connecting america’s leaders june 2011 $4 · 2016-11-28 · connecting america’s leaders june...

CONNECTING AMERICA’S LEADERS June 2011 $4.50

RahmEmanuel

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1May 2010 | GOVERNINGJune 2011 | GOVERNING 1

06.2011

FEATURES24 RAHM’S WAY

Chicago’s Richard Daley is a tough act to follow. But Rahm Emanuel is determined to make his own mark.By Alan Greenblatt

34 STREET SMARTSSix ideas for untangling the nation’s infrastructure problems. By Ryan Holeywell and Russell Nichols

42 ALL ABOARDA true high-speed rail network may be years away. Despite some setbacks, the fast train is moving. By Elizabeth Daigneau

44 ENDING MEDICAID AS WE KNOW IT

The push to remake the way states pay for low-income care. By John Buntin

50 DITCHING THE CARROT & STICK

The culture of awards and accountability has a dark side. By Ken Miller

VOL. 24, NO. 9

Outside the Harold Washington Library in Chicago.

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DEPARTMENTS

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GOVERNING | June 20112

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54 Homeownership with a Happy Ending Massachusetts helps marginal earners become fi rst-time homeowners.

56 Smart Management Employers can’t pinpoint what the real value of retiree benefi ts is to them.

58 Idea Center When is the gas-guzzling SUV the green option? When your other car is a fi re truck.

60 Tech Talk When cloud computing fails, governments need to be prepared.

62 Public Money Congress looks into making new issues of state and local debt taxable.

64 Player A Gulf Coast mayor works to bring tourists back to the beach.

4 In This Issue

6 Letters

8 Dispatch States and localities want to dump a costly tax provision.

POLITICS + POLICY

11 Observer Who gets to vote? This basic exercise has become the subject of considerable debate.

14 At Issue Texas may ban texting by lawmakers during meetings.

16 Potomac Chronicle In school cafeterias, a new battleground has emerged.

17 FedWatch Dan Crippen has big shoes to fi ll.

18 Health California may set a national precedent on tanning beds.

20 Green Government Electric cars pose a challenge to public utilities.

22 Economic Engines Ports may represent an old industry, but they’re more important today than ever.

23 Urban Notebook Adding bike lanes often means reducing car lanes.

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siemens.com/answers

As the residents of Anaheim, California, walk their dogs in the morning, few realize there’s a substation right under their feet distributing power throughout their neighborhood.

The station under Roosevelt Park delivers much-needed power to 25,000 people. It’s the first underground substation in America, a feat made possible by an advanced design that makes it 70 percent smaller than traditional substations.

It seems like such a simple idea. But by putting the substation beneath the ground instead of above it, Siemens helped make life in Anaheim a little bit better.

Today, cities across the nation face countless choices about how to generate, distribute, and use electricity. Those choices call for unconventional thinking — because that’s the kind of thinking that leads to truly lasting answers.

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IN THIS ISSUE

Courageous Leadership

Governing today has become more complicated than ever. With fewer resources and ever increasing demands from the public, government executives need strong policy and implementation strategies to eff ec-

tively manage operations. Earlier this year, Governing introduced a conference series

for executives to gather and discuss the pressing issues facing government. Convened in strategic states, each Leadership Forum is developed by an advisory board composed of government exec-utives and select private-sector professionals who bring their expertise to shape an agenda relevant to a state’s issues.

At our North Carolina forum in April, 125 senior-level govern-ment executives shared ideas and best practices in a highly inter-active format tailored to address the state’s biggest concerns. Session discussions included how to make smart budget cuts, points of intersection between health care and human services, and the qualities of a strong leader.

Former Kansas City, Mo., Mayor Mark Funkhouser led the discussion on coura-geous leadership, and he shared what he thought were some essential leadership characteristics.

First, he asked us to distinguish between physical and moral courage. Many of us would run into a burning building to save a person, he said, but would we stand up for something that could cause us ridicule? Physical courage is rarely required for lead-ership; moral courage is always required.

Funkhouser went on to say that good people and true leaders diff er: Good peo-

ple stay out of trouble, minding their own business, whereas leaders are often in the midst of trouble, making it a point to get into people’s business.

“Hoop jumpers” are not leaders, he said. Hoop jumpers take zero risks. Leaders, on the other hand, take risks and have the courage to swim upstream when necessary.

Real leadership is being courageous. It’s easy to make a few minor changes, but it is more courageous when you’re trying to turn the tide. As one senior North Carolina leader told me, “We all have to be leaders in every part of our job and cannot wait for others to ask us to step up. We are truly in this storm together, and it will take all of us to get out.”

For more information about future Leadership Forums, please visit us at Governing.com/events.

I hope you enjoy our June issue. We profi le Chicago’s new leader, Rahm Emanuel, on page 24, and we assess the idea of man-agement by fear on page 50. As always, please let me know how we’re doing by e-mailing me at [email protected].


Publisher Fred Kuhn

Editor Tod NewcombeExecutive Editor Jonathan WaltersEditor-at-Large Paul W. TaylorManaging Editor Elizabeth DaigneauSenior Editor Zach PattonAssociate Editor Jessica B. MulhollandChief Copy Editor Miriam JonesCopy Editors Elaine Pittman, Lauren KatimsStaff Writers John Buntin, Caroline Cournoyer, Ryan Holeywell, Russell Nichols, Tina TrenknerCorrespondents Katherine Barrett, Richard Greene, Alan Greenblatt Contributing Editors Penelope Lemov, Steve TownsColumnists William Fulton, Peter A. Harkness, Donald F. Kettl, Alex Marshall, Girard Miller, John E. Petersen

Creative Director Kelly MartinelliDesign Director & Photo Editor David KiddArt Director Michelle Hamm Senior Designer Crystal HopsonIllustrator Tom McKeithProduction Director Stephan WidmaierProduction Manager Joei Heart

Marketing Manager Jenna AlifanteEvents & Program Manager Jennifer Carman

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Reprint Information Reprints of all articles in this issue and past issues are available (500 minimum). Please direct inquiries for reprints and licensing to Wright’s Media: 877-652-5295, [email protected]

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Governing (ISSN 0894-3842) is published monthly by e.Republic Inc., with offi ces at 1100 Connecticut Ave. N.W., Suite 1300, Washington, D.C. 20036 and at 100 Blue Ravine Road, Folsom, CA 95630. Telephone: 202-862-8802. Fax: 202-862-0032. E-mail: [email protected]. Web: Governing.com. Periodical postage paid in Washing-ton, D.C., and at additional mailing offi ces. Copyright 2011 e.Republic Inc. All rights reserved. Reproduction in whole or in part without written permission of the publisher is prohibited. Governing, Governing.com and City & State are registered trademarks of e.Republic Inc.; unauthorized use is strictly prohibited. U.S. subscription rates: Govern-ment employees—free; all others—$19.95 for one year. Foreign subscriptions: $74.95 in U.S. funds. Post-master: Send address changes to Governing, 100 Blue Ravine Road, Folsom, CA, 95630. Subscribers: Enclose mailing label from past issue. Allow six weeks. Member: BPA International. Made in the U.S.A.

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LETTERS

A Neighborhood’s CharacterAs a former resident of a cottage house myself, I always found it so insulting to hear the fallacy that renting a backyard home to “strangers” will destroy the character of a neighborhood [Think-ing Small, May 2011]. When I moved to Seattle, I didn’t want to live in a huge, generic apartment complex. I wanted to be part of a neighborhood, but couldn’t aff ord a home. (What single person can in Seattle?) Living in a cot-tage home in fact made me feel like a bigger part of my community and my neighborhood. Any resistance to these cottages is pure snobbery.

— Jenifer Kooiman, Seattle

I lived in West Seattle in the 1990s and there were a number of these places already available. Many lots in Seattle are huge and often already have either a garage or parking spaces in the back. I lived in a great one-bedroom carriage house that was atop a three-car garage .... Neighbors had a similar unit, and sev-eral others had them too. They didn’t ruin property values, they didn’t invite criminals to live in them and the streets were more walkable since you didn’t have so many cars parking on the street.

— Greg Dewar, San Francisco

Cash Is Not the AnswerWe in San Francisco have a long history of administering and rethinking “food stamp” credits [Legalizing Cash, May

2011]. For more than 40 years, the city has been tracking trends and performance .... Indeed, the most eff ective program that San Francisco has initiated over the last decade is Care Not Cash, in which the city and local nongovernment organi-zations work together to consolidate services, increase access and streamline oversight of administration. It’s far from perfect, don’t get me wrong, but in dense poverty clusters, straight cash tends to infl ame crime and corruption, and allows harmful behavior and illnesses to persist without intervention. My point is that yes, counties and states would likely see an initial fall in program expenses, but at the cost of program performance and eff ectiveness.

— Governing.com reader

As one who was present at the incep-tion of the national food stamp program, I was interested to read Paul W. Taylor’s call for a “free market” cash program. Back in 1969, it was voices from the left that called for cash (the slogan was “Bread Now!”) as a step toward a guaranteed minimum income. The more complex stamp approach was chosen, as I recall, basically for two reasons. One was a concern that the proposal would be politi-cally vulnerable if recipients spent cash on alcohol and drugs. The other was a fear that a signifi cant infusion of cash into low-income urban neighborhoods would lead to rent hikes that would absorb the funds; this was based on experience around mili-

tary bases following increases in enlisted men’s pay. Both of these concerns were tied to the fact that food stamps were intended as a nutrition program.

— André Mayer, Cambridge, Mass.

A Critical Volunteer ForceThank you for the great article [Voluntary Force, April 2011]. During my career, we would not have been able to function as well as we did without volunteers. They were an essential support element at my last assignment as a precinct com-mander for the Sheriff ’s Offi ce in King County, Wash. I could always count on them more than a few of the regular paid employees. During the Green River homi-cide case when Gary Ridgway was killing women in King County, volunteers can be credited for inputting most of the case information into a master database that eventually became available to investi-gators. As it turned out, Ridgway was in the database and was later convicted for 49 homicides based on DNA evidence.

— Dick Kraske, a former King County Sheriff ’s major, Seattle


What You’re Commenting OnHere are the articles from the May issue of Governing that drew the largest reader response. Although we received many of these com-ments online, several were shared via e-mail. Letters to the editor are still welcomed and encouraged at [email protected].

Thinking Small by Zach Patton

A Financial Home Run? by Ryan Holeywell

Making Prison Work by Russell Nichols

Legalizing Cash by Paul W. Taylor

How Bad Is It? by Ryan Holeywell

1 2 3 4 5

GOVERNING | May 201136 37May 2011 | GOVERNING

It’s chilly, gray and raining.In other words, it’s an utterly unremarkable spring day in Seat-tle, as the city’s urban planning supervisor Mike Podowski pulls up to a home in the Columbia City neighborhood southeast of downtown. The large clapboard-and-cedar house is a charming two-story Craftsman, but Podowski’s not interested. Instead, he makes a beeline for a freestanding structure in the backyard. “This is great!” he says, as the homeowner ushers him through a gate. “It’s an ideal set-up.”

Podowski has come to check in on one of Seattle’s fastest-growing new modes of housing: the backyard cottage. Since 2006, the city has allowed homeowners to build stand-alone cottages—officially known as “detached accessory dwelling units”—behind existing single-family homes. At first, the zoning change only applied to a few neighborhoods on the city’s south side, includ-ing Columbia City. But in November 2009, Seattle expanded the pilot program throughout the city, to any residential lot of at least 4,000 square feet. In the 18 months following the expansion, 57 backyard cottages have been permitted, and roughly 50 of those are either completed or nearly finished.

Like other mid-size cities that came of age in the first few decades of the 20th century, Seattle is made up largely of com-pact neighborhoods filled with single-family bungalows. Today, almost two-thirds of the city is zoned for single-family homes, so it’s harder for Seattle to accommodate its growing population—the city swelled from 563,374 residents in 2000 to 608,660 last year—without spreading farther and farther into the forests of

Cities are struggling to increase residential density without destroying their established single-family neighborhoods. In Seattle, that means the return of the backyard cottage.

By Zach PattonP h o t o g r a p h s b y D a v i d K i d d

Thinking small

Seattle’s newest variety of homes max out at a footprint of just 800 square feet. The owner of this house uses it as an office.



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A seemingly modest 3 percent could turn out to be a big deal for states and many localities. Section 511 of the Tax Increase

Prevention and Reconciliation Act of 2005, known as TIPRA, requires states and localities (those cities that do more than $100 million in business) to with-hold 3 percent of nearly all payments for goods and services, and remit the money to the IRS for income tax purposes. Delayed several times, Section 511 is now due to start in January 2013 for new con-tracts, and its potential costs are causing concern in the procurement community. So far, the total is in the tens of billions of dollars—that’s a major impact on a still-anemic economic recovery.

The intent of Section 511 is to increase revenue without raising taxes. That is an attractive proposition. But as with many unfunded mandates, the compliance measure brings with it a signifi cant shift in costs to state and local governments at a most inopportune time.

“The real cost is lost,” laments Ron Bell, president-elect of the National Association of State Procurement Offi cials. He warns that the withholding requirement will reduce competition in public procure-ment and increase costs to taxpayers. When states and localities purchase goods or services now, they pay the ven-dor in full, leaving it up to them to pay the IRS. Once TIPRA goes into eff ect, govern-ments will be required to withhold the 3 percent at the time of purchase. The scheme restricts cash fl ow for all busi-nesses, but could hurt cash-strapped small companies, in particular.

“Businesses often fail because of cash fl ow issues and this takes 3 percent right out of the cash fl ow,” he says.

Offi cials also worry vendors may sim-ply increase their prices by 3 percent or

By Paul W. Taylor

A Real Tea Party Moment?State and local governments want to dump a costly tax provision.

DISPATCH

Section 511 work, and most would require signifi cant modifi cations to tables, fi les, document processes, withholding rules, category codes, exception processing and error tracking.

Given enough time and clear rules, most of the requirements to implement the with-holding provision can be accomplished with changes to software code. What cannot be automated will require manual intervention and more staff time.

In addition, contracts with vendors may have to be reopened, renegotiated and reset. Last month, the IRS delayed implementation for the thrid time when it released its fi nal rule on exactly how states and localities should implement the withholding tax.

States and localities—together with the coalition—would like to kill the provision once and for all. Repeal legislation has been introduced in both the House and Senate, but its passage relies on fi nding $10.9 billion over 10 years to make it rev-enue neutral. That requirement could not come at a worse time either. G

E-mail [email protected]

more, in order to minimize their loss of revenue. States and localities will likely have to absorb this increase, seriously impacting their ability to obtain the low-est possible pricing for purchases using public funds. Bell’s concerns are echoed by the Government Withholding Relief Coalition, an industry-backed group that has pushed for repeal of the provision.

States and localities face added costs of $10 billion over fi ve years, according to the coalition, an amount that could rise to as much as $48.4 billion if the IRS fails to exempt credit card purchases. That does not include the liability the legislation imposes on state and local governments to remit the tax to the IRS.

“If we don’t come out of the chute withholding that 3 percent, then the state is liable for it,” says Bell.

“In theory it sounds easy just to put a fl ag on it and remit those mon-eys, but it operates much diff erently in your payroll system,” observes Cornelia Chebinou, who speaks for the National Association of State Auditors, Comptrol-lers and Treasurers. Her members run the computer systems that have to make

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Wireless puts efficiency in your hands. Pay for parking with your phone. Use your GPS to find a 24-hour pharmacy. Change your flight with a tap of your tablet. When America’s wireless companies are free to compete, you’re free to command your world. Innovation, not regulation. Wireless is freedom.

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Senior policy leaders, infl uential thinkers and practitioners

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September 12 & 13, 2011Washington, D.C. – The Newseum

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SENATOR MARK R. WARNER, COMMONWEALTH OF VIRGINIA

2010 SUMMIT ON THE COST OF GOVERNMENT


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OBSERVER By Alan Greenblatt

Who Gets to Vote?

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11June 2011 | GOVERNING

N othing is as central to democracy—or held so sacred within American civic culture—as the right to vote. Yet this basic exercise has become the subject of considerable debate in state legislatures this year.

