The State of American Federalism 2014–15:
Pathways to Policy in an Era of Party
Polarization
Shanna Rose* and Cynthia J. Bowlingy
*Claremont McKenna College, [email protected]
y
Auburn University
The state of American federalism in 2014^2015 is characterized by inertia and centrifugal force.
Party polarization and divided government exacerbate gridlock at the federal level as President
Obama faces Republican majorities in both houses of Congress. Policy activity has shifted outward
to state legislatures and citizens, the federal and state executive branches, and the court system,
creating a diverse set of alternative institutional pathways and outcomes. Some policies, like
Medicaid and K-12 education, are largely shaped by federal-state executive branch negotiations,
leading to individualized state programs. Other policiesçsuch as marijuana, gun, and immigration
lawsçare made by state legislatures or citizens acting through the initiative process. Meanwhile, a
series of court decisions has doubled the number of states where same-sex marriage is legal. In
the current political context, American federalism is characterized by a substantial dispersion of
power and a variety of pathways to policy-making.
The state of American federalism in 2014–2015 is characterized by inertia and
centrifugal force. As partisan gridlock continues to stall the passage of federal
legislation, policy activity has shifted outward to other venues: state legislatures,
voters (through the ballot initiative process), the federal and state executive
branches, and the court system. As this diverse set of political actors has expanded
the patchwork of federal and state laws, the result has been further fragmentation
of many policy arenas. However, there are also some new signs of convergence in
other areas.
In the 2014 annual review of American federalism, J. Mitchell Pickerill and
Cynthia J. Bowling observed that ‘‘the predominant theme across the country for
several years has been partisan gridlock at the federal level, whereas state
governments have been activist and more productive than their federal
counterpart’’ (Pickerill and Bowling 2014, 370–371). Divided government and
partisan polarization have contributed to an unprecedented lack of federal
legislative productivity in recent years. By contrast, as of 2015, three-fifths of the
Publius:The Journal of Federalism volume 45 number 3, pp. 351^379
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S. Rose and C. J. Bowling
states have unified party control of the executive and legislative branches,
contributing to greater legislative productivity at the state level. Pickerill and
Bowling observe that, as a result, the federal government ‘‘seems to be increasingly
sitting on the sideline as states pursue their own agendas’’ (Pickerill and Bowling
2014, 394). These trends have continued into 2015.
In 2014–2015, a continued lack of federal legislative productivity meant that
policy activity shifted away from Congress toward other venues within the federal
system. First, 2014 and 2015 saw continued legislative and direct democracy activity
at the state level. Several states passed legislation legalizing medical marijuana,
expanding Medicaid eligibility under the Affordable Care Act (ACA), or extending
educational benefits for immigrant students. Elsewhere, voters passed ballot
initiatives legalizing the use of marijuana for recreational purposes or increasing the
state minimum wage.
Second, 2014 and 2015 saw considerable executive and administrative action. At
the federal level, President Barack Obama’s inability to push his immigration
reform agenda through Congress led him to use an executive order (whose legality
was subsequently challenged by state officials). Although federal marijuana policy
remained unchanged on the books, it nonetheless shifted significantly with the
Obama Administration’s decision not to enforce federal marijuana statutes in states
where the drug’s recreational use is legal. At the state level, several governors
negotiated Medicaid waivers with the Obama Administration, allowing them to
ignore certain features of federal Medicaid law and also overcome resistance to the
ACA among conservative state legislators. Further, the number of states with No
Child Left Behind (NCLB) waivers—which grant states flexibility and relief from
certain provisions of the federal education law—reached forty-three. Thus, in the
health care and education policy arenas, the details of how states implement federal
law are increasingly being negotiated by executive officials ‘‘outside of the floodlit
legislative process,’’ raising concerns about democratic accountability (Kincaid
2001, 22).
Third, the courts had a noticeable impact on state and federal policy in 2014–
2015. Most notably, a series of federal court decisions more than doubled the
number of states that recognize same-sex marriage, from seventeen to thirty-seven,
between January 2014 and March 2015. This marked a significant departure from
previous years, when the majority of states that legalized same-sex marriage did so
voluntarily through the legislative process. In the environmental policy arena, the
Supreme Court largely upheld the Environmental Protection Agency’s ability to
pursue climate change regulation under existing authority provided by the Clean
Air Act. This was particularly a significant development given that congressional
deadlock has stalled progress on comprehensive climate change legislation in recent
years.
State of American Federalism 2014–15
353
The result of this centrifugal force has been continued divergence in a number
of policy arenas. Whereas some states passed laws extending benefits such as instate tuition to certain illegal immigrants, others passed laws limiting benefits or
appropriating new funds to crack down on illegal immigration. Though several redstate governors successfully negotiated Medicaid expansion waivers in 2014–2015,
conservative state legislatures rejected nearly identical proposals to expand
Medicaid in several other states. A bipartisan consensus on the Common Core
educational standards began to crumble, as three states that had adopted the
standards voted to repeal them, and a dozen others sought to do the same.
However, there were signs of convergence in other policy arenas. Same-sex
marriage became legally recognized in three-quarters of the states, and many legal
scholars believe the Supreme Court will expand the number to fifty in 2015.
Although uniformity in the sphere of medical marijuana policy is moving
more slowly, there are nonetheless reasons to believe convergence is underway. In a
shift of national policy, Congress in 2014 blocked the Justice Department from
allocating funds to enforce a federal ban on growing or selling marijuana in the
states that have legalized its medical use. Although it was only legal in twenty-three
states and the District of Columbia as of March 2015, another one-third of
state legislatures will consider measures to legalize medical marijuana in 2015.
With Congress signaling acquiescence and 85 percent of Americans in support,
there is a strong likelihood that many of these measures will pass (Fox News Poll
2013).
In this year’s annual review of American federalism, we focus attention on how
the fragmented federalism noted in previous years continues into 2015. State policy
activism continues—the states are driving choices within their own boundaries and
diffusing policy across the rest of the country. However, we also see increasing
prominence of the executive branch and judiciary in determining and negotiating
policy outcomes. We begin with a discussion of the midterm elections and the
policy environment created by the current patterns of party control. Then, we
examine several issues exemplifying the policy processes and decisions made by
actors outside of a polarized Congress, followed by a discussion of important court
decisions. Next, we present a brief examination of the fiscal status of the nation and
states. We conclude by discussing how these various aspects—party polarization,
state policy proliferation, court decisions, and budgetary realities—are creating a
centrifugal policy-making process.
The 2014 Federal and State Elections
The 2014 federal elections continued the recent pattern of divided party control of
the house, senate, and presidency. As has been the norm in U.S. midterm elections,
and in a pattern that is generally even stronger in the sixth year of an
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S. Rose and C. J. Bowling
administration, the president’s party lost seats in both houses of Congress. In the
house, which Republicans have controlled since the 2010 midterm election,
Republicans gained thirteen seats to secure a 247-188 advantage, their highest total
since the 1920s. Republicans picked up nine seats in the senate, to claim a 54-46
majority in a chamber that had been controlled by Democrats since the 2006
midterm election. The 114th Congress (2015–2016) therefore continues the longstanding pattern whereby one party controls the presidency and the other party
controls at least one house of Congress. Unified party control of the presidency and
congress has only been achieved for brief periods in the last four decades: during
the entirety of the Carter presidency (1977–1980), the first two years of the Clinton
presidency (1993–1994), just over half of the Bush presidency (the first five months
of 2001 and then 2003–2006), and the first two years of the Obama presidency
(2009–2010). Otherwise, American politics in recent decades has been characterized
by divided government, at least at the federal level.
