Back on Track? · Back on Track? Richard Rodriguez is determined to ﬁ x Chicago transit. CONNECTING AMERICA’S LEADERS July 2010 $4.50 GGOV07_cover.indd 2OV07_cover.indd 2 66/28/10

Back on Track?Richard Rodriguez is determined to fi x Chicago transit.

CONNECTING AMERICA’S LEADERS July 2010 $4.50

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07.2010

July 2010 | GOVERNING 1

FEATURES

20 ‘L’ CAPITANChicago transit chief Richard Rodriguez combats a monumental fi scal crisis.By Zach Patton

26 CHARGING AHEADState and local governments are betting big that electric cars will drive the economy in a cleaner, greener direction. But will the needed investment in new infrastructure pay off ? By Russell Nichols

VOL. 23, NO. 10

30 LINING UP FOR HEALTH ITThe huge challenges of implementing a $30 bil-lion program are just beginning to hit the states.By David Raths

34 MUDDIED WATERSWetlands can protect cities from fl oods, but it’s no longer clear which wetlands the Clean Water Act protects. By Jonathan Walters

38 ARRESTING DESIGNThe Los Angeles Police Department is building the next generation of police stations that underscore its commitment to a new style of policing—and to the architectural avant-garde. But is it misplacing something important in the process? By John Buntin

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PROBLEM SOLVER

44 Work-Share, Save Jobs Businesses partner with states to retain workers.

46 Smart Management Funding for state programs that research and analyze long-term issues is dwindling.

47 Idea Center Two Baltimore libraries off er grocery ordering and pickup to their patrons.

48 Tech Talk Arizona pits the public sector against the private sector in a cloud e-mail face-off .

50 Public Money Some see California’s future in Greece’s current woes.

52 Player Israel “Izzy” Colon is spearheading Philadelphia’s eff orts to become an immigrant hub.

DEPARTMENTS

4 In This Issue

7 Letters

8 Dispatch A tax policy to change behavior leaves a loser in its wake.

POLITICS + POLICY

11 Observer The arrival of summer also means the arrival of state fair season— unless you’re in Detroit.

13 Ballot Box More Republican gubernatorial candidates are skeptical of the science of climate change.

14 Potomac Chronicle In the recession’s wake, states and localities face new realities.

15 At Issue A new Maryland law prohibits schools from sending test scores to military recruiters.

16 Health In-house clinics help government reduce the cost of health benefi t claims.

17 Green Government Reno, Nev., plans to study local wind patterns, assessing its power in the region.

18 Economic Engines Short-term gimmicks to boost local sales tax revenue aren’t working anymore.

19 Urban Notebook More than half a century after the streetcar’s heyday, this transportation mode is poised to make a comeback.

18

GOVERNING | July 20102

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IN THIS ISSUE

Ready to debut July 27 is Governing’s new monthly e-newsletter devoted exclusively to health-care issues—the latest in health-care reform, Medicaid, Medicare, innovative health information technology (IT) solu-

tions and health information exchanges—so I encourage you to visit Governing’s website today to subscribe.

In the same health-related vein, this month’s issue includes a story by contributing writer David Raths about the promise and perils of health IT. In the health-care reform debate, the one area on which every state can agree—and without much partisan squabbling—is health IT. With billions in grants sud-denly fl ooding coff ers, states are gearing up to oversee an array of health IT initiatives, including health information exchanges,

Medicaid incentive programs, health IT training initiatives, portals that make health insurance exchange informationaccessible, and regional extension centers that help physicians adopt elec-tronic health records. State offi cials worry about their ability to oversee and fi nd matching funds for a dizzying array of new government programs.

Our cover story assesses transpor-tation—we profi le Richard Rodriguez, head of the Chicago Transit Author-ity, and look at how Chicago’s system is navigating the immediate transit crisis.

We use a day-in-the-life snapshot of this transit leader to look at challenges facing urban transit systems nationwide as they try to deliver more services to more people on an ever-tighter budget.

On another note, we move to water—can a bill pending in Con-gress fi x the gutting of the Clean Water Act? Thousands of the nation’s largest water polluters are beyond the act’s reach because the U.S. Supreme Court has left uncertain which waterways the law protects. Regulators can’t prosecute as many as half of the nation’s largest known polluters because they lack jurisdiction—or proving jurisdiction is overwhelmingly diffi cult and time con-suming. To deal with it, many states are shutting down their Clean Water Act programs.

And fi nally, should a police station have a meaningful civic presence architecture-wise or exude authority and read “police” to every passerby? A photo essay by David Kidd and John Buntin illustrates that the new Los Angeles Police Department headquar-ters and several of its precincts defi nitely have a presence. The question is whether they have the right presence.

Enjoy our July issue, and let me know how we’re doing by sending me an e-mail at [email protected].


Publisher Fred Kuhn

Editor Tod NewcombeEditor-at-Large Paul W. TaylorManaging Editor Elizabeth DaigneauAssociate Editor Jessica B. MulhollandPhoto Editor David KiddChief Copy Editor Miriam JonesCopy Editors Elaine Pittman, Sarah RichStaff Writers John Buntin, Josh Goodman, Zach Patton, Tina Trenkner, Andy KimCorrespondents Katherine Barrett, Richard Greene, Jonathan WaltersContributing Editors Blake Harris, Steve TownsColumnists William Fulton, Peter A. Harkness, Donald F. Kettl, Alex Marshall, Girard Miller, John Petersen

Creative Director Kelly MartinelliDesign Director David KiddSenior Graphic Designer Crystal HopsonGraphic Designer Michelle HammIllustrator Tom McKeithProduction Director Stephan WidmaierProduction Manager Joei Heart

Marketing Manager Jenna AlifanteEvents & Program Manager Heather KerriganOffi ce Manager Tracie Davis

Founder & Publisher Emeritus Peter A. Harkness

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Director of Advertising Erin Waters [email protected]: Account Director Chris Hempel 818-445-4451South/Midwest: Account Director Jennifer Gladstone 281-888-4125East/Advocacy: Account Director Erin Waters 202-862-1453VP Strategic Accounts Jon Fyff e jfyff [email protected] Director Strategic Accounts Shelley Ballard [email protected] Production Manager Whit Walker 202-862-1456Advertising Coordinator Kori Kemble 202-862-1448

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Gosia Colosimo, 916-932-1460, [email protected]://governing.com/subscribe

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 Washington, D.C., and at additional mailing offi ces. Copyright 2010 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 regis-tered trademarks of e.Republic Inc.; unauthorized use is strictly prohibited. U.S. subscription rates: Government employees—free for one year; all others—$19.95 for one year. Foreign subscriptions: $74.95 in U.S. funds. Post-master: Send address changes to Governing, P.O. Box 3535, Northbrook, IL 60065-9887. Subscribers: Enclose mailing label from past issue. Allow six weeks. Member: BPA International. Made in the U.S.A.

Staying on Top of Today’s Health-Care Issues

By Fred Kuhn, Publisher



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Max Tax? “When states consider the fi lm tax credit (production costs only), they must remem-ber that there are two types of fi lm com-panies: those that come into a state, make a fi lm and leave, which creates ancillary tax revenue; then there is the fi lm com-pany that decides to actually build sound/production studios (a fi lm campus), which creates permanent real estate (tax) and per-manent jobs. There needs to be a study that compares the two operations for max tax and job creation. Maybe there should be a split tax after the study.”

—From a Governing.com reader

Benefi ts Outweigh Investment? “Most recently, Dr. Edward M. Mazze, distinguished professor of business at the University of Rhode Island, did a compre-hensive study on the matter entitled, The Economic Impact of the Motion Picture Tax Credit on the Rhode Island Economy for the Years 2005-2009, and discovered that ‘the total economic activity that resulted from the $56.7 million tax credit was $465.51 million. The tax credit was responsible for creating and supporting 4,184 new FTE [full-time equivalent] jobs. The actual head count of crew and cast members was 6,488,

which converted to 2,595 FTE workers using the formula 1 FTE=2.5. This does not include the more than 10,000 extras. The economic benefits of the 25 percent tax credit far out-weigh the state’s investment in the program,’ he concluded.”

—From a Governing.com reader

“A happy employee does not mean an engaged employee … there is far more to gaining productivity from your work force. You cannot separate talent engagement from retention; engagement is a leading indicator [of] retention. … In the public sector, employers have a leg up as engage-ment starts with commitment to a big idea or purpose. Jim Collins found that public-sector employees generally had a stronger sense of purpose and mission—service if you will. It is the job of managers and supervisors to tap into that service/purpose.”—From a fan of the Governing LinkedIn page

Join Governing’s LinkedIn group at linkedin.com

Fan Governing on Facebook at facebook.com/governing

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Check out the new and improved Governing.com and our new (and renewed) blogs!

Fed Watch

Public Great

Sunlight

BFC (Better, Faster, Cheaper)

Politics (formerly Ballot Box)

View (formerly the 13th Floor)

Audience BreakdownThe following chart shows which articles from the June issue of Governing drew the most reader views. Although we receive many article comments online, letters to the editor are still welcome and encouraged.

CONNECTING AMERICA’S LEADERS June 2010 $4.50

Do movie tax incentives

really work?

FFllaammaammmmmmmmmmmmmmmmmmmm??????????????????Film

Corrections: In the June issue of Governing, Girard Miller’s Public Money

column referenced a PDF from the Government Finance Offi cers

Association. The included link was printed incorrectly. The correct

link is: http://www.gfoa.org/downloads/GFOA_

governanceretirementbenefi tssystemsBP.pdf.

Also in the June issue, our article on Franklin

Brown, planning director for the Ohio School

Facilities Commission, stated that Ohio had

built or renovated some 700 schools to gold or

silver LEED specifi cations. The actual number

is 245 LEED registered buildings.


LETTERS

In the 2009 movie Whip It, 17-year-old misfit Bliss Caven-der longs to escape the beauty pageants and big hair of her tiny hometown of Bodeen, Texas, by joining an under-ground roller-derby league in Austin. In the film—actress Drew Barrymore’s directorial debut—Bliss stares wist-fully across the desolate Texas plains while killing time dur-ing her waitressing shift at the Oink Joint, the local barbecue dive that sports a giant pink pig on the roof and a sign touting its signature menu item, the “Squealer.”

It’s quintessential small-town Texas. Only it’s not. It’s southeast Michigan. Whip It was filmed almost entirely in and

around Detroit. And Ypsilanti, a town near Ann Arbor, stood in for the fictional Bodeen. The Oink Joint was actually Ken’s Diner, a shuttered restaurant in the little town of Birch Run, north of Flint. (Thanks to the increased local notoriety, Ken’s has since been reopened and rechristened the Oink Joint. The giant pink pig, however, remains in storage.)If you’re wondering why a movie seeking to capture the flavor of Austin and its environs would set up shop in Michi-gan, it helps to know that for the past two years, the state has been home to the nation’s most generous film incentives. Thanks to an aggressive tax-credit plan created by Gov. Jennifer

Granholm in 2008, productions that shoot in Michigan can be reimbursed by the state for as much as 42 percent of their expenses.That was enough to lure Whip It, which originally planned to shoot entirely in the Lone Star State. During filming, the movie’s screenwriter told an Austin newspaper that the Michi-gan deal was just too good to pass up. “For a year, it was going to be Texas, and if it hadn’t been for money, it would have been Texas all the way.”The influx of showbiz cash is welcomed by many in Michi-gan. In a state that’s lost nearly a million jobs since 2000 and still suffers the nation’s highest unemployment rate, attracting

business revenue and creating new jobs—even the temporary, short-term positions associated with movie productions—is seen as a bright spot for the economy. But it’s not quite that simple.

Michigan’s movie-money measure has drawn all sorts of big-budget Hollywood productions, including Clint Eastwood’s Gran Torino in 2008 and 2009’s Up in the Air, starring George Clooney. This summer, the state will play backdrop for films starring Hugh Jackman, Pierce Bros-nan and Jennifer Connelly, as well as the next installment of the

SPECIAL SECTION Finance 2010

MovingPictures

MOVING PICTURES

22 GOVERNING | June 2010

23June 2010 | GOVERNING

States spend billions on incentives to lure film productions away from Hollywood. Some say it’s gone too far.

By Zach Patton

Paying for Lost Time by Tina Trenkner

12%

Computing Performance by Jonathan Walters

Home Work by Katherine Barrett and Richard Greene

Wanted: A Gold Standard for Pensions by Girard Miller

Other articles

Fraud Fighter by John Buntin

5%

6%

9%

16%

Rise of the Generals by Josh Goodman

19%

33%



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This month, tax offi cials in Washington state will see the first evidence of whether its residents will suck, chew and

slurp their way out of the state’s budget crisis. Candy, gum, soda and bottled water lost their exemption from sales tax on June 1, after the state’s elected offi-cials proved they were prepared to tax almost anything to help close a voracious $2.8 billion budget shortfall.

Together these convenience store favorites are expected to raise $605 million in additional sales tax revenue annually. Mike Gowrylow, communications direc-tor at the Washington State Department of Revenue, says the numbers are startling at fi rst blush. “Soda, candy, gum and bottled water,” he says, “are consumed in startling large quantities.”

Candy alone is expected to add $30.5 million to state coff ers each year, but a local long-time self-described con-fectionary man says the state has not counted the cost.

Pierson Clair is president and CEO of Brown & Haley, the 96-year-old Tacoma, Wash.-based manufacturing confectioner that gave the world Almond Roca back in 1923—what Clair describes as “a wonder-ful piece of celebration confection.” Roca is a log-shaped piece of buttercrunch toff ee coated in chocolate, topped with almonds, wrapped in gold foil and packaged in distinctive red tins.

He guards his company’s recipes and reputation jealously, and insists that Almond Roca is food. “We buy 2 mil-lion pounds of butter. We buy 2 million pounds of California almonds. We buy 3 million pounds of sugar. We buy vanilla, and we buy soy lecithin. That’s all that goes into Almond Roca. That is all food, and all we do is apply Washington labor. We cook it. How is that not food?”

By Paul W. Taylor

Candy EconomicsA tax policy to change behavior leaves a loser in its wake.

DISPATCH

make “healthier food choices.” And that may ultimately be the heart of the matter.

Conventional wisdom holds that governments raise taxes for only two reasons—to increase revenue and change behavior. The candy tax will contribute only slightly more than 1 percent of the state shortfall. Together with gum, soda and bottled water, the new sales tax will be about a one-fi fth down payment on what the state needs to balance the budget.

These are not insignifi cant sums, but the real value may be in the behavioral change they are intended to bring over time. The fi scal crisis allowed policy makers to levy punitive taxes against things that are bad for us or the packag-ing of which is bad for the environment.

