and shipment of tangible goods, GATS touches upon many sectors regulated by states and of interest to state legislators.
Services constitute an important and growing segment of the American and the global economies. NCSL concurs that it is critical that the United States remain competitive in services sectors. However, international competition in service industries cannot compromise state constitutional or traditional authority or in any way impinge upon states’ ability to protect the public interest. Services negotiations in particular must incorporate a concerted effort to consult with state legislatures, where policies about government-provided services, regulation of monopolies, provision of essential services (such as energy, water, health, education, or public safety), powers of public utility commissions, or privatization are set. Consultation with state legislators is absolutely necessary prior to, during, and after negotiations conducted under GATS.
NCSL is particularly interested in and concerned about negotiations underway, through the Working Party on Domestic Regulation (WPDR), to define and implement GATS Article VI:4, "Disciplines on Domestic Regulation." As the principles negotiated through the WPDR will affect all current and future commitments made under the GATS, it is critically important that U.S. negotiators fully understand and take into account states' interests. These interests include:
Maximum latitude for state policymakers to establish regulatory frameworks that protect the public interest as defined through the state legislative process;
Full recognition of the legitimacy and appropriateness of and protection for subnational regulatory regimes; and
Support for fully transparent regulatory processes that are respectful of, and not burdensome to, state and local governments, as determined through open, public governmental deliberation, and administered in a just and fair manner.
U.S. negotiators must consult regularly with the Intergovernmental Policy Advisory Committee as well as other state policy and regulatory bodies to ensure that the U.S. position incorporates and protects state interests.
In particular, NCSL is concerned about GATS negotiations relative to energy and electricity sectors. Trade rules of GATS apply to more than cross-border trade and cover state regulation of a domestic market, such as electricity where multinational companies have a commercial presence. GATS negotiations on energy and electricity on services related to transmission, distribution, and access of energy traders to the grid could conflict with state energy policy and alter the balance of domestic authority between states and the Federal Energy Regulatory Commission (FERC). NCSL has led efforts to create a working group of state and local policymakers, regulators, and other officials to examine and discuss energy and trade policy. This working group has held mutually beneficial meetings with USTR to promote dialogue and information exchange and has undertaken an exhaustive study of GATS implications for state and local authority over electricity policy. NCSL encourages USTR to remain engaged with the working group as it continues to study these issues.
NCSL applauds the consultations that have been undertaken thus far related to renewable energy and electric utility services and encourages USTR to devote substantially the same attention and effort, potentially through similar working groups such as the Intergovernmental Policy Advisory Committee’s services and investor-state working groups, to consultations related to other sectors.
NCSL recognizes that sections 2103 and 2106 of the Presidential Trade Promotion Act of 2002 now require that the President notify the Congress as new rounds of GATS negotiations begin and that the Congress approve the results of those negotiations before implementation. NCSL applauds the Congress for instituting this modification to the GATS process and looks forward to working with the U.S. Trade Representative (USTR) and the Congress as negotiations continue.
Agreement on Government Procurement
The United States is party to the World Trade Organization’s Agreement on Government Procurement (GPA). When negotiating the GPA, USTR solicited the state governors for permission to include state procurement and to bind state procurement processes to the GPA. USTR asserts that 37 states were voluntarily bound through this process to the GPA. In September 2003, USTR requested state governors to make similar commitments to several free trade agreements (FTAs) being negotiated at the time. NCSL recognizes that consultation with a limited number of governors is simpler than communicating with 7,500 legislators and that USTR has increasingly made these letters available publicly on the Internet. Nonetheless, the federal government must work with state legislatures to ensure that decisions about state procurement practices are made with their consent.
NCSL is concerned that USTR’s policy of communicating only with governors on procurement issues does not adequately provide for consultation with state legislatures or consider a need to change state law to adjust and obligate state procurement policy. State procurement policy and practices often are set in state law and are sometimes designed to serve social or economic purposes beyond the mere provision of goods and services for state government use. NCSL encourages USTR to insure that states can retain the ability to use procurement policy to promote these public interests while negotiating any modifications to GPA or procurement chapters in FTAs.
USTR has indicated to NCSL that there is some movement within the WTO to open and renegotiate sections of the GPA. Recognizing the value of state purchasing power to international agreements including procurement provisions and the role of state legislatures in setting state procurement policies, NCSL urges USTR to consult regularly and meaningfully with NCSL during any renegotiations.
August 2011
NCSL Staff contacts:
Diana Hinton, Committee Director
Jeanne Mejeur, Program Director
Robert Strange, Policy Associate
Last updated July 28, 2009