In today’s world, though, divided government is distinctly different from
previous incarnations of split party control. Divided government is now
characterized by increasing partisan polarization that intensifies ideological
separation between members and elected officials of the two major parties
(Abramowitz 2010; Barber and McCarty 2015). From 1935 to about 1978, there
was significant ideological overlap among the most conservative Democrats and the
most liberal Republicans, which led to an increased likelihood of agreement and
compromise on at least some issues. Democrats and Republicans began to move
apart ideologically in 1978. However, although Democrats remained rather constant
in their ideological positions, Republicans have become increasingly conservative.
In addition, the most conservative Republicans are distant from mainstream
Republicans, though 2013 data indicated a conservative shift even by the more
moderate Republicans (voteview.com 2014). From 2011 through 2014, Tea Party
Conservatives pulled Republicans away from moderation and compromise with a
Democratic-controlled Senate, creating gridlock in legislative activities. This
divergence was most noticeable in the fiscal showdowns, government shutdowns,
and budget sequestration that occurred.
Now that Republicans control both houses of Congress, can we expect at least
some greasing of gridlocked policy wheels? The answer depends on the degree of
polarization within the Republican Party itself. At the beginning of the session,
there was a degree of uncertainty as a few members challenged John Boehner’s
speakership. Further, initial attempts to extend funding for the Department of
Homeland Security in early 2015 were stalled by the more conservative Republican
wing attempting to force changes in immigration policy by tying its passage to the
financing bill. With a shutdown imminent, more moderate Republicans, aided by
Democratic representatives, managed to push a temporary funding bill without the
immigration clause through the House at an unexpected time. The temporary
State of American Federalism 2014–15
355
funding was then extended until the end of the fiscal year (FY). While this may
seem like a minor accomplishment, the process indicates that Republicans may be
ready to rein in representatives at the margins as well as alleviate the policy gridlock
that has occurred in the legislature.
Republicans also gained seats in state elections in 2014, continuing a recent
pattern. Across all fifty legislatures, Democrats have lost over 900 seats since 2009;
Republicans have gained 888. Democrats control both houses in only eleven state
legislatures, down from twenty-seven only five years ago. Republicans control both
houses in thirty states. Only eight states have divided party control in the legislature
(Desilver 2015). This pattern is a major change from the recent past. In 1978, the
situation was almost exactly reversed—thirty-one legislatures were completely
controlled by Democrats; eleven were controlled by Republicans; and seven had
divided control. The number of Democratic-controlled state houses gradually
declined through the 1980s and 1990s, then increased through the late 2000s,
before undergoing an abrupt shift to Republican control after Obama’s first
midterm elections in 2010.
Thus, where the national government faces partisan polarized divided branches,
after the 2014 elections thirty states feature united party control of both legislative
houses and the executive (Storey 2014). The number of states with divided party
control actually ticked upward after the 2014 elections. In some cases, Republicans
gained control of governorships in states such as Illinois, Massachusetts, and
Maryland where Democrats enjoy overwhelming majorities in both houses of the
legislature. Meanwhile, in several other states, Democrats (in Pennsylvania) or
Independents (in Alaska) won the governorship and created divided government
where Republicans previously enjoyed unified control. For the most part, though,
the 2014 elections saw Republicans achieve, maintain, or strengthen control of state
houses, at times by winning supermajorities of both houses of the legislature to go
along with control of the governor’s office (NCSL 2015).
This pattern of divided national control and unified state governments has
existed for the past several years. With the institutional divisions exacerbated by
increased party polarization, gridlock in the national government has pushed
policy-making to states, where parties were prepared to proceed with their own
agendas. Over the past several years, unified party control of states, some under
Democratic control but the majority under conservative Republican control,
enabled passage of policies on the state level that were blocked in Congress. This in
many ways polarized policies across the states, creating a fragmented policy
landscape (Pickerill and Bowling 2014). For instance, in 2015 Wisconsin became
the most recent Republican-controlled state to enact a ‘‘right-to-work’’ law, and
West Virginia became the latest state to adopt a ban on abortions after the twentyweek mark, when the Republican-controlled legislature overrode Democratic
Governor Earl Ray Tomblin’s veto. In Massachusetts, by contrast, Democratic
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Governor Deval Patrick signed a sweeping gun control bill into law in 2014,
granting police chiefs the authority to prevent certain individuals from obtaining
firearms licenses.
Initiatives and referenda are available in twenty-four states and have served as a
vehicle for responding to Congressional inaction and at times overcoming
opposition from state-elected officials. In addition to the typical bond and tax
proposals on the ballot in 2014, voters in several states enacted policies on issues
gridlocked elsewhere. Several were particularly noteworthy. Voters in Alaska,
Arkansas, Nebraska, and South Dakota approved ballot measures to increase the
minimum wage—a nonstarter on the national level. Voters in Alaska and Oregon
approved initiated measures legalizing recreational marijuana, following a path
taken in recent years by voters in Colorado and Washington, as well as a number of
other states that have legalized medical marijuana in recent decades through the
initiative process. Meanwhile, at a time when members of Congress have been
unable to agree on legislation expanding background check requirements for gun
purchases, voters in Washington approved an initiative requiring background
checks at gun shows and for online gun purchases. Among other measures on the
ballot in 2014, Massachusetts voters approved an ‘‘Earned Sick Time for
Employees’’ ballot measure enabling workers to accrue up to forty hours of paid
sick time per year.
Direct democracy allows the people in states to act when neither their national
nor state governments do; the passage or failure of ballot measures also allows
citizens to moderate state government elites’ party polarization. For instance, voters
in two more states in 2014 defeated personhood amendments, continuing a string
of defeats for these measures that generally declare that life begins at conception.
For the most part, these measures have been placed on the ballot through the
initiative process, as in Colorado, where a personhood measure was defeated in
2014 for the third time in the last six years. But in North Dakota in 2014, the state
legislature gave the requisite approval to a personhood amendment that voters
defeated by a two-to-one margin at the polls. This disjunction between the views of
elected representatives and the electorate has been on display and remedied through
citizen-initiated referendums on several recent occasions. For instance, in 2011,
Maine voters restored same-day voting after it had been repealed by the legislature,
and Ohio voters overturned limits on public-employee collective bargaining
enacted by the legislature that year.
We now turn to a discussion of some of the most salient policy issues
stirring across the states. In this section, we focus on the various pathways used to
make policy in the context of a gridlocked Congress—that is, those developed
through state action, executive and bureaucratic negotiations, and/or court
decisions.
State of American Federalism 2014–15
357
Policies and Intergovernmental Implications
Immigration
Immigration is a classic example of a policy area where most of the key decisions in
2014 were made outside of Congress, whether through state activism, federal
executive action, or federal court rulings. In recent years, state governments have
been particularly active in legislating in this area. Arizona, followed by
Alabama and other states, passed strict legislation to require documentation from
immigrants and limit employment of illegal residents. Other states worked to
alleviate illegal and legal aliens’ plight by allowing immigrants to pay in-state
tuition rates at colleges and universities. In many cases, state actions were taken to
compensate for a perceived abdication of federal responsibility in this area.
Although the President and Congress have been debating this issue for years, most
recently in 2013, when the senate passed a comprehensive immigration bill by a
sizable margin, agreement has been elusive. In 2014, a humanitarian crisis in border
states and a gridlocked Congress pushed Obama to act unilaterally to reform
immigration policy.