All this would be an easier swallow if faceless multinational food conglom-erates had to pay the tab. This was not supposed to be Clair’s fi ght. He made his fi rst batch of chocolate when he was 16 years old. Even as you hear the pas-sion for his life’s work in his voice, there is also the unmistakable sound of loss. G

E-mail [email protected]

The line of demarcation is around a single ingredient: fl our. “The issue is black and white,” Gowrylow says. “If a prod-uct does not contain fl our made from grain, it is a candy and is subject to sales tax.”

But Clair, who has headed Brown & Haley since 2003, won’t buy the easy fi x—on prin-ciple. “Quite frankly, any number of confectionary companies could add a little rice fl our in. You wouldn’t taste it. But that isn’t the underlying value. The underlying value is taxation of food.”

And confection is a food, Clair con-tends. “This has become an onerous tax because of disproportionate use of confection by the elderly, low income and children,” he says. “It becomes a tax against those who can least aff ord it.”

Moreover, he worries that candy is now being lumped with sin tax prod-ucts. “The moment you say, ‘We’ll just add a little fl our,’ is the moment you say there is something wrong with confec-tion,” he says. “Confection is consumed at less than 2 percent of total calorie intake—probably someplace around 1.6 percent is confection—a miniscule proportion of the calories we take in a year to keep us running.”

Clair says the appetite for a treat has helped keep the doors open at about 20 mid-sized confectioners in Washing-ton state alone. “So clearly it is a little bit of fun and a little bit of pleasure. And to group that in as a sin just shows you—shows me—the disconnect between those who make laws and those who don’t.”

Gowrylow responds that it is “not our job to decide what is a sin. Our job is to collect the revenues the law requires.” But he adds that the exemp-tions may prompt Washingtonians to

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Navigating today’s complex state and local government can be a challenge. GOVERNING management books provide practical tools and tips for success. Reserve your copy of these vital resources today!

“A fun read but, more importantly, a practical and pithy primer on the reality of media relations in the modern era.”

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11July 2010 | GOVERNING

OBSERVER By Josh Goodman

Fair WarningFor states, the best of both worlds would be to have a fair with-

out having to pay for it. The Texas fair already operates without state funding. A second fair in Michigan’s Upper Peninsula that lost state funding will continue as a private venture. Rogers is supporting legislation to bid out the rights to the Michigan fair that formerly was based in Detroit.

Whether that’s a realistic strategy in Michigan or elsewhere is an open question. In South Dakota last year, lawmakers slashed the fair’s funding from $768,000 to $400,000. The fair survived by reducing its advertising and entertainment budgets, and by raising some fees. This year, the Legislature rewarded the fair by cutting its budget by another $100,000.

Jerome Hertel, the fair’s manager, says he’ll have no choice but to delay capital spending and equipment purchases. Even after doing that, bad weather could force the fair to go back to the South Dakota Legislature to ask for more money. Hertel thinks the current level of state subsidy is unsustainable, but he’s not giving up. “The state fair has survived wars and the Great Depres-sion,” he says, “and we’ll survive this too.” G

T he arrival of summer also means the arrival of state fair

season—unless you’re in Detroit.While balancing the budget last year, Michigan

Gov. Jennifer Granholm axed the subsidy for the nation’s oldest state fair, forcing it to shut down. She decided that compared to the core functions that state government pays for—education, health care and public safety—it couldn’t compete. Many Michigan lawmakers agreed. “The reality of the situation is that our state is in, shall we say it politely, fi nancial ruins,” says Rep. Bill Rogers. “I hate to term them as luxury items, but that’s what they are.”

Like Michigan, many states are facing structural defi cits and reassessing what government should and shouldn’t do. More states could conclude that fairs are luxuries they can’t aff ord.

Jim Tucker, president and CEO of the International Associa-tion of Fairs and Expositions, says that would be a mistake. Tuck-er’s case is that fairs aren’t just about Ferris wheels and corndogs. He argues that fairs teach city dwellers about the importance of farming. Tucker also points out that state fairgrounds often serve as venues for other events, much like arenas and convention cen-ters, which also are often subsidized by governments.

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

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Mike McGinn campaigned for mayor of Seattle in 2009 as a foe of expensive road projects and of automobiles in general. To the surprise of the Seattle political establishment, he actually meant

it. The result is a foundering relationship between the mayor and City Council just six months into his tenure.

The biggest issue has roiled Seattle and Washington state for almost a decade: how to replace the Alaskan Way Viaduct, a key piece of roadway that was damaged in the 2001 Nisqually earthquake. The solution, agreed to in 2009 by state and local offi cials, is to replace it with a $4.2 billion tunnel.

McGinn’s campaign was propelled by his view that this was the wrong approach. He didn’t want the viaduct replaced at all. He thought the city should instead strengthen its transit system and network of secondary roads to compensate for the lost viaduct. But supporters of the tunnel were comforted when, just days before the election, McGinn said he would abide by the deal.

As it turned out, though, the establishment wasn’t listening carefully enough to what McGinn, an environmental activist and political neophyte, was saying. In the same breath, he’d pledged to fi ght a provision in the agreement that requires Seattle property owners to pay for any cost overruns. “It was a long campaign and he said it a lot,” says Aaron Pickus, a McGinn spokesman, “and now he’s still saying it.” The mayor is vowing to veto legislation that moves the tunnel forward unless the state picks up the cost overruns.

The viaduct dispute is just one sign that, in his fervor to get people out of automobiles, McGinn is unlike any big city mayor in the country. He’s pushing for Seattle to reopen plans for another major road project—a new bridge on Highway 520—

so that it can accommodate light rail, even though the city’s existing plans don’t call for light rail there for years. McGinn also has pitched an expansion of light rail to the city’s west side. He’s launched an initiative called “Walk, Bike, Ride,” declaring in a statement, “We cannot sustain the fi nancial, environmental and health costs of a transportation system that is overly reliant on automobiles.”

For now, these proposals represent a bold vision, but little more. The main result of the mayor’s stands is that he has alienated most of the Council, which faults him for trying to reverse decisions that already have been made. McGinn has played the role of outspoken activist, even challenging the Council president to a debate on the tunnel. He hasn’t built consensus. As a result, the Council may override McGinn on both the tunnel and the 520 bridge. “You can’t really go it alone when you’re working on regional and state projects,” says Council Transportation Chairman Tom Rasmussen. G

Larry Naake is trying to bring back the good old days of local, state and federal collaboration.

Naake, executive director of the National Association of Counties (NACo), is helping to lead a push for Congress to create a new commission of representatives from all levels of government. But the same things that killed the old commission that Naake is trying to replicate—partisanship and federal indiff erence—are the factors

that make it a long shot to succeed this time around.

That old panel, known as the Advi-sory Commission on Intergovernmental Relations (ACIR), formed in 1959, and it died when Congress defunded it in 1996. Through ACIR, congressmen and federal cabinet offi cials talked regularly with mayors, governors and legislators. “It provided a really wonderful forum for leaders to talk about problems that were

mutual to all levels of government,” Naake says, “and how you work together to solve those problems.”

The commission’s nonpartisan profes-sional staff helped mold these conversa-tions into reports that discussed concrete policy alternatives. The result was some low-profi le but notable accomplishments. During the 1960s and 1970s, for example, ACIR helped shape the way federal money fl owed to states and localities.

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Nostalgic for Collaboration

Politics+Policy | OBSERVER

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You could call it a climate change on climate change.

Many Republican candidates running for governor this year are express-ing doubts about the scientifi c research that says the Earth is getting warmer and that humans’ activities are the reason why. The result is that

the class of 37 governors elected this year could be far more skeptical of limiting greenhouse gas emissions than the governors they’re replacing, especially if Repub-licans win key races.

Over the last few years, Republican governors have been as active as anyone at combating climate change. Former New York Republican Gov. George Pataki was an architect of the Northeast’s Regional Greenhouse Gas Initiative, the country’s fi rst operational cap-and-trade system. California’s Arnold Schwarzenegger signed AB 32, legislation that many environmental experts consider the toughest green-house gas emissions limitations in the country. Florida Gov. Charlie Crist and former Utah Gov. Jon Huntsman angered their states’ conservative legislatures by sounding the alarm on the climate.

By January, many of these same states could have Republi-can governors who take a strikingly diff erent view. Crist could be replaced by Florida Attorney General Bill McCollum, who once sent the governor a documentary titled, The Great Global Warming Swindle. Schwarzenegger might be replaced by for-mer eBay executive Meg Whitman, who has promised to stall implementation of AB 32. “I do think the scientists say that the Earth is getting warmer,” Whitman said at a debate this spring. “Whether it is man-made or not, I don’t know. I’m not a scientist.” Republican candidates in several other states have expressed skepticism, including Illinois, Minnesota and Utah.

These Republican gubernatorial aspirants are refl ecting a shift in public opinion. A March Gallup Poll showed that more Americans say the threat of global warming is exaggerated than in 2008, and that fewer Americans believe that global warming already is occurring.

Even if many of the Republican skeptics win, the policy implications won’t nec-essarily be clear cut. The skeptics, of course, aren’t likely to favor policies explicitly to cut greenhouse gas emissions. But they are supporting some of the same envi-ronmental strategies as candidates concerned about global warming, albeit for dif-ferent reasons. Most candidates, regardless of their views on global warming, are speaking in favor of things like greater energy effi ciency and more development of alternative fuels. Some argue for these measures to fi ght global warming, but others support them as economic development tools or to reduce American dependence on foreign oil.

The policy implications of the newfound Republican skepticism are murky for another reason too. Candidates often change their views once they win. “When Schwarzenegger, Huntsman and Crist were running for offi ce, I don’t think they were saying much about the climate,” says Patrick Hogan, regional policy coordina-tor for the Pew Center on Global Climate Change. “It wasn’t really an issue. Things can change very quickly.” —Josh Goodman

Global Warming Cool Down? More Republican gubernatorial candidates are skeptical of the science of climate change.

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That isn’t to say that everyone thinks the good old days were all that good. ACIR was predicated on the idea that Democrats and Republicans who represented diff er-ent levels of government could come to a consensus if they spent enough time researching and discussing problems. “My view is that it wasn’t a good structure,” says Richard Nathan, a former ACIR com-missioner and longtime federalism expert. “The ACIR was fundamentally fl awed. It was fl awed because it had 26 members from all these disparate groups that all have disparate agendas. It couldn’t be an action group.”

But ACIR did try to take action on con-troversial topics. That’s what helped kill it. The fi nal straw was a report that docu-mented the federal government’s larg-est unfunded mandates, which included environmental regulations and disabil-ity protections. Activists protested and the Clinton administration pulled support for ACIR.

Since then, representatives of the major governmental associations have complained that Congress and the White House don’t understand state and local governments and their needs. NACo, the U.S. Conference of Mayors, the National League of Cities and the International City/County Management Association hope that a new commission would change that. These groups have supported a pair of congressmen who introduced legisla-tion that would set up the National Com-mission on Intergovernmental Relations.

But even Naake acknowledges that get-ting something approved will be diffi cult. After all, if Congress were strongly inter-ested in intergovernmental aff airs, there wouldn’t be a problem that needs address-ing. So far, the bill has stalled. It may be that an institution to bring people together regardless of political party is both badly needed and unrealistic right now. “The 1950s bipartisan public administration kind of environment we had when the commission was created,” says John Kin-caid, a former ACIR executive director, “that’s all gone.” G


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Restoring the BalanceIn the recession’s wake, states and localities face new realities.

By Peter A. Harkness

At the National Association of State Chief Information Offi cers 2010 Midyear Conference in Baltimore—which included private-sector vendors who provide the software and systems that allow CIOs to run their

governments—I asked the audience of almost 400 people to respond to a deliberately provocative statement: “A fi scal crisis may be a terrible opportunity to waste, but pretty much that’s what we’re doing.”

To my surprise, 62 percent of the audience, who voted using electronic gadgets, agreed with that proposition, and 32 percent—less than one-third—disagreed. I thought the results would be closer.

If you believe, as I do, that the Great Recession will have lasting eff ects on how governments from Washington to the smallest towns and counties must govern in the future, then we need to face some realities.

A couple of months ago, former President Bill Clinton made some telling points at a conference on the nation’s debt crisis. The gist of it was: We’ve got serious delivery system problems. In health care, we have no better outcomes even though we’re

spending more than other advanced countries. In 2009—a horrible economic year—we spent 17 percent of our gross national product on health care while health industry profi ts were up 56 percent. Our education system is deeply fl awed, again with more money being spent to produce mediocre results. We can’t depend on discretionary spending because the future never has the imperative compared to the present. America must get back in the business of our future. We can’t do it if health care continues mortgaging the future, or when foreign investors are covering almost half our debt. We won’t suc-ceed unless we do more to create jobs and reform health care and other service delivery systems.

In other words, we need to start seeing more bangs for our bucks.

It’s hard to imagine making much progress in improving those delivery systems with our exist-ing intergovernmental structure, fragmented and siloed as it is. With the federal government now paying an increasing share of the tab for state and local programs (30 percent and rising), the Obama administration is gently demanding a greater say in who receives federal funding (probably regions instead of states) and how it’s

spent. The goal is a greater degree of uniformity, with policy formed, top to bottom, around more uniform national goals.

“This is an administration that doesn’t take the states and locals as it fi nds them. It has an agenda,” Paul Posner, a federal-ism expert and director of the Public Administration Program at George Mason University, recently told the National Journal. “I can see this administration pursuing additional ways to put money down in the state and local sector but tying it to strong national goals. It’s going to have to be a twofer.”

In other words, Washington, D.C., likely will be less willing to pay for state and local initiatives that earn governors and mayors gold stars unless they address broad federal objectives. And the old adage that “he who pays the piper calls the tune” is operative—at least during this administration. In at least half the states, this may be a bitter pill to swallow. Already, more than 30 states are pursuing various eff orts to block key elements of the newly passed health-care reform law; 20 of them have fi led suit in federal court challenging its constitutionality.

The best way to restore more balance between Washington and the states and localities would be to return to some fi scal

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AT ISSUE: Student Privacy

balance. But even if we do things right and truly take advantage of the opportu-nity the crisis presents, it will be a long slog. Some taxes have been increased and more likely will be, particularly on alcohol, cigarettes, sugary soda pop and candy. Tolls are being raised or insti-tuted. In half the states, gambling is being allowed or expanded. And spending is being reduced, particularly in areas like prisons, parks and pension plans, which was once considered taboo.

Finally many state and local lead-ers are looking for opportunities to be seized in how government is adminis-tered. Local leaders in particular are trying to determine how to change gov-ernance, not government—how to work more collaboratively across boundaries with nonprofi ts and the business com-munity to meet common goals, rooted in the proposition that government cannot do it all.

Perhaps one recent event best exem-plifi es what’s going on. In late April, New York City Mayor Michael Bloom-berg appointed Stephen Goldsmith as the city’s deputy mayor of operations. Goldsmith is best known as Indianapo-lis’ fi scally conservative former mayor who was willing to think the unthink-able in running his city, requiring public agencies to compete against private fi rms for contracts to do city work. Often the unions won and lowered costs by thin-ning management ranks. The effi ciencies were signifi cant.