For decades, the federal government has sought to make vot-ing easier, through measures such as the Voting Rights Act, the 26th Amendment, which lowered the voting age to 18, and the motor-voter law, which simplifi ed registration. This year, however, numerous states are rolling back early voting and Election Day registration laws, or demanding that voters show government-issued identifi cation at polling places or off er proof of citizenship.

Not all these eff orts are bearing fruit. Montana Gov. Brian Schweitzer in April dramatically halted legislation to end same-day voter registration when he vetoed the bill with a branding iron. But enough bills are moving forward to lead many Democrats to complain that GOP legislators are seeking to disenfranchise vulnerable groups of vot-ers, including African-Americans and college students. You know, the Obama coalition.

Republicans deny any such intention, saying they are merely pro-tecting the sanctity of the ballot. “The goal is to ensure the integrity of the election process and provide a common-sense means of combating voter fraud, and the perception of voter fraud,” Ohio state Rep. Louis Blessing said as his chamber passed a voter identifi cation requirement in March.

The fact that so many states are considering rolling back eff orts that sought to make voting easier for citizens represents a shift away from the long-standing trend of recognizing the fundamental nature of the right to vote and its importance for citizens participating in democracy, voting rights experts say.

Throughout American history, there have been arguments about who gets to vote, with new restrictions enacted from time to time. But in recent decades, “It really did seem that universal suff rage was a consensus value, with exceptions at the edge like felons,” says Alex Keyssar of Harvard and author of The Right to Vote. “What is happen-ing here does seem to me to be an attempt to roll it back.”

The desire to place limits that fall most heavily on certain kinds of voters appears to be driven by partisanship, Keyssar says. “Voting is like motherhood and apple pie, especially for ‘my’ people. If ‘your’ people want to vote, I’m not so sure.” G

Politics+PolicyA look at the people, events and ideas that shape state and local government.



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It’s a rite of spring in the education fi eld. Districts traditionally send lay-off notices to far more teachers than they actually intend to let go. This

year, however, they mean it.Not only are state and local budgets

still under strain, but the last of the federal stimulus dollars meant to keep teachers working—the so-called EduJobs funds—are about to run out. As a result, two-thirds of all districts are planning to let people go, according to surveys by the American Association of School Administrators.

Individual districts, such as Detroit and New York City, are talking about hav-ing to drop upwards of 5,000 teachers apiece, so layoff s in excess of a quarter million educators nationwide are possible. “Usually lots end up getting hired back,” says Andrew Rotherham, an education consultant, “but this year there will be real layoff s, year-over-year reductions.”

This is leading not only to the prospect of larger class sizes, but also concerns that young people will shy away from entering what is suddenly a less-than-secure pro-

fession. The number of students earning credentials in California, for instance, has already dropped by more than 50 percent from its peak in 2003-2004, while enroll-ment in teacher preparation programs dropped by a third over the past fi ve years.

There are still plenty of teachers—hence the layoff s—so the major policy debates turn on the question of who should be shed. Traditionally, seniority has been the decisive factor, but a handful of states have recently passed legislation calling on districts to base their picks on

R emember when fi xing bridges seemed like it was going to be a big deal? After the 2007 Interstate-35W bridge collapse in Minneapolis, many states talked about the need to address an infrastructure crisis

that included crumbling bridges [see Street Smarts, page 34].But bridges have never emerged as a real spending priority.

Even when states were handed what amounted roughly to an extra year’s worth of transportation dollars through the 2009 federal stimulus package, bridge repair remained rather low on the list.

A recent study by the advocacy group Transportation for America found that nearly 70,000 bridges—or more than 11 percent of the nation’s total—remain “structurally defi cient.”

“Two key problems persist,” according to the group’s report. “While Congress has repeatedly declared bridge safety a national priority, existing federal programs don’t ensure that aging bridges actually get fi xed; and the current level of invest-ment is nowhere near what is needed to keep up with our rapidly growing backlog of aging bridges.”

It was never going to be the case that stimulus dollars would be spent primarily on bridges, says Lloyd Brown, a spokesman for the American Association of State Highway and Transportation Offi cials. For one thing, the term “struc-turally defi cient” sounds scarier than the reality. All the term means is that a bridge needs repair—not that it’s about to fall down. State transportation departments inspect every bridge

at least once every other year. They shut down the ones that aren’t safe to drive on, Brown says.

Also, bridge projects are generally too complicated to have met the spend-it-fast demands of the stimulus law. “Most of the states put money into things they could move quickly, such as asphalt overlays,” he says. “Bridge projects, especially replacement projects, tend to be a longer-term development.”

Some states are making a concerted eff ort to fi x up their bridges. Oklahoma is midway through a decade-long project devoting nearly $2 billion to bridge repair. The state still holds the second-worst ranking in the Transportation for America report, but it’s brought down the number of its problem bridges by 32 percent over the past fi ve years.

But for most states, bridges are symptomatic of a larger problem. Transportation projects in general are going to slip behind. President Obama and House Republicans have ruled out increases to the gas tax, and the next federal transporta-tion law is likely to off er states half of what Obama initially asked for.

“It’s not a question of whether it’s important, it’s a question of whether there’s money to do much,” says Richard Little, who heads the Keston Institute for Public Finance and Infra-structure Policy at the University of Southern California. “The way the country is right now, if we had bridges falling down every week, I don’t know if we could get both sides to agree on a program.” G

Pink Slip for Teacher

Politics+Policy | OBSERVER

Fixing Bridges … Or Not


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Politics+Policy | OBSERVER


| AT ISSUE

By Caroline Cournoyer

Don’t Mess with TextingTexas may ban texting by lawmakers in session.

Scores of states and cities have recently enacted bans on texting while driving. But a proposed bill in Texas could make it the fi rst state to prohibit a different kind of technology use: texting while lawmaking.

The measure, introduced in March by Rep. Todd Hunter, would make it illegal for Texas legislators to send or receive a text, e-mail or instant message, or make posts to websites, during public meetings. It’s not a question of whether lawmak-ers are paying attention—although that’s an issue—but rather, the concern is that such communication violates open meeting laws.

If enacted, Texas would be the fi rst state with a law of this kind. But the legality of texting while lawmaking has already been cause for debate in places around the country. In San Jose, Calif., controversy erupted in 2009 when a lobbyist texted the wrong city councilmember telling him how to vote. In response, the city adopted an ordinance requir-ing councilmembers to disclose relevant electronic communications they receive during meetings. The state also prohibited lobbyists and lawmakers from texting one another while on the fl oor or in committee.

Legislative chambers in at least 36 states—not including Texas—plus the District of Columbia have rules restricting the use of electronic devices, such as cell phones. But most of these rules don’t pun-ish violators and only address the device’s noise, calling for them to be turned off or silenced, according to the National Conference of State Legislatures.

The Colorado Senate is one of the few chambers to mention text messaging in its rule. Texting, e-mailing and making phone calls are prohibited on the fl oor and at all other offi cial meetings. However, members can use laptops and tablets, except during a bill’s fi nal reading. But the consequences of violating the rule are nominal—a $2 to $5 fi ne—and not one lawmaker has been punished for breaking the ban since it was enacted over fi ve years ago. Colorado Sen. Greg Brophy calls the rule “stupid,” adding that legislators ignore it “as often as people break the law regarding the use of cell phones while driving.”

The problem, critics say, is that electronic communication is useful—especially during public meetings. Texas Rep. Marc Veasey says technology allows him to keep his constituents updated during meetings through social media. “If mem-bers can’t restrain themselves properly in the use of this technology,” he says, “then maybe there needs to be some House rules. But not a law.”

If Hunter’s bill does become law, Veasey says, it will create more distractions than the texting itself, because members will leave the room whenever they need to post a social media message, check e-mail or work on press releases. None-theless, Veasey says, the bill has a good chance of being adopted, because Hunter chairs the powerful House Calendars Committee that determines which bills will be brought to a vote.

classroom performance, rather than just years on the job.

“None of us want to see school districts have to make layoff s due to budget con-straints,” says state Rep. Alisha Morgan, sponsor of a Georgia bill ending senior-

ity-based layoff s. “But in case they do, we want them to make decisions based on the best interests of the students.”

Morgan’s bill leaves a lot of discretion to districts in terms of determining how best to evaluate performance. But she was disturbed by testimony from school board offi cials that indicated they were never-theless more comfortable making such decisions based primarily on seniority.

That’s all too often the case, says Rotherham. Even when districts are freed from traditional personnel rules, they still largely adhere to seniority, rather than making tough calls comparing individuals.

That means many schools, even as they shrink the size of their workforces, are going to miss an opportunity to ensure that they’re keeping their strongest possi-ble lineups intact. “This can be a chance to hold onto really good people, and get rid of bad people,” Rotherham says. “What’s frustrating is that schools don’t [see] the silver lining.” G


Students protest teacher layoffs in Fremont, Calif.

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Building the Innovation Nation

an interactive tool of State and Local e-Government performance measures.

Get the full report at www.governing.com/innovationnation

underwritten by:


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The Flaws in Flavored MilkA new battleground has emerged, pitting government against a powerful industry.

By Donald F. Kettl

One of my fondest memories from kindergarten was the treat of a couple of graham crackers and choco-late milk served in a waxy paperboard container. In those days, primary school was mostly about helping

kids learn how to spend half a day away from mom. Milk was an important bait, luring us into the world of education.

A lot’s changed since then. Kindergarten is now a serious edu-cational venture. Kids make big steps in reading instead of having See Spot Run read to them, and they learn how to write instead of coloring elephants with giant crayons. Chocolate milk too, has changed. It’s now at the center of an enormous policy battle regarding school lunches.

Some school districts have banned fl avored milk completely. In Florida, the battle has become white-hot. The State Board of Education campaigned to pull chocolate milk out of lunch-rooms, as part of its ongoing eff ort to eliminate sugared sodas and high-calorie desserts. When the board turned to fl avored milk,

opposition from the dairy industry fl ared. Big business was at stake—in 2010, the state’s four largest school districts spent $13 million on fl avored milk, and students downed 49 million half-pints of the chocolate version.

State Agriculture Commissioner Adam Putnam countered the board’s eff orts by trying to pull decisions about cafeteria food into his offi ce. But Board of Education member Roberto Martinez fi red back, “We have to put the kids fi rst, not the agriculture industry fi rst—period. End of story.”

So how does taking much-loved chocolate milk out of school cafeterias put kids fi rst? Two words: fat and calories. The standard half-pint serving of low-fat milk has 102 calories, of which 21 come from fat. Chocolate milk has more than twice the calories (226) and almost four times as many calories from fat (78). With childhood obesity reaching epidemic levels, public health groups have pressed school dis-tricts to switch to lower-calorie options.

Following on the heels of the wildly popular “Got Milk?” ads, the dairy industry promoted a “Raise your hands for chocolate milk” campaign. In Boulder, Colo., chef Ann Cooper, a self-styled “renegade lunch lady,” says the campaign has more to do with selling milk than promoting nutrition.

In April, Fairfax County, Va., schools reversed their chocolate milk ban after an avalanche of protests from disappointed stu-dents—and concerned nutritionists, who argued that chocolate milk is an important way to get vitamin D and calcium into the diets of nutritionally challenged children. Interestingly, Fairfax’s new chocolate milk is low-fat and contains sucrose instead of high-fructose corn syrup. Some critics of the old chocolate milk say the switch is healthier because sucrose is less heavily pro-cessed. Others say that sugar is sugar and it doesn’t make much diff erence how it comes into the diet. The Corn Refi ners Associa-tion shares that opinion—and a concern that it not lose the big chocolate milk market.

The feds have found themselves squarely in the middle of this intense battle. The U.S. Department of Agriculture’s (USDA) Center for Nutrition Policy and Promotion, along with the Depart-ment of Health and Human Services, reinvented the food pyramid to help Americans make healthier choices, and especially to help

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reduce the fat and calories in the diets of youngsters. Meanwhile, the National Milk Processor Board, which created the “Got Milk?” campaign, works under the USDA’s umbrella as part of its mission to pro-mote dairy products. The department’s National School Lunch Program provides subsidized meals and snacks for less-affl uent children. It calls for schools to serve milk, and chocolate is OK.

Is it the USDA’s policy to promote good nutrition, low-fat milk, chocolate milk or milk production in general, regardless of fl avor? One way or another, the answer is yes, to all four. Then there’s fi rst lady Michelle Obama’s campaign for child nutrition, and Rep. Michele Bachmann’s charge that the fi rst lady is trying to roll out a “nanny state.” Bachmann castigated the nutrition campaign in telling talk radio host and Fox News contributor Laura Ingraham that “For them, government is the answer to every problem.”

One blogger at the San Francisco Chronicle simply told other readers, “You couldn’t get me to drink school milk as a child. If it was chocolate, I’m sure it would have been diff erent! It’s like an adult at Star-bucks ... even kids need a little vice!”

But this little vice, if that’s what it is, has become a very big battle. Fairfax’s Penny McConnell, who directs the dis-trict’s food and nutrition services, says that before the district reversed its deci-sion she received 10 to 20 e-mails a day contending that students liked the drink and it supplied essential nutrients to help growing kids grow strong bones. “It was a lot of pressure.”

Since 1946, milk has been a corner-stone of the federal school lunch program. Little did its sponsors back in the Truman administration realize that their plan to bring better nutrition to the nation’s chil-dren would erupt into such a deep moral, scientifi c, economic and political battle, involving everyone from renegade lunch ladies to fi rst ladies. It makes me long for a few sips of soothing snacks and a nap on the blanket I used to store in my kinder-garten cubby. G


June 2011 | GOVERNING 17

By Ryan Holeywell

The Governors’ Guy in D.C. The new head of the NGA has big shoes to fi ll.

Dan Crippen recently took over as executive director of the National Governors Association (NGA), which had been led by his predecessor, Ray Scheppach, since 1983. Crippen has an impressive resumé of his own, highlighted by his role as director of the Congressional Budget Offi ce from 1999 to 2002.

What drew you to the job at the NGA?I was feeling a little guilty for having not been back in public service for a while. I’ve worked with governors most of my life. In fact, I started out in public service when I was an undergraduate working for a governor in South Dakota. It’s back to where I started in some ways.

It seems that when money is tight, partisan divisions become more appar-ent. What’s the role of the NGA given its diverse political membership?We obviously have to look for the middle ground or a nonpartisan, apolitical ground. I think we’ve seen a little more division at the moment around the whole issue of health care and health-care reform. When it comes to day-to-day stuff, however, the governors are certainly not unanimous, but they all share big problems and big challenges. So actually I think they are probably more amenable to shared solutions.

A recent Pew Center on the States study says the average state pen-sion system was funded at 78 percent in 2009—a decline of 6 percentage points from 2008. What do you see states doing to address that problem?I think the headlines overstated the fi ndings. It was not much [of a drop]. Overall, the states are mindful of whatever the gaps are and are taking actions—both to manage the funds better but also reduce future obligations somewhat. Around 20 states have changed parts of their program just this year alone.

Health-care costs are a growing burden for states. Is Medicaid a sustain-able program or are we going to reach some sort of tipping point?Clearly, health care writ-large is unsustainable. We can’t grow health care faster than the economy forever. [The question] is not just, “Is it sustainable?” but, “What are the consequences of continuing [to grow] at the current rate?” [As it is,] we don’t have as much money as we’d like for education, transportation, infrastructure—for investments in the future.

Revenues are rebounding, but will we ever return to where we were?I don’t know that it’s a sea change, but I think we have had one of those moments where the economy and demography collide. We’re going to go from 40 million retirees to 80 million in the next 20 years. So whether it’s Medicaid or long-term care—we’re going to be putting demands on government. At the same time, [retirees don’t] generate as much income or as much tax revenue for a jurisdic-tion either. So the demographic [shift], along with the economic, means these

are long-term challenges. It’s not just that we can recover and in two years it will be rosy again.

|

Read more from the inter-view with Dan Crippen at governing.com/crippen

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By Jessica B. Mulholland

The Tan BanCalifornia may set a national precedent on tanning beds.

a similar bill in 2007, says he’s confi dent the bill will pass this time around.