Illegal immigration is not a new phenomenon in the USA, neither is
unaccompanied children crossing the Southern U.S. border. However, the swift
upsurge of child immigrants in 2014 from Central America—numbering in the tens
of thousands—created a humanitarian crisis in border states and a significant
pressure on local, state, and the national governments (Park 2014). Thus, while the
President was trying to move forward with immigration policy reform over
gridlocked Congress’ objections, this crisis brought a new dimension to the board.
How do all levels of government respond when over 60,000 children cross into the
states in less than a year’s time (Park 2014), many fleeing impossible situations in
their native country? Cristina Rodriguez notes that ‘‘state and local authority in this
domain is limited, but it exists . . . state and local police historically have played a
role alongside the federal government (2014).’’ In this case, the crisis was one of
intergovernmental concern as not only law enforcement but social service workers,
immigration administrators, judges, and federal resources were needed quickly.
However, partisan politics fueled opposition to a supplemental budget request to
help alleviate the crisis. Democrats also stalled, afraid the funds would be used to
more quickly send the children back to dangerous countries (Shear and Peters
2014).
Such was the context for President Obama’s November 2014 executive actions
that would allow many illegal persons to remain in the USA. The executive action
targeted two groups in particular. First, about 3.7 million undocumented
immigrants who have a child that is a U.S. citizen and have been in the USA for
five years would be allowed to stay. Second, the president expanded the Deferred
Action for Childhood Arrivals (DACA) program, which he initiated by executive
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order in 2012, by granting protective status to over a million persons brought by
their parents to the USA illegally when they were children. The expansion includes
any person brought to the USA in 2009 or earlier (O’Keefe and Ehrenfreund 2014).
All of these people would have temporary legal status and be eligible to work in the
USA. Obama’s actions, though, did not address the other approximately six million
undocumented immigrants. However, the White House did seek to turn the focus
to deporting security threats and criminals (O’Keefe and Ehrenfreund 2014).
In response to the unilateral action, congressional and intergovernmental
conflict surged again. After all, the states and localities would be the frontline in
subsuming over five million newly legal immigrants and providing necessary
services. Republicans were opposed to any presidential response to immigration
issues, especially after a bitter battle over funds requested to alleviate the summer
surge of child immigrants. Democratic members of Congress were concerned that
the immigration changes would affect localities negatively and harm reelection
chances (Nakamura 2014). In early 2015, the Republican-controlled House sought
to tie funding for the Department of Homeland Security to a reversal of the
President’s actions on immigration policy, albeit unsuccessfully.
In a move supported by Republican congressional leaders, officials from twentysix states joined a lawsuit filed by the Texas Attorney General seeking to halt
implementation of the president’s executive actions (Foley 2015; Jaffe 2015).
Federal district judge Andrew S. Hanen in February 2015 agreed to enjoin
enforcement of these executive actions, in a decision that the administration
appealed to the Fifth Circuit Court of Appeals. Therefore, the battle continues with
state and local opposition, proponents’ support for reform, and the polarized
positions of parties on Capitol Hill. In this policy arena, stalled legislative/executive
action and intergovernmental conflict will be pushed into the judicial arena for
adjudication.
Health Policy
President Obama and a Democratic-controlled Congress passed the ACA of 2010 as
part of a process that began when Democrats benefited from a rare sixty-vote
filibuster-proof senate majority. Although Congress has made several minor
changes to this health-care law in the ensuing five years, for the most part the
policy battles regarding concerns about the act have played out in the courts, in
state governments, and in negotiations between state officials and Obama
administration officials in the Department of Health and Human Services, with a
particular focus on the law’s Medicaid expansion provision.
In 2012, the Supreme Court upheld the constitutionality of most of the ACA but
struck down the mandatory expansion of eligibility for the federal state Medicaid
program. The ACA had called for states to expand Medicaid eligibility to nearly all
State of American Federalism 2014–15
359
Americans under age sixty-five with family incomes at or below 138 percent of the
federal poverty level. The federal government would pay 100 percent of the cost of
covering the newly eligible in the short run and 90 percent in the long run.
However, the Supreme Court ruled that this mandate—and particularly the
stipulation that the federal government could withhold all of a state’s existing
Medicaid funds if the state did not comply with the new mandate—was unduly
coercive. The Court’s ruling thus leaves the decision of whether or not to
participate in the expansion in the hands of each state’s elected leaders.
Since the Supreme Court ruling, twenty-nine states and the District of Columbia
have opted to extend Medicaid eligibility, whereas twenty-one states have thus far
chosen not to participate. The decision to opt in or out thus far has been largely
driven by partisanship (see table 1). Within a few months of the Supreme Court’s
June 2012 decision, every Democratic governor had declared an intention to
expand Medicaid. Republican-controlled legislatures have blocked several of these
efforts. No Republican governor signed on until after the 2012 election, and even
then most continued to express strong opposition. This partisan split at the state
level mirrors the federal pattern, as not a single Republican in Congress voted for
passage of the ACA, although nearly every Democrat did (Jacobs and Skocpol
2012). Several empirical studies confirm that party composition of government has
been the single best predictor of state participation thus far (Jacobs and Callaghan
2013; Barrilleaux and Rainey 2014). These results are consistent with NicholsonCrotty’s (2012) finding that, over the past fifty years and across various policy
arenas, ‘‘partisanship appears to explain the high-profile rejections of federal money
by the states quite well.’’
However, this partisan pattern is clearly not the full story. Ten Republican-led
states have expanded Medicaid, as shown in table 1. In addition, several Republican
governors—including, most recently, Robert Bentley of Alabama and Pat McCrory
of North Carolina—who previously had opposed expansion have begun to express
support. These state leaders appear to be ‘‘cross-pressured’’ by other political and
economic forces that are pushing them toward participation despite partisanship
and ideology (Jacobs and Callaghan 2013). These cross-pressures include public
opinion, interest group pressure, and budgetary considerations, among others
(Rose 2015).
First, public opinion polls indicate strong public support for Medicaid
expansion, even in red states, and even where a majority of residents disapprove of
President Obama and the ACA. In one survey, between 58 and 65 percent of the
residents of Alabama, Georgia, Louisiana, Mississippi, and South Carolina favored
expansion (Ollove 2013). Second, powerful special interest groups such as state
hospital associations and chambers of commerce are pushing for expansion in
many states. Medicaid expansion reduces the uninsured population, thereby
alleviating hospitals’ uncompensated care costs, which in turn alleviates the
S. Rose and C. J. Bowling
360
Table 1 Status of state Medicaid expansion decisions as of April 2015
State
Status
Year adopted
Governor’s
party
Legislative
majority party
Indianaa
Montana
Pennsylvaniaa
New Hampshirea
Arizona
Arkansasa
California
Colorado
Delaware
District of Columbia
Illinois
Iowaa
Kentucky
Maryland
Massachusetts
Michigana
Minnesota
Nevada
New Jersey
New Mexico
North Dakota
Ohio
Oregon
Rhode Island
Washington
West Virginia
Connecticut
Hawaii
New York
Vermont
Alabama
Alaska
Florida
Georgia
Idaho
Kansas
Louisiana
Maine
Mississippi
Participating
Participating
Participating
Participating
Participating
Participating
Participating
Participating
Participating
Participating
Participating
Participating
Participating
Participating
Participating
Participating
Participating
Participating
Participating
Participating
Participating
Participating
Participating
Participating
Participating
Participating
Participating
Participating
Participating
Participating
Not participating
Not participating
Not participating
Not participating
Not participating
Not participating
Not participating
Not participating
Not participating
2015
2015
2014
2014
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2012
2012
2012
2012
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
R
D
R
D
R
D
D
D
D
N/A
D
R
D
D
D
R
D
R
R
R
R
R
D
D
D
D
D
D
D
D
R
R
R
R
R
R
R
R
R
R
R
R
S
R
R
D
D
D
D
D
S
S
D
D
R
D
D
D
D
R
R
D
D
D
D
D
D
D
D
R
R
R
R
R
R
R
D
R
(continued)
State of American Federalism 2014–15
361
Table 1 Continued
State
Status
Year adopted
Governor’s
party
Legislative
majority party
Missouri
Nebraska
North Carolina
Oklahoma
South Carolina
South Dakota
Tennessee
Texas
Utah
Virginia
Wisconsin
Wyoming
Not
Not
Not
Not
Not
Not
Not
Not
Not
Not
Not
Not
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
D
R
R
R
R
R
R
R
R
D
R
R
R
N
R
R
R
R
R
R
R
R
R
R
participating
participating
participating
participating
participating
participating
participating
participating
participating
participating
participating
participating
Sources: Advisory Board Company, Henry J. Kaiser Foundation, National Conference of State
Legislatures.