In New York City, where unions are unlikely to be so compliant, the com-petition strategy probably will be much tougher. And the truth is that privati-zation eff orts in general have, at best, a spotty record across the country.

But Bloomberg, facing close to a $5 billion budget shortfall next year, is short of options. There is no alternative to reducing costs; it will depend only on how it is accomplished. You can call what Bloomberg is doing grasping at straws or grabbing an opportunity. Only time will tell. G


By Tina Trenkner

Up in Arms A new Maryland law prohibits schools from sending

test scores to military recruiters. It might protect

student privacy, but prevent career discovery.

High school is full of state profi ciency exams and college boards such as the PSAT, SAT and ACT. But these tests aren’t generating the kind of controversy that a Department of Defense-sponsored test is. That test’s scores, along with other student data, can be released to the military, which spurred Maryland lawmakers to enact the nation’s fi rst state law prohibiting schools from releasing test scores to military recruiters.

About 12,000 high schools across the country offer the Armed Services Vocational Aptitude Battery (ASVAB) exam, a test that evaluates math, reading, science and technical skills. Besides determining a student’s strengths and weaknesses in these areas, the test also assesses a student’s eligibility for a military career. Schools can choose one of eight options regarding the release of test scores to recruiters. Maryland’s law, in effect this month, requires public schools to choose “Option 8,” prohibiting schools from releasing student scores. Students who want to release their ASVAB scores can do so individually.

The law stems from concerns that ASVAB scores for underage students were being sent without parental consent. A provision in the No Child Left Behind Act of 2001 allows recruiters to request the names, addresses and telephone numbers of secondary school students. But ASVAB data includes more personal information about a student, like their strengths and weaknesses. The Family Educational Rights and Privacy Act does not apply to ASVAB data since the test and scoring is done by the Department of Defense. Hawaii is the only other state where all schools select Option 8, a policy the Hawaii Department of Education adopted in 2009.

Supporters of Maryland’s legislation—similar legislation in California was vetoed in 2008—are starting to mobilize, planning conference calls to see if they can replicate similar legislation in their state, says Pat Elder, teacher and co-founder of the Maryland Coalition to Protect Student Privacy. The Defense Department doesn’t have an offi cial position on such legislation, but there is concern that students might miss out on a potential career. “An important part of any career exploration process is the ability to talk about career opportunities with potential employers—including military recruiters,” says department spokes-woman Eileen Lainez.

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By Jessica B. Mulholland

Conference Room CheckupIn-house clinics help government reduce the cost of health benefi t claims.

In 2008, health spending in the country topped $2.3 trillion, up 4.4 percent from the previous year. Those same cost increases hit state and local governments, and are expected to keep grow-ing—an average of 2 percent per year until 2035, according to

the U.S. Government Accountability Offi ce. Take, for instance, Lakeland, Fla., a city of more than 94,000 located in the midsec-tion of the state, which saw its worker health claims rise 6 percent in 2005 and a whopping 37 percent in 2006, according to Director of Risk Management Karen Lukhaub.

Not surprisingly, the city is looking for ways to cut health-care expenses for its workers. What is surprising is that the city found a way to save $1.1 million in health claims in just one year. How did Lakeland do it? By opening an in-house “preventive medicine” wellness clinic for city workers in August 2007. Since its launch, city work force participation has grown from 67 percent to about 87 percent. “We really haven’t even seen the full potential of the clinic,” Lukhaub says, “because we’re just getting started.”

Nearly three years ago, Lakeland city offi cials transformed its civil service conference room by dividing it into four indi-vidual rooms with a separate small hallway and waiting area. At the Healthstat Clinic on North Lake Parker Avenue, employees can receive basic medical services at no cost, an idea born after Lukhaub and then-benefi ts broker Jim Powell watched the city’s health insurance costs continue to escalate.

Since then, Charlotte County Public Schools (CCPS) in Port Char-lotte, Fla., also created a clinic, which opened Jan. 27, and many more local government agencies are considering the same. The reason is simple: Clinics may cost money in the beginning, but they save more as time goes on by having healthier employees, Lukhaub explains.

To create its clinic, the CCPS in January converted unused classrooms and labs in its technical school. It pays approximately $600,000 annually to Healthstat, which provides a nurse practi-tioner, a receptionist, an offi ce assistant who does lab work and an overseeing doctor who is not based on site.

The CCPS pays for this program through part of the monthly premium charged to each employee, says Carrie Klum, the CCPS’ manager of HR and employee benefi ts. “I would say last spring is when we came to the idea that we could do this,” Klum says of contracting with Healthstat. “So it went pretty fast.”

Lakeland also contracts with Healthstat, which has approxi-mately 300 clinics nationwide, serving about 100 clients, 15 of which are public-sector entities. Healthstat Chief Financial Offi cerand Executive Vice President Susan Kinzler says these clinics are catching on quickly in the public sector—the majority of Health-stat’s 15 public-sector clients came on board within the past 24 months for a few reasons. First and foremost is the cost savings.

“After the fi rst 18 months, they save $1 for every $1 they spend on the program, and from that point on, the savings begin to mount,” she says. “So by the end of the second and third year, their health-care costs are going down by about $2 for every $1 they’re spending for the clinic. And by the end of the third year, their costs are going down by $3 for every $1 they spend in the clinic.”

Sarasota County, the city of Sarasota and the Manatee County School District in Florida are considering opening clinics, and state offi cials plan to open more clinics in Englewood and Punta Gorda.

“The public sector was slow, but it’s now starting to pick up,” Kinzler says. “It’s growing faster than the private sector, I think because this is positively impacting escalating health-care costs, saving them money. So they are saying, ‘This is something we really need to think about,’ because unfortunately, many of the other cost-saving components that they’ve tried just haven’t been sustainable long term.” G


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SCHOOL DISTRICTSare facing numerous challenges today, including budget cuts and pressure to deploy new technologies that keep students engaged in learning. Using desktop virtualization, a large school district in Ohio is answering these challenges, deploy-ing a bold solution on a larger scale than per-haps any other school district in the country.

A massive desktop virtualization project will be completed in August 2010 at Columbus City Schools (CCS). CCS is replacing approxi-mately 19,000 computers with thin-client work-stations. The district is also repurposing around 3,000 computers, converting their operating systems and other features for use as thin clients. Virtualization of these 22,000 desktops will save significant money for the district, sim-plify maintenance and support, and give users a better experience. And, there are a lot of users — 53,000 students and 7,400 employees.

Desktop virtualization takes software, operating systems and data normally found on desktop computers and places them on central servers. From there, the resources can be distributed enterprise-wide to thin-client computers.

CCS could be leading the way for other school districts by moving to virtualized

desktops on such a huge scale. It’s certainly a challenging proposition. And it’s made more difficult by the district’s heavy use of leading-edge, yet demanding applications, such as streaming video and interactive educational tools. The sheer number of applications the district uses — more than 1,500 — adds another level of difficulty.

“The other big challenge was the desktop, and the delivery of all the video that we must provide daily,” said Rod Houpe, CIO of Columbus City Schools. Interactive math and reading, virtual reality learning games and other educational applications are much more demanding than even a typical business requires.

Thanks to advances in desktop virtualiza-tion, the technology can now provide these elaborate services to 22,000 computers. “We’d looked at the strategy for several years in a row,” said Michele VanDyke, IT operations manager for CCS. “But the technology wasn’t mature enough to handle this until now.”

The $8.3 million project — which also includes server virtualization in data centers and migration to a new operating system — was funded by a tax levy. “The funding was probably the biggest challenge,” said Houpe. “This was a significant piece of this.

ADVERTISING SUPPLEMENT

Server and desktop virtualization cut costs and raise efficiency in a large, urban school district.

NEW DIRECTION

COLUMBUS CITY SCHOOLS• Largest school district in Ohio• 53,000 students• 7,400 employees• 220 square miles• 127 schools• 72.6 percent of students receive

free/reduced lunch• 87 different languages spoken• 4,118 English as a second

language students• 8,354 special needs students• 11,000 gifted & talented students

Challenges • Replace 19,000 aging computers

in a cost-effective way that also improves performance.

• Find a delivery system capable of handling more than 1,500 applications — including very demanding applica-tions, such as streaming video and interactive educational tools.

Solution • Virtualized desktops for a 21 percent

cost savings, better performance and improved user experience.

• Virtualized servers to improve data centers and lower costs.

• A new virtualized environment that’s easier to manage and support.

Case Study | Insight

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How do you acquire the funds to facilitate this process? So our voters were key.” The funds covered servers, software, licensing and desktop hardware.

The Board of Education invited community leaders to constitute a millage committee to recommend a levy millage amount for the November 2008 election. The creation of an acceptable millage amount would pro-vide the necessary funding to update many needed items, including technology. In 2007, the Board of Education passed a resolution to place a 7.85 mill levy and 1.13 mill bond issue on the November 2008 ballot.

Voters passed the levy and bond issue, which provided the funds to upgrade technology

challenges, CCS will finish the project six months early. The technology upgrade is assisting CCS in achieving its long-range goals of achieving a 90 percent graduation rate and sustaining a system of excellent schools.

NUMEROUS VIRTUALIZATION BENEFITS

CCS is committed to building a system of excellent schools. The district has noticed several key factors affecting students after graduation: continued earnings decline for Americans lacking 21st-century skills, more aggressive competition for jobs, more auton-omous workplaces and outsourcing. The district believes three chief skills are required today: expert thinking, problem-solving and complex communication.

The vision of Superintendent Gene Harris, Ph.D., is that all students will be successful. To that end, she’s created the CCS 100% student success model, which includes the infusion of technology throughout the curriculum and business functions of the district.

Technology solution provider Insight played a large role in helping the district realize its vision for desktop virtualization. The company helped design the virtualiza-tion solution and aided in the hardware acquisition. Insight is also the managed services provider, and is delivering, placing

This e.Republic custom publication is sponsored by Insight. © 2010 e.Republic Inc. All rights reserved. Printed in the U.S.A.

and configuring the new machines at the district’s sites.

Desktop virtualization allows the district to standardize hardware platforms and software content in all schools. The new thin-client computers are less expensive and need less support, so total cost of ownership is lower than with traditional computers. The district will save $145.29 per computer, including software, licenses and installation. That’s a savings of 21.2 percent compared to traditional machines.

The thin-client workstations are new, com-pact and faster than the computers they’re replacing. They have no moving parts, such as disk drives or fans, and emit very little heat. Thus, there will be fewer repairs and less downtime. Even disposal costs are lower because there are no hard drives. However, disposal of the new equipment won’t be an issue for some time because the thin clients don’t need to be replaced as often as tradi-tional, more complex desktop computers.

Users get a faster, better experience with the virtualized desktops, and CCS gains numerous administrative advantages by hav-ing applications and information in a central location. All computers will have the same images, making them easier to update, sup-port and maintain. The machines can be managed remotely, so desk-side visits by support staff will be greatly reduced. The thin clients also can be powered on and off remotely, according to schedules, for improved power conservation. Security is inherently better too, since software, data and other elements reside in a secure data center and not on the desktop.

Insight is also helping with “reworking” of old computers either by salvaging “good” parts or “re-assigning” PCs within the district, minimizing the disposal costs for the district.

STREAMLINED ENVIRONMENTInsight began helping the district improve

its data center five years ago with many additional improvements over the years. In 2009, the district virtualized its three data cen-ters, making them more able to respond to

increasingly demanding software needs. The district wanted to reduce server sprawl in its main data center, while developing a stronger business continuity infrastructure.

CCS now has a streamlined server environ-ment that’s easier to manage, with 113 virtual servers on 15 physical servers. It had close to 250 servers before virtualization. Power and cooling needs have been greatly reduced, operating expenses are lower, and the district now has failover capabilities between its three data centers.

IMPROVEMENTS ALL AROUNDWhile the new systems mean changing some

habits for teachers and students, it’s clearly for the best. “The students love the technology,” Houpe said. “They’re excited to walk in the door, and they say, ‘Thank you for our technology and for investing in us.’” Teachers appreciate the students’ enthusiasm, as the ability to provide engaging applications keeps them interested in their lessons.

Desktop virtualization also gives the district a better handle on how its computers are used. “We will have an opportunity to look at all the software offerings that we have, for the first time,” said VanDyke. “We can really monitor the uses. We can look at the growth potential for some of those. Being virtualized, we can look at the whole picture now, where we couldn’t before.”

CCS pulled it all together with the help of a good partner. “Anytime you build an initiative of this magnitude, you need to have a part-nership,” Houpe said. “The relationship with Insight and their ability to provide service for us has been very good.” Insight worked closely with the school district to overcome the tough challenges inherent in such a big project.

Insight continues to seamlessly help CCS achieve its goals. “They are our face when they go out to service, support and imple-ment this technology,” Houpe said. “Our customer base doesn’t know them as Insight. They know them as the technology folks within Columbus City Schools. That’s fantas-tic. That’s how it should be.”

For more information on desktop virtualization or other technology solutions for K-12, please contact your Insight Public Sector education account team at [email protected] or visit us online at www.ips.insight.com/K12solutions Insight is proud to offer our entire line of hardware, software and services to schools and governments nationwide under our U.S. Communities contract for Technology Products, Services and Solutions. Learn more at www.ips.insight.com/uscommunities

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throughout the district. And despite all the

By Linda Baker

Testing Urban TurbinesReno, Nev., plans to study local wind patterns, assessing its power in the region.

Politics+Policy | GREEN GOVERNMENT


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Renewable energy in the form of wind farms with large wind turbines are becoming increasingly prevalent nationwide. But over the past few years, the market for small wind turbines also has grown—by 15 percent

in 2009, an increase of about 10,000 new units, according to the American Wind Energy Association. States and the federal government helped fuel their sale by off ering renewable energy incentives, including a 30 percent federal tax credit for alterna-tive energy investments.

Small-scale turbines provide 100 kilowatts of energy or less (enough to power, on average, 12-volt appliances), are pointed by a simple wind vane, and can be mounted on a rooftop much like a satellite TV dish. But unlike solar energy, wind can be fi ckle, making it diffi cult to predict exactly how much power a given turbine will generate.

This is especially true in cities, where buildings and trees cause wind turbulence. So to help people navigate the com-plexities of urban wind, Reno, Nev., recently partnered with the U.S. Department of Energy (DOE) in a study focused on local wind patterns. The project, funded by $550,000 in DOE wind and stimulus grants, will install nine small turbines in various locations around the city. Project staff will collect data on wind speed, wind direction and electrical output, and then create a 3-D map showing citizens what kind of wind energy to expect for their residence or business.