“You have health insurers like Blue Cross supporting the bill because they realize the cost they’re paying for skin cancer treat-ment from people who get it from tanning beds,” he says.

Though California may be the fi rst in the U.S. to ban teenagers from tanning beds, it will not be the fi rst place worldwide. Many countries have already done this—in April, England and Wales banned teen indoor tanning, and in February, Brazil banned tan-ning beds for cosmetic purposes for the entire population.

The tanning industry—which in 2010 was sued by the Federal Trade Commission for deceiving customers about health-care risks—is up in arms about the bill, claiming that if banned from tanning salons, teens will resort to using unregulated home UV appliances. “You’re going to create a garage, underground tan-ning industry with this bill,” Joe Levy, executive director of the International Smart Tan Network, told the state Senate Business, Professions and Economic Development Committee.

Lieu doubts rogue tanning will take off anytime soon, however. “They will do what Snooki on Jersey Shore does,” he says. “They will do spray tanning.”

Shifting its teens away from tanning beds and toward spray tanning—a safe method with the same “sunkissed” outcome—is a win-win for California and its teenagers, Lieu says. Teens can still enjoy the glowing result without the cancer risk. G


Politics+Policy | HEALTH

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On May 2, a state Senate committee approved legislation that would make California the fi rst state in the nation to ban teenagers from hitting the indoor tanning bed. The bill follows a statement in February by the Ameri-

can Academy of Pediatrics calling for a ban on ultraviolet (UV) tanning beds and similar devices for anyone under the age of 18, according to state Sen. Ted Lieu, who says “because skin damage is cumulative, the more exposure to tanning beds you have early in life, the worse it is later in life.”

Several scientifi c studies show a direct connection between indoor tanning beds and cancer, and the World Health Organiza-tion has classifi ed tanning beds as a Level 1 carcinogen, the same as plutonium and cigarettes. Every year, an estimated 1 million people in America are diagnosed with non-melanoma cancer, which is caused by overexposure to the sun and tanning devices, according to the American Cancer Society.

In 2004, then-Gov. Arnold Schwarzenegger signed a law ban-ning anyone in California younger than 14 from using a tanning bed, but allowed teens between the ages of 14 and 17 to use them with parental consent. Many states have their own variations of tanning laws and regulations, but none ban tanning entirely for minors, despite the fact that the American Medical Association has rec-ommended it. New York state has also introduced a bill that would ban indoor tanning to anyone under 18.

But with the addition of new medical evidence, as well as increasing support from not only the California Medical Association but also health insurers, Lieu, who tried to pass



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By Elizabeth Daigneau

Planning for Plug-insElectric cars pose a challenge to public utilities.

Swapping a gas-guzzling automobile for a plug-in electric car has defi nite environmental advantages. There’s the lack of emissions, for one thing, and electric vehicles (EVs) obviously don’t require drilling for oil, refi ning

it or transporting it. But it’s not as if EVs have no impact on the environment. The power to charge a plug-in EV has to come from somewhere. And that’s got some people worried about just what an infl ux of EVs might mean for the nation’s electrical grid.

With gas back up to $4 a gallon and generous government incentives for buyers, more than 30,000 EVs are expected to hit the streets in the coming year. Adding an electric car to the driveway can be like adding another house to a neighborhood,

says Karl Rábago, vice president of distributed energy services for Austin Energy, the public utility for Austin, Texas. It has led to the perception that EVs could seriously burden electric grids. Should public offi cials be concerned?

In the near term, the answer is no. Simply put, “We can’t build them that quickly,” says Clay Perry, senior media relations man-ager for the nonprofi t Electric Power Research Institute (EPRI). The Nissan Leaf and the Chevrolet Volt—the country’s fi rst truly mass-market EVs—aren’t cheap. The Leaf sells for $33,000; the Volt, $41,000. The high price tags and limited driving distances—at least until more charging stations are built—are obstacles to wide-scale adoption of EVs.

In the long term, however, the vehicles may pose more of a problem. If public utilities do nothing and a million electric vehi-cles fl ood the market by 2015—a target that President Obama has espoused—then the grid could become overloaded, possibly knocking out power to a home or even a neighborhood.

But if public utilities plan properly, the arrival of the electric vehicle could be met with little more than a hiccup. Both Austin and Los Angeles are trying to get ahead of the EV impact. Austin Energy is off ering a rebate of up to 50 percent off the cost and installation of home EV charging stations. To receive the rebate, Austin residents must agree to participate for three years in a pilot program in which they share information about their EV

charging habits. “We are providing incen-tives and tying them to requests for data so we can learn and study the impacts [of EV charging],” says Rábago.

Los Angeles is running an almost iden-tical program. Its public utility is off ering residents up to $2,000 to purchase and install home EV charging stations. The fi rst 3,000 to 5,000 Los Angeles Department of Water & Power customers who sign up will be required to participate in its “residential time-of-use rate” program, which provides a signifi cant discount for electrical use during off -peak hours—weeknights and anytime on weekends.

Austin Energy has been planning for the arrival of electric cars for fi ve years. Its electric vehicle-readiness program will use the data collected from custom-ers participating in the rebate program to develop “smart charging” strategies to prepare the grid for the expected infl ux

of electric vehicles—research by EPRI indicates there may be as many as 36,000 EVs in the Austin area by 2020. One smart charging strategy includes incentivizing customers to charge their EVs in the middle of the night. Austin Energy’s lowest demand for electricity occurs about 2:30 a.m., which also coin-cides with the state’s highest production of wind power. (In Los Angeles, the peak hours of wind power production also occur at night.) But even charging an EV during peak hours on a coal-powered electricity grid would still be cleaner than a petro-leum-based vehicle, Rábago says. G


Politics+Policy | GREEN GOVERNMENT


About 469,000 EVs are expected to be on American roads by 2015, according to the nonprofi t Center for Automotive Research.

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SMARTER.At Ford Fleet, we never stop learning. We believe in continually pushing ourselves to bring the best thinking and innovations to market. Our exclusive Crew Chief™ feature* is just one example. It provides real-time telematics, for tracking routing times, fuel economy, vehicle performance/maintenance, engine idle times, even vehicle speed and location. With online access to Crew Chief’s customizable tools and displays, fl eet managers get critical, up-to-date information exactly when they need it. Ford Fleet. Get More.

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ships to leave places like Shanghai (now probably the world’s largest port), cross the Pacifi c Ocean, go through the Panama Canal and then sail on to Houston, New Orleans, Miami, Savannah, Charleston, Norfolk or New York City.

States and cities that support these sprawling port operations are scrambling to adapt, debating whether to spend the enormous sums of money necessary to deepen channels and expand facilities to handle these “post Panamax” and “new Panamax” ships. These ships are huge—the largest are four football fi elds long, a football fi eld and a half wide, and require a channel depth of 50 feet.

To handle these behemoths, the Port of New York and New Jersey, for exam-ple, must dredge its shipping channels to 50 feet from the present 40 feet. The “natural” depth of these channels is only

The Shipping NewsPorts may represent an old industry, but they’re more important today than ever.

Shipping has been the key to prosperity and the very exis-tence of many cities and nations since ancient times. It is dif-

fi cult to think of any major metropolis that did not begin as a port. London orig-inated as a Roman port, and ancient quays have been unearthed on the banks of the Thames River. From the Middle Ages to the Renaissance, Venice was one of the wealthiest cities and empires in the world because it controlled trade in the Adri-atic Sea with, among other things, the thousands of ships its Arsenale churned out. Until the advent of railroads, it was usually cheaper to ship something 5,000 miles than transport it 50 miles overland.

The modern telecommunications rev-olution has only made this ancient form of transport more important. Factory managers in China and India communi-cate via computer with owners in Austin,

Cupertino or São Paulo. They churn out iPhones, shirts and plastic toys, and put them into digitally labeled containers that go onto ships, where they are sent across oceans to be put on the beds of trucks or trains, and then transported to waiting warehouses or even directly into stores. There is always pressure to make things move faster with one less step.

Port cities have always scrambled to modernize, as well as to change through innovation. It’s generally agreed that New York City became the dominant North American city because New York state fi nanced construction of the Erie Canal in 1817, which opened up the Midwest to international shippers via New York City.

A major event occurring now, sched-uled for completion in 2014, is the expan-sion of the Panama Canal. The widening of this historic gateway between the Atlantic and Pacifi c oceans will allow enormous

By Alex Marshall

Politics+Policy | ECONOMIC ENGINES

22 GOVERNING | June 2011

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June 2011 | GOVERNING

15 feet, so they must be dredged continu-ally to maintain that depth. The New York/New Jersey port would also have to raise the Bayonne Bridge that connects Staten Island to New Jersey—a billion dollar project—to allow these super-sized ships to fi t beneath it.

Meanwhile, the ports of Los Angeles and Long Beach , as well as the train and truck companies that interlink with it, are preparing for the day when ships have less of a reason to stop there.

Ports are funny things. They are essen-tial to the prosperity of states and cities, but are largely invisible to residents. No longer do sweating gangs of stevedores unload sacks of coff ee into downtown warehouses, as businessmen stop in their daily rounds to watch.

The 21st-century industrial term for moving stuff around is “logistics.” Like “infrastructure,” “logistics” is a modern, fancy word that replaces an older, simpler one: “shipping.” Our historic waterborne roots are evident in the fact that rail, road and air professionals call themselves “shippers,” and describe what they do as “shipping.” It’s even correct English to say, “the goods will be shipped by rail.”

The continual rise and importance of ports and the huge ships that service them have a number of implications, not all pleasant. The possibility of environmentaland other sorts of “black swan” catastro-phes is almost certainly made larger when so many eggs are put in one basket. But that’s a subject for another day. For now, give a nod to your port when you drive by. Your life is depending on it. G


By Tod Newcombe

| URBAN NOTEBOOK

23

A major event

occurring now, sched-

uled for completion in

2014, is the expansion

of the Panama Canal.

“

Bicycle BattlesAdding bike lanes often means reducing car lanes.

As Americans seek out less costly, nonpolluting and healthier ways of getting around, nothing looks more promising than bicycling. Its popularity continues to grow, and so does government investment in bike trails, lanes, stands and programs that support cycling. At the same time, all those moving bicycles have to go somewhere, and in cities, that means the streets. As a result, the relationship between bicyclists, drivers and pedestrians has grown testy and, in some locations, rather hostile.

There are more than 50 million Americans who ride bicycles, according to the U.S. Department of Transportation (DOT). Of those, a small but growing number cycle to and from work on a regular basis. Between 1990 and 2009, the number of

commuting cyclists increased fourfold in Chicago, and tripled in Washington, D.C., and Portland, Ore. Federal funding for bicycling has also grown over the same period, increasing from $23 million in 1992 to more than $1 billion in 2009-2010.

Eighth in Bicycling.com’s ranking of the country’s most bike-friendly cities, New York City has come to represent just about everything there is to like and not like about biking in a city. Its vehicle and pedestrian congestion is known the world over, making any bike ride a risky venture. But Mayor Michael Bloomberg and his DOT Commissioner Janette Sadik-Khan believe New Yorkers will embrace bike lanes. Since 2007, the city has added 255 miles of lanes, with more to come.

But adding bike lanes in a dense city like New York means something has to be taken away, like a car lane, parking spaces or both. That’s what happened in March when the city built a bike lane in the tony Brooklyn neighborhood known as Pros-pect Park West. Three lanes of traffi c became two, and six parking slots disappeared, unleashing a wave of controversy in the city.

Opponents have fi led a lawsuit against the city demanding the lane’s removal, and set up surveillance cameras to count the number of bikers who actually use the lane. The New York Post has opposed it in print, and Prospect Park West resident Iris Weinshall, Sadik-Khan’s predecessor at the DOT and the wife of U.S. Sen. Chuck Schumer, has spoken out against it.

In other cities, similar bike lane controversies have erupted, exposing the some-times tricky problem of adding another form of transportation infrastructure to a city. For now, the Bloomberg administration has signaled that it will continue to add bike lanes. But opponents say the battle has just begun. G


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Chicago’s Richard Daley is a tough act to follow. But Rahm Emanuel is determined to make his own mark.

By Alan GreenblattPhotographs by David Kidd

Chicago’s RRRRiiiiccchhhard Daley

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Rahm Emanuel came up with a useful catch phrase when he was White House chief of staff for Presi-dent Obama. With the new administration facing challenges that started with two wars and a recession of vast proportions, Eman-uel declared, “You never want a serious crisis to go to waste.” The phrase took on a life of its own—at least in Washington.

Now Emanuel is bringing it home to Chicago. With good rea-son. Chicago’s fi nances are a wreck, murder rates in parts of the city are among the highest in the country and infrastructure has been long neglected. In addition, foreclosures and unemployment have exacerbated the traditional disparities between the rougher south and west sides of town and the still-glittering downtown. It’s a set of problems on which Emanuel, who was sworn in as mayor on May 16, fully intends to bring his crisis-exploiting men-tality to bear.

“This is the opportunity to do things you couldn’t do before because it was too politically hard,” Emanuel says. “The change is going to be signifi cant, and it’s going to be equal to the chal-lenges we face.”

For those who have not been following Chicago politics closely, it may come as something of a surprise that Emanuel has inherited a raft of problems. He is following in the footsteps, after

all, of Mayor Richard M. Daley, who not only served for a record 22 years, but also earned an international reputation as one of the most successful and innovative mayors this country has ever seen.

Daley was fearless in addressing many of the intractable dif-fi culties of the city, taking formal control of perennial problem areas such as management of the school system and public hous-ing. Unlike many other former industrial cities in the Midwest, Daley helped Chicago adapt to a post-manufacturing economy long after it ceased being the hog butcher for the world and suf-fered the shutdown of the massive U.S. Steel plant along the lakefront. “Chicago stands out in the industrial heartland,” says Minneapolis Mayor R.T. Rybak, “as being the best example of

repositioning your city for the post-industrial economy.”

Daley’s emphasis on quality-of-life issues—not just the climate change and green roof campaigns that were widely copied by his peers, but his pro-motion of parks, colleges and cultural institu-tions—have helped spruce up a downtown that remains a magnet for tourists and corporate head-quarters. The downtown Loop area, which might have had 10,000 residents 10 or 15 years ago, now

is home to 150,000. Daley helped change the notion that cities were the sick centers of regional doughnuts, showing instead that they could be places that create wealth. “A lot of cities didn’t pro-tect their downtown areas,” says Alderman Bob Fioretti. “That’s when they got in trouble.”

But for all his clear victories, Daley punted some fi scal problems into his successor’s hands. The recession that Emanuel and his old boss, Obama, couldn’t fully lift is still aff ecting Chicago. The city is dependent on help from a

state that will begin its new fi scal year next month more than $8 billion in arrears in scheduled payments to municipalities,

His ambitions may exceed his grasp—and the tough decisions ahead of him will make for an exceedingly short honeymoon period.



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school districts, hospitals and other service providers. The city’s budget shortfall will be at least $500 million; the school district’s will easily exceed that. Chicago, which managed to defy the population-loss trend in other major cities in the 2000 Census, has over the past decade lost nearly 200,000 residents, slipping back to a population level not seen since before 1920.

Emanuel intends to address all that and more. His ambitions may yet exceed his grasp—and the tough decisions ahead of him will make for

an exceedingly short honeymooon period. But to the extent that Emanuel can right Chicago’s wrongs, he may provide a more use-ful guide to his peers in how to steer through tough times than even Daley would have, had he stuck around for yet another term.

Emanuel recognizes that his job description now requires not only putting the fi scal ship back right but ensuring that Chicago doesn’t slip up in the ways that Daley managed to prevent during his long time in offi ce. “The decisions we make in the next two or three years will determine where we are in the next 20 to 30 years,” Emanuel says. “If we make the wrong decisions, we could veer off . We could become a Cleveland.”

Emanuel is famous not only for his catch phrase, but also for a few personal quirks. He studied ballet throughout his youth and then served as a civilian vol-

unteer on an Israeli army base during the fi rst Gulf War. What he’s best known for, though, is his swearing.