Note. Party control variables are for 2014. R ¼ Republican, D ¼ Democrat, S ¼ Split party control,
N ¼ Nonpartisan.
a
States with Section 1115 expansion waivers.
‘‘hidden health care tax’’ that increases business’s costs of covering their workers
(Duval 2013). Third, from a budgetary perspective, since the federal government is
footing the vast majority of the bill, states that opt out are potentially forgoing
hundreds of millions of dollars in federal funding each year that could give their
state’s economy and employment figures a boost. Meanwhile, the state’s taxpayers
must continue to pay the federal income taxes that finance the cost of expansion in
participating states and continue to bear the financial burden of a larger uninsured
population within the state. Of course, states must share in the long run cost of
expansion; these additional costs are not trivial, particularly given that the typical
state already spends more on Medicaid than any other program.
In a growing number of states, officials are turning to waivers as a way to
reconcile these competing pressures. Federal law permits the U.S. Secretary of
Health and Human Services to waive certain Medicaid requirements so as to allow
state experimentation with new health-care approaches, as long as they promote the
objectives of the Medicaid program. In 2013, Arkansas became the first state to get
federal approval for a ‘‘private option’’—using federal Medicaid funds to buy
private health insurance for the state’s low-income populations rather than
expanding eligibility for the state’s traditional Medicaid plan. Several Republicanled states including Iowa, Michigan, and Indiana have followed suit, adding to the
private-option model a variety of conservative provisions, such as requirements
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S. Rose and C. J. Bowling
that beneficiaries pay monthly premiums or make contributions to health savings
accounts, as well as financial incentives to encourage healthy behaviors. Waivers
have thus proven to be politically expedient—allowing conservatives to distance
themselves from the stigma of Obamacare and remain critical of Medicaid while
pursuing federal funds for their states (Jones, Singer, and Ayanian 2014).
Waivers have been used in red states for another reason: the executive branch
typically takes the lead in developing the proposal and negotiating with the federal
government, while the legislature largely sits on the sidelines—a dynamic known as
‘‘executive federalism’’ (Thompson and Burke 2007; Weissert and Weissert 2008;
Thompson 2012). Governors, who represent the entire state and must balance the
budget, tend to be more pragmatic and moderate than their legislative
counterparts, and thus predisposed to the practical arguments for expansion. By
contrast, state legislators represent narrower constituencies—often very red or very
blue districts—and may find it politically feasible and even rewarding to take strong
partisan or ideological positions. Indeed, almost without exception, it is governors
rather than legislators who are taking the lead in red states.
Waivers are not a panacea, however; setbacks in several states in early 2015 have
highlighted the limitations of waivers in overcoming conservative opposition. In
February 2015, Tennessee’s Republican-controlled legislature rejected Governor Bill
Haslam’s waiver proposal, known as ‘‘Insure Tennessee,’’ despite strong public
support and intense pressure from special interest groups representing hospitals and
businesses. The proposal, which would have used federal Medicaid funding to help
280,000 residents purchase private insurance, died in a legislative committee despite
Haslam’s efforts to make it conservative friendly through the addition of cost-sharing
requirements and incentives for healthy behavior. By many accounts, the decisive
factor was the mobilization of the Tennessee chapter of conservative political
advocacy group Americans for Prosperity (Bacon 2015). This surprising turn of
events reveals the potential limitations of waivers and ‘‘executive federalism’’ in
overcoming partisan and ideological opposition to the expansion of Medicaid.
Education
In a process that began in 2001 during a period of unified government and was
completed in early 2002, George W. Bush secured bipartisan majorities in Congress
for passage of the NCLB Act. In the thirteen years since passage of NCLB, however,
Congress has generally not been at the forefront of policy-making regarding K-12
schools. As Kenneth Wong discusses in his article for this issue, although Congress
was supposed to reauthorize the NCLB in 2007, Republicans and Democrats in
Congress have been unable to reach agreement on a reauthorization statute, even as
numerous problems surfaced regarding the implementation of the law and it
became clear that few states would meet the law’s requirement that students
State of American Federalism 2014–15
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demonstrate 100 percent proficiency by 2014. In the absence of congressional
action, as Wong shows, the Obama administration has relied on its waiver power
to excuse states from a number of NCLB requirements in exchange for state
officials agreeing to make changes to student and teacher assessment policies, along
with various other K-12 policy changes. If education policy has frequently been
made in recent years in part through negotiations between state and federal
executive officials, other education policy decisions have been made through
interstate negotiations about standards for student achievement.
In 2009, the nation’s governors and state education commissioners initiated the
Common Core Standards Initiative, a set of math and English standards designed
to provide a shared benchmark for comparing the effectiveness of public education
across the states. While this bipartisan initiative originally boasted widespread
support on both sides of the proverbial aisle, in the past year the political ground
has shifted dramatically, as Ashley Jochim and Lesley Lavery discuss in their article
for this issue. Defections by prominent state leaders who once championed the
program evince a surprisingly swift fracture in the bipartisan coalition. Whereas
some prominent supporters like Ohio Governor John Kasich and former Florida
Governor Jeb Bush continue to support the standards, several Republican
governors—including New Jersey’s Chris Christie and Louisiana’s Bobby Jindal—
have sought to distance themselves from Common Core in advance of the 2016
presidential race.
Public support for the Common Core standards also has slipped substantially,
from 65 percent in 2013 to 53 percent in 2014, largely due to the souring of
Republicans on the standards. Common Core appears to be an increasingly tainted
brand among conservatives; survey evidence suggests that the phrase itself elicits
greater antagonism than does the general concept of common standards
(Henderson, Peterson, and West 2015). One reason for the mounting partisan
opposition: after the U.S. Department of Education made eligibility for the
federally-funded Race to the Top program contingent upon adoption of the
standards, conservatives increasingly associated the program with federal overreach.
However, Common Core’s dwindling popularity is not driven solely by
conservative opposition; it also reflects escalating opposition from liberal groups,
such as teachers’ unions and parent–teacher organizations in a growing number of
states. Some teachers complain that the curriculum is inflexible and that its
implementation has been disorganized. Teachers worry that they will be blamed if
students do not score well on the exams (Williams 2014). And parents of various
political persuasions are participating in ‘‘opt out’’ movements in virtually every
state, refusing to have their children sit for the tests (Harris 2015).