“We’re trying to help the average person understand what that turbine is doing and if that wind resource is good or bad,” says Andy Solberg, a mechanical engineer with CH2M Hill, an engineering and consulting fi rm that’s using computational fl uid dynamics software to help develop the 3-D map.

Although most turbine manufacturers provide estimates of electricity generation for a given product, Solberg says those estimates are based on steady wind speeds. When those speeds dissipate—which often happens in the real world—the turbine generates only a “tiny fraction of what it’s rated,” Solberg says.

A study commissioned by the Massachusetts Renewable Energy Trust showed just how fi ckle wind energy can be. The analysis, which reviewed electricity output from 21 small wind turbines placed throughout the state, showed that the manu-facturers’ estimate of power generation was about three times higher than the turbines’ actual performance.

Known for its afternoon “zephyr” winds coming from the Sierras, Reno provides robust consumer incentives for wind installation, including streamlined permitting and $3- and $4-per-watt rebates from the local utility, NV Energy, depending on whether the customer is in the public or private sector. With the help of the 3-D map, which will be available online, residents and business owners will soon see if those incentives are worth the upfront investment. By simply plugging in an address, they’ll receive guidelines on likely wind speed and ideal turbine height and placement.

In 2007, CH2M Hill helped develop a similar mapping pro-gram for solar energy in San Francisco—a project that will soon include a wind power component. Such tools are becoming invaluable as cities weigh the relative benefi ts of diff erent green energy sources. “Everyone thinks wind is a good resource here,” says Jason Geddes, Reno’s environmental services coordinator. “But we don’t have the data to prove it.” G




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Some cities, of course, always have been sensitive to the sales tax issue. Over the past 20 years, I’ve read maybe a hun-dred “retail leakage” studies prepared by

various consultants for diff erent commu-nities. All of them said there’s a “leakage” problem—that their local residents were spending their dollars elsewhere and the community should try to recapture that money. Not one of them ever said that the community was importing sales tax dollars from elsewhere.

Almost without exception, the solution cities adopted was to attract more retail-ers—often with deep subsidies. In some cases, property tax increment fi nancing was used to subsidize auto dealerships and shopping malls, with the hope of gen-erating a sales-tax payoff . In other cases, cities simply split the sales tax increases with the retailers.

The recent recession has rendered these models outdated, at least for the moment. No increment in property taxes has occurred because property values have been falling, and there has been no increase in sales tax to share.

Leaky TaxesShort-term gimmicks to boost local sales tax revenue aren’t working anymore.

Everybody should buy local. It’s good for local businesses, it increases local tax revenue, and it makes people feel good about

their community.But do “buy local” campaigns work?

They’ve certainly been in vogue during the recession, especially as sales of big-ticket, big-tax items such as automobiles have been on the decline. Some cities have simply tried to raise awareness. If you shop in the next town, you’re paying the salaries of their police offi cers, not ours. Others have taken more aggressive steps, giving gift cards or rebates for local car purchases. Yet there’s one common theme: As retail sales has gone into steep decline in the last few years, jurisdictions nationwide have realized that they can’t take sales tax for granted.

It’s not surprising that the locals have gotten desperate about sales tax. Over the past few decades, cities and states have become more dependent on the consumer

economy to survive. Beginning with Cali-fornia’s passage of Proposition 13 more than 30 years ago, property tax—always an extremely stable source of revenue—fell into disfavor. Meanwhile, sales tax—a regressive tax but more painless to pay and hence less unpopular—has become the preferred substitute. It’s surely no coincidence that as reliance on property tax has dropped in California, the sales tax rate has risen. Up from 6 percent in 1990, it’s now 8.25 percent statewide, with local add-ons that can push it above 10 percent.

Yet consumer spending is volatile, and that means sales tax revenue fl uctuates a lot. In the early part of the 2000s, that was good for government, because spend-ing was through the roof—fueled in part by easy access to credit cards and credit lines. Now it’s bad for government because spending has fallen through the fl oor. It appears to be leveling off now, but at a far lower level than was observed at the peak.

By William Fulton

Politics+Policy | ECONOMIC ENGINES

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July 2010 | GOVERNING

It may lack the romance and history of the St. Charles streetcars in New Orleans, but Seattle’s modest streetcar line in the South Lake Union district has given a once downtrodden city neighborhood instant credibility as a place to live and work. The new line links South Lake Union to the city’s growing light-rail system, which in turn connects to downtown Seattle shopping areas, commuter rail and the airport. The 2.6-mile loop with single cars trundling along at city traffi c speeds might just be the future of streetcars in America.

While many single streetcar lines play to the tourist crowds and trolley fans, numerous cities seriously are considering and planning legitimate streetcar systems as part of their mass transit network. In addition to Seattle, which plans to add a second line, Cincinnati, Denver, Houston, Salt Lake City and Char-lotte, N.C., are exploring adding streetcar lines to existing transit systems. Tacoma, Wash., operates a short modern line; Portland, Ore., has a popular service in its downtown; and Washington, D.C., is constructing a streetcar line in its Anacostia neighborhood.

Streetcars diff er from their light-rail cousins in several ways. They operate in city traffi c rather than on their own right of way. They typically are a single car that’s powered by overhead electric lines, runs at local speed limits, makes frequent stops and travels for short distances—often just 1 to 3 miles. Light-rail systems, however, run multi-car train sets, travel at higher speeds, stop less frequently and often are on lines that extend well into the suburbs.

Critics contend that cities would get far more bang for their buck by investing in bus systems. But streetcar advocates emphasize their ability to connect neighbor-hoods, increase accessibility and spur economic development, as Seattle is discov-ering. Most of all, though, they stress their low cost: approximately $25 million per mile to build versus anywhere from $50 million to $75 million per mile for light rail, depending on whether the track is elevated or on the surface.

Speaking at an American Public Transportation Association (APTA) conference, Transportation Planner Lyndon Henry of the Capital Metropolitan Transportation Authority in Austin, Texas, said streetcars “seem to off er a substantial array of poten-tial benefi ts which, combined with lower costs and an ability to attract signifi cant ridership, suggests that appropriate projects may be cost-eff ective.” While ridership was down on all major forms of public transit in 2009—from an all-time high in 2008—streetcars were the one mode of transportation to gain riders, according to the APTA.

For now, most people are likely to ride a streetcar that is part of a downtown loop, often running vintage trolleys that suggest transit from a bygone era. San Francisco’s use of classic streetcars from around the world on its Embarcadero loop is probably the best-known example. But even tourist systems in places like Memphis, Tenn.; Tampa, Fla.; and Little Rock, Ark., are looking for ways to expand from a novelty act into something more cohesive in terms of transportation. Whether streetcars are the new form of cost-eff ective transit to emerge from the recession remains to be seen, just don’t be surprised by the sound of a streetcar bell the next time you’re downtown. G


Nevertheless, some localities continue to subsidize their big retailers to keep them afl oat. In May, the Long Beach, Calif., City Council approved a loan to legendary Ford dealer Cal Worthington of $600,000 to keep him going—and stay in town. Other cities may face similarly diffi cult choices as the auto manufactur-ing industry contracts.

Other localities have taken a diff er-ent but equally aggressive approach. Some cities have simply set aside a slug of money to give rebates to people who buy—in their town—big-ticket items like cars. Others have worked with their retailers to off er gift cards: Buy a car, get a gift card worth several hundred dollars for other retailers in town.

In general, these buy local cam-paigns—or as one wag has called them, “bribe local” campaigns—have had the same eff ect as the Obama administration’s Cash For Clunkers program: A brief boom in sales, followed by a crash back to previ-ous levels when the program ended.

In the end, a buy local campaign that’s truly eff ective is a sustained eff ort, not one based on gimmicks. This is hard to cali-brate with retail thinking, since retailers are always focused, understandably, on the short term and often use gimmicks to boost sales. But all the evidence points to the idea that people will stop leaving town to buy things when two things happen: fi rst, when the stuff they want to buy is available in their town; and second, when they realize that there’s a relationship between where they buy stuff and how many police offi cers and fi refi ghters their city can aff ord.

With the current retail market in fl ux, it’s a little hard to know just exactly what stuff people are going to want to buy in the future (will they be buying cars or not). Therefore it is hard to know which retail-ers to go after. But the other half of it is easy: Rather than using short-term gim-micks, cities should use long-term pub-lic education eff orts to ensure that their residents know where their sales tax dol-lars go—even when it means pointing to another city. G


By Tod Newcombe

| URBAN NOTEBOOK

A Desire for More Streetcars

More than half a century after the streetcar’s heyday, this transportation mode is poised to make a comeback.

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Richard Rodriguez washes his hands a lot. That’s because Rodriguez, who has run the Chicago Transit Authority (CTA) since March 2009, has earned a reputation for picking up trash whenever he rides a bus or rail car in the city. Waiting on a subway platform or climbing the stairs to catch an “L” train, Rodriguez is constantly darting over to snatch the candy wrappers, scraps of paper and other detritus scattered on the station fl oor.

He’s recently institutionalized his habit—senior CTA staff ers now are required to spend a couple of hours each month on litter patrol at a bus terminal. And they seem to be picking up Rodriguez’s crusade, grabbing bits of trash and stuffi ng them into their pockets or purses. “I just can’t stand garbage in our system,” Rodriguez says as he lobs a wad of paper into a nearby trash can. “I always tell my employees, ‘Don’t you think if the president of the CTA can pick up trash, you can too?’”

Rodriguez may be focused on the details, but he’s simultaneously balancing many much bigger issues—and they’re a lot thornier than errant candy wrappers. The CTA is emerging from the worst bud-get crisis of its 60-year history. Massive gaps in funding have forced sweeping layoff s and service reductions. In addition, the system—some

‘L’CAPITAN

Chicago transit chief Richard Rodriguez combats a monumental fi scal crisis.

By Zach PattonPhotographs by David Kidd



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parts of which date to the 1890s—needs billions of dollars of infrastructure repairs and upgrades.

Chicago’s challenges aren’t unique. Transit systems nationwide face severe budget shortfalls and a massive backlog of much-needed repairs. At the same time, they’re straining to serve a growing number of riders: Despite a recession-related dip in 2009, ridership across the country remains at near record-high levels. Aging “legacy” systems in Chicago, New York, Boston and Philadelphia, to name a few, contribute to an estimated $78 billion national backlog in transit maintenance needs, according to the Federal Transit Administration. Even newer systems in Atlanta and Washington, D.C., suff er from a funding system their managers say is broken and unsustainable. According to a survey from the American

Public Transportation Association, more than 80 percent of the nation’s transit systems have raised fares or cut service in the past year.

“There’s no question that fi nancial problems top the list of concerns for all these city transit agencies,” says Robert Puentes, a national transportation expert and a senior fellow in the Brookings Insti-tution’s Metropolitan Policy Program. Puentes says a raft of diff erent problems have converged to create the current cri-sis: deteriorating infrastructures; popula-tion growth; an aging population, which adds more pressures to transit; and fund-ing systems that rely heavily on revenues from declining gas taxes, and volatile sales and property taxes. “There’s almost nobody who’s immune from these issues.”

But Chicago’s transit system—the coun-try’s second largest with an average 1.8 mil-lion riders every weekday—faces some of the nation’s most dire challenges. It has more than $7 billion in unfunded main-tenance needs. On parts of the system, for example, trains engineered to speed along at 70 mph hour now must slow to a 15 mph crawl because the fragile rails can’t handle faster speeds. “They’re going at the speed of a horse and buggy because the rails are literally eroding and coming loose from the ties,” says Ben Forman, research director for MassINC, a nonpartisan, Boston-based

public policy think tank. “When transit breaks down as it has in Chicago, cities lose a big part of their core.”

Puentes is more blunt about the Windy City’s problems: “The system in Chicago needs to be rebuilt almost from scratch.”

The man charged with res-cuing the CTA—or at least helping steer it through the current fi scal day of reckon-

ing—is Rodriguez. He’s something of an unlikely savior: At 39, he’s never before worked in a mass transit agency. Over the past decade, however, he’s skyrock-eted through the Chicago government management ranks, establishing himself in the city—and more importantly, in the mind of Mayor Richard Daley—as a quintessential fi x-it man.

A native Chicagoan, Rodriguez was born and raised in the Humboldt Park neighborhood on the city’s west side. His father immigrated from Puerto Rico; his mother, from Ecaudor. (The couple met on a CTA bus in the late 1950s.) Rodriguez stayed in Chicago through college and law school. After brief stints in the Offi ce of the Attorney General of Guam and with the Federal Emergency Management Agency in the late 1990s, he returned to his hometown to start a family—and begin his rise through Chicago city government.

Chicago’s buses and rail cars move 1.8 million people every weekday, but the system, some of which dates to the 1890s, faces a $7 billion maintenance backlog.



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Over the following decade, Rodri-guez held numerous positions in diff erent municipal agencies, including oversee-ing a strategic-sourcing initiative for the city’s public schools, and helping to manage the demolition and transforma-tion of Chicago’s infamous public-housing high rises, including Cabrini-Green and the Robert Taylor Homes. Along the way, Rodriguez became one of Daley’s go-to guys for managing tough projects. The mayor appointed him as execu-tive director the city’s Department of Construction and Permits, where he whittled the residential permitting pro-cess from six months down to six weeks. Daley moved him to the Department of Buildings, where Rodriguez cleaned up an agency long riddled with corruption. He then became commissioner of the city’s Department of Aviation, where he oversaw the opening of an expansion at O’Hare International Airport.

Overall, Rodriguez held 10 diff erent positions in 10 years. But he downplays his reputation as a fi xer. “I see it as kind of corporate employment, just like any private corporation,” he says. “I’m a part of the city of Chicago, and I like going wherever the mayor needs me to go and being able to solve a crisis.”

The crisis he faces at the CTA certainly is the biggest of his career—and by far the worst in Chicago’s transportation history. Upon walking into his offi ce last March, Rodriguez was informed that the state cut $58 million from the CTA’s operat-ing budget. Then in May, the agency’s funds were slashed by another $155 mil-lion—and by another $35 million in July. Rodriguez aggressively sought ways to stave off service cuts: He restructured departments and required furloughs for nonunion employees. He even cut his own salary by 10 percent.

As the CTA composed its 2010 budget last fall, however, it was clear the internal belt-tightening could only go so far. Rodri-guez proposed cuts to rail service and bus routes, pulling 287 buses off the roads and laying off 1,100 CTA workers, including 1,000 union employees.

As expected, the layoff plans led to a clash with labor leaders. Rodriguez asked union workers to sacrifi ce vacation days or take unpaid furloughs. “The unions

were not about to give concessions with-out getting something in return,” says Robert Kelly, president of Amalgamated Transit Union Local 308, which repre-sents the city’s rail workers. “Negotiating with him was strictly a one-way street. It’s his way or there’s no other way.”

Stuck at an impasse, the service cuts occurred in February. For his part, Rodri-guez says he gave the unions “a litany of things and said, ‘Pick and choose, what-ever your membership feels they can actu-ally contribute,’” he says. “But the unions would have nothing of it.”