Emanuel is known to have cursed not only at White House underlings, but at presidents

and prime ministers too. (He served as a top aide in the Clinton White House before winning a seat in Congress in 2002, which he gave up to work for Obama.) When as a teenager he sliced his middle fi nger—he lost part of it—Emanuel developed an infection so bad that his parents worried it might cost him his life. After he checked himself out of the hospital, his mother worried the fever “might have aff ected his mentality or his intellect,” as she once told a reporter. “But the fi rst time he woke up, I realized he was cursing, and it was, ‘He’s going to be OK.’”

That kind of reputation might harm a mayoral candidate’s image in many places, but not Chicago, which likes its leaders to be strong. “The more they said things about Rahm being tough and not necessarily a nice guy, the stronger his support became,” says Paul Green, a veteran observer of the city’s politics and a political scientist at Chicago’s Roosevelt University.

Emanuel has a tough-guy gaze but also a high-pitched laugh. His personality seemed to undergo a bit of a shift as he made the rounds of school auditoriums and “L” train stops during his cam-paign. He may have always used swearing for emphasis—“even when he has a temper and says [the F-word], he is not out of control,” says Marilyn Katz, a media and public policy consultant who has known him for years—but throughout the campaign, he swore it off . When confronted about his foul language at a forum a couple of weeks prior to his inaugural, Emanuel said, “I would like the record to show—have I done that in seven months?”

There are still reports leaking out about Emanuel cursing dur-

Chicago’s fi nances are a wreck, exacer-bating the traditional disparities between struggling parts of the city and the still-glittering downtown. Above right: “Even when [Emanuel] has a temper and says [the F-word], he is not out of control,” says Marilyn Katz, who has known him for years.



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ing private meetings with aldermen, but his public demeanor has become G-rated and perfectly calm. The sense of discipline he’s displayed has helped him, says Larry Bennett, a political scien-tist at DePaul University and author of The Third City, a recent book about Chicago. During the long, heated battle about whether Emanuel met the city’s residency requirements to run for mayor, he remained composed in the face of considerable baiting. “It allowed him to be the embattled fi gure who was the victim of small-minded Chicago ways,” Bennett says. “It was tremendous for him. He was the calm public servant, just waiting for the opportunity to serve.”

Chicagoans are deeply proud of their city. In contrast to his opponents, who often seemed unable to look beyond the city’s fi s-cal problems and endemic economic divides, Emanuel managed to convey a sense of Chicago’s continuing promise—if it can get such problems under control, he always emphasized. “For as long as I’ve known him, 20 years, he’s been a person who wasn’t afraid to push to make things happen, and voters like that,” says Avis

LaVelle, a consultant and Daley’s fi rst mayoral press secretary. “I don’t think voters chose Rahm Emanuel to keep doing the same things and not ruffl e the nest. They like the get-it-done attitude of the new mayor.”

Emanuel’s appeal apparently transcended racial lines, some-thing he has in common with his predecessor. Daley may not have been known for it nationwide, but in Chicago one of the main accomplishments people speak of in discussing his legacy was his success in calming the city’s racial tensions. Chicago was known as “Beirut by the Lake” during the 1980s tenure of Harold Wash-ington, the city’s fi rst black mayor, who was undercut by a racially divided council that frequently came down 29-21 against his pro-posals. His opponent’s theme song in the 1983 mayoral election was Bye, Bye Blackbird .

But where Washington entered offi ce after winning just 13 percent of the white vote, Emanuel had the support of 53 percent of the city’s African-Americans.

“For as long as I’ve known him, he’s been a person who wasn’t afraid to push to make things happen, and voters like that,” says Avis LaVelle, a consultant and Rich-ard M. Daley’s fi rst mayoral press sec-retary. Left: Emanuel wants public employ-ees to recognize that they will have to help make up the gap in areas such as pension funding.



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LaVelle recounts being approached by an African-American man at an inner-city McDonald’s who told her he would be supporting Emanuel, despite the attempts of other candidates to divide the vote along racial lines. Emanuel pulled together a coalition resembling Obama’s in 2008, winning the support of affl uent white liberals and African-Americans alike. Emanuel avoided a runoff , carrying 40 out of the city’s 50 wards. “I’m going with Rahm,” the man at the McDonald’s told LaVelle, “because we don’t want a nobody for mayor, and we don’t want a mayor that nobody knows.”

Emanuel may have proven popular among black voters, but he did less well with Hispanics, and some of the relatively few wards he lost

had been reliably Democratic since the days of mayors who predate even Daley’s father’s time in City Hall.

The reason is that Emanuel lacked support from public employees, who share a great deal of unease that he will become yet another contemporary executive setting out to cut their salaries and benefi ts. “There is no way he can go and attack the defi cits of $500 million to $700 million without going after pensions and health care,” says Roosevelt Univer-sity’s Green. “He lost wards that have been Democratic since [Mayor] Anton Cermak [in the 1930s] because city workers know what’s coming.”

Last year, Daley fi lled a budget hole of $650 million without raising property taxes, but he did it primarily through the use of one-time funds. Daley drained dollars raised through leasing parking meters and a highway. That means the city has already used up in six years some 80 percent of the money raised by 75- and 99-year leases. He also bought labor peace by inking multi-year contracts—written in more prosperous times, when 4 per-cent annual pay raises seemed like a reasonable idea.

In addition to the operating defi cits, the city’s four major pen-sion funds are more than $12 billion short of full funding. As a result, over the past decade Chicago has not only lost population, but also seen the share of unfunded pension liability increase from $827 to $4,340 per resident. “A recent Daley commission I served on found that the city is $710 million short annually in pen-sion contributions,” says Laurence Msall, head of the city’s Civic Federation, a nonpartisan government research organization. “Making this up would require that the city more than double its annual property tax levy.”

Emanuel had no trouble winning applause during the cam-paign by promising not to double property taxes. He devised a variety of ideas to tackle the city’s fi nancial problems, from charg-ing nonprofi ts for water use to instilling competition in such areas as garbage pickup. He has even, like many other soon-to-be disap-pointed elected offi cials before him, talked up the idea of lower-

ing the sales tax but broadening the base to capture more of the economy, including services.

The main thing, though, is that he wants public employees to recognize that they will have to help make up the gap in areas such as pension funding. Emanuel says he’s open to ideas about how to achieve the savings he needs, but he also says he won’t vary from his goal in terms of dollar amounts. “Nobody—business, labor, people in the administration—can come to me with the atti-tude of defending the status quo,” he says. “The status quo does not work, and I’ve got $500 million in problems to show you that.”

The public employee unions, which did not support his can-didacy, say that while Emanuel talked a good game about con-sulting them during his transition, they have yet to see evidence of his willingness to work with them. “Some people, their idea of collaboration is to say, ‘Here’s our plan, and we want you to endorse it. If you don’t endorse it, you’re an obstacle to change,’” says Henry Bayer, executive director of American Federation of State, County and Municipal Employees Council 31. “I don’t think someone is being an obstacle to change if they don’t want to rub-ber stamp every idea the mayor has.”

Emanuel is fond of pointing out that the unions didn’t sup-port him—but he won anyway. Even before being sworn in, he successfully lobbied the Illinois Legislature to change work rules

“A lot of cities didn’t protect their downtown areas” says Alderman Bob Fioretti. “That’s when they got in trouble.”

R A H M ’ S W AY



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in the Chicago schools, which he frequently complained have the shortest term of any major city’s district, as well as school days that run 90 minutes shorter than most other metropolitan districts. “We can’t run from these problems any longer,” he says. “I want a debate about how we’re going to use that hour and a half, not how we’re going to get compensated for it.”

Daley managed to convince not only Chicago residents, but also businesses that expended millions at his behest that it was worth investing in what had been a miser-able public school system. Daley put bil-lions into school construction and helped pave the way for a host of reform ideas that are now being promoted nationally by his former schools chief, Arne Duncan, Obama’s secretary of education. “If Daley hadn’t changed the tone about what could be accomplished, there would have been a taxpayer revolt,” says Alderman Patrick O’Connor.

As in many areas, Emanuel not only wants to build on what Daley has done in education, but to move things a few steps further. Chicago public schools, though much improved, remain a disappointment, with a dropout rate

of about 50 percent. Emanuel supports a broad panoply of educa-tion changes—not just lengthening the school day and school year, but more aggressive use of charters, a limit on teacher strikes, and changes to tenure and merit pay for administrators as well as teachers. “Rahm is going to take on what Daley couldn’t—the unions and longer school days,” says Chuck Bernardini, a former alderman. “What’s going on countrywide will probably be helpful to Rahm. Everyone sees what’s happening in other states, and that has to bring some realism to the unions.”

Emanuel may be convinced that he is going to have to restructure the services the city can deliver—and reduce the size of the workforce that delivers them. But within the school district, as in other areas of govern-ment services, Emanuel is going to have to confront forces that aren’t convinced his ideas are necessar-ily the best, or even politically ten-able. Bernard Stone, who served for 38 years on the City Council before being ousted in April, notes that his opponent—who was backed by Emanuel—received signifi cant fi nancial support from unions. The question Stone asks is, “What loyalty does she owe?”

One-fourth of the 50 City Council members are newly sworn in, along with Emanuel. The vast majority are inclined to sup-port his positions, but many will be looking to establish their own

power. Despite being a city that’s long been known for its mayors, Chicago actually has a weak-mayor form of government by law. “Daley didn’t start with a council that gave him unanimous votes for everything,” says LaVelle, the consultant. “He had to earn that.”

But the fact that the council is so sprawling makes it diffi cult for it to stand on equal footing with the mayor—particularly one with the star power Emanuel has shown. “The problems of the city are so great, and 50 aldermen have such nar-row interests,” says Green. “Only the mayor can provide a citywide solution.”

Emanuel starts out as mayor with the ear of the president, and the personal Rolodex and fundraising ability to chart his own course. He has already attracted top talent from around the country, not relying on the usual coterie around Chicago City Hall. His pick to run the school sys-tem, Jean-Claude Brizard, helped raise graduation rates from 39 percent to a much-improved though still miserable 51 percent during three years in the

Emanuel took the risk during the election of saying he was going to take on the city’s most diffi cult problems, and he won a big victory. So he starts, at least, with a strong hand.

The sense of disci-pline he’s displayed has helped Emanuel, says Larry Bennett, a political scientist at DePaul University. “It was tremendous for him. He was the calm public servant, just waiting for the oppor-tunity to serve.”



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same job in Rochester, N.Y. Garry McCar-thy, his pick for police chief, comes from Newark, N.J., where he helped drive down crime rates—especially for violent crime—repeating a trick he’d pulled off as a deputy commissioner in New York City. “He’s attracting talented people from inside and outside the city,” says Msall, the Civic Federation president.

Not everyone has applauded Eman-uel’s picks. A group of black aldermen complained that the faces of the mayor’s public safety team are too white. The Chicago Teachers Union is more than a bit unhappy that he chose a schools CEO who had just received a vote of no-confi -dence from the union in Rochester. How Emanuel’s administration is ultimately judged, of course, will depend on how close he can come to making good on his promises to address Chicago’s problems.

But because of his prominence and the independence his political celebrity buys him, some Chica-goans even dare to hope he’ll run

an administration that won’t be hampered by the same sort of corruption that the city has long been known for. As media and public policy consultant Katz notes, when Steven Spielberg handed Emanuel a check, he wasn’t hoping to land a city contract.

Mostly, Chicagoans hope that Emanuel will not only bring new ideas, but also the drive to push them past what is likely to be considerable resistance. This is not the time for a wimpy mayor. Emanuel took the risk during the election of saying he was going to take on the city’s most diffi cult problems, and he won a big victory. So he starts, at least, with a strong hand. If the person taking offi ce after Daley was some-one “who people felt was a step down, Chicagoans would be nervous about their future,” says Alderman O’Connor. “But I don’t think that’s the case.” G


Bernard Stone served 38 years on the City Council but was defeated by an Emanuel-backed candidate. “Almost every new mayor inherits a mess,” he says. “It’s just the way it is.”

R A H M ’ S W AY

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By most accounts, transportation infrastruc-ture in the United States is in serious disrepair. As roads and bridges across the country continue to age and deteriorate, governments at all levels are

struggling to pay for maintenance and upkeep—not to mention investments in much-needed upgrades and new projects. Since the federal Highway Trust Fund was established in the late 1950s, total combined highway and transit spending as a share of gross domestic product has fallen by about 25 percent, according to the federal National Surface Transportation Infrastructure Financing Commission. Without changes to current policy, the commission projects a federal highway and transit funding gap totaling nearly $2.3 trillion through 2035.

With Congress debating reauthorization of the transportation bill this summer, and with states and localities looking for their own solutions, here are six ideas for fi xing the nation’s infrastruc-ture system—how to plan it, how to fund it and how to make it safer and more effi cient than ever.

By Ryan Holeywell and Russell Nichols

SIX IDEAS FOR UNTANGLING THE NATION’S INFRASTRUCTURE PROBLEMS.

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Revamp the Highway Trust FundSpeaking before a conference of state transportation offi cials

in a D.C. hotel ballroom in March, Transportation Secretary Ray LaHood challenged his audience to ask him some hardball questions. John Schroer, the transportation commissioner from Tennessee, delivered. Schroer wanted to know how Congress and the Obama administration are addressing a situation most state and local transportation offi cials worry about: the future of the gas tax. “Well,” LaHood replied, “we’re not doing anything about it.”

That’s a serious problem, according to virtually all transporta-tion experts. The nation’s highways are primarily fi nanced by the Highway Trust Fund, which gets most of its money from a gas tax of 18.4 cents per gallon. The tax has remained unchanged since 1993 and isn’t tied to the price of gas or infl ation. As a result, it’s lost a third of its purchasing power over the past 18 years. That’s caused both short- and long-term consequences. In the short term, Congress has had to bail out the trust fund to the tune of $35 billion since 2008—the fund spends more money than it takes in. In the long term, the situation is even more problematic. As more and more Americans opt for hybrid and electric vehicles—and as cars in general continue to become more fuel effi cient—the highway system faces a future in which it is perpetually under-funded. It’s a system, Schroer says today, that is “at best archaic.”

So what’s the fi x? In the short term, a 10-cent increase to the federal gas tax, indexed to infl ation, could provide some com-fort. A commission authorized in 2005 by the previous highway bill has endorsed that plan as a way to generate an extra $20 bil-lion per year for the trust fun and recapture the tax’s purchas-ing power. The 10-cent increase would cost U.S. households an average of $9 per month, which would equate to about 1 percent of household spending on owning and operating vehicles. But even that modest bump may be a diffi cult sell when the price of gas hovers around $4 per gallon. “I don’t think that at this time,

raising the gas tax is an option,” says Bill Kennedy, a county com-missioner from Yellowstone County, Mont., and a member of the commission that made the recommendation. “I don’t think the public is in favor of that.” It’s not just the federal government that’s reluctant to address gas taxes. No state raised its gas taxes last year, and just a handful did in 2008 and 2009.

In the long term, just about everyone besides federal lawmakers endorses a transition from a gas tax to a vehicle miles-traveled fee (VMT). That would be a truer “user fee” that pegs drivers’ payments to their use of roads, essen-tially solving the funding problem caused by fuel-effi cient cars. “We’ve got all these federal policies toward reduc-ing fuel consumption,” says Trey Baker of the Texas Transportation Institute, a research group within Texas A&M Uni-versity. “But when you drive down fuel consumption, you’re driving down the revenue base. What are you going to do when the vehicle fl eet looks completely diff erent than it does now?”

Shifting to a VMT system would not be simple, of course. The biggest ini-tial obstacle involves privacy concerns: Many drivers don’t like the notion of onboard monitors tracking their driv-


New interstate lanes are being built near I-495 in Virginia.

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ing history. Convincing citizens about the necessity of moving to a VMT sys-tem might be tough too. According to research conducted by Baker, which involved interviewing focus groups, many Americans have such a minimal understanding of the current funding mechanisms for roads that making the case for a switch could be diffi cult.