In the face of mounting public opposition, state officials have taken a variety of
steps to dismantle or distance themselves from the Common Core, as Jochim and
Lavery document in their contribution to this issue. A number of states have
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sought to ‘‘rebrand’’ the Common Core standards; in Iowa they are ‘‘The Iowa
Core,’’ whereas in Arizona they are ‘‘Arizona’s College and Career Ready
Standards.’’ Such moves have provided state officials with political cover without
making major substantive changes to the standards. Some states have gone further,
either declining to adopt the standards (Alaska, Nebraska, Texas, and Virginia) or
passing legislation replacing them with a state-designed alternative (Indiana,
Oklahoma, and South Carolina).
The Common Core was initially envisioned as a tool for standardizing English
and math objectives and measuring the nation’s students against a universal
benchmark. As certain states repeal or rename the standards or back away from the
testing consortia, Common Core is becoming less common. Frederick M. Hess,
director of education policy at the American Enterprise Institute, points out: ‘‘Part
of the whole point was you were going to have commonality that would let you
compare schools in Chicago to schools in Cleveland. We may not see the benefits
that folks were hoping to see . . . The whole notion of commonality, which was so
attractive, is more and more a phantasm’’ (Brown 2015). What started with broadbased policy buy-in has begun to drift in diverging directions.
Marijuana
For many reasons, 2014 was a watershed year for marijuana policy (Chokshi 2014).
The legal sale of marijuana for recreational use began in Colorado. Several
additional states and the District of Columbia legalized the medicinal or
recreational use of marijuana. President Obama declared ‘‘I don’t think it is more
dangerous than alcohol.’’ Congress blocked the U.S. Department of Justice from
spending money to prosecute medical marijuana patients or dispensaries that abide
by state laws. Public support for legalization continued its steep upward trajectory.
And although marijuana continues to be illegal under the federal Controlled
Substances Act, three-quarters of Americans said they believe its eventual
legalization is inevitable (Pew Research Center 2014).
The past year saw the continued expansion of access to marijuana in the states.
First, the number of states where marijuana may be used legally for medicinal
purposes grew to twenty-three (see table 2). In May 2014, Minnesota’s Democratic
Governor, Mark Dayton, signed legislation approving the use of marijuana for
treatment of some chronic medical conditions, cancer, and epilepsy in children.
One month later, New York’s Democratic Governor, Andrew Cuomo, signed
similar legislation. In 2015, more than a dozen states are slated to consider
legislation legalizing or expanding access to medical marijuana. As the popularity of
legalized medical marijuana soars—with 85 percent of Americans expressing
support—the issue appears to be becoming increasingly less partisan (Fox News
Poll 2013).
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Table 2 State legalization of marijuana for medicinal and recreational purposes
State
Year adopted
Legalization of marijuana for adult recreational
District of Columbia
2014
Alaska
2014
Oregon
2014
Washington
2013
Colorado
2013
Legalization of marijuana for medicinal use
New York
2014
Minnesota
2014
Maryland
2014
Illinois
2013
New Hampshire
2013
Connecticut
2012
Massachusetts
2012
Delaware
2011
Maine
1999, 2011
Montana
2004, 2011
Vermont
2011
Washington
1998, 2011
Arizona
2010
District of Columbia
1998, 2010
New Jersey
2009
Rhode Island
2009
Michigan
2008
New Mexico
2007
Oregon
1998, 2007
California
1996, 2003
Hawaii
2000
Colorado
2000
Nevada
2000
Alaska
1998, 1999
Mechanism
use
Ballot
Ballot
Ballot
Ballot
Ballot
Vote in 2012
Presidential
Election
Initiative
Initiative, Legislation
Initiative
Initiative
Initiative
Legislation
Legislation
Legislation
Legislation
Legislation
Legislation
Ballot Initiative
Legislation
Ballot Initiative,
Ballot Initiative,
Legislation
Ballot Initiative,
Ballot Initiative
Ballot Initiative,
Legislation
Legislation
Ballot Initiative
Legislation
Ballot Initiative,
Ballot Initiative,
Legislation
Ballot Initiative
Ballot Initiative
Ballot Initiative,
Legislation
Legislation
Legislation
Legislation
Legislation
Legislation
Legislation
Obama (D)
Romney (R)
Obama (D)
Obama (D)
Obama (D)
Obama (D)
Obama (D)
Obama (D)
Obama (D)
Obama (D)
Obama (D)
Obama (D)
Obama (D)
Obama (D)
Romney (R)
Obama (D)
Obama (D)
Romney (R)
Obama (D)
Obama (D)
Obama (D)
Obama (D)
Obama (D)
Obama (D)
Obama (D)
Obama (D)
Obama (D)
Obama (D)
Romney (R)
Source: National Conference of State Legislatures.
Second, as noted earlier, voters in Oregon and Alaska approved measures
legalizing marijuana for recreational use in November 2014. The two states joined
Colorado and Washington, which had legalized recreational use of marijuana in
2012. This was the third time that Alaskans had voted on a measure to legalize
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marijuana for recreational purposes; previous attempts were rejected by voters in
2000 and 2004. From a political standpoint, Alaska’s Measure 2 is particularly
noteworthy as it indicates that such initiatives can succeed in conservative states,
too—particularly those with a libertarian inclination (Wallach and Hudak 2014).
From a federalism standpoint, one of the most noteworthy developments of the
year was Congressional Republicans’ attempt to block the implementation of a
ballot measure passed by 70 percent of Washington, DC, voters legalizing the use of
marijuana for recreational purposes. Unlike the measures passed in the
aforementioned four states, Initiative 71 only permits the home cultivation and
possession of small amounts of marijuana. Limitations on DC ballot initiatives
prohibited the District from enacting a regulatory framework for the sale or
taxation of marijuana. Moreover, smoking or consuming marijuana in public
remains prohibited. Nonetheless, shortly after the initiative passed, two House
Republicans attached a rider to a federal budgetary bill forbidding the city from
spending federal or local funds to ‘‘enact’’ the law. District leaders responded that
the initiative had already been enacted when voters approved the measure, setting
off a series of confrontations between federal and state leaders. Congressional
Republicans warned that proceeding with legalization amounted to ‘‘willful
violation of the law,’’ while Democratic Mayor Muriel Bowser warned
Congressional leaders to stop ‘‘bullying the District of Columbia’’ (DeBonis and
Davis 2015). Initiative 71 went into effect in February 2015 as planned. Although
the chapter is not closed, the episode appears to mark an uncommon victory in
DC’s decades-long struggle for the right to govern itself.
In 2014, Colorado became the first state to oversee the legal sale of retail
marijuana. Although possession, consumption, and small-scale home cultivation
and noncommercial transfers have been legal under the initiative known as
Amendment 64 since the end of 2012, retail sales did not become legal until 2014.
The state’s 28 percent sales tax rate generated $53 million in tax revenue in 2014—
somewhat less than economists had predicted and a modest figure compared to the
state’s $27 billion budget. However, the dire consequences that many opponents
had predicted failed to materialize. In fact, marijuana use, crime, and traffic
fatalities appear to have fallen, leading many observers on both the right and left to
declare the experiment’s first year a success (Miron 2014). Democratic Governor
John Hickenlooper, who originally opposed the initiative, has begun to express
cautious support: ‘‘It seems like the people that were smoking before are mainly the
people that are smoking now. If that’s the case, what that means is that we’re not
going to have more drugged driving . . . But we are going to have a system where
we’re actually regulating and taxing something, and keeping that money in the state
of Colorado . . . and we’re not supporting a corrupt system of gangsters’’ (Sullivan
2014).