To others, Rodriguez’s management of the layoff s and service cuts was exem-plary. “I hate the fact that we had to cut

service,” says John Paquet, the CTA vice president for planning and develop-ment. “But Rich was surgical and stra-tegic about the whole process. We cut service on every route in the system, but we did it by looking at the data, route by route, at every half-hour increment throughout the day. When we were talking through it, Rich constantly wanted to know who would be aff ected by each change: If we cut this route to this neighborhood, how will that aff ect people on this block?”

Rodriguez enters an “L” station in Chicago’s downtown Loop, on his way to announce a new station entrance opening at a

Chinatown stop (a project funded with some of the $241 million in federal stimu-lus dollars awarded to the CTA, without which the 2009 fi scal crisis would have been even worse). As Rodriguez steps onto the platform, he’s stopped by a man who’s certain he recognizes Rodriguez from somewhere. “Have I seen you on TV?” Maybe, Rodriguez says. “Oh, I know! You’re the CTA guy!”

When he rides the system, Rodriguez is recognized constantly—by train opera-tors, bus drivers, janitors and citizens.

The labor union clash and Rodriguez’s frequent public pleas for more transit funding have made him a very familiar face. He also happens to be rather easy to pick out of a crowd, with his close-cropped beard and combed-back hair. And his natty style of dressing recalls a bygone level of formality: cuff links, monogrammed shirts and—unfailingly—a three-piece suit.

But Rodriguez’s familiarity in the city also stems from the fact that he rides the trains and buses so frequently. He

‘ L ’ C A P I T A N

John Paquet, left, says Rodriguez’s handling of employee layoffs and service reductions earlier this year was “surgical and strategic.”



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commutes by train two or three days a week. (He drives the other days so he can spend more time with his wife and their fi ve young children.) On weekends, he often loads up some of his kids to ride the train. And he randomly chooses one day a week simply to ride around on the system in a given part of the city, talking to operators in the fi eld, monitoring the

conditions of vehicles and stations. “My employees hate it,” he says, grinning. “They’re getting e-mails from me every few minutes about, ‘We need to fi x this,’ and, ‘Why can’t we clean this up?’” He pulls out his BlackBerry, which is fi lled with countless photos of graffi ti, rust and damaged garbage cans.

Rodriguez says it’s important for him and his management staff —whom he requires to ride the system at least 40 times a month—to know exactly what the CTA’s needs are, as they advocate for more funding in Washington. Fix-ing graffi ti is one thing, but Rodriguez says he’s also focused just as intently on restructuring the way transit is funded in the United States. “Looking at the other legacy systems around the country—the matter in which we’re all currently funded, the age of our infrastructure, the state of disrepair that we’re in, the lack of

investment by the federal government—it’s a national crisis.”

Rodriguez and his counterparts in other cities are pushing for a major infl ux of revenue from Washington. “If they really wanted to get us to a state of good repair, they would make a national invest-ment similar to the way there’s been an investment in high-speed rail, the way

there’s been investment in the banking industry and the automobile industry.”

He has reason to hope. As he alights from the train at the Chinatown station, Rodriguez pulls up his BlackBerry and sees news that the Federal Transit Administra-tion is seeking comment on how to better evaluate massive investments in transit projects. Looking at transit’s impact on economic development and the environ-ment would mark a decided shift in the way Washington doles out funds. Rodri-guez excitedly holds out his phone: “See? Somebody’s starting to listen. In the past, it’s all been just about the number of peo-ple you move from one place to another every day,” he says. “But mass transit has so much more value than that. We’ve got to get to a point where we recognize that.” G


Rodriguez spends one day a week riding the system, checking on the condi-tion of stations and talking with operators about what could be improved.

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In the current move away from cars that run on petroleum, David Rolf found the perfect alternative fuel: Kona coff ee.

Two years ago, as the executive director of the Hawaii Auto-mobile Dealers Association, Rolf shipped a box of Hawaii’s

indigenous coff ee to senior executives of Detroit’s embattled Big Three automakers, along with a white paper on the future of elec-tric vehicles and a letter: “Please accept some 100 percent Kona coff ee from Hawaii … we know everyone will be turning in long hours to deal with the issues surrounding $4-a-gallon gas.”

It was a plea for support as gas prices skyrocketed in the Aloha State, which gets about 90 percent of its energy from petroleum. Since then, in the face of a rickety budget, Hawaii government offi cials launched an initiative to have 70 percent of the state’s energy come from renewable sources by 2030. With that, Hawaii, the nation’s crash test dummy for crude oil spikes, zoomed to the front of the pack in the push for electric vehicles.

The electric car movement connects countries and spans decades, but in recent years, Hawaii and other state and local governments have started exploring the green car concept to cut energy costs, curb pollution and jump-start a stalling economy. Charging stations for electric vehicles already have been deployed in Michigan and sold in Boston and Chicago. Later this year, Nissan and General Motors will unveil new electric cars marketed to middle-class families—and state and local offi cials want to be ready for that fi rst surge.

“For us to create a future where we’re powering ourselves, we can’t be half-hearted about it,” says Ted Peck, energy program administrator for the Hawaii State Energy Offi ce, “so we’ve been working across our community to get people to buy into it.”

But public policy is not plug-and-play. Departments must determine price and tax incentives. Cities may need to build infrastructure and fi nd locations for charging stations. Electric grids may need to reinforce their capacity. Offi cials must create regulations, and utility companies may need to establish rates. At the same time, the technology in many ways still needs to be tested. So it’s hard to gauge whether such a massive overhaul will pay off , or if the public will even pay up.

Nevertheless, Hawaii and California are leading the charge and placing big bets on electric vehicles. Hawaii has $4 million in federal stimulus funds in the pipeline for transportation energy transformation, including $3 million for larger, complex projects and $1 million in rebates for whoever wants to purchase an elec-tric vehicle or a charger.

California’s fi rst transportation Investment Plan, adopted in 2009 by the California Energy Commission, provides about $120 million over the next seven years to stimulate green trans-portation projects. The commission plans to use $46 million for electric vehicles, public charging stations and manufactur-ing plants, and $40 million to increase the number of hydrogen fueling stations.


State and local governments are betting big that electric cars will drive

the economy in a cleaner, greener direction. But will the needed investment

in new infrastructure pay off? By Russell Nichols

State and local governments are bbetting big that electric cars will

Charging Ahead

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As these governments gear up for a major shift in the auto industry, offi cials admit that the conversion will not happen over-night. “Gasoline is the major drug that we’re addicted to,” Peck says. “It will still take 20 years to swap out the existing cars. The Stone Age didn’t end because we ran out of stones.”

With the arrival of electric vehicles, it won’t be a mat-ter of what you drive as much as it is how far you can go before your battery runs out of juice.

An effi cient gas-powered car can run 350 miles or more with 12 gallons topped off , but a battery-powered electric vehicle can only go 100 to 200 miles with a full charge. And unlike gas stations, charging stations don’t yet dot city blocks or interstate rest stops. Nobody wants to get stranded in the middle of nowhere.

As a state made up of many small islands, Hawaii negates this so-called “range anxiety.” The geographic advantages, along with the state’s high energy costs, solar-power potential and citi-zens with green on their minds, make Hawaii an ideal test bed for electric vehicles.

At the beginning of the year, the fi rst public electric car charging station in Hawaii went online. Charging station companies have full-scale networks in the works. In May, Korean electric vehicle manufacturer CT&T announced plans to establish an assembly plant in Hawaii that would make 10,000 two-seater electric vehi-cles per year. Around the same time, Nissan picked Hawaii as an early launch market for its forthcoming Leaf, a fi ve-passenger, all-electric car with a 100-mile battery range.

“You don’t have people driving hundreds of miles between cities here the way you do on the mainland,” says Darren Pai, spokesman for the Hawaiian Electric Co. “It’s a good test lab for the adoption of electric vehicles.”

The Hawaii Clean Energy Initiative calls for at least 3,000 electric vehicles in 2010 and 50,400 in 2015. By that time, offi -cials plan to have a web of some 100,000 charging stations up

and running that will be powered by renewable energy sources. Charging stations may sprout up in parking garages, lots or shop-ping centers where drivers can pull up and plug in for a quick boost. Or there may be battery-swapping stations, such as the one in Yokohama, Japan.

Regardless, most experts recommend that electric vehicle owners charge their cars at home after 7 p.m. when the grid is less stressed. That would provide an outlet for energy produced by the state’s proposed wind farms, and other ocean and geothermal energy-conversion projects.

“We don’t have any oil wells here obviously, but we have this abundant source of wind, wave and thermal energy and sunshine,” Rolf says. “If you could convert those assets into electric energy effi ciently and use that to plug your vehicles into your garage, we could keep the $2 billion that was going off shore.”

But utility offi cials must determine how to add that infrastruc-ture to the electric grid without compromising reliability, Pai says. Otherwise overloaded local power grids could be in trouble.

Too much power consumption could trip off a trans-former and cause a local blackout. “In the worst case, you can have the transformer blow up because it’s used too intensely,” according to Andy Campbell, energy

adviser to Commissioner Nancy Ryan at the California Public Utilities Commission (CPUC), based in San Francisco.

Potential grid overload is one of the key challenges for policymakers, Campbell says, especially given the expectation that electric vehicles will be adopted in concentrated clusters. In collaboration with automakers, utilities and charging station companies, the CPUC is drawing up the rules for these electric cars for the future.

One policy under examination would off er electricity at lower rates to electric vehicle owners who charge their cars at night. Charging rates in California have been in place since the


Since 2008, Oregon’s Portland General Electric has been building out infrastructure for electric vehicles through a network of charging stations in its service territory.

Multiple charging stations dot the Northern and Southern California landscape, and www.evchargermaps.com shows where they are and whether they’re currently working.

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1990s, but with the projected infl ux of electric vehicles, the rates may change to help curtail daytime demand. Pacifi c Gas and Electric Company, San Francisco’s main supplier, has report-edly started plotting “heat maps” of neighborhoods at risk of power overloads.

Charging rates, policymakers say, will vary depending on when and where the charging occurs. The commission also is looking into technologies that would allow the utility to control the times owners can plug in their cars, Campbell says, so the charging doesn’t damage the grid.

“We have to carefully think about whether those proposals make sense,” he says. “Consumers are not going to want to give up control in how they charge their vehicle, but maybe the utility can off er a fi nancial incentive.”

President Barack Obama wants 1 million electric vehicles and plug-in hybrids on American roadways by 2015. To help prepare the public, the U.S. Department of Energy announced last fall a $99.8 million grant to launch a comprehensive electric vehicle and charging station infrastructure trial.

In the Electric Vehicle Project, which launched in October 2009, participating drivers will test up to 4,700 zero-emission electric vehicles. And starting this summer, 11,210 charging sys-tems will be deployed in strategic markets in fi ve states: Ari-zona, California, Oregon, Tennessee and Washington. From the 36-month-long project, government offi cials and energy compa-nies hope to learn how to successfully deploy a network of charg-ing stations down the road.

But local offi cials, some experts say, can’t aff ord to wait for test results. With the fi rst mass-market electric cars cresting over the horizon, some governments already are moving forward with charging station infrastructure. In 2008, the mayors from San Francisco, Oakland and San Jose pledged to make the metropoli-tan area America’s electric car capital. Since then, San Francisco has installed charging stations for plug-in hybrids outside of City

Hall. This year, the city adopted building codes requiring that all new structures be wired for electric car chargers.

However, Terry Tamminen, former secretary of the California Environmental Protection Agency, believes this rapid acceleration is steering the electric car movement in the wrong direction.

Tamminen, who advises California Gov. Arnold Schwar-zenegger on energy and environment matters, doesn’t think average consumers are ready for battery-powered electric cars. His reasons include: the high costs of new batteries, disposal issues and the long hours it takes to charge a car with a standard 110-volt outlet. Not to mention the big money cities will need to fork over to build all the charging stations.

He would rather see battery-powered electric cars as a net-work of local fl eets fi rst. That would allow for central charging, he says, and offi cials could estimate the amount of driving for vehicles such as delivery vans.

“Imagine if several cities did that, you’d have the exact same vehicle in several cities,” Tamminen says. “They could mass produce it and bring the cost down and get real-world experience. The next thing you know, it’s something that could be rolled out more cost-eff ectively for consumers.”

Other critics question whether government should stimulate demand for electric cars by building charging stations. The greater the need for elec-tricity to fuel the cars, the greater the need for power generation plants, the most common of which run on carbon-emitting coal.

But perhaps his biggest red fl ag comes from recent history.

A few years ago, the same momen-tum built around corn-based ethanol as a green alternative to gasoline, he said, but ethanol production drove corn prices through the roof and stran-gled the food supply.

“People literally couldn’t get torti-llas in Mexico City,” Tamminen says. “That’s a cautionary tale about rushing into one technology over another.”

And in the end, processing ethanol from corn had no environmental ben-efi ts, he adds, and was actually “just as bad as refi ning a gallon of gasoline.”

“We have chased after phantoms in the past because we really didn’t think things through upfront,” he says. “Battery electric cars are in that same category. No question, they will meet some needs, but they’re just not ready for prime time for the average consumer.” G



In mid-February, San Francisco Mayor Gavin Newsom announced the installation of three electric vehicle charging stations in front of City Hall.

The EV Charger Finder iPhone application shows charging station locations, and can give turn-by-turn directions from the driver’s current location to his charging station of choice.

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To get a sense of the information technology (IT) chal-lenges states face under the new health-care law, take a quick peek at Jonah Frohlich’s schedule. On a recent day, California’s deputy secretary for health IT started

the morning by meeting with the leaders of 12 departments from the state’s Health and Human Services Agency. The agenda: the implications of a health information exchange (HIE) on the agen-cy’s business processes. Next up, a get-together with offi cials from the California Public Employees’ Retirement System—the pen-sion fund is a large employer—to discuss the role their purchases play in supporting e-health initiatives. Then it was on to a briefi ng on Medi-Cal’s electronic health record (EHR) incentives, which was followed by a meeting with academics at a University of Cali-fornia school of informatics. The subject: an anticipated demand for skilled health IT labor. Back at his offi ce, Frohlich was briefed on a broadband infrastructure the California Telehealth Network is developing, and he then met with a local HIE organization.

The meetings upon meetings aren’t what wear on Frohlich. The hard part, he says, “is coordinating this grand scheme.” Every jurisdiction—from the smallest town to the federal government—plays a role in creating a health IT system that can bring effi ciency and modernization to the health-care system. “The alignment is tough,” Frohlich admits.

Lining Up for Health ITThe huge challenges of

implementing a $30 billion

program are just beginning

to hit the states.