Still, there are signs that a miles-based fee could be on the horizon: Researchers in as many as 16 states have studied the fea-sibility of a VMT system, according to the National Conference of State Legislatures, and some are fi nding that it could work. States don’t need federal permission to implement a VMT, and some transportation leaders believe the best way to bring about a change from Washington would be by fi rst proving a VMT sys-tem is workable at the state level.

Get Washington to Take the Issue SeriouslyFor federal lawmakers on a few key committees, transpor-

tation is a major issue. But for most of the rank-and-fi le, it’s far from the front burner. “For a lot of folks on the Hill, this is just not important enough,” says Susan Binder, a former director of the Federal Highway Administration’s Offi ce of Legislative and Governmental Aff airs. “It’s invisible. There are a few players who have been extremely dedicated. [The rest] just don’t seem to have the interest, and it’s absurd.”

Transportation experts are trying to change that by engaging both lawmakers and the public. Transportation for America, an advocacy group pushing for greater investment in transportation infrastructure and an emphasis on multimodal solutions, is treat-ing the issue like a political campaign, says James Corless, the organization’s director.

Meanwhile, those lawmakers who are engaged on the issue often put forth unrealistic proposals. House Republicans are seeking to limit highway spending to revenue from the trust fund, which could result in signifi cantly less annual spend-ing on federal transportation programs. Republican Rep. Paul Ryan of Wisconsin has proposed a budget that calls for a 30 percent reduction in transportation funding over the next six years. His plan suggests that eliminating duplication of vari-ous highway programs would be enough to fi x the Highway Trust Fund without bailing it out with general funds or raising gas taxes. Critics say that wouldn’t be nearly enough to bridge

the gap. The White House, mean-while, has called for a six-year surface transportation bill at $556 billion, nearly double the amount in the previous six-year bill. While Ryan’s budget fails to explain the sources of the savings, President Obama’s budget fails to describe the sources of revenue.

State leaders say they need a fully funded, long-term bill, and that the series of ad hoc spending measures that have funded surface transportation since the previous bill expired in September 2009 has crippled their ability to pursue long-term projects.

Compounding that problem are the upcoming elections in 2012.

Many experts believe that if Congress passes a reauthorization bill before the elections, states would get less money than if it occurred afterward. For that reason, some state transportation offi cials are now pushing for a two-year bill instead of a six-year one, with the logic that more funding may become available if they’re willing to wait. For what it’s worth, Florida Rep. John Mica, who chairs the House Committee on Transportation and Infrastructure, vigorously supports a six-year plan. At a recent meeting of state transportation leaders, Mica joked, “Anyone who talks about anything less, I’ll take you outside and beat the crap out of you.”

Empower State and Local GovernmentsStates pay for about two-thirds of surface transportation

spending. With less money available from the feds, their portion may need to grow—an increasingly familiar storyline in all areas of funding right now. Given that dynamic, states and localities are asking for more fl exibility on how they can spend federal


For Florida Rep. John Mica, transportation and infrastructure are major issues.

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dollars and are endorsing plans that would allow the federal government to leverage the limited funds that are available.

One idea that has received bipartisan support is a plan known as America Fast Forward. It’s a proposal to expand a federal program of the Transportation Infrastructure Finance and Innovation Act (TIFIA) that provides low-interest loans for transportation projects. The proposal’s biggest cheer-leader is Los Angeles Mayor Antonio Villaraigosa. In 2008, Angelinos approved a sales-tax hike for a set of highway and transit projects; but rather than funneling that revenue into new projects outright, Villaraigosa’s goal is to use the money to pay debt on a federal transportation loan. An upfront loan would allow the city to complete its projects rapidly while using the proceeds of its 30-year sales-tax hike to pay it back over time. Currently TIFIA isn’t big enough to accommodate such large-scale plans, which is why Los Angeles has backed a national push to expand the program from $122 million annually to $375 million, and to raise its cap from 33 percent of project costs to 49 percent. “It’s an idea that’s diff erent from a grant program,” says L.A. Deputy Mayor for Transportation Jaime de la Vega. “We’re coming to the table with money and saying we need a partnership. It’s not a handout.”

State leaders are also backing a plan to reduce the number of federal highway programs from 55 to fi ve, in an eff ort to gain greater fl exibility in how the dollars are spent. That would help clear up what some people see as troublesome inconsisten-cies in how funds are meted out. For example, federal aid can be used for preventive maintenance of highways, but routine maintenance is considered a state responsibility. Rhode Island Transportation Director Michael Lewis recently testifi ed before Congress that his state has to take on debt just to get the required match to receive transportation funds, when that money could have been used to perform maintenance. “Now is not the time to tie our hands and limit the use of transportation dollars and assets,” Lewis told Congress.

Other options that would grant more power to states have been gaining traction in D.C., including creating an infrastructure bank, expanding public-private partnerships and allowing tolling on interstate highways (an idea LaHood has said he’s open to). However, fl exibility can be a double-edged sword, cautions Leslie Wollack, program director for infrastructure and sustainability at the National League of Cities. “If fl exibility means a state doesn’t want to spend any [of its own] money on transportation enhance-ment or transit or to collaborate on what’s going on at the local level, then we see that as a problem.”

Increase Rural AccessHighways in rural states play a critical role in the country’s

economy: They connect to Western ports to facilitate the trans-port of goods, and they serve as interstate bridges for agriculture, energy and freight industries.

But with national transportation planning often focused on urban development, rural highways can get neglected, leading to stretched capacity, reduced connectivity and strained two-lane

roads used by heavy trucks. Mass transit in rural areas is even more problematic. In 2010, 8.9 million rural residents lacked access to intercity transportation by air, bus, ferry or rail, up from 5.4 million in 2005, according to a report from the Department of Transportation’s Bureau of Transportation Statistics. Alabama had the steepest drop: Nearly 700,000 rural residents lost access between 2005 and 2010.

As Congress debates reauthorization of transportation fund-ing, rural states will be working to remind lawmakers of their unique needs, says John Cox, director of the Wyoming Depart-ment of Transportation, who recently testifi ed before the Senate Committee on Environment and Public Works on behalf of Wyoming, Idaho, Montana, North Dakota and South Dakota. “In the mix of competing issues for putting together a transpor-tation bill, our priority is to make sure that the rural states are part of that deliberation,” he says, “and that the next highway bill doesn’t become too preoccupied with the legitimate needs of cities to the exclusion of [rural communities].”

But rural states shouldn’t just wait idly for federal funds to trickle down, says Sean Slone, transportation policy analyst for the Council of State Governments. Transportation offi cials, he says, should use their limited dollars to widen and upgrade two-lane roads and relieve congestion by investing in roadway redesign and technologies that improve traffi c fl ow. “By improv-ing roads in, around and through rural communities, states and localities can better serve the freight, agricultural and energy sec-tors and make them an even more vital link in the nation’s supply



Denver’s $1.67 billion Transportation Expansion Project has become a national model.



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chain,” he says. “That will, in turn, put rural states higher on the priority list for future federal investment.”

Get Cities to Think BigMassive infrastructure construction projects didn’t single-

handedly save the U.S. from the Great Depression. But the New Deal did create millions of jobs and pump billions of dollars into public works projects that became a crucial part of the country’s economic backbone decades later. Across the country, dams, roads, sewage systems and bridges were built with Works Progress Administration funds in the 1930s. Seventy years later, President Obama has sought to replicate the long-term, large-scale investment strategies of FDR. But as local govern-ments grapple with defi cits, public offi cials must decide whether to pour limited funds into giant projects or focus on fi xing existing infrastructure. “It’s time to get back to fundamen-tals—either you scale back what you’re doing, fi nd a new source of revenue or make changes in rules that aff ect cost parameters,” says David Luberoff , a

researcher at Harvard’s Kennedy School of Government and co-author of Mega-Projects: The Changing Politics of Urban Public Investment. “Making sure you can keep what you’ve got in a state of good repair seems to make a fair bit of sense.”

But rather than dial back, some cities have decided to go big. Consider the $1.67 billion Transportation Expansion Project in Denver, a multi-agency venture to overhaul multimodal trans-portation networks throughout the metro area. Completed in 2006 and hailed as the model for the next generation of high-way and transit construction, the megaproject added 19 miles of light rail and pedestrian bridges, improved highway merging, and widened 17 miles of highway to relieve congestion and handle 300,000 vehicles per day. Its origins date back to a 1992 traffi c congestion study, which found that traffi c volume along Den-ver’s Southeast Corridor had exceeded its maximum capacity of 180,000 vehicles per day. In 1999, voters approved two bond measures to creatively fi nance the highway and light rail.

Villaraigosa’s transit plans for Los Angeles are on a similarly epic scale. His voter-approved tax hike will raise $40 billion over the next 30 years for light rail, subway and rapid bus projects, creating about 165,000 new jobs. If Villaraigosa is able to leverage a federal loan, all of those projects could open within the next 10 years, rather than the next 30.

Neither of these megaprojects would have gotten off the ground without voter support. That’s why it’s imperative that local offi cials prove to the public that they can make smart invest-ments, says Brian Pallasch, managing director of government relations and infrastructure initiatives with the American Society of Civil Engineers. Above all, he says, big infrastructure requires a big vision that clearly lays out benefi ts for local citizens and delivers results.

Make Bridges SmarterWhen Minneapolis’ Interstate-35W bridge crumbled into the

Mississippi River in August 2007, killing 13 people and injuring


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145, it became a symbol of the deterioration of the American infra-structure system. Indeed, one-quarter of the more than 600,000 bridges across the country have structural problems or obsolete designs. They’re built to last 50 years; the average bridge today is about 45 years old.

Monitoring bridges’ structural health is more important than ever. But outdated assessment methods and visual inspections don’t catch all the signs of structural fatigue, impact damage and corrosion. That’s starting to change, as more transportation departments explore new technologies that constantly monitor overstressed bridges, alerting offi cials to structural problems before it’s too late. Automated monitoring systems already scan for bridge deterioration in places like Hong Kong and Taiwan. In the United States, funding from the National Institute of Standards and Technology supports the development of state-of-the-art sensors.

Researchers at several universities are exploring other smart bridge technologies, including high-performance steel, self-healing materials and wireless systems that inspect the general performance and health of bridges in real time. The University of Michigan is midway through a fi ve-year project that includes the development of a carbon nanotube-based “sensing skin” lined with electrodes that would detect cracks and corrosion invisible

to the human eye. Although most of this technology is still in incu-bation, the Federal Highway Administration’s 20-year Long-Term Bridge Performance program aims to accelerate the next genera-tion of bridge management systems. Current sensor technology has popped up in some places: Completed three months ahead of schedule in 2008, the I-35W bridge replacement boasts more than 320 sensors that record how the bridge handles stress from traffi c.

Scattering sensors across every single bridge in the coun-try might be prohibitively expensive. But it may not actually be necessary, says Franklin Moon, an associate professor of civil, architectural and environmental engineering at Drexel Univer-sity in Philadelphia. With transportation agencies facing pro-longed funding shortages, Moon supports a stratifi ed sampling approach. That means dividing bridges into categories based on various factors—age, span, material—and then testing one or two from that population to determine the needs of a certain type of bridge. “[Some people] argue that all bridges are unique and to learn about 600,000 bridges, you need 600,000 sub-populations,” Moon says. “On the surface, I don’t think that sounds credible. We’re going to have to learn to leverage if this technology is ever going to be compatible.” G

E-mail [email protected] and [email protected]


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Minneapolis’ I-35W bridge was rebuilt with current sensor technology that records how it handles stress from traffi c.




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High-speed rail does not exist in the U.S. And the fact that the new congres-sional budget deal completely eliminated high-speed rail funding for 2011 may lead many to believe it never will. Who can forget the headline-grabbing declara-tions by governors Rick Scott of Florida, John Kasich of Ohio and Scott Walker of Wisconsin that high-speed rail is a no-go in their states? Between their refusal of federal funds, the political posturing on Capitol Hill and the endless debates in the editorial pages of newspapers, it’s easy to get the sense that high-speed rail is dead.

But while the fast train indeed has been dealt a serious blow, the fact remains that it’s coming: Illinois will spend more than half a billion dollars this year on upgrading existing tracks to accommo-date speeds of 110 mph, while California offi cials plan to break ground next year on the $42 billion Los Angeles-to-San Francisco high-speed rail link. Notwith-standing the congressional budget cuts, there was still $2 billion up for grabs this year—thanks to Florida. Twenty-four gov-ernors—12 Democrats, 11 Republicans and one Independent—applied for that money. The Federal Railroad Administration dedicated the $2 billion to 15 states and Amtrak in May.

The path toward a high-speed rail network started in 2009, when President Obama allocated $8 billion in stimulus funding to rail projects, followed by $2.5 billion in 2010. Projects to identify high-speed rail corridors and build up existing rail lines to support these future networks are already under way in 32 states and the District of Columbia.

The following map takes a closer look at the status of fi ve lines. This is by no means all-inclusive, but gives an overall picture of where high-speed rail stands today. G

*Price estimates based on data from the

Federal Railroad Administration; Amtrak;

Illinois Governor’s Offi ce, North Carolina

Department of Transportation

Other sources: Census 2010; Environmental Law & Policy Center; Washington State DOT; California High-Speed Rail Authority

CaliforniaPrice Tag*: $42 billion

Miles of Track: 432

Est. Population Served: 35 million

Status: California is building an extensive 800-mile high-speed rail system that will consist of 24 stations and operate at speeds of up to 220 mph. Initially running from San Francisco to Los Angeles via the Central Valley, and later to Sacramento and San Diego, trains will travel the 432 miles between L.A. and San Francisco in less than 2 hours and 40 minutes. Today, that route can take up to 9 hours. Initial construction will begin in the Central Valley, the backbone of the system, in 2012.

Pacifi c NorthwestPrice Tag: $756.5 million

Miles of Track: 467

Est. Population Served: 8.3 million

Status: The passenger rail line between Port-land, Ore., and Vancouver, B.C., is one of the best maintained lines in the U.S.: Nearly $1 billion in capital and operating funds has been invested in the corridor since 1994. The long-term vision is to create a dedicated high-speed track where trains will operate at up to 150 mph on 13 daily round trips between Seattle and Portland, eventually expanding to include Eugene, Ore., and Vancouver. To lay the groundwork for the line, work will begin this summer to increase speeds on existing track and boost rail-line capacity.


By Elizabeth Daigneau

Vancouver, B.C.

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MidwestPrice Tag: $1.4 billion

Miles of Track: 284

Est. Population Served: 13 million

Status: Illinois is the only state with shovels in the ground. Last fall, it began upgrading the existing track between Chicago and St. Louis to handle 110-mph trains by 2012. More than $770 million is being spent in 2011 to move Illinois one step closer to faster trains and improved service along what could become the nation’s demonstration project for high-speed rail. Interestingly, Michigan is plan-ning a high-speed rail line connecting Chicago and Detroit. It just received more than $199 million in federal funds to rehabilitate track and conduct envi-ronmental impact studies. Wisconsin’s Gov. Walker, after refusing federal money, requested funding to begin work on tracks that would connect Chicago and Milwaukee via high-speed rail. Wisconsin was left out of the latest high-speed rail funding alloca-tion in May.

NortheastPrice Tag: $117 billion

Miles of Track: 445


Status: Many argue that there is no better candi-date for true high-speed rail than the Northeast Corridor. With a ridership that totaled about 10.4 million in 2010, it is the busiest and most highly developed rail corridor in the U.S. But when Obama handed out $8 billion for high-speed rail in 2009, he gave very little to the Northeast. Part of the reason is that until this year, the Northeast Corridor was not designated a high-speed rail corridor by the U.S. Department of Transporta-tion. The new designation means that Amtrak can apply directly for high-speed rail funding—as opposed to states applying individually for their segment of the line. In May, Amtrak and several Northeast states were awarded $795 million to upgrade some of the most heavily-used sections of the corridor. The investments will increase speeds from 130 to 165 mph on critical segments.