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However, Colorado’s rollout of Amendment 64 has been the target of a series of
legal challenges, as Sam Kamin observes in his contribution to this issue. Since its
passage in 2012, law enforcement officials in neighboring states have expressed
concern about the state’s ability to contain the effects of the measure within its
borders. In December 2014, the Attorneys General of Nebraska and Oklahoma filed
a lawsuit against Colorado with the U.S. Supreme Court, alleging that Amendment
64 violates the supremacy clause of the Constitution because marijuana remains a
controlled substance at the federal level. Moreover, the lawsuit argues that the two
states have experienced a ‘‘significant influx’’ of Colorado-sourced marijuana and
will incur increased costs from arrests, seizure of contraband, and transfer of
prisoners. Given how infrequently states sue one another, and given that the U.S.
Justice Department has chosen not to challenge state laws legalizing marijuana,
legal scholars have expressed surprise and skepticism. Drug law expert Robert
Mikos has called the lawsuit a stretch, noting: ‘‘A state is constitutionally allowed to
legalize something the federal government forbids. As long as the state of Colorado
is not actively participating in a federal crime or actively subsidizing one, there is
nothing the federal government can do’’ (Koppel 2014).
Same-Sex Marriage
The policy arena of same-sex marriage has undergone a rapid and dramatic
transformation over the past several years, and the pace only accelerated in 2014–
2015. Between January 2014 and March 2015, the number of states where same-sex
marriage is legal more than doubled from seventeen to thirty-seven. A majority of
states that legalized same-sex marriage prior to 2014—such as New York, Hawaii,
and Minnesota—did so voluntarily through legislation. The more recent wave of
same-sex marriage legalization has occurred as a result of federal and state court
rulings in predominantly conservative states in the South and Midwest. As such,
many of these recent changes in same-sex marriage have been bitterly contested.
The recent flurry of court activity in same-sex marriage can be traced to United
States v. Windsor, 133 S.Ct. 2675 (2013), the Supreme Court decision that struck
down the provision of the Defense of Marriage Act (DOMA) that denied federal
benefits to same-sex couples in states that recognize same-sex marriage. Writing for
the five-justice majority, Justice Anthony Kennedy cited federalism as an important
basis for the decision, emphasizing the federal government’s historical deference to
the states in the area of domestic relations. However, it was another part of his
opinion—the argument that DOMA imposed ‘‘a disadvantage, a separate status,
and so a stigma upon all who enter into same-sex marriages made lawful by the
unquestioned authority of the states,’’ violating the Constitution’s guarantees of
due process and equal protection—that the lower courts subsequently focused on
in their rulings in favor of same-sex marriage. Following Windsor, proponents of
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same-sex marriage scored a virtually unbroken string of more than forty legal
victories in state courts, federal district courts, and federal appeals courts.
In the absence of a split among the federal appeals courts, the Supreme Court in
October 2014 declined to hear appeals from five states where the courts had struck
down same-sex marriage bans. The decision delivered a tacit victory to supporters
of same-sex marriage, allowing lower-court rulings to stand in Indiana, Wisconsin,
Utah, Oklahoma, and Virginia. The decisions also paved the way for same-sex
marriage to proceed in six additional states: West Virginia, North Carolina, South
Carolina, Kansas, Colorado, and Wyoming. In addition to greatly increasing the
number of states where same-sex marriage is legal, the decision sent a powerful
message that the high court saw no reason to reinstate the bans that lower courts
had struck down.
A circuit split emerged in November 2014, however, when a divided three-judge
panel of the Court of Appeals for the Sixth Circuit in Cincinnati upheld the right
of four states—Michigan, Ohio, Kentucky, and Tennessee—to ban same-sex
marriage. In the decision, Circuit Judge Jeffrey Sutton argued that the issue was
better decided through the political process than the court system. In light of the
resulting circuit split, the Supreme Court announced that in 2015 it would hear
cases brought by fifteen same-sex couples in those four states, focusing on two
questions: ‘‘Does the Fourteenth Amendment require a state to license a marriage
between two people of the same sex?’’ and ‘‘Does the Fourteenth Amendment
require a state to recognize a marriage between two people of the same sex when
their marriage was lawfully licensed and performed out-of-state?’’
The Court’s decision in Windsor and its subsequent refusal to consider appeals
from supporters of gay marriage bans suggest that it will likely rule in favor of
same-sex marriage, thereby settling the question once and for all. However, the
Court also has a history of cautiousness in this area; in Hollingsworth v. Perry, 133
S.Ct. 2652 (2013), regarding California’s Proposition 8, the Court dodged the
constitutional question by dismissing the case based on an issue of standing (Liptak
2015). In 2015, following the expansion of same-sex marriage to thirty-seven states
which are home to nearly three-quarters of the nation’s population, the Court may
be more open to tackling the constitutional question. Moreover, research indicating
that public opinion influences the court suggests that the rapidly rising share of
Americans who believe gays and lesbians have a constitutional right to marry—60
percent according to one recent poll (Greenberg Quinlan Rosner Research 2015)—
may nudge the Court in that direction as well (Epstein and Martin 2010).
Previously, some observers had voiced concern that a Court mandate that got out
ahead of public acceptance might cause a backlash; these recent changes may be
sufficient to assuage such concerns (Socarides 2015). Thus, at least in this area, the
Courts are leading same-sex marriage policies to convergence across the states.
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The Supreme Court
Bond v. United States, 134 S.Ct. 2077 (2014) was the leading case in 2014 and 2015
concerning the extent of congressional power—specifically, whether the treaty
power can be used to expand congressional authority. However, the Court declined
to reach the constitutional issue, and instead issued a decision interpreting the
congressional statute in question in a narrow fashion. As a result, Bond will have no
meaningful effect on federal state relations. Thus, from a federalism standpoint, the
ruling is more interesting for what it did not do than for what it did.
The federal government prosecuted Carol Anne Bond for violating a 1998
federal law implementing an international convention banning the use of chemical
weapons. Bond had taken toxic chemicals from the pharmaceutical lab where she
worked and applied them to the mailbox, car, and doorknob of a woman who had
been having an affair with Bond’s husband.
All nine justices agreed that the federal government had gone too far in
prosecuting Bond. The six-justice majority, in an opinion by Chief Justice John
Roberts, ruled that: ‘‘Because our constitutional structure leaves local criminal
activity primarily to the States, we have generally declined to read federal law as
intruding on that responsibility, unless Congress has clearly indicated that the law
should have such reach. The Chemical Weapons Convention Implementation Act
contains no such clear indication, and we accordingly conclude that it does not
cover the unremarkable local offense at issue here.’’ The ruling was an application
of the avoidance doctrine, whereby ‘‘normally the Court will not decide a
constitutional question if there is some other ground upon which to dispose of the
case.’’
However, the remaining three justices—Antonin Scalia, Clarence Thomas, and
Samuel Alito—held that the federal government’s prosecution of Bond was not
only unwarranted but also unconstitutional. In a scathing critique of the majority
opinion, Scalia argued that the Constitution’s necessary and proper clause does not
confer an independent power on Congress to implement treaties: ‘‘a power to help
the President make treaties is not a power to implement treaties already
made . . . Once a treaty has been made, Congress’s power to do what is ‘necessary
and proper’ to assist the making of treaties drops out of the picture.’’ In a
concurring opinion, Thomas posited limits on the treaty power itself, opining that
‘‘even if a treaty may reach some local matters, it still must relate to intercourse
with other nations.’’