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Health IT wasn’t supposed to require this much govern-ment intervention. In 2004, when President George W. Bush set 2014 as the goal for widespread use of EHRs, his administration saw development of the

infrastructure to transmit health data as something the private sector could handle—with a little guidance and incentives from the states. That model was foundering when in 2009, President Barack Obama signed the American Recovery and Reinvest-ment Act, a portion of which addressed and provided funding for health IT. Besides the $14 billion to $28 billion in Medicare and Medicaid incentives for providers who become “meaning-ful users” of health IT, the Health IT for Economic and Clinical Health (HITECH) Act also set aside $2 billion in federal grants—a 30-fold increase—for states to use to promote EHR use and create HIEs, which are the regional and statewide networks that enable sharing of patient data.

Suddenly responsible for administering millions of dollars in grants, once-sleepy state health IT offi ces are gearing up—they must oversee Medicaid incentive programs; health IT training initiatives; portals that make information accessible on health insurance exchanges; and regional extension centers, which are responsible for helping physicians adopt EHRs. The new law “calls for a more involved role for state government,” says Lynn Dierker, project director for the State Level HIE Consensus Project. “It is an immense load to drop on people.”

As states work to implement the program, four key issues top health IT leaders’ to-do lists: identify ongoing matching funds for statewide HIE, engage small physician practices in EHR adop-tion, fi nd consensus on privacy and security policies, and develop governance mechanisms.

Funding is the No. 1 priority. Some money from the feds comes with no matching-strings attached. There is a pot of $564 million allocated from the HITECH Act for statewide HIE development, with no match

required in the startup phase. The federal government already has awarded $386 million of it. But starting in 2011, states that receive program funds beyond the start-up phase must come up with matching money. The matching formula starts at $1 for every $10 federal dollars the fi rst year and increases to $1 for every $3 by 2013.

Finding the match in this day of constrained budgets is a challenge. Some states are ahead of the game. In 2008, Vermont created a dedicated health IT fund for its own health reform ini-tiatives, Blueprint for Health. Set to expire in 2015, the fund is derived from a small (0.199 of 1 percent) quarterly fee on health-care insurance claims and is expected to raise $32 million overall. “With the fund, we already have ready-made matching dollars,” says state Rep. Steve Maier, chair of the House Health Care Com-mittee. Fortunately for Vermont, its Blueprint for Health aligns with the federal government’s program, which means the state can continue steering the course it already planned and use its money to capture federal dollars.

New York also has planned for and started making major investments in health IT. Since 2007, the Empire State has put

some $250 million into health IT projects, and that money has been augmented by local funding and in-kind donations. That puts the state in an excellent position to meet grant matches and keep building what it was building.

States without programs in place—or with just the minimal beginnings of one under way—face a daunting road. They may lack a collaborative culture among health-care stakeholders, the presence of which could make fundraising from the private sec-tor possible. Or the state may be experiencing a severe budget

crunch that will limit its ability to come up with public matching funds. Or it’s both.

New Jersey, for instance, has a fl edgling HIE system, but with the state economy still reeling from the recession, no private or public monies are available for the program. The federal govern-ment awarded the state a $11.4 million start-up grant, but with-out seeing how he can raise public or private funds to gain other grants, Bill O’Byrne, state coordinator for Health Information Technology Development, wonders how the state will build a connected system of care.

A key part of a health IT system is the EHR. In a growing number of states, hospitals and large physician prac-tices have begun to use them—large organizations tend to have the fi nancial base and technological expertise

to put an expensive and complicated system in place. But that is not the case with smaller practices consisting of 10 or fewer physicians. Not only are they resistant to the investment, but they also lack access to the technological expertise to make the change. Nonetheless, it is important to convert them if there is to be a bona fi de health exchange network: Small-practice physicians account for three-fourths of the nation’s practicing doctors.

New York City developed what many, including federal health IT offi cials, consider the model for helping small physician offi ces adopt EHRs. Launched in 2007 by the New York City Department of Health and Mental Hygiene, the Primary Care Information Project centralized technical support and education for doctors


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President Barack Obama, Vice President Joe Biden and senior staff react in the Roosevelt Room of the White House as the House passes the health-care reform bill in March.



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and worked with the software supplier to tweak and tailor the system to the small-practice physicians’ needs. While the pro-gram’s rollout is ongoing, by 2010, computerized records were being used by 2,200 primary care providers in the city’s under-served communities—in settings such as hospital outpatient clin-ics, small group practices and a jail.

For Rachel Block, the state’s deputy commissioner for health IT, the next step is to adapt the project to serve 5,000 physicians in upstate New York. She will tap federal grants for regional extension centers to pay for the eff ort, but is concerned about the implementation cost. “From the New York City experience,” she says, “what it took in terms of eff ort and money for each phy-sician practice was about twice as much as [regional extension centers] are receiving.”

Although it has conducted health IT planning for many years as part of its larger Blueprint for Health reforms, Vermont also has much work to do to get small practices to deploy EHRs. Most doc-tors are in one-person practices, and EHR usage is only around 20 percent, according to David Cochran, president of Vermont Information Technology Leaders Inc., the nonprofi t agency that runs the state HIE and acts as the regional extension center. Some physicians, he notes, have expressed confusion about the defi ni-tion of “meaningful use.” Under the law, physicians can receive incentive money for putting EHRs in place—so long as they can

demonstrate meaningful use. “For providers, this is a high-risk business, and ambiguity breeds caution,” Cochran says. “Our goal is to help them work through those things with the idea that clar-ity will emerge later.” In working with physician groups, Cochran fi nds the key is to focus on improvements in patient care and phy-sician reimbursement rather than on the technology itself. It is more eff ective, he suggests, to “focus on what you are trying to fi x that IT can assist.”

Once computerized medical records exist, privacy issues abound. First is the question of getting patients’ consent to having providers share their personal health data; second is how to handle privacy over

sensitive information, such as substance abuse and HIV/AIDS.Finding consensus on privacy and security “is absolutely one

of the biggest issues that we face,” Frohlich admits. “There is a patchwork of rules, case law and a state constitutional right to privacy that essentially is diff erent from or in addition to federal HIPAA [Health Insurance Portability and Accountability Act] privacy rules.” Many current state laws may need to be amended.

But there is little agreement on what the solutions to some privacy issues should look like. For two years, the California Privacy and Security Advisory Board has been working to develop

privacy and security policies. Pam Dixon, co-chair of the board, says the group has had diffi culty fi nding common ground between consumer advocates like herself and health-care industry organizations, such as physician groups and hospitals. As an example, she points to the patient consent issue. “Opt-in consent has to be granted for sensitive information,” she says. But how? “There have to be some ingenious policy and technology solutions to make it happen,” she says, and she sees her board members as the ones to do it. “We cannot pass the buck farther down the line.”

Similar privacy debates are being held in almost every state or between states. In Vermont, Hunt Blair, an assistant director in the state’s Offi ce of Health Access, is concerned about sharing patient data across state lines. “It doesn’t appear there will be federal pre-emption on privacy and security laws, and every state has its own laws and regulations,” he says. “We are working on a pilot project involving providers and patients in Maine, New Hampshire and Vermont, and we will have to confront these issues.”

As to the governance challenges, New York has spent sev-eral years addressing some of those issues with some success. So far, Block reports, the state has found that a public-private governance model is essential to success,

and that it’s important to include clinical end-users in the design process of HIEs. “If we are going to get to clinical transformation,” she says, “their considerations have to be baked into the design.”

Another potential governance stumbling block involves this fall’s elections. Thirty-eight governorships will be contested, with at least 24 governors defi nitely leaving offi ce. New administrations will come in, but in most states, the health IT programs have no history or institutional memory to carry them over to the new offi cials.

And that’s why Frohlich thinks California is in good shape. Cal eConnect, the organiza-tion overseeing HIE development in the Golden State, is a non-profi t organization, which keeps it one step outside government. “That’s essential,” Frohlich says. “It’s important to have continu-ity between administrations.” G



For providers, this is a

high-risk business, and ambiguity

breeds caution.

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For more on how

health-care reform

will impact state IT

systems, see the July

issue of Government

Technology magazine.

The Children’s Hospital in Pittsburgh seems to have effi ciency and modernization down: It’s a paperless campus, and with a few mouse clicks, doctors can check on patients from home.



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CONNECTING AMERICA’S LEADERS

Getting connected and staying connected are vital components for success in today’s complex

state and local government. From the latest news, analysis and resources to building and

strengthening relationships with private sector partners, GOVERNING keeps you connected to

the states and localities like no other media brand.

GET CONNECTED. GET GOVERNING.

To learn more about GOVERNING’s publications and events, or to subscribe, visit www.GOVERNING.com.


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WETLANDS CAN PROTECT CITIES FROM FLOODS, BUT IT’S NO LONGER CLEAR WHICH WETLANDS THE CLEAN WATER ACT PROTECTS.

By Jonathan Walters

WATERSMUDDIED




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As the Cumberland River’s murky waters lapped the doors of the Grand Ole Opry concert hall in May, the U.S. Army Corps of Engineers described the fl ooding in and around Nashville, Tenn., as a fl uke—the result of a

“1,000-year rain event.”True, the region was inundated with 13-plus inches of rain in

one weekend. The ensuing fl ood not only caused more than $1.5 billion in damage to buildings and their contents, but also was a factor in the death of more than 20 people.

Those on the front lines of the rain-and-runoff wars, how-ever, aren’t so sure that the muddy mess in Nashville was due only to the torrential downpour. Poorly planned development in and around the city also contributed. One of their many cases in point: Several years ago, developers proposing a major commer-cial complex stood before city planners claiming their property wasn’t in the Cumberland River fl oodplain. Therefore, they had no obligation to consider mitigation plans for stormwater runoff . City planners accepted that argument. In May, that complex was swamped by the river’s waters.

The Nashville fl ood is, sadly, “a signifi cant and historical human tragedy,” says Mike Butler, CEO of the Tennessee Wildlife Federation. “The rain amounts are off the charts, but you have to ask what’s going on that it did so much damage.” His answer: Part of it is due to increases in the amount of impervious surfaces in and around the city, and part of it is a history of poor stormwater runoff planning. “Fortunately today, Nashville Metro is doing a much better job of stormwater management and planning,” Butler says. “However, we can’t escape a long history of poor decisions.”

But over the past decade, Butler says, there has been an erosion in protection for wetlands—those hydrological sponges that not only support wildlife and contribute to clean water, but also soak up rain in ways that help ease the damage from major storms.

Stories like Nashville’s are no longer rare. In the past year, fl ooding—from the Midwest to the coastal northeast to the inte-rior southeast—have been staples of the weather-disaster news. These events raise new questions about growth and development, and the extent to which human settlements have encroached too heavily on both fl oodplains and wetlands.

Questions about current growth and development pat-terns and their eff ect on fl ooding are not just issues that get raised whenever an extraordinary storm wreaks fl ooding havoc. They are front and center now as the

U.S. Congress debates an update to the Clean Water Act of 1977. A key part of the bill is aimed at tightening wetland protection. And proponents of the update say what’s needed is a clean and clear defi nition of what a wetland is and, by extension, what is protected by federal regulation.

The issue has come to head in the wake of U.S. Supreme Court decisions made in 2001 and 2006 that narrowed the scope of waters protected by federal law. Under the Clean Water Act, the U.S. Army Corps of Engineers operated under a broad regula-tory defi nition of “waters of the U.S.” that aff orded federal protec-tion for almost all of the nation’s wetlands, including “isolated”


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wetlands and small, often intermittent streams. The two Supreme Court cases, critics argue, have narrowed that defi nition—and that narrowing has opened up millions of acres of formerly protected wetlands and streams to both toxic dumping and destruction for development and other purposes.

In the fi rst case, Solid Waste Agency of Northern Cook County (SWANCC) v. United States Army Corps of Engineers, the court ruled that to be protected by the Clean Water Act, there must be a link between the wetland or stream in question and “navigable waters.” Since many wetlands are isolated and intermittently dry, critics of the decision worry that entire classes of wetlands have been stripped of protection.

The second decision further clouded regulatory authority: Rapanos v. United States split the court 4-1-4, and the court cre-ated a two-part test to determine “navigability.” First, a waterway had to be navigable; and second, there had to be some record that the water has been used for interstate commerce. This was not a decision popular with most states, almost 35 of which had signed onto an amicus brief in support of the more expansive and tradi-tionally accepted reach of the Clean Water Act.

The net eff ect of the two decisions, says Jim Tierney, assis-tant commissioner for water resources with the New York State Department of Environmental Conservation, has been a great deal of uncertainty over what is a “water of the United States” subject to protection under the Clean Water Act. And that uncertainty has practical implications. “The regulatory fl oor has been rolled back to the basement,” Tierney says. “And if the fl oor is that low, it puts pressure on people like me to do the minimum.”

The numbers coming out of the U.S. Environmental Protection Agency (EPA) suggest that the pressure is infectious. According to EPA offi cials, 1,500 pollution investigations have been put on hold pending clarifi cation around jurisdiction and wetland defi nition.

The perilous state of some important wetlands now in limbo was outlined in a recent report sponsored by the National Wildlife

Federation, Trout Unlimited and Ducks Unlimited, which looked at fi ve examples of Tennessee streams and wetlands left vulner-able due to the SWANCC and Rapanos decisions. According to the report, the two decisions have “eff ectively stripped protec-tion from many of the nation’s waterways, including 20 million acres of geographically isolated wetlands, or 20 percent of the remaining wetlands in the lower 48 states.” In Tennessee alone, the report says, the court decisions have put nearly 800,000 acres of wetlands in jeopardy.

In the wake of SWANCC and Rapanos, some states—includ-ing Tennessee—have rallied to beef up their regulatory over-sight, scrambling to cover wetlands they thought might no longer be protected. Part of that eff ort has meant asking the

federal government to delegate authority to them over dredging and fi lling permits. Under Section 404 of the Clean Water Act, anyone who proposes an activity that would discharge dredged or fi ll material into U.S. waters is required to apply for a permit from the U.S. Army Corps of Engineers. That means physical alteration of any aquatic site, including wetlands, should require a 404 permit.

Getting that permitting process switched to the states is not an easy procedure. “A number of states did apply for assumption of the 404 [dredging and fi lling] program,” says Steve Brown, executive director of the Environmental Council of the States. “They basically gave up because the process is so freaking com-plicated that nobody can get it done.” Among other things, it requires getting permission from a gaggle of federal depart-ments, including agriculture, mining, and fi sh and wildlife, to name a few.

At the same time, states have moved to control toxic discharge into waterways. But again, many state EPA offi cials believe the protections aren’t as strong as when wetland defi nitions were clear—and if the feds were clearly behind the protection eff orts.

The fed piece is key, seeing that state regulations can’t address problems that arise when the consequences of one state’s dump-ing or fi lling in wetlands cascades into another state. “Yes, states could pursue their own wetland mapping, and they can take sov-ereignty,” Tierney says. “But that doesn’t solve very problematic interstate regulatory issues.”