North CarolinaPrice Tag: $623 million

Miles of Track: 174


Status: After months of wrangling with Norfolk Southern Railway, the freight company that controls both passenger and freight train traffi c on North Carolina’s railway, the state is moving forward with plans to put faster, more frequent and more reliable passenger trains on the tracks between Charlotte and Raleigh. The initial investment will get the trains up to speeds of 90 mph. The ultimate goal, however, will be to connect the Charlotte-Raleigh line to Richmond and Washington, D.C. The state received $4 million toward that goal in May.

mtrak ng—y for and

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New York

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St. Louis

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All AboardA true high-speed rail network may

be years away. But despite some setbacks, the fast train is moving.



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44 GOVERNING | June 2011

Ending Medicaid as We Know It



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The push to remake the way states pay for low-income care.

By John Buntin

It would be easy to miss the signifi cance of Utah’s 100-person, $600 Medicaid pilot. When Gov. Gary Herbert signed it into law in March, it was less than a tiny tick on the back of the state’s $1.6 billion Medicaid program.

But there’s a good reason to pay attention. The idea that animates this pilot program might one day transform Medicaid. The Medicaid benefi ciaries in the pilot program will have to meet a work or community-service requirement. The goal, says Utah state Rep. Ronda Menlove, who shepherded the bill through the Legis-lature, is “to get at the concept of ‘I get something for nothing. I am entitled.’” Inspiration came, Menlove says, from a couple of places: the Mormon Church’s practice of extending help to needy members but requiring service in return, and from “Republican principles of self-suffi ciency, self-reliance, personal ownership of your life and taking responsibility.”

There was another infl uence too—the example of welfare reform.The original welfare program—Aid to Dependent Children—

was crafted in 1935 to provide fi nancial assistance to children whose families had low or no income. In 1962, the program was rechristened Aid to Families with Dependent Children (AFDC). Six decades later, Congress passed and President Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act, replacing AFDC with Temporary Assistance to Needy Fami-lies (TANF). TANF was block-granted, and it limited the duration of benefi ts and gave states the leeway to require recipients to fi nd employment, seek education or job training. Today, the TANF cash assistance program—and the work and job training programs that support it—are a fi scal footnote, accounting for about 0.6 percent of state general fund spending, or approximately $11 billion .

Medicaid was created in 1965 to address a specifi c shortcoming of AFDC, namely its failure to provide medical assistance. Today, Medicaid is the largest state expenditure, accounting for nearly 22 percent of state spending in fi scal 2010. (Focusing only on state general funds, it’s the second largest item, after elementary and sec-ondary school spending.)

Not surprisingly, a growing chorus of conservatives is saying that it’s time to do to health assistance what was done to cash assis-tance: End it as we know it. “The Medicaid program is broken from both budget and health outcomes perspectives,” says Mississippi Republican Gov. Haley Barbour, one of the more outspoken leaders for change.

Increasingly the conservative critique of Medicaid resembles the arguments made about the old AFDC program. In a recent Wall Street Journal op-ed column, Scott Gottlieb, a resident fellow at the conservative American Enterprise Institute for Public Policy Research , argued that Medicaid benefi ciaries would “do just as well without health insurance.” Others have pointed to studies to suggest that having Medicaid might even harm benefi ciaries. Critics such as Alice Rivlin, former director of the Offi ce of Management and



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E n d i n g M e d i c a i d a s W e K n o w I t

Budget under the Clinton administration, have also argued that the way the federal government funds Medicaid—by matching state spending with a larger federal match—eff ectively encour-ages states to increase spending. States that want to tailor ben-efi ts for specifi c populations must seek approval from the federal Centers for Medicare & Medicaid Services (CMS) to do so. What is needed, critics say, is a new deal: greater fl exibility for states in exchange for a defi ned contribution—or block grant—from the feds.

Thirty states had piloted welfare reform programs before Clinton ended the old AFDC program. But with Medicaid, only one state has been allowed to experiment with greater fl exibility—Rhode Island. Its unique waiver, in exchange for operating under a cap, was autho-rized by CMS on the last day of the George W. Bush administration. Other off ers, however, are now at hand. In April, the Republican-con-trolled U.S. House of Representatives passed a budget resolution drafted by Budget Commit-tee Chairman Paul Ryan that would convert all state Medicaid programs into a block grant and give states the freedom to manage the program as they see fi t. The Ryan proposal would also reduce the federal contribution by $771 billion over 10 years, a cut that the Congressional Bud-get Offi ce has predicted would reduce federal Medicaid spending by 35 percent by 2022.

“Bipartisan eff orts in the late 1990s trans-formed cash welfare by encouraging work, limiting the duration of benefi ts, and giving states more control over the money being spent,” Ryan wrote in his budget resolution, called The Path to Prosperity. “These reforms worked because the best welfare program is one that ends with a job and a stable, independent life for the individual. Now it is time to implement these same reforms across other areas of the social safety net, especially Medicaid.”

That approach sits well with several Republican governors. Barbour in Mississippi, Chris Christie in New Jersey, Robert McDonnell in Virginia and Rick Perry in Texas have endorsed the proposal on behalf of the Republican Governors Association. Ear-lier this spring, Barbour told the House Energy and Commerce Committee that, in exchange for managing its Medicaid program, his state would agree to cap the federal medical assistance match to Mississippi at 2 or 3 percent per annual increase. Such a deal, Barbour noted, would save the federal government $10 billion if other states followed suit.

A cynic might say that it’s easy for Republican governors to support such a proposal because there’s no chance of it becoming law: President Obama has already promised to veto it. However, even liberal critics of the proposal say it would be a mistake to dismiss the seriousness of this idea. “The Medicaid block grant is not likely to be enacted as is,” says Edwin Park of the left-leaning Center on Budget and Policy Priorities. “But there are other pro-posals on the table that would inevitably result in things like a

Medicaid block grant.” One is the proposal by Republican Sen. Bob Corker of Tennessee and Democratic Sen. Claire McCaskill of Missouri to cap total federal spending at 20.6 percent of over-all gross domestic product. Moreover, if the GOP wins control of the U.S. Senate in 2012—something many political forecasters predict—and if a Republican wins the presidency as well, then block-granting Medicaid could well follow.

In short, a serious debate over the future of Medicaid has begun, and states will have to consider their positions on some fundamental questions. Is Medicaid in its current form sustain-able? And if not, should states glom onto welfare reform as the right model for Medicaid reform?

There are few state leaders who don’t see Medic-aid as a program that’s devouring state budgets and one that will become even more disruptive when the Medicaid expansion portion of the health-care reform law—the Aff ordable Care Act (ACA)—is implemented. For the past 10

years, Medicaid’s costs have risen at a rate of approximately 8 percent per year—well beyond state revenue growth which, for the 30 years before the Great Recession, averaged 6 percent per year. Few economists see a return to such robust growth even when the states have recovered from the long and deep downturn. Meanwhile, CMS estimates that average annual health expendi-ture growth between 2009 and 2019 will be 6.1 percent per year . This means that over the long term, states face a widening gap between their expenses and revenues—in 2010, state revenue growth was 2 percent .

“States can’t handle the current Medicaid program going forward,” says Ray Scheppach, former director of the National Governors Association.



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In April, the Government Accountability Offi ce (GAO) took a look at what it called “the fi scal gap.” Its fi ndings were sobering. The GAO estimated that in order to meet statutory and consti-tutional requirements to balance their budgets, state and local governments would have to cut expenditures (or raise taxes) by 12.5 percent a year—every year.

“From where I sit, the so-called Great Recession is a game changer,” says Ray Scheppach, former director of the National Governors Association. “Probably states can’t handle the current Medicaid program going forward.”

In short, if the question is, “Is the current Medicaid program sustainable?” The answer is no.

That raises another question. Can state-managed Medicaid programs do more with less?

The poster child for the conservative model of Medicaid reform is the state that accepted a cap on federal funding from the Bush administration. To conser-vatives, Rhode Island’s experience suggests that block granting Medicaid would work out in much the same, successful way as welfare reform. To Gary Alexander, former Rhode Island Executive Offi ce of Health and Human Services secretary—who man-aged Rhode Island’s turnaround (and who is now the acting secretary of the Pennsylvania Depart-ment of Public Welfare)—it suggests something else: a way out of the deeply dysfunctional relation-ship between states and CMS.

Before he undertook Rhode Island’s experiment in reform, Alexander worked for the Massachu-setts Legislature, then moved south to join Rhode Island’s Department of Health and Human Services. When then-Gov. Donald Carcieri wanted someone to tackle Medicaid reform, he turned to Alexander.

Carcieri believed that reforming Medicaid was central to addressing his state’s structural defi cits. The centerpiece of Alexander’s reform agenda—shifting resources away from expensive nursing homes and toward less expensive home and com-munity care settings—wasn’t controversial. Car-cieri and Alexander believed that other ideas to delete or modify benefi ts across the population wouldn’t be either. “If there is an elderly population that needs podiatry, we want to be able to off er it to them rather than to the entire population,” Alexander says.

The problem was that every time the state tried to put in such changes to the state program, it would hit a stone wall with the federal government. CMS was not uncooperative. On the contrary, sometimes it was too helpful, inundating Alexander’s offi ce with e-mails, regulations and expert consul-tations. The real problem was the state Legislature’s budgetary cycle. In January or February, the governor would present his budget to the Legislature. That budget would include delivery changes or cost containment measures relating to Medicaid. By the time the Legislature made its decisions, it was usually June, with implementation mandated for July. While Alexander’s offi ce could talk to CMS about how it might view proposed changes earlier, it couldn’t formally ask for amendments to its

state plan or to existing waivers until the Legislature had acted. So instead of implementing what the Legislature had passed, Alexander and his offi ce had to wait and negotiate with CMS.

“Some things the feds would approve in a month or two months; other times it was three to six months,” Alexander recalls. “There were times that we had initiatives tagged as savings, and all the paperwork back and forth, the phone conferences, the experts on the phone, take six to eight months.” By that time, the savings had failed to materialize and the Carcieri administration had to go back to the Legislature, hat in hand, for supplemental appropriations.

“The governor kept getting frustrated,” says Alexander. “‘I don’t understand this,’ he’d tell me. ‘Who deals like this in real, everyday life?’” Ultimately Carcieri got so frustrated that he decided to do something radical. He approached CMS with an

unusual proposal. The state would accept a block grant in exchange for the ability to retain 20 percent of any savings it produced from real delivery reforms—“not just cutting people,” Alexander says.

Unfortunately that proposal was incompatible with existing fed-eral law. So instead, Rhode Island and CMS agreed on an alternative arrangement: Rhode Island’s 11 existing waivers would be consoli-dated into one global waiver, and CMS would commit to responding to requests in 45 days. In return, Rhode Island would agree to a cap on federal contributions to the state Medicaid program—$12 billion over fi ve years.

Advocates were horrifi ed by the proposal and warned of dire conse-quences. Those have not material-ized. Moreover, state spending on Medicaid has proven to be much

lower than predicted. According to Alexander, reform eff orts related to the move to a global waiver saved the state $100 million over the course of the fi rst 18 months and reduced the growth of Medicaid from 8 percent to 3 percent.

Liberals take issue with Alexander’s math and with seeing the Rhode Island approach as a model for other states. “Rhode Island lucked out because the cap was set at such a high amount,” says Linda Katz, policy director of the Poverty Institute at the Rhode Island College School of Social Work. That’s a deal, she cautions, that other states are unlikely to get. She also suggests that Rhode Island could have undertaken many of its reform initiatives with-out a global waiver.

She also sees disturbing parallels between Medicaid reform and welfare reform. At the same time Carcieri and Alexander were pursuing a block grant, she argues, the state “radically reformed our cash assistance program in ways that are extraordinarily det-rimental to our families. If you think about something like that

What is needed, critics say, is a new deal: greater fl exibility for states in exchange for a defi ned con-tribution—or block grant—from the feds.



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in Medicaid, which is paying for long-term care for people, it is extraordinarily frightening.”

To Alexander, the experience of alarmist warnings followed by anticlimactic outcomes has a familiar ring. “The analogy with welfare reform isn’t exact,” he says, “but we need to take prin-ciples of that model and apply that to Medicaid in a way that gives states greater fl exibility to design programs for its people and gives the federal government an oversight role for performance measurement and outcomes.”

As he sees it, Rep. Ryan’s block-grant proposal is a step in the right direction. “States are broke,” he says. “The only way you can fi x it is to tame entitlement spending.”

So what is more frightening? A future where Medicaid isn’t curbed, or a future where it is? The answer to this question lies in the answer to another one: Is the prob-lem Medicaid itself or is it rising health-care costs?

Medicaid has problems, to be sure. Provider reim-bursement rates in many states are almost certainly too low, access to specialists is spotty and in the long run, Medicaid in its current form isn’t sustainable. But that’s probably true of overall health spending as well.

“Medicaid is not an out-of-control program,” says Park of the Center on Budget and Policy Priorities, noting that on a cost-per-benefi ciary basis, Medicaid is cheaper than private insurance or Medicare. “Is there a long-term issue in terms of the sustainability of health-care spending overall?” he continues. “The answer is yes. We have to slow the rate of health-care cost and make structural changes, but that’s true for private markets and public programs too.”

The real threat to the budget, he says, “comes from projected increases in health-care spending. The practical question is, what do we do about it and when do we do it?”

Ryan’s answer—capping the annual growth rate of federal contributions to Medicaid and voucheriz-ing Medicare—addresses the federal government’s long-term health-care spending problem. But it’s hard to see how it’s a good deal for the states. Ryan’s proposal would peg annual increases in fed-eral Medicaid spending to the consumer price index plus 1 percent. However, medical price infl ation has historically increased at more than twice the rate of the Con-sumer Price Index (CPI). By pegging federal increases to the CPI at a time when the population is poised to age rapidly, the Ryan proposal would make a state burden that is already crushing “untenable,” in the words of Josh Barro, the Walter B. Wriston fellow at the Manhattan Institute. “[T]he rate of spending growth that Ryan envisions is too low,” wrote Barro recently .

Of course, Congress could off er states a more generous block grant arrangement. According to Scheppach, virtually any block grant arrangement would have “pretty signifi cant problems to overcome.” Because one-third of Medicaid’s costs come from treating the elderly and disabled, a formula must be developed that takes the age of the population into account. Then there’s the

problem of high-cost states and low-cost states. Finally, there’s the issue of who defi nes and sets regulations. Even if you block-grant the program, Scheppach warns, “somebody in interpreting the law or in writing the regulations, will defi ne the benefi t pack-age.” Instead of the fl exibility that should come with a block grant, states might end up with less money and less discretion.

Liberals off er a diff erent alternative for resolving Medicaid’s problems—systemic health-care reform. That may help over the long run. But in the short term, health-care reform will impose new costs on states at a time when they can ill aff ord them. Greater fl exibility would help. But, says Matt Salo, executive director of the National Association of Medicaid Directors, “while greater fl exibility is necessary, broadly speaking, I would stop short of saying that’s it’s suffi cient for ensuring the sustainability of the program.”

Instead, Salo sees the need for a “fundamental rethinking” of the relationship between Medicaid and Medicare, as well as some relief for the states from the burden of providing long-term care through the Medicaid program. “States have kind of innovated their way into an increasingly large and permanent role as the only provider of long-term care, and that’s got to stop,” he says. For now, however, there’s no sign of that kind of help from the federal government.

“The bottom line on this is that the states who make the invest-ments in elementary and secondary education and the infra-

structure we need to be competitive and productive—that’s what’s really going to lose out,” Scheppach says. “You are already seeing that in state after state, and it’s going to get worse. From a long-term economic growth perspective, it’s scary.”

It’s a scenario Menlove spells out as part of her rational for Utah’s welfare-reform-like pilot. “Eighteen percent of our state budget is con-sumed by Medicaid costs,” she says. “We anticipate that by 2014”—when the Medicaid expansion mandated by the federal ACA goes into eff ect—“that number will double to 36 percent. We will have a whole new population qualifying,” including

childless, non-elderly adults whose family incomes fall below 138 percent of the federal poverty level. Menlove is concerned about what the implications of that are for budget dollars to support public education. Utah has added 28,000 students to its public schools over the past two years , but has not been able to provide additional funding for them. Instead, it’s raising tuitions at public universities and cutting state support. “We are raising K-12 class sizes just unbelievably,” she says. “How much more can we raise college tuitions before we start to completely discourage people from getting educated?”