Conservative groups had seized on the case, hoping that—with the executive and
legislative branches largely sidelined by political gridlock—the Court would limit
Congress’s powers and deliver them a victory. Yet as legal scholar Heather Gerken
(2014, 90–91) notes, for state sovereignty advocates, Bond proved to be ‘‘another
setback in the epic battle to stave off an overweening federal government . . . For the
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nationalists, Bond followed the comedic tradition of tragedy averted . . . the threat
to congressional power turned out to be fleeting.’’
In 2014, two environmental cases had significant federalism implications. First,
the Court upheld the U.S. Environmental Protection Agency’s Cross-State Air
Pollution Rule in Environmental Protection Agency v. EME Homer City Generation,
L.P., 134 S.Ct. 1584 (2014).
In this case, a coalition of fifteen states, along with several energy companies
and labor unions, challenged the Environmental Protection Agency (EPA)’s rules
regulating coal-fired power plant emissions in ‘‘upwind’’ states for the benefit of
‘‘downwind’’ states. However, the Court held that the EPA had not exceeded its
statutory authority under the Clean Air Act. Second, the Court largely upheld the
EPA’s ability to regulate greenhouse-gas emissions—challenged by numerous
parties including several states—in Utility Air Regulatory Group v. EPA, 134 S.Ct.
2427 (2014). The Court allowed the EPA to require greenhouse-gas controls on
power plants and other large stationary sources of pollution. However, the Court
rebuked the EPA for changing emission standards without clear guidance from
Congress—even if it did so in a limiting fashion, to prevent the standards from
applying to smaller emitters like apartment buildings and schools. Justice Antonin
Scalia, writing for the majority, noted, ‘‘EPA is getting almost everything it wanted
in this case.’’ The EPA’s ability to pursue climate change regulation under existing
authority provided by the Clean Air Act is particularly noteworthy given that
congressional gridlock has prevented Democrats from advancing comprehensive
climate change legislation and has led most recently to the EPA’s proposed Clean
Power Plan, analyzed by Kirsten Engel in her article for this issue.
In the run-up to the November 2014 election, the Court was asked for
emergency orders to stay lower court decisions regarding state voter ID
requirements, cutbacks in early voting, and limitations on same-day voter
registration. Republican legislatures in several states had imposed these restrictive
voting laws in response to the Supreme Court’s ruling in Shelby County v. Holder,
133 S.Ct. 2886 (2013), which struck down the longstanding formula in the Voting
Rights Act of 1965 for determining which states and localities had a history of
voting discrimination that required them to get federal approval before changing
their voting rules and procedures. Although Congress could update this formula
and proposals have been introduced for doing so, in the absence of congressional
action the preclearance provision of the Voting Rights Act is not currently in effect.
For the most part, the Supreme Court allowed these state election changes to take
effect—upholding a Texas voter ID law, early-voting cutbacks in Ohio, and
limitations on same-day registration in North Carolina. However, the Court did
not allow Wisconsin’s voter ID law to take effect due to its last minute
implementation. As legal scholar Richard Hasen noted, the outcome of these orders
was largely predictable for two reasons. First, ‘‘there is a consistent theme in the
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court’s actions, which we can call the ‘Purcell principle’ after the 2006 Supreme
Court case Purcell v. Gonzalez: Lower courts should be very reluctant to change the
rules just before an election, because of the risk of voter confusion and chaos for
election officials’’ (Hasen 2014). Second, Hasen notes that with a few exceptions,
the justices’ votes largely reflect their ideological or partisan leanings, with the
conservative majority largely voting to uphold the restrictive voting laws and the
four liberal justices dissenting.
The year 2014 also saw various Supreme Court rulings of note either upholding
or invalidating state or local laws. In Schuette v. Coalition to Defend Affirmative
Action, 134 S.Ct. 1623 (2014), the Court upheld a Michigan constitutional
amendment—passed by voter initiative—that prohibits state universities from
considering race as part of its admissions process, ruling that the amendment does
not violate the Constitution’s Equal Protection Clause. In Town of Greece v.
Galloway, 134 S.Ct. 1811 (2014), the Court allowed more leeway for governmentsanctioned prayer at local meetings. By contrast, in Hall v. Florida, 134 S.Ct. 1986
(2014), the Court limited state discretion in determining whether a capital
defendant is intellectually disabled and therefore cannot be executed. And in
McCullen v. Coakley, 134 S.Ct. 2518 (2014), the Court unanimously ruled that a
Massachusetts law that makes it a crime to stand on a public road or sidewalk
within thirty-five feet of a reproductive health-care facility violates the First
Amendment. However, the Court left open the possibility that states may use other
methods to address violence and harassment at abortion clinics.
The court agreed to hear two cases with potentially important implications for
federalism in 2015. The first, Obergefell v. Hodges, Docket No. 14-556 (2015),
concerns whether there is a federal right to same-sex marriage (as discussed earlier).
The second concerns federal subsidies for health-care insurance under the ACA. In
November 2014, the Supreme Court agreed to hear King v. Burwell challenging the
federal government’s authority to provide subsidies to people who buy insurance in
federally operated insurance exchanges under the ACA. The case hinges on the
ACA’s statutory language stipulating that tax credits would be available for health
plans purchased ‘‘through an Exchange established by the State.’’ The plaintiffs
have argued that this language suggests that consumers who buy insurance through
federally run exchanges are not eligible for subsidies—contrary to an Internal
Revenue Service (IRS) rule that has permitted subsidies for all exchanges, regardless
of whether they are state or federally operated.
The Supreme Court’s decision to hear the case surprised many, given the
absence of a split in the lower courts. The Fourth Circuit unanimously upheld the
IRS rule, reasoning that ‘‘the applicable statutory language is ambiguous and
subject to multiple interpretations’’ and that the IRS rule was ‘‘a permissible
exercise of the agency’s discretion.’’ Although a DC Court of Appeals panel
reversed this decision—concluding that the ACA unambiguously restricts the
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subsidy to insurance purchased on state exchanges—the full DC Court of Appeals
subsequently vacated that ruling.
The outcome of King v. Burwell has potentially enormous implications, affecting
approximately 7.5 million people who have purchased health insurance through the
federal HealthCare.gov site. If the plaintiffs prevail, these individuals would see
their cost of insurance rise, and those who are unable or unwilling to pay the full
cost would likely lose their coverage (Bagley, Jones, and Jost 2015). Moreover, such
a ruling would threaten the overall integrity of the ACA: without subsidies,
insurance would be unaffordable for many, rendering the individual mandate
politically and morally questionable (Gostin 2015).
Fiscal Status
The fiscal status of the states in 2014–2015 offers few surprises, with continuing
signs of economic recovery in many states and the usual areas of resource
uncertainty. The landscape continues to be complicated by indecisiveness at the
national level, and states still struggle to fund increasing needs in some service
areas.
Overall, the states continue their modest economic recovery. Enacted fiscal 2015
budgets anticipate an increase of 3.1 percent over FY 2014, an expenditure level
that overall is lower than the 4.9 percent increase in 2014 (NASBO 2014). Despite
aggregate growth in FY 2014, nineteen states suffered revenue declines from 2013
levels, indicating much variability across the states (NASBO 2014). At the end of
FY 2014, half of the states had collected more funds than originally forecast; half
were on target or under projections. Currently, in the majority of states, revenue
collection for FY 2015 is largely on target. Legislative fiscal officers in forty states
expect to meet or exceed revenue projections; only six states project lower than
expected revenue (NCSL 2015). Despite uncertainty in revenue projections and less
than expected collections, states have cut taxes and fees by an estimated $2.3 billion
in FY 2015, a slight increase over 2014 reductions. Overall in FY 2015, twenty-one
states adopted net tax cuts and ten enacted increases.