While some states have tried to step up and broaden pro-tection, other states lack the same capacity or ethic to regulate dredging, fi lling and dumping. And the money for such eff orts is a complicating factor. “Given the budget situation in states, they’re having a hard time keeping up as it is,” says Jeanne Christie, exec-utive director of the Association of State Wetland Managers.

One point of particular worry, given current questions over jurisdictional and regulatory reach, is that aggressive developers will exploit the confusion by simply moving ahead with devel-opment-related dredging and fi lling, absent any permits. Given today’s construction technology, it’s relatively easy to move lots of dirt in a short period of time—and that has the potential to do much damage quickly. The economic downturn put a hold on many development projects, which has off ered some pro-tection for wetlands. As the economy improves, Christie says,


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“I see an increasing chance that people simply won’t apply for 404 permits.”

That was never much of a worry pre-SWANCC and Rapanos, when Tierney claims that what constituted a wetland was “fairly black and white,” and messing with a designated wetland carried the threat of fi nes of up to $37,500 per violation per day. “Basically people now have a ‘get out of jail free’ card by contesting designa-tions and ducking liability,” he says, adding that the “EPA is too gun shy to aggressively enforce.”

Congress now is considering new legislation recently intro-duced in the House of Representatives by Jim Oberstar of Minnesota. This bill, the Clean Water Restoration Act, would restore the Clean Water Act and its defi nitions of wetlands to pre-SWANCC status.

The legislation’s fate, however, is uncertain. The bipartisan nature of a desire for clean water and a clean environment gives backers some hope, as does the frustration among state water regulators. But the sense of urgency in the states is not matched in Congress, distracted as it is by oil spills, a still-recovering economy and looming elections. Moreover, powerful interests have lined up in opposition to the bill, including the National Association of Home Builders (NAHB).

NAHB believes the current regulatory regimen is not only workable, but is preferable to the pre-SWANCC era. “Those who disagree with SWANCC and Rapanos say they want to bring us back to the day just before the SWANCC decision,” says

Annie Bartlett, who lobbies on water issues for NAHB. “The fact is, things weren’t all that clear even back then, but they have been getting clearer with each subsequent court case and rule change.” Bartlett also argues that states and localities are better positioned to regulate because they’re more familiar with local environmental circumstances.

In Fact, the Oberstar bill doesn’t simply bring back the Clean Water Act to pre-SWANCC days, Brown says. It “actually has some restrictions in it to narrow it in order to address opponents’ claims that, ‘You’re going to try to regulate the water in my birdbath.’”

What opponents and proponents of the Oberstar legislation appear to have in common, though, is the notion that regulatory certainty is a good thing: Both sides say they want clarity about what will be regulated, by whom and how. But what homebuilders care about above all, says NAHB spokeswoman Calli Barker Schmidt, is the eff ect on the price of a house. “Anything that drives up the cost of homes,” she says, “is going to make it harder for people to buy homes.”

The question of cost is complicated. There are many ways to calculate cost, and one of them, arguably, is the price of envi-ronmental damage. “There’s an overwhelming scientifi c case to be made for comprehensive protection,” Tierney says. “I’m just hoping it doesn’t take some catastrophe. But if you don’t fi x this problem, people are going to get hurt.” G



Established in 1978, the National Association of State Technology Directors (NASTD) is a member-driven organization of state government technology professionals committed to advancing the effective use of information technology to facilitate operational efficiencies in state government. NASTD provides information, educational programs and networking opportunities to more than 1,500 state and private sector technology professionals across the United States. For more information, go to www.nastd.org.

National Association of State Technology DirectorsTechnology Professionals Serving State Government

GOV_July10.indd 4 6/3/10 4:12:05 PMGOV07_34.indd 37GOV07_34.indd 37 6/15/10 10:13 AM6/15/10 10:13 AM


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ARRESTING



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DESIGN

The Los Angeles Police

Department is building

the next generation of police

stations that underscore

its commitment to a new

style of policing—and to

the architectural avant-

garde. But is it misplacing

something important

in the process?

By John Buntin

Photographs by David Kidd

Hollenbeck Station brought cutting-edge design to Boyle Heightsin East Los Angeles.



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40 GOVERNING | July 2010



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A 10-story wall of glass on the new police administration building catches a refl ection of Los Angeles’ famous City Hall.

A R R E S T I N G D E S I G N


When Central Division station fi rst opened in 1977, Los Angeles police offi cers dubbed it “Fort Davis” with heavy irony. Under former Chief of Police Ed Davis, offi cers were supposed to be building

relationships with their neighborhoods. But instead, the depart-ment built a bunker—a massive, block-long structure in the heart of Skid Row. With no exterior windows and an inaccessible roof-top parking deck, Central Division was designed not so much to protect the surrounding community as it was to protect the police.

“It’s an occupying block,” says Thom Brennan, Los Angeles Police Department (LAPD) Facilities Management Division’s commanding offi cer. “You look at the architecture of that build-ing and it means, ‘stay away.’”

Three decades later and six blocks north, a very diff erent model of police-community interaction is on display. At the corner of Main and West First streets, across the street from architect Thom Mayne’s futuristic California Department of Transportation building, an angular offi ce tower stands, sheathed by a 10-story glass wall that refl ects Los Angeles’ ziggurat-shaped City Hall in the distance. At one corner of the complex, workers are fi nishing renovations on what will soon be a restaurant. At another, a crew is shooting a fi lm on the facility’s immaculate lawn, tastefully landscaped with desert succulents. In a north side refl ection garden, a detective in the LAPD’s Cold Case Unit enjoys a moment of quiet. The structure behind him is the department’s new home.

The recently completed $437-million police administration building isn’t alone. For the past eight years, the LAPD has been on a building spree, thanks to a $600-million construction bond approved by voters in 2002 at the urging of former Mayor James Hahn. To date, nearly half of the department’s 21 stations have been replaced or built from scratch. In doing so, the LAPD hasn’t sought to simply upgrade facilities. It’s set out to build stations that embody its hopes for a new relationship with local commu-nities—one of transparency and cooperation. The result has been a profusion of architecturally avant-garde police stations unlike

anything else in the country. But to some, the new buildings come with a cost—the disappearance of the police station as a distinct and recognizable part of urban neighborhoods.

Policing is a new profession. Not until the 1840s did cities like New York begin to establish departments based on London’s model. These early departments had a much broader range of responsibilities than today’s police offi cers, including picking up loose paper (it could spook horses), clearing weeds from aban-doned lots and enforcing foot-and-mouth disease regulations. One of their most important obligations, though, was housing the homeless. In many cities, police stations routinely opened their cellars to tramps and thieves, the destitute and disabled, and chil-dren and criminals. Unhappy occupants of these police “lodging houses” were routinely robbed by toughs, forcibly vaccinated and then packed off to the recruiting offi ce or an out-bound steamer.

There were other horrors too. In the early 1930s, the so-called Wickersham Commission revealed the practice of “the third degree,” whereby police coerced confessions out of alleged law-breakers through tactics that included round-the-clock interro-gations, sleep deprivation and beatings. Los Angeles’ main police station, an imposing Romanesque structure at the corner of First and Hill streets, actually contained “a rubber room” for that very purpose. Yet despite these abuses, these fi rst- and second-gener-ation police stations had an unmistakable civic presence—which had largely gone missing by the 1960s.

In the Westlake section of Los Angeles, the Rampart Division best illustrates police-community relations gone wrong. In the 1920s, Westlake had been one of L.A.’s most desirable neighbor-hoods. By the 1980s, it was home to the notorious gang Mara Salvatrucha 13, crack cocaine and rampant police corruption. When the department got funds to build a new station for the district, it chose, not surprisingly, to bulldoze the old structure and start anew.

Today’s Rampart Division station refl ects a new conception of the police department’s relation with the community. Inside, the station off ers a 24-hour ATM. A fi rst fl oor community room



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opens out onto a pleasant patio and barbecue area, both of which are routinely used by community groups. The station’s grounds feel like a park. Stray soccer balls, not random bullets, are now Rampart Division’s biggest concern.

Another new station, Harbor Division, sits 20 miles due south of Rampart, just across the road from the port of San Pedro, the largest container shipping port in the United States. The values of transparency and accessibility are refl ected in the architecture of this new, LEED-certifi ed station, which opened in May 2009. Visitors entering the station step into a soaring, light-fi lled atrium. At one end sits a desk sergeant, unprotected by the bank teller-style Plexiglas windows that make many big city police stations so inhospitable. Citizens visiting the station for the fi rst time can’t help but notice the change from the police station’s traditional structure.

“All this space for the entry, it just makes you feel good,” says Judith, a local artist who’s come with her husband to fi le a com-plaint about a damaged car. “I’ve been sitting here, watching how the light moves. Look how delicately they used the colors,” she says admiringly.

As striking as the architecture of the LAPD’s new stations are, some department members miss the civic presence that the old stations had. Glynn Martin, executive director of the Los Angeles Police Historical Society, oversees the department’s history from the historic Highland Park Police Station, built in 1925. Walking through the front doors of the Highland’s Renaissance revival building, visitors step up to an imposing oak desk where the desk

Top: Kids play in front of the new Rampart station. Bottom: San Pedro’s landscaping refl ects Los Angeles’ arid climate.

A R R E S T I N G D E S I G N



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sergeant once sat. The row of cells behind the desk leave no doubt as to the power and purpose that person once exercised.

“Early LAPD station houses were clearly recognizable as just that—a place where police assistance is rendered,” Martin says. In contrast, the newer stations, though “absolutely strik-ing and operationally superior,” often look like buildings that “could just as easily be fi lled with attorneys or accountants instead of L.A.’s fi nest.”

If the new Harbor Station looks like a stylish art gallery, Hollenbeck Station, which opened in September 2009, would be a cutting-edge museum. The station’s striking coral colors, punctuated with openings that expose interior patios, and its

front entrance, which is framed by a rippling, frosted-glass façade, seem more Frank Gehry than Adam-12. Only the stylishly sans-serif word “Police,” emblazoned on several frosted-glass panels, communicates the building’s purpose. On a recent quiet Friday afternoon, the station was fi lled with Hollenbeck residents, who stopped to chat easily (in Spanish) with Capt. David Hanczuk.

“The relationship between Hollenbeck the community and Hollenbeck the station is among the best in the city,” Hanczuk says proudly as he shows off the new facility.

But looks can be deceiving. A recent gang fl are-up keeps police offi cers clear of a second fl oor patio that looks out on a park across the street, lest they put themselves into the line of fi re. It turns out that some of the station’s most cutting-edge features are actually partially defensive in their posture. Take the undulating glass façade: The frosted-glass panels aren’t just stylish, they also obscure sight lines and are backed by bullet-resistant glass.

“It wouldn’t resist a [round fi red from an] AK-47 or a M16, but it would slow and defl ect it,” Hanczuk says.

Maybe the new Hollenbeck Station isn’t so diff erent from the old “Fort Davis” after all. G


Top: Hollenbeck Station’s balcony is too exposed for some offi cers. Left: Skylights bring natural light into San Pedro’s station. Above: Hollenbeck’s lobby is airy and welcoming.



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When the economy hit the skids three years ago, many businesses found them-selves desperately trying

to hang on to workers. When the housing bubble burst, Comfortex, a window shade manufacturer in upstate New York, felt the pinch. But instead of pink slips for many of its 300 employees, the company reduced employees’ weekly hours and pay, and partnered with the state to make up some of the lost wages.

Work-sharing, as it’s known, has been popular in Europe for years, but has never really caught on stateside—until now. In 2009, work-share programs saved a record 166,000 jobs in 17 states, including a per-capita best of 6,600 in Rhode Island. The state has one of the nation’s highest unemployment rates at

12.5 percent, but it could be much higher if not for the innovative program. In a work-sharing program, private-sector businesses partner with states to reduce their employees’ hours rather than undergo layoff s. The program is popular with both employees and employers—the former get to keep their jobs, and the latter maintain a stable work force and don’t have to worry about rehiring and retraining costs down the road.

Rhode Island’s work-share program began in 1992, more than a decade after California became the fi rst state to imple-ment the program. In Rhode Island’s pro-gram, a company has various options as to how it will rework hours for employees. Techniques include four eight-hour days per week and part-time schedules, to name a few. The state, in turn, agrees to

provide some of the employee’s lost wages through unemployment insurance (UI) funds. The employer continues to pay the employee for time worked. The combina-tion means employees still make a portion of their earnings, and the state does not see its unemployment funds further drained. While the time frames attached to how long an employee can remain on a work-sharing program vary by state, they gener-ally are long enough to allow companies to resume full-time operation.

The number of companies participat-ing in Rhode Island has increased dramat-ically each year. In 2006, 66 companies participated; in 2007, when the fi rst signs of a recession hit, 180 companies part-nered with the state. By 2009, that num-ber grew to 661. The program’s increasing popularity can be attributed to the state


Problem Solver

Work-Share, Save JobsBusinesses partner with

states to retain workers.

By Heather Kerrigan

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Department of Labor and Training’s mar-keting campaign, which includes reaching out to employers through the Chamber of Commerce and with informational notices. The department also partners with various media organizations to get stories published about businesses that have succeeded with the program. “Those testimonials do more than anything we can do here in terms of outreach because it’s got a diff erent level of credibility,” says Laura Hart, the department’s communi-cations manager.

The department also tracks compa-nies that are laying off employees and asks them if the department can discuss other options, including work-sharing.

“It is an excellent tool for employers because the employer retains a trained worker,” says Raymond Filippone, the Department of Labor and Training’s assis-tant director of Income Support. “When the economy improves for that employer, that individual is still there attached to the job, so it’s not as if they need to hire new individuals.” In eff ect, companies avoid severance payments and the expense of rehiring and retraining later.

It also creates a better sense of loy-alty, Hart says, “because your employees know that you’re fi ghting to keep them; they know they have value, and that’s a big moral boost.”

Still, 33 states are without a work-share program, and many believe the hindrance stems from the common mis-conception that these programs create too much paperwork, raise administra-tive costs or will put further strain on unemployment funds that already are stretched thin.

The Congressional Research Service, however, says these ideas simply are not true. Any impact on states’ UI funds is a wash, because the cost of full ben-efi ts for laid off employees is similar to the cost of partial benefi ts for those in a work-share program. Private companies, which already pay into a state’s UI trust fund through taxes, are charged higher rates, but they are equivalent to what

the company would pay if it had instead laid off employees. As for administrative costs, states using a paper-based applica-tion process could see a slight increase in hours needed to process applications; however, because work-sharing partici-pants do not check in weekly with the unemployment department as typical unemployed people do, the resulting administration cost could be about equal. Rhode Island saw no increase in admin-istrative costs—it simply reorganized its staff to ensure that applications and benefi ts are processed quickly. And as for the UI trust fund, “if there had been lay-off s, the drain [on UI] would have been greater,” Hart says. “Work-sharing is fi s-cally responsible.”

