March | April 2017

By Katherine Barrett and Richard Greene, CSG Senior Fellows
We spend a great deal of our time in an activity we think of as “radar screening.” The whole point of the effort is to read as much as we can about state government, while interviewing dozens of officials and observers every month. Then we connect the proverbial dots and try to discern the most important topics for the states, whether or not they’ve actually reached the general press.

Here are five items we think will grow ever more significant to the states as the new year moves along:

1. Water’s Importance in Economic Development

In recent years, devastating drought in the West and the depletion of groundwater in many parts of the U.S. have dramatically increased the focus on water supply. California’s drought is front page news and even states with traditionally healthy water resources now require long-term water plans.
This phenomenon is clearly crucial to the health and welfare of residents. But easily missed is the impact of water shortages on economic development. Corporations considering where to locate or expand their operations, which used to focus primarily on availability of workforce, climate and taxes, increasingly are taking a hard look at the availability of water now and into the future.
A growing number of states are pointing to their water resources—and even their stewardship of water—in their promotional literature. Georgia’s Department of Economic Development, for example, boasts that it’s “the only state with a complete inventory of water systems,” and the state’s Environmental Protection Division “has drafted baseline water resources assessments; forecasts of agricultural water demand; and new ways to forecast future municipal and industrial water demand.”
That’s just not the kind of verbiage you used to see in economic development literature.

2. Infrastructure Neglect

We were talking to a rather large group of public sector officials recently and asked them to name the fiscal issues that worried them the most. High on their list were problems with the maintenance of infrastructure. These concerns are borne out by The American Society of Civil Engineers report card, which most recently gave the nation’s infrastructure a grade of D+.
Many of the states’ issues with infrastructure are their own fault. In good times, as well as hard times, they’ve ignored maintenance needs in favor of funding other—more politically beneficial—expenditures. There simply aren’t a lot of votes available on a road resurfacing platform. Yet, every year that maintenance is put off, the costs just grow larger and larger, until roads, bridges and buildings begin to crumble and hugely expensive efforts are required to fix them. Along the way, safety issues arise.
Sadly, there are no requirements for states to disclose the amount of deferred maintenance they have accrued. That only turns a time bomb into something worse—a hidden time bomb.

3. Geographic Inequality

There was never a time when states were economically homogeneous. But in conversations with a number of demographers, we’ve come to realize that the divide between “have” and “have not” cities and counties in individual states is expanding worrisomely.
In Colorado, for example, as of last spring, 19 counties were at pre-recession levels in terms of jobs, but 45 were still at recession levels. The counties that were doing best were those with nicely diversified economic bases. On the flipside were a number of counties that depend on revenues from tourism or from natural gas or coal.
This dichotomy can create enormous complexities, and legislatures are going to have to deal with them as they allocate resources. Montana’s demographer Jim Sylvester told us the legislature there is in a quandary about how to govern a state in which the East is doing wonderfully—partly due to fracking—and the West’s economy is flat. He asks, “How do you do policy that applies to the whole state?”

4. Cybersecurity

One of the smartest guys we know is Don Kettl, former dean of the University of Maryland’s School of Public Policy. As he told us, “Cybersecurity is, beyond doubt, one of the most important but least-explored issues facing the nation. Period. … The biggest route to failure on this issue is for everyone to assume that the feds have it under control and will solve it for everyone else. It’s an issue we all share and all need to own.”
While it is not possible to put a total dollar amount on the potential threats, the drama of the risks entailed is clear. So far, most of the successful attacks on computer security have been hazards to privacy. But a severe IT breakdown endangers services like electricity, water supplies, emergency responders, financial services, public safety, corrections, health care and so on. When we hear about the number of so-called “breaches” faced by individual states, it feels to us like it’s not a question of whether a life-threatening attack on a state’s computers will occur, but when it will occur.

5. Investing in What Works

Evidence-based practice centers have proliferated from coast to coast, and we think that’s a very good thing. There’s a bipartisan allure to the idea that data mixed with meaningful evaluation will help government spend its money where it counts and drive down spending on programs that don’t work well.
But as much as improved use of evidence-based data looks like a very sweet donut to many states, we can’t help but notice that the hole in the middle is getting bigger. No doubt, programmatic data sharing and longitudinal data are desirable, but we believe legislatures will be grappling increasingly with privacy concerns, shortages in analytic capacity and multiple problems with data quality.
About Barrett and Greene
Noted journalists, consultants and performance management experts Katherine Barrett and Richard Greene have joined CSG as senior fellows. They founded the Government Performance Project, a 10-year effort by The Pew Charitable Trusts to improve state government management. As CSG senior fellows, Barrett and Greene will serve as advisers on state government policy and programming and will assist in identifying emerging trends affecting states. They will write a regular column in Capitol Ideas magazine.