That is the dilemma an untamed Medicaid poses. G


Medicaid in its current form isn’t sus-tainable. But that’s probably true of overall health spend-ing as well.




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On March 28, USA Today published a scathing exposé of the seemingly miraculous test score gains of students in the Washington, D.C., public school system. Under former chancellor Michelle Rhee, schools that previously had

underperformed on standardized tests began making remarkable gains. So remarkable, in fact, that Rhee became a national poster child for school reform. She graced the covers of Time and Newsweek, and appeared on countless TV programs touting her simple cure for the district’s education malady: accountability. Measure performance, set a target, reward those who meet it and fi re those who don’t. High-scoring teachers and principals received bonuses of $8,000 to $10,000. Low performers were dismissed—Rhee replaced nearly 45 percent of the teachers and principals in the system. Test scores improved mark-edly. Some schools posted gains of more than 40 percent, meriting national awards and federal incentive grants. When the city’s mayoral administration changed last fall, Rhee left to start a billion-dollar foun-dation to replicate the accountability model nationwide.


The culture of awards and accountability has a dark side.

By Ken Miller

Ditching the

StickCarrot&



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So how exactly did all these incentivized, accountable educators improve their test scores? According to USA Today and CTB/McGraw-Hill, the two organizations that scored the tests, they cheated. The high-performing D.C. schools had alarmingly high instances of wrong-to-right erasure rates on test answers. That is, someone was erasing wrong answers and replacing them with correct answers before the sheets were machine-graded.

Rhee, of course, denies any wrongdo-ing. And no one accuses her of ordering the schools to cheat. But critics say she didn’t have to. Creating a climate of fear was enough to make these actions inevitable.

“The pressure on principals was unre-lenting,” Aona Jeff erson, a former D.C. principal, told USA Today. Jeff erson is now president of the Council of School Offi cers, representing principals and other administrators. Every year, Jeff erson says, Rhee would meet with each principal and ask what kind of test score gains he or she would post in the coming school year. Jeff erson says principals told her that Rhee expected them to increase scores by 10 percent or more every year. “What do you do when your chancellor asks, ‘How many points can you guarantee this year?’” Jeff erson says. “How is a principal sup-posed to do that?”

It would be easy to point the fi nger at the educators who cheated. But the real question is, what would cause these good people—teachers and principals who love educating children—to make these unethi-cal choices?

The problem is the system. When gov-ernments design and implement a system based on accountability and results, public employees—logi-cally—start to tailor their results accordingly. Yelling at systems doesn’t improve systems; bribing systems doesn’t improve sys-tems. Fixing systems improves systems. When we don’t do the hard work to fi x the systems, the only option is to game the mea-surement system.

It’s a perfectly rational reaction: The smart choice when faced with being held personally accountable for a broken system is to game the measurement system. That’s exactly what the D.C. principals and teachers did. Faced with being fi red for low test scores—and with little control over the complex variables that make up student success, including class size, curriculum, socio-economic conditions, the education level of parents, availability of quality food and the compound performance of all the previous teachers—what choice did they have?

It’s OK to want results. It’s OK to focus on results. But when managers move from desiring a better outcome to demanding a better outcome, unhealthy behavior occurs. It was perfectly acceptable for Rhee to want better test scores. It was OK for her to expect improved performance from her principals and teachers. But instead of tell-ing educators, “Give me a number that I will hold you accountable for,” Rhee could have been asking, “What systems in our district must improve in order for you to improve your learning outcomes? What methods need to be improved, adopted or removed to improve student performance?”

The entire carrot-and-stick accountabil-ity movement is predicated on the notion that the only variable that matters is eff ort. Front-line public employees simply must not be trying hard enough. With the right goals, incentives and constant monitoring, managers can fi nally get workers to use all that eff ort they’ve been withholding all these years. In that mentality, results come from people simply trying harder to get a carrot or avoid a stick.

The real truth is that we have good people trapped in complex, broken sys-tems that they did not create. Performance improves when these good people in the system get together with those aff ected by the system to build a better system.

Management-by-fear has been the fad in the public sector for more than a decade. Across the coun-

try, in conference rooms of every size, governors are looking at cabinet members’ performance measures and demanding to

know why the curve isn’t bending. There are city managers berating department heads because the trend line is going in the wrong direction. There are federal appointees making up excuses for why the green light turned yellow on their dash-board. Of course, nobody calls it management-by-fear. It’s called accountability, managing for results, dashboards, score-cards or STAT. Diff erent names, same assumption: The way to get better results is to hold people accountable for measurable goals. Unfortunately not only do these accountability systems rarely work (affi xing blame instead of fi xing systems), they also produce devastating side eff ects (gaming the measurement system and increasing fear).

As a management consultant to states and localities, I used to believe very strongly in accountability systems. I created and implemented dashboards, scorecards and every other one of the


D I T C H I N G T H E C A R R O T & S T I C K

5 STEPS TO TRUE ACCOUNTABILITY

1Defi ne your system.Where does it start?

Where does it end? What does it produce? Who is it for?

2 Measure the system.How long does it take?

How much does it cost? Is it achieving its purpose? Are the customers happy?

3 Form a team of peoplefrom all aspects of the

system and study it.

4 Radically redesignthe system to get

better results.

5 Continuously improve the system

by communicating the measures and soliciting ideas.



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buzzwords. None of them made a bit of diff erence. Not because we didn’t do them right. Rather, it’s because we got the notion of accountability all wrong.

My own view on accountability was greatly changed by the stories of soldiers from World War II. My grandfather had fought in the war, but like so many of his generation, he had cho-sen not to speak of it. I had no idea what he went through until I saw the incredible work of Stephen Ambrose, Steven Spielberg and Tom Hanks in the HBO mini-series Band of Brothers. This graphic, eye-popping series followed Easy Company from the storming of Normandy Beach through the liberation and the eventual end of the European confl ict.

Each episode of the 10-part series showed a key battle through the eyes of one of the true-life characters. Viewers saw what the soldiers saw and felt what they felt through some amazing acting and directorial magic. The most memorable part of each story, though, was the fi nal fi ve minutes, when the show interviewed the actual soldiers depicted. Seeing the gentleness in their faces, the wisdom in their eyes, the bottled-up pain and their lifelong quest for a peaceful place to live out their days brought me to tears. I appreciated my grandfather as I never had before.

If you’ve seen the series or know about the events, you know that these men dis-played acts of unthinkable courage. They ran head-long into a hail of bullets. They dived on grenades and ran across enemy lines with little regard for their own lives. How? How did the military breed that kind of dedication? How do they continue to do that? Why does a soldier give his life? Surely it’s because he is accountable to his sergeant and doesn’t want to let him down. The sergeant, in turn, is accountable to his major, and the major to his colonel. All the way up the chain, everybody is accountable to someone above them.

Right?Of course not. What the military knows, and what the soldiers

in Band of Brothers revealed, was exactly the opposite. The front-line troops didn’t feel accountable to their commanding offi cer. Heck, they didn’t even like their commanding offi cer, and couldn’t care less about his commanding offi cer. They were accountable to one another. They would rather take a bullet than see their friend take one. They risked their lives to save the man next to them, knowing full well that man would do the same. True account-ability is shoulder-to-shoulder. It’s horizontal. Yet we keep trying to make it vertical.

True accountability looks like love and respect; we keep mak-ing it feel like fear.

Rather than creating a band of brothers (and sisters), rather than cultivating teamwork and togetherness, we continue to divide, separate and force competition. We incentivize the chain of command but do little to cultivate the foxhole. We keep trying

to “re-form” government, thinking that another accountability form or scorecard will create excellence. That type of account-ability only breeds compliance—doing just enough to avoid punishment. We can’t comply our way to excellence. Excellence is a pursuit of the heart.

So how do we create shoulder-to-shoulder accountability? Create more foxholes. Continually cultivate ways for people to work together for a common good. Create organizational puz-zles to solve and use teams to solve them. Good leaders don’t have all the answers. Rather, they frame puzzles and challenge their people to solve them. The best way to do this is to form a team of people who work in a system to come together with people who are aff ected by the system to create a better system. Much like real foxholes, these team projects are harrowing and intense at the time, but create bonds that last a lifetime.

These foxhole moments not only create shoulder-to-shoulder accountability as the team members struggle, fi ght, coalesce and

transcend, these moments also create the other powerful accountability: over-the-counter accountability. That is, accountability to the people that govern-ment serves. A child-abuse caseworker may loathe her supervisor and may not particularly enjoy her co-workers, but just try to get between her and what is best for the kids she is trying to protect. No top-down accountability system can produce even a fraction of the motiva-tion, passion and creativity that comes from accountability to one’s team and one’s customers.

Vertical accountability perpetuates the parent-child relationships that so permeate public-sector agency cultures. Management author Peter Scholtes

laments that most of our organizational cultures, rather than being populated by adult-to-adult relationships, instead are dominated by parent-child relationships. When we see others as children, we treat them accordingly. We try to direct them and control them. We punish them and praise them. If they please us, they get a reward. If they displease us, they get a talking-to. With this mentality, all organizational progress takes the same energy as getting a 3-year-old to put his shoes on.

Government managers have two options. They can keep try-ing to goad workers into putting forth more eff ort and punishing them for results that are beyond their control. Or they can create a system that fosters true accountability. They can foster the kind of horizontal accountability that arises when men and women form a band of brothers and sisters. That’s the kind of meaningful accountability—and results—that can never come from a carrot and a stick. G

Ken Miller co-writes Governing’s Public Great blog. This article is drawn from his newly released book, Extreme Government Makeover, available at GOVERNING.com/books.


D I T C H I N G T H E C A R R O T & S T I C K

True accountability looks like love

and respect; we keep making it feel like fear.



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When the housing bubble burst, homeowners on the fi nancial margin couldn’t keep up with their mort-

gage payments. Both lenders and home-owners alike were shellacked by the double whammy of lower home prices and high unemployment. Foreclosures skyrocketed.

Under the circumstances, one would expect that a government-run homeown-ership program, especially one targeting

low- and moderate-income earners, would suff er mightily under the strain. However, the SoftSecond Loan program of the Mas-sachusetts Housing Partnership, which was started in the early 1990s to address the concern of low mortgage lending to underserved borrowers in minority and other low-income communities, hasn’t suff ered from the sort of high default rates one might expect.

Through SoftSecond, fi rst-time home-owners can obtain a second mortgage

worth 20 percent of a home’s purchase price, which when combined with a stan-dard mortgage worth 77 percent, allows these fi rst-timers to enter the housing market by putting down just 3 percent of the purchase price. It also only requires borrowers to pay interest for the fi rst 10 years and enables them to avoid costly private mortgage insurance.

To qualify, borrowers must meet income limits. More than half the bor-rowers had incomes that were 60 percent

Homeownership with a Happy EndingMassachusetts helps marginal earners become fi rst-time homeowners.

Problem SolverReal-world solutions and ideas for government managers.


By John O’Leary

Since 1991, the SoftSecond Loan program has leveraged more than $2.3 billion in private mortgage fi nancing to help low-income families purchase homes like this one.

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or less of the area median income. “We aim for the lowest income homebuyer we can reach responsibly,” was the way one offi cial put it. As such, one would think these marginal earners would have been swamped when the housing bubble burst.

But that’s not what happened. As of June 30, 2010, the statewide foreclosure rate for prime loans was 2.1 percent, while the rate for those in the SoftSecond pro-gram was just 1 percent.

There are a few reasons the program has thrived in the most brutal sort of environment. First, the strategy of being selective in identifying responsible, long-term homebuyers has paid off .

For example, the program requires that if the home is “fl ipped” or sold within fi ve years, all interest subsidy funds must be repaid—which discour-aged those looking to make a quick buck from getting into the market. One of the forces driving the bubble was the willing-ness of loan originators to give oversized mortgages to those with dubious ability to repay. This was fi ne so long as home prices were appreciating at 8 or 10 per-cent a year. But when the housing market correction hit, these borrowers were the fi rst to default. SoftSecond’s borrowers, however, have proven more resilient.

Second, all borrowers are required to attend homeownership training courses prior to closing on the loan. Unlike those hastily rushed into “no money down” loans, these borrowers understand what they’re getting into.

The Massachusetts Housing Partner-ship also connects these fi rst-time buyers with access to municipalities that market reduced-price, deed-restricted, low-income properties. Borrowers are able to obtain slightly below-market interest rates from participating banks as well.

SoftSecond is run by Clark Ziegler, who attributes the program’s success to its collaborative approach. There is, Ziegler says, a “solid partnership between the state, the participating banks and the community groups that provide the homeownership counseling

that sets the fundamental foundation for the program.”

The program hasn’t defi ned success in terms of volume, but rather in terms of quality. Since each loan requires a gov-ernment subsidy, the idea is to choose borrowers who are good risks, not indis-criminately lend to all those who meet the fi nancial qualifi cations. Since the program went statewide in 1992, SoftSecond has provided 15,000 Bay State residents a shot at homeownership—a healthy contribu-tion to the market, Ziegler says. It is hardly the sort of reckless giveaway programs that critics contend led to the meltdown at Fannie Mae and Freddie Mac.

Perhaps the most critical element to success wasn’t on the borrower side, but on the lender side. Because SoftSecond loans do not meet conforming criteria, such as debt-to-income ratio limits and documen-tation requirements, lending institutions have never been certain of a resale market for the loans. This makes lending banks wary when it comes to assessing the bor-rower’s creditworthiness, since the bank may be on the hook for the loan for years to come. Retained risk leads to better loans.

One factor driving the subprime mortgage mess was the fact that loan originators knew they’d be reselling questionable loans—and their high risk—to a secondary market as soon as possible.

This helped fuel the ugliest aspects of the real estate bubble. During the real estate boom years, some of the riskiest and most sophisticated loans were made to the most unqualifi ed, unsophisticated borrowers. Thanks to retained risk, that hasn’t hap-pened with Massachusetts’ program.

The SoftSecond program isn’t free, and each loan ends up costing a little less than $5,000. Critics point out that rather than serving the poorest of the poor, the program serves a working population that would probably do well in rental units in the absence of the program, perhaps mov-ing more gradually to homeownership.

But in terms of a program that has met its goals of increasing homeownership among marginal earners, the program is a success in an area in which the govern-ment has struggled mightily. In addition to the meltdowns of Fannie Mae and Freddie Mac, the many travails of the U.S. Depart-ment of Housing and Urban Development and the disastrous experiments with pub-lic housing projects are cautionary tales for those seeking to improve housing options for low- to moderate-income com-munities through government. G



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Get more innovative ideas for government at:governing.com/blogs/bfc

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Number of SoftSecond Loans, 1991-2009

1991 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09

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strong, public employers tend to expe-rience higher turnover because better opportunities become available outside the public sector,” says Keith Brain-ard, research director of the National Association of State Retirement Admin-istrators. “To some extent, the opposite is true when the economy is poor.”

Brainard believes that “a pension plan can help moderate that turnover by cre-ating an inducement in good times to stay with their employer,” which certainly seems to be common sense. And, just out of our own understanding of the way the world works, we tend to agree. But the issue here isn’t whether or not retirement benefi ts provide value for cities and states. The question—particularly when it comes to cutting them—is how great is that value and how much does a government have to pay to maximize return on investment.

Maria D. Fitzpatrick, a postdoctoral scholar at the Stanford Institute for Public Policy, agrees that “we know very little about what benefi ts states or local governments are getting for off ering these benefi ts to their employees.” She did

By Katherine Barrett and Richard Greene

56

Problem Solver | SMART MANAGEMENT

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are,” says Leslie Scott, director of the National Association of State Personnel Executives. “There is really not a lot of analysis or research that has been done on it.” But that isn’t stopping states and localities from tampering with their ben-efi t packages. “The fi scal crisis is so great they are making these decisions based on [bottom-line considerations],” Scott says.

It’s not that folks are being lazy out there. These are extremely hard facts to come by. “It would be very hard to study the impact of a change in benefi ts on job retention—or new job applicants for that matter,” says Willow Jacobson, a public administration professor at the University of North Carolina School of Government. “There are larger macro-economic trends that could be driving those things, regardless of the way benefi ts may change things.”