Pennsylvania and New Jersey are among seven states currently working through their legislatures to pass work-sharing bills. In both states, the unemployment trust funds have been operating in the red, and supporters say a work-share program could alleviate some of the burden. Colorado, Hawaii, New Hampshire, Ohio and Oklahoma also are looking into work-share programs.

Given the scramble by states and the federal government to maintain and create jobs, Congress has taken notice of the increasing popularity of these types of programs. To encourage more states and employers to join, Sen. Jack Reed of Rhode Island proposed a bill that would provide federal funding for work-share programs and simplify the application rules.

Economists, including Federal Reserve Chairman Ben Bernanke, support increased federal involvement in work-share pro-grams. “Many economists believe that the current U.S. unemployment insurance system is biased toward the use of layoff s because laid off workers are eligible for UI benefits,” Bernanke wrote in support of Reed’s bill, “while workers whose hours have been reduced because of slack work are not.” G



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cuts reduced the staff in 2009 and again in early May, shrinking the number of positions to about 60. Talking about the earlier round of cuts, OPPAGA Director Gary VanLandingham says, “You want accountability and you want to be able to identify your options, but [cutbacks] reduce the Legislature’s ability to get that type of information.”

Such reductions are going beyond the major centers of research. Gary Blackmer, audit director in Oregon, points to depart-ment of administration cuts to human resources, budgeting, fi nance and facili-ties—things agencies depend on.

“If you’re losing altitude and your plane is going down,” Blackmer says, “you don’t

By Katherine Barrett and Richard Greene

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“When the Legislature created the center, it wanted independent information. And then, I think it became an issue that they were so independent.” One former appro-priation chairman even quipped, “We’ve been trying to get them for a long time.”

Even if this kind of political power play isn’t at work in Kentucky or elsewhere, it’s sad to see states cut back on analysis that helps them in the long term. The Oregon Legislature, for instance, stopped funding the Oregon Progress Board altogether. Even Florida’s much-praised Offi ce of Program Policy Analysis and Govern-ment Accountability (OPPAGA) is being severely cut back. Four years ago, it had about 90 positions; legislative budget

Goodbye to Good ResearchFunding for state programs that research and analyze long-term issues is dwindling.

Sometimes we really don’t want to be right. Nearly a decade ago, we wrote a column called Bad-News Budgeting. At the time,

we referred to a sub-oceanic, urban myth about a “slimy, aquatic creature that nour-ishes itself by absorbing its own brain.” We were talking about such a creature in the context of fears that governments at the time would respond to the recession by cutting management analysis.

And that’s exactly what’s happening as a result of the so-called “Great Recession.” A recent casualty was the Kentucky Long-Term Policy Research Center, abolished by the Legislature in March. The much-praised center—created in 1992—gave Kentucky an enormous boost by focusing on the kinds of long-term issues that are often given short-shrift by legislators. It’s often been named by national organiza-tions as a model of good state research. The cost was $1.1 million—a tiny frac-tion of a percent of the state’s two-year $17 billion budget.

The center is credited with helping the state to reduce its dependency on tobacco crops in the mid-’90s. Its work on retirement systems was used by the Legislature to arrive at much needed pension reforms. “Political leaders never think far enough ahead and the Long-Term Policy Research Center helped us do that,” says Rep. Carl Rollins, chair of the Kentucky House of Representatives’ Education Committee. What will happen when the center closes its doors at the end of June? “Basically there’s nobody in state government who does what these people did,” Rollins says.

Some observers speculate that tough fi scal times can be used to get rid of potentially unwanted information. Regi-nald Meeks, a state representative and for-mer chair of the board for the Kentucky Long-Term Policy Research Center, says,

If you’re losing altitude and your plane

is going down, you don’t try to shed weight

by tearing out your instrument panel and

throwing it out.

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try to shed weight by tearing out your instrument panel and throwing it out.” For example, in the personnel area, three of the four classifi cation-compensation consultant positions are vacant and not currently being fi lled. This has resulted in a long list of agencies needing assistance when they want to change employees’ job duties. There also are a signifi cant number of unfi lled jobs on both the legislative and executive side in the performance manage-ment or measurement area.

Sadly these kinds of cuts are taking place when the need for program analysis has never been greater. Auditors in many states, for instance, have had to take on a whole set of additional responsibilitiesattached to the evaluation of stimu-lus-fund spending. Janice Mueller, the legislative auditor in Wisconsin, says this vastly increased the workload for her audi-tors last year, but next year will be even worse. That’s because fi rst-year Recov-ery-Act dollars were generally focused on existing programs, such as unemploy-ment insurance, increases to medical assistance or school funding. Second-year audit responsibilities likely will be much more complex as they involve a host of smaller, distinct programs. She and other auditors question how they can manage so many new requirements when they are asked to take furlough days as budgets are cut back.

We should point out, of course, that strong leadership and focus can mitigate the damages of budget cuts. The Oregon Department of Human Services has been working on a transformation initiative in the last several years that enabled it to reduce large backlogs in its food stamp program to same-day service. Human service and health offi cials emphasize that the Progress Board’s defunding didn’t stop them from measuring performance and moving forward with a variety of management tools to make the kinds of changes they needed to make.

We assume the same thing is happeningin other states. But we still keep thinking about that sea slug. G


By Tina Trenkner and Andy Kim

Not Your Average Supermarket Libraries increasingly are becoming more than a place to check out books or DVDs—they’re places where users can create multimedia projects, use the branch’s Internet access to apply for jobs and even gain access to a social worker. And two Baltimore libraries now have another service to offer their patrons: grocery ordering and pickup. The City Health Department’s Virtual Supermarket Project (VSP) lets patrons living in “food deserts”—areas without shops offering healthy food at reasonable prices—order and pick up groceries at the library. Once a week, library visitors place their orders online with a local grocer and pay with cash, check, credit or food stamps. Patrons can pick up their orders the next day without paying a delivery fee. The program is funded through a $60,000 grant made possible through the 2009 American Recovery and Reinvestment Act. Administrators hope to add a third VSP location with the help of the city’s Department of Recreation and Parks.

| IDEA CENTER

Help From AboveThe days when 911 operators only knew a caller’s street location are over. In Dur-ham, N.C., communication offi cers now can visually inspect an inbound caller’s location through images. Thanks to Pictometry software, users can view aerial images from various angles, allowing offi cers to measure the distance, height and elevation of surrounding structures. This data can give offi cers tactical advan-tages by fi nding alternative traffi c routes to the location and uncovering the site’s

entry/exit points. The software—also being implemented in Rhode Island—is wireless, so offi cers can follow a caller on the move.

Find more ideas forcreative programs atgoverning.com/ideas

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By Steve Towns

E-Mail Showdown Arizona pits the public sector against the private sector in a cloud e-mail face-off.

Problem Solver | TECH TALK

companies like Google, which host the systems and deliver e-mail service to agencies via the Internet. Los Angeles became the public cloud poster child in 2009 when the City Council unanimously approved a fi ve-year deal with Google to use the company’s Internet-based e-mail and productivity tools. The city is thought to be the largest government entity to move its entire e-mail system—used by 30,000 municipal employees—to Google’s Gmail service.

And Colorado recently unveiled its twist on the public cloud model by ink-ing a contract in April to deliver Google’s Gmail and other hosted applications to state and local agencies through its State-wide Internet Portal Authority, a quasi-government organization created to run the state’s website.

With the private cloud model, states or localities run their own central e-mail sys-tems and deliver services to agencies via a private government network. Utah and Michigan—both of which have invested heavily in statewide IT consolidation—are

By the time you read this, Arizona hopes to be pitting Microsoft against Google in something of an e-mail consolidation showdown.

State CIO Chad Kirkpatrick planned to launch an experiment in June where one group of state employees will use Google’s Internet-based Gmail service and another would use Microsoft’s Exchange Server product delivered through the state gov-ernment’s private computer network. “We’re going to separate the hype from the reality, and see what works best both from a practical standpoint and a cost standpoint,” Kirkpatrick says.

While there’s broad agreement that individual government agencies should get out of the e-mail hosting business, there are varying opinions on the right way to do it. More so than pitting the IT industry’s big-gest rivals against one another, Arizona’s experiment will evaluate two competing e-mail consolidation strategies: the “public cloud” and “private cloud” models.

The public cloud approach outsources government e-mail systems to private

moving in this direction. They’re develop-ing the capacity to host e-mail and other computer applications in centralized state government data centers and pipe those services out to state and local agencies through a secure “government cloud.”

Arizona plans to sample both fl avors of e-mail consolidation before deciding which way to go. The e-mail experiment will run for six weeks, and then the state will spend about a month analyzing the results. Those fi ndings will shape Arizona’s statewide e-mail strategy, Kirkpatrick says. Along the same lines, the University of Arizona compared Gmail and Microsoft in late May, ultimately choosing Microsoft as the winner after an exhaustive study.

Whichever model the state ultimately chooses, something must change. “We have about 135 state agencies, boards and commissions, all of them running their own e-mail systems,” Kirkpatrick says. “So you have a lot of redundancies—whether it’s the people managing the systems or the purchasing of the physical equipment. There’s a lot of savings opportunity there.”

It probably goes without saying that those savings are more important than ever. Although Kirkpatrick describes Arizona’s current revenue situation as “less bad,” the state still struggles with the large gap between income and spend-ing. As states and localities nationwide confront the reality of long-term reduc-tions in spending growth, getting indi-vidual agencies and departments out of the e-mail business off ers one avenue for reducing the cost of running government.

“The goal is that by the beginning of next calendar year, we’ll actually be on the path to some sort of consolidation,” Kirkpatrick says, “but we will have done our homework.” G



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The newest Converge Special Report on Classroom Technologies features:

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By John E. Peterson

How far is Sacramento from Athens? Until a few months ago, this would have been a question on a geography quiz. Today it’s

an urgent fi nancial issue. Is the perilous pathway to default that Greece, 6,669 miles away, has been treading a precedent for California?

Not so long ago, this query would have seemed far-fetched. California, for all its bizarre politics and weird public fi nance system, has been an epicenter of growth and vitality. Boom times or bust, people moved there, made money and bought houses at ridiculous prices. Today though, California—like Greece—is watching its economic position slip. Does this sug-gest—as some in the media have—that California is sitting at the precipice of an implosion the way Greece is?

While these are superfi cial similarities between the two situations, there are deep, real-world diff erences in the circum-stances of a beleaguered country and a hard-pressed state. Let’s start with the size of the economies and the amount of debt relative to the means of repayment. California’s economy—the eighth largest in the world—produces $1.81 trillion in gross domestic product; Greece’s GDP is about $350 billion, which makes it a mere runt by comparison. Moreover, Greece, with a population of 11 million, has out-standing, tax-supported bonds equal to $290 billion, as compared to $83 billion for California, with its 37 million inhab-itants. So Greece has about 12 times the amount of debt per capita as California. Even when one adds in the underlying California local government bonds and the overlapping U.S. federal debt, the Greek government’s debt is 2.5 times greater on a per capita basis.

The greater diff erence, though, is in fi scal policy. Greece has had the capac-ity to run large defi cits for many years

that were artfully disguised by account-ing tricks. California has undergone suc-cessive, highly publicized battles over closing the budget gaps, but the actual defi cits incurred at the end of the fi scal periods have been relatively modest. In 2009, Greece’s national government had a defi cit of $36 billion, while California, amid painful cutbacks and tax increases, actually ended up only $5 billion short in its general fund. That’s not good, but it’s a whale of a lot better performance than a nation fi nancing a huge defi cit by borrowing.

Greece also is burdened by being a land where tax evasion is a national sport. About $110 billion of Greece’s economic activity—nearly 30 percent—is thought to be under-ground and thus not reported. As a result, the country loses an estimated $30 billion per year in revenues from evaded taxes. California, on the other hand, has built a volatile tax system—the better-off pay most of the taxes, while some major taxes, like property tax, are patently inequitable—but outright evasion is relatively low. In the United States, only about 8 percent of the economy is underground.

There is another key factor: The United States, despite the current fi scal problems at the local, state and federal

levels, is grounded on a tradition of governments paying their bills. The U.S. government has never defaulted on its debts. Even though one state (Arkansas) did during the Depression, the debt was restructured and ultimately repaid. Greece, on the other hand, defaulted four times in the 19th century and on its foreign-held national debt in 1931. Despite its membership in the European Union, the Greek national government is once again faced with default.

State and local governments will have a tough time ahead as they adjust to slower growth and an aging national economy. These problems will be multi-plied by the federal government’s struc-tural defi cit. But the 50 states have two important legacies. First, they have not borrowed improvidently, especially not to fi nance operating defi cits. Second, they are embedded in a legal and politi-cal system that has enforced the pay-ment of taxes and debt. That has made access to the private capital markets not only feasible, but easy and economical. In the fi nancial world, that legacy is what makes the distance between Athens and Sacramento so great. G


Sacramento’s Socratic MomentSome see California’s future in Greece’s current woes.

Problem Solver | PUBLIC MONEY


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While many public offi cials are trying to restrict illegal immigrants, Israel “Izzy” Colon, Philadelphia’s director of multicul-tural affairs, is doing something different:

He’s welcoming them, no questions about papers asked. It’s all part of Mayor Michael Nutter’s effort to revitalize Philadelphia by making it a 21st-century immigrant hub.

Colon, age 60, moved to Philadelphia in 1976. How-ever, his roots go back to the island of Puerto Rico and New York’s Lower East Side, where Colon grew up in a tenement with no heat and a bathtub in the kitchen. After graduating from the State University of New York, Bing-hamton, Colon worked as a community organizer for Aspira, a nonprofi t focused on Latino youth.

In 1988, he went to work for Councilman Angel Ortiz and his then-Chief of Staff Nutter. When elected mayor in 2007, Nutter tapped Colon to reach out to the city’s fast-growing immi-grant community and charged Colon with making Phila-delphia a more immigrant-friendly city by aggressively pushing city services—and city jobs—into immigrant communities. That hasn’t always been popular, but Colon says Philly has no choice.

“These people aren’t going away,” he says. And Colon doesn’t want them to. On the contrary, he and Nutter are counting on them to help build the city.

—John Bunti n

Izzy ColonPhiladelphia Immigrant Facts:

Latino population, 2009: 165,000

Percentage of Latino immigrants who are Puerto Rican: 70 percent

Fastest-growing immigrant groups: Mexican, Vietnamese and Russian

Source: Offi ce of Multicultural Affairs



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LET FREEDOM RING. america’s wireless companies

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Back on Track? · Back on Track? Richard Rodriguez is determined to ﬁ x Chicago transit. CONNECTING AMERICA’S LEADERS July 2010 $4.50 GGOV07_cover.indd 2OV07_cover.indd 2 66/28/10