Budgeted expenditure increases are seen primarily in K-12 education and
Medicaid. Thirty-nine states enacted increases for K-12 education totally over $11
billion. Thirty-six states increased Medicaid expenditures by a total of $8.5 billion.
A majority of states also increased expenditures for Higher Education and
Corrections. Although budget increases were the norm, some states made cuts to
these areas—six states cut K-12 education; seven states decreased higher education
expenditures; and twelve states cut corrections expenditures. For the second year in
a row, across the states, public assistance programs received net budget decreases
(NASBO 2014). A few states face gaping shortfalls with highly politicized proposed
solutions. In publicized moves, two GOP Governors with Presidential aspirations,
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Scott Walker of Wisconsin and Bobby Jindal of Louisiana, have proposed massive
cuts in higher education (Bidwell 2015). In Alabama, a GOP governor pushes for
tax increases.
Almost half of the states are reporting that at least one category of state
spending will experience budget shortfalls. Medicaid programs pose by far the most
challenging expenditure problems; over a quarter of states project to be over
budget, including estimates of $170 million and $100 million shortfalls in Louisiana
and Mississippi, respectively. Other problem areas include corrections (with at least
nine states over budget), K-12 education (eight states), and social services (Kansas,
New York, Vermont, and Washington) (NCSL 2015). Several states face a rocky
future heading into FY 2016. For instance, Alabama, which must ‘‘pay back’’
money to a state trust fund that carried state programs through the last few years
of slow revenue growth and increase funding to its beleaguered general fund, is
estimated to need between $500 and $700 million in new revenue for FY 2016.
Arizona’s new Republican governor promised tax cuts and changes in education
funding during the campaign but faces a possible half billion dollar shortfall this FY
and more projected in the future. Similar conflicts loom in Kansas, Illinois, and
Maryland (Povich 2015)
As states begin passing FY 2016 budgets, they are again facing uncertainty. With
Republican control of both houses of Congress, states logically fear reductions in
federal transfers, especially in funding arenas the states find problematic—
Medicaid, education, public assistance, and infrastructure/transportation. Medicaid
expenditure needs are expected to grow by 7.1% annually over the next few years,
with enrollment projected to rise 13.2% in FY 2015 (including states that expanded
Medicaid and those that did not) (NASBO 2014). Uncertainty over the impact of
reduced federal funds for Medicaid in 2017 also exists.
Although spending control will be the primary concern of both Houses of
Congress, President Obama released an executive budget proposal in January 2015
that would end ‘‘mindless austerity’’ (Farmer et al. 2015). His budget calls for the
end of discretionary spending caps, which would presumably mean additional
funds to states. After Medicaid, states would welcome intergovernmental transfers
to increase spending on education and transportation. If the discretionary spending
caps are not lifted, education spending would be at the lowest real per-pupil
funding level since 2000, according to the White House. Transportation and
infrastructure expenditures from the state and federal governments have been
uncertain since the Great Recession. Unable to agree, Congress has passed thirtytwo short-term transportation spending bills since 2009. The executive budget
proposal to increase transportation spending comes at a time when bipartisan
support for transportation funding seems to be increasing and states are beginning
to consider gas tax increases (as gas prices lower to less than two dollars per gallon)
in many parts of the country (Farmer et al. 2015; NCSL 2015).
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Although unlikely to pass as is, the President’s budget includes a total increase in
federal transfers to states and localities of about 13 percent. In addition to
transportation, health, and education, additional spending would target community
colleges, Head Start, and local police. On the other hand, the preliminary budget
includes reductions in expenditures for community development block grants,
which localities use for services and improvements to low income citizens and
communities, and other grants to local programs. The importance and role of
federal grants for states and localities are highlighted by Sean Nicholson-Crotty and
Jill Nicholson-Crotty in their article in this issue. They provide an analysis that
investigates interstate variation in the amount of ‘‘pass-through’’ funds sent to state
governments and then distributed to localities or nonprofits.
Contrary to budget requests from the President, the Center on Budget and
Policy Priorities predicts that Congressional leaders will seek to reduce federal
budget deficits through more cuts to programs (Greenstein, Joel, and Isaac 2015).
At the same time, paradoxically, House leaders are pushing permanent tax cuts,
primarily corporate deductions (Marr and DeBot 2015). In all likelihood though,
budgetary stalemates between the President and Congress will continue with at least
three possible consequences. First, sequestration could remain in place leading to
continuing budget rigidity and austerity. Second, the budgeting process will remain
piecemeal. Short-term budget extensions, continuing resolutions, and repeatedly
looming deadlines will be the norm. Finally, both federal and state programs will
continue to face uncertainty, making long-term planning and programming highly
problematic.
Conclusion
In the introduction to this piece, we noted that the state of American federalism is
characterized by inertia and centrifugal force. As in the last few years, party
polarization and Congressional impasse describe the national stage. Even though
the mid-term elections unified both houses under Republican control, the
ideological divisions within the Republican Party and the bitter opposition to
President Obama’s proposals make agreement and compromise very unlikely. This
Congressional vacuum has pushed policy-making to other political actors—citizens,
state legislatures and governors, the president, executive departments and agencies,
and the federal judiciary. As Pickerill and Bowling (2014) concluded in the last
annual review, ‘‘the nature of American federalism and intergovernmental relations
seems to take shape largely in an ad hoc manner, dependent on the issue and the
partisan orientation of individual states’’ (394).
With Congress largely sidelined, policy has followed a diverse set of alternative
institutional pathways. Some of these pathways have yielded predictable outcomes,
while others have led in not-so-predictable directions. In some cases, as with
State of American Federalism 2014–15
375
same-sex marriage, the federal courts have been the key actors, producing
convergence and likely national uniformity. In other cases, the President has
bypassed Congress, either by taking unilateral executive action (as with
immigration) or through administrative rule-making (as with the EPA), in a way
that also generally leads to uniform outcomes. However, as Engel demonstrates in
her article in this issue focusing on the wide variation in the carbon-reduction
targets established for states under the EPA’s Clean Power Plan, such developments
still allow for some variation in policy outcomes. In still other cases, as with
Medicaid and NCLB waivers, the federal executive has negotiated with state officials
to reach agreements to grant policy leeway. This path often leads to somewhat
particularistic outcomes. In a final set of cases, as with marijuana and gun laws,
state legislatures and electorates are the main actors, bypassing Congress and other
federal officials. This activism within states leads to highly particularistic and
divergent policy outcomes.
We have focused on the ways in which various political institutions and
actors have filled the vacuum created by congressional deadlock. In one sense,
this is a departure from recent years, when Congress was responsible for enacting
major changes in education, health care, and other policy areas. In a broader
sense, however, these developments are perhaps in keeping with enduring
patterns in American federalism, which has long allowed for a variety of
pathways to policy-making depending on the circumstances. Additionally, as was
well detailed by Agranoff and Radin (2015), a full range of federal, state, and
local actors wield influence in the U.S. federal system at various points and
within different policy arenas. In the current political context and for the
foreseeable future, American federalism is characterized by a substantial dispersion
of power.
Note
The authors thank Tyler Finn for research assistance, the Rose Institute of State and
Local Government for support, and John Dinan and two anonymous referees for
helpful comments on earlier drafts.
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