There’s no question that the economy is probably the biggest single driver of employee decisions. It overwhelms all the potentially positive outcomes achieved by off ering a good package of post-retire-ment benefi ts. “When the economy is

What’s a Pension Perk Worth?Employers can’t pinpoint what the real value of retiree benefi ts is to them.

Tough economic times have made old-style budgeting obsolete for smart managers. In the old days, when times were good, budget-

ers could simply add a set percentage to the budgets of most departments and programs. And in bad times, they’d just make the appro-priate across-the-board cut. But these days, budgeters need to be signifi cantly more targeted when they make cuts; shortfalls are simply too big for simple solutions.

Of course, in order for this to work, managers need to know what the dollars they’re spending are actually buying in terms of real results. There are a number of areas in which this is tricky—few of which are of greater importance these days than retiree benefi ts for public-sector employees.

It’s conventional wisdom that there’s an awful lot of cash being spent to keep pension promises made to employees dur-ing the course of their work life. But what benefi ts—aside from the obvious humani-tarian desire to provide a good quality of life for retirees—are these pensions buy-ing for the entities that off er them?

One argument has been that higher pension benefi ts make for lower turnover and more qualifi ed applicants. There have been a small handful of studies over the past two decades that support the very broad idea that employees of governments that off er pensions are often more loyal than those working for entities that don’t off er pensions. But even if we accept those assumptions without question, there doesn’t seem to be anyone who can tell us what the marginal value each additional dollar of post-retirement benefi ts buys—and what we give up if we cut benefi ts by any given amount.

“I don’t think a lot is known, frankly, as to what the real value of those benefi ts



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Why technology isn’t the answer


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make an observation, though, that’s worth considering: In a study of Illinois public school teachers, she found that employees appreciated benefi ts somewhat less than you might anticipate based exclusively on the actual amount spent on them. With-out more and better data, the state simplyhad no way of knowing how it might re-arrange the kind of benefi ts it off ered

to get more out of them in the eyes of the recipients. For example, might the teachers put more value on post-retirement health care in lieu of pension dollars?

There doesn’t seem to be much point in belaboring the little that is known and the vast amounts that aren’t known about post-retirement benefi ts. Rather, our issue is with the fact that decisions about cutting back on pension plan benefi ts (or, in the rare case these days, making them more attractive) are being made based more on politics and fi scal exigencies than on any real sense of the longer-term impact of the decisions being made now.

Flying blind like this means govern-ments that have been pushing for steep cuts in retiree benefi ts are risking a long-term negative change in their workforce that will make services costlier and less eff ective. By the same token, if cuts at a certain level could be shown to have minimal impact on workforce consid-erations, then there are a whole passel of states and cities that should consider making cuts without delay.

We don’t know the answer. But we sure believe somebody should. G


By Caroline Cournoyer

Benching the Big Red Fire TruckWith rising gas prices, fi lling up the gas tank is far from cheap—especially for enormous fi re trucks. To try to conserve fuel, one of the fi re stations in Arlington, Texas, is reducing its use of trucks and increasing its use of SUVs, reports the Arlington Citizen-Journal. Obviously an SUV can’t put out a fi re or effectively respond to car wrecks, but it can go to certain medical calls that wouldn’t require use of the traditional, gas-guzzling red truck. According to Assistant Fire Chief Alan Kassen, the Chevy Suburban (the squad’s SUV of choice) may be more effi cient in that it gets 10 to 12 miles per gallon of gasoline, while the fi re truck only gets 3.6 miles per gallon of diesel. He projects that this program could save the station $4,600 in just one year. Aside from reducing trips to the pump, the station also hopes to extend the life of its fi re trucks and reduce maintenance costs, which often cost more than repairs on an SUV. The pilot, which started in April, is expected to run for 90 to 180 days and is factoring fuel costs into its study.

| IDEA CENTER

Jobs on WheelsSearching for a job isn’t like it used to be. Instead of handing applications to employ-ers, hundreds of job seekers send their applications to generic e-mail accounts, hoping to fi ll just a few spots. But how do the 28 percent of Americans who don’t use the Internet—and the many rural residents who lack a fast connection (or any connection at all)—compete? In Tennessee, residents of rural communities can now take advantage of traveling career centers. Gov. Bill Haslam and the state Department of Labor and Workforce Development recently rolled out three vehicles to rural areas to bring job matching and training to the unemployed. Each “Career Coach” is fully equipped with satellite Internet, computers, printers, fax machines and fl at screen TVs. Each vehicle will also be staffed with up to fi ve employees tasked with helping residents fi le unemployment claims, earn their GED, craft resumés, look for jobs and prepare for interviews. A secondary function of the Career Coaches is to act as mobile command centers during natural disasters. Each vehicle was outfi tted with the latest in mobile communication, and can serve as a vital lifeline to emergency services

personnel. The vehicles are made possible by a $4.6 million grant from the American Recovery and Reinvestment Act.

Find more ideas forcreative programs atgoverning.com/ideas

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Yours, Mine and OursState Technology Leaders Driving Operational Excellence

August 28 - September 1, 2011Omaha, Nebraska

Hilton Omaha / Qwest Center Omaha

34thAnnual Conference & Technology Showcase

National Association of State Technology Directors www.nastd.org

Since 1978, the National Association of State Technology Directors (NASTD) has provided state government information technology professionals with information, educational programs and networking opportunities with a focus on helping members improve productivity and ef ciency in state government operations.

The 2011 Annual Conference and Technology Showcase will examine innovative methods and sourcing opportunities for delivering operational excellence. The program will focus on achieving excellence in three areas: service leadership, data center management and network operations.

Attendees will include state government technology professionals along with representatives from the private sector technology organizations that serve them. The annual conference is NASTD’s premiere event for networking, sharing information and learning about new ideas and solutions.

For more information about the 2011 Annual Conference and Technology Showcase, visit www.nastd.org or contact Pam Johnson at 859-244-8184.


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By Steve Towns

Stormy CloudsWhen cloud computing fails, governments need to be prepared.

applications to the cloud. The new com-puting model puts a premium on choosing reliable cloud contractors, since agencies depend on them to host websites, store data and run computer programs. It also demands more attention on contract terms that hold contractors accountable for outages and performance problems.

Despite their enthusiasm for the cloud, CIOs still are carefully weighing what can be hosted in the cloud and what belongs

in-house on government-owned comput-ers. Oregon, for instance, relies on cloud companies to host its public data-reporting website and an internal collaboration site for state employees. “But that’s a diff er-ent story than putting very sensitive data that you need immediate access to in the cloud,” says state CIO Dugan Petty. Eff ec-tive backup plans and good service-level agreements with contractors will be keys to using the cloud eff ectively, he says. “If you can’t live with the consequences of the cloud being down, then that’s a potential problem.”

In that regard, it makes no diff erence whether government agencies run their

Problems in April with Amazon’s cloud computing platform sparked media questions about cloud computing’s readiness for

prime time. The well publicized incident on April 21 brought down a number of websites, including news aggregator Reddit and Q&A site Quora. Ultimately, though, the incident is unlikely to slow government’s adoption of the new com-puting technique.

Government CIOs have been wary of moving their data and software applica-tions to Internet-based cloud services run by private companies, often citing concerns about reliability and security of systems over which they have little con-trol. But wide adoption of the technology and the desire to control costs is gradually breaking down public-sector resistance.

Indeed, CIOs who gathered in Wash-ington, D.C., for the National Association of State Chief Information Offi cers’ Mid-year Conference in May ranked cloud computing among their highest priorities in an onsite poll taken by the organization. The Amazon incident did little to dampen their interest.

“Did it give us pause for a minute? Prob-ably,” says Michigan CIO David Behen. “But quite frankly, the whole idea about security around the cloud is something that we just need to educate more people about. The private industry is using the cloud for everything, and government needs to embrace that.” Behen’s recession-wracked state has been a leader in sharing computer systems among state agencies and between state and local entities. Behen sees cloud computing as a tool for sharing technology resources on an even broader scale.

Behen and others may be ready to move forward on cloud computing ini-tiatives, but they say that the Amazon incident also holds lessons for public agencies moving data and computer


own computer systems or offl oad some tasks to Amazon, Google or other cloud providers. CIOs readily acknowledge that no system is 100 percent reliable; eff ec-tive backup and recovery plans must be in place despite how and where governments operate their technology.

In fact, the Amazon outage provided a dramatic example. While the incident knocked out a number of websites, it was widely reported in the IT press that

Netfl ix, which hosts its video streaming service on Amazon’s cloud, weathered the ordeal just fi ne, thanks to smart applica-tion design that anticipates unexpected problems and overcomes them.

Perhaps the biggest lesson to be learned is that moving to the cloud doesn’t relieve agencies from ensuring public services and programs continue operating in spite of the inevitable technological hiccups. “Bad things are going to happen,” says New Hampshire CIO Bill Rogers. “What’s important is how you take care of your customers when they do.” G


Michigan CIO David Behen sees cloud computing as a tool for sharing technologies on a broader scale.

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Problem Solver | TECH TALK



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©2011 CDW Government LLC. CDW®, CDW G® and PEOPLE WHO GET IT™ are trademarks of CDW LLC.

WHAT’S OLD IS NEVER NEW AGAIN.

Technology is constantly changing. And you get the thankless task of keeping up. We get it and can help your agency stay productive with the latest technology, including desktops, notebooks and tablets from partners like Apple, HP and Lenovo. Plus, whatever you need, we can configure, tag and image it, too. So that never-ending cycle becomes a welcome evolution.

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SOLVED.


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By Girard Miller

There’s an old saying that you’ll catch more fl ies with honey than with vinegar. As Congress considers a proposal to make

municipal bonds taxable, legislators should take that adage into account.

Under a proposal by U.S. Sens. Ron Wyden, D-Ore., and Dan Coats, R-Ind., muni bond issuers would lose the tax-exempt status of their bonds, but instead receive a federal subsidy to lower their interest rate cost. The theory behind this “mandatory taxable bond” policy is that the federal government loses billions of dollars every year in income taxes evaded by super-rich investors and large insurance companies that invest in muni bonds. So it would be better to subsidize states and localities directly, as Congress did with Build America Bonds—known fondly as BABs. Very few municipal bond issuers now sell their paper at an inter-est rate below the proposed subsidy level, so the economics could make sense on the surface—if Uncle Sam could provide an irrevocable promise to pay its share, which we all know it cannot.

The bill is probably dead on arrival. States and localities will oppose the idea that Congress should tax their bonds on a mandatory basis. Even though they lost the landmark court case on immunity from federal taxation in the 1988 South Carolina

not reach, such as pension funds and foreign investors who do not pay U.S. income taxes. Those markets are too large to ignore, and they would be acces-sible for muni-bond issuers—as long as the federal subsidy is reliable and cali-brated properly.

But the proposal to make all munici-pal bonds taxable is a bad idea that smells like vinegar. Congress should instead provide honey to state and local issues of muni bonds to enable them to make rational decisions that benefi t both fed-eral and municipal taxpayers. They could simply reduce the reimbursement rate previously paid for BABs—35 percent—to something that makes sense for the long run. The proposed bill suggests 25 percent. That’s too stingy. State and local leaders should channel the energy behind the Wyden-Coats bill to promote a fi ve- or 10-year extension of the taxable bond option at a reimbursement rate equal to the weighted average marginal tax rate of muni-bond investors. In today’s income tax schedules, that should be around 30 percent, which is still wider than the spread between muni bonds and taxable paper for many issuers.

Every dollar borrowed by state and local governments under this approach will cost the federal government less, and municipalities will use the tool only when they know it works to their advantage. If Congress later raises the upper-income tax rates to Clinton-era levels, my formula would automatically raise the taxable bond subsidy rate commensurately.

Yields on traditional tax-exempt bonds will decline as some of the supply is channeled into markets that issuers cannot otherwise tap. It’s a win-win if done properly. G


Muni Market MandateCongress looks into taxing muni bonds, but it might catch more fl ies with honey.

Problem Solver | PUBLIC MONEY


v. Baker decision, they still have a solid public policy argument for preserving their historical exemption from federal taxes on public-purpose infrastructure projects. And BABs were unpopular with some members of Congress who saw them as a giveaway to underwriters.

A number of municipal bond issuers have always been suspicious of propos-als to authorize the taxable municipal bond option. They are afraid something like this new proposal could be the fi rst step down a slippery slope that ends with Congress pulling the plug on tax benefi ts now enjoyed by the sovereign states. They worry that if Uncle Sam eventually runs out of money to pay for anything besides the military (“the com-mon defense”), its own debt and our social entitlement programs, there won’t be money to pay the promised subsidies on muni bonds. Current fi scal projec-tions by the Government AccountabilityOffi ce show that scenario no later than 2030, before some of today’s bonds would mature. Of course, that doomsday scenario off ers little solace that Congress would not begin taxing muni bond inter-est anyway.

Taxable muni bonds have a worth-while place in the public fi nance system. They permit issuers to tap into markets that traditional tax-exempt bonds can-S

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Catch up with us in one of our selected cities for 2011.

www.governing.com/events

To get involved, please contact:

Liz Wallendorf, Event Director

[email protected] | 520.869.1276

North Carolina Raleigh, NC April 27, 2011

TexasAustin, TXSeptember 7, 2011

CaliforniaSacramento, CA October 6, 2011

New YorkAlbany, NY November 9, 2011

Each regional GOVERNING forum offers public leaders

an opportunity to learn and share best practices in a

highly interactive format custom tailored to the specifi c

issues of the host jurisdiction.

• Jobs • Policy• Budgets • Healthcare

LE ADERSHIP FORUMS2011

GOVERNING is pleased to announce our new series of Leadership Forums.


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64

Player

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Tony Kennon

Position: Mayor, Orange Beach, Ala.

Age: 54

Education: B.S., University of South Alabama

Previous career: Owner of physical therapy clinics


When the Deepwa-ter Horizon oil rig exploded last year, the sight of tarballs

fl oating onto Gulf beaches became all too familiar. Beach towns like Orange Beach, Ala., saw the tourists on whom their livelihood depends disappear practically overnight—the city’s lodging revenue dropped about $1 million between 2009 and 2010. Frustrated by BP’s slow cleanup efforts, the city’s Mayor Tony Ken-non publicly challenged the company at a press conference last year. “We should be like Disney World: Somebody throws a piece of trash down, there ought to be somebody right behind them, getting it up within 10 sec-onds,” Kennon said.

Since then, Kennon may as well be an accountability czar for BP , pushing for bigger beach cleanup efforts, faster settlement of claims and larger marketing budgets to bring visitors back to Ala-bama’s Gulf Coast. When BP completed a major clean-ing of the beach, Kennon made sure it was done right by having city workers put a 12-inch auger on the back of a John Deere tractor and drill 10,000 holes, 4 feet deep, looking for any evidence of oil.

With the beaches clean, business owners are opti-mistic tourism will bounce back. The city has already seen plenty of snowbirds and spring breakers so far this season, Kennon says. “[But] if we don’t have a good summer, then this off season will be devastating.”

—Tina Trenkner

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Options shown. 1Based on Vincentric’s 2011 Fleet Awards Analysis – Mid-Size Sedan. 22011 IntelliChoice, www.IntelliChoice.com; Passenger Car, 4-cyl. model only. 3MotorIntelligence.com, CY 1997-2010 sales. ©2011 Toyota Motor Sales, U.S.A., Inc. fleet.toyota.com

Give your drivers a raise that saves you money.Everyone wins with a Camry Fleet. Whether it’s the bottom line you’re concerned about or the well-beingof your drivers, Camry has you covered. It has been named a 2011 Vincentric Best Fleet Value in AmericaTM1

for its unsurpassed life-cycle cost performance and is considered an Excellent Value2 by IntelliChoice.It’s also been named a SmartChoice for Ownership Costs and Retained Value.2

Did we mention that Camry has been named the best-selling car in America for 13 of the last 14 years?3

That means your employees will be thanking you but really you’ll be the one who’s full of gratitude. Now that’s a good deal. To find out what Camry can do for you and your company, contact 1-800-732-2798.


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