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The Biggest Issues Facing State Legislators in 2021

by John Haughey, FiscalNote

The pandemic will pare 2021 state priorities to mitigation and economic recovery. A look at the top issues on legislative agendas next year.

FiscalNote State Legislation 2021

The COVID-19 pandemic will winnow down priorities for the nation’s 7,383 state legislators in 2021 to diminishing the disease, containing its devastation, and developing economy recovery strategies. That would be challenging enough in a stable political environment but, in the aftermath of one of the most divisive election cycles in modern American history, potential upheaval could change the calculus for state lawmakers in 2021.

With 80 percent of legislative seats across 44 states — 5,876 seats — on November’s ballot, dealing with all things pandemic will likely fall to a significantly altered cadre of legislators in 2021. Lawmakers will still contend with their two most prominent responsibilities in 2021: education and healthcare — both of which have been and will continue to be drastically affected by the pandemic. Transportation and infrastructure spending, the environment, gun control, and tax policy will also remain on legislative dockets along with emerging issues, such as facial recognition technology, college athletes’ bills of rights, and insurance reform finding traction. But contending with dramatic revenue declines and mounting expenses related to the pandemic will be an all-encompassing priority in every state capitol beginning in January.

To prepare for the upcoming policy discussions, we bring you seven of the issues that will be most commonly addressed by state lawmakers in 2021.

1. Budget/Finances

When the COVID-19 outbreak emerged in March, it snapped a decade of growth in state tax collections as most state legislatures were in session crafting the Fiscal Year 2021 budgets. 

Total tax revenue shortfalls for all 50 states fell by about $75 billion during the last four months of FY20 and will decline by $125 billion in FY21.

The Urban-Brookings Tax Policy Center

The upheaval upended the last quarter of FY20 budgets with states collectively hammered by revenue declines of 49 percent in April, 21 percent in May, and 13 percent in June compared with the same months the previous year. The Urban-Brookings Tax Policy Center estimates total tax revenue shortfalls for all 50 states fell by about $75 billion during the last four months of FY20 (46 states have July 1-June 30 fiscal years) and will decline by $125 billion in FY21. The Center on Budget and Policy Priorities (CBPP) estimates state budget shortfalls averaged nearly 10 percent in FY20 budgets and will decline by more than 20 percent in FY21.

The underway pandemic forced lawmakers in some states, including Pennsylvania, New Jersey, and Massachusetts, to adopt stopgap plans that were later revised. Other state legislatures approved FY21 plans where governors used line-item vetoes and other emergency executive actions to defer expenses and cut spending from budgets before the fiscal year went into effect on July 1. 

The revenue drop-off and pandemic-induced increase in expenditures prompted state and local governments, which employ 13 percent of the nation’s workforce, to lay off or furlough 1.5 million workers by June. While that number of “lost” state and municipal workers has been whittled back since, most states will enter 2021 with general hiring freezes.

Additionally, nearly all states are drawing on reserves. The good news is 33 state legislatures, in the wake of the 2008-09 Great Recession, had built up a combined $75 billion in rainy day funds that were available to plug budget holes.

20
Percent

State budget shortfalls average in FY21 budgets, according to estimates from the Center on Budget and Policy Priorities (CBPP).

In planning FY22 budgets, however, state fiscal managers face myriad uncertainties in preparing the revenue projections that lawmakers will use when they convene 2021 sessions early next year. Only one thing is sure: revenues will decline while costs related to unemployment, Medicaid, social services, and other assistance programs are unlikely to substantially decrease until the pandemic subsides and a full economic recovery can begin. 

Nearly every governor in the country has ordered across-the-board spending reductions, ranging from 3-to-15 percent, for state agencies in submitting FY22 budget requests. A projected 4-percent growth in personal income and sales tax revenues — states’ two largest sources of revenues — in FY22 are now forecast by the Tax Policy Center to each decline by more than 6 percent. Corporate income taxes, the third-largest revenue source for most states, are also expected to decline. Moody’s Analytics projects that, without a federal aid package, states and local governments would need to slash more than $500 billion in spending next year.

Tax Revenue Declines by State

CBPP has issued preliminary estimates of general fund tax revenue declines for each state, although not all FY22 forecasts were posted by mid-October. They include: 

State

Tax Revenue Decline $

Tax Revenue Decline %

New Mexico

$1.7 billion

22%

Maryland

$2.6 to $4 billion

13 to 20%

Wyoming

$213 million

19%

Hawaii

$1.4 billion

18%

New York

$16 billion

17%

Alaska

$797 million

14%

Oregon

$1.7 billion

14%

Colorado

$1.7 billion

12%

Connecticut

$2.3 billion

12%

Maine

$434 million

10%

Minnesota

$2.5 billion

10%

Delaware

$396 million

8%

Michigan

$2.1 billion

8%

Washington

$2.3 billion

8%

Washington, D.C.

$606 million

7%

Florida

$2 billion

6%

Vermont

$104 million

6%

Virginia

$1.4 billion

6%

Arizona

$663 million

5%

2. Police Reform

The shooting deaths by police of George Floyd, Breonna Taylor, and Daniel Prude fostered wide-scale police brutality protests and, in some cities, violent confrontations with law enforcement and counter-protestors. While much media attention has focused on a “defund police” movement, those calls have gained little traction beyond a handful of cities, including failed efforts in Minneapolis and Cincinnati.

However, among policing reform issues on the docket for lawmakers in 2021 in most states will be bills addressing police accountability and oversight, qualified immunity, civilian review boards, body cameras, civil rights lawsuits, and triggers to initiate federal investigations of local and state law enforcement agencies.

In 2020, lawmakers in 34 states filed bills related to policing policy, resulting in nearly 600 new bills, 50 of which were adopted. In Colorado, lawmakers became the first in the nation to pass a bill that eliminates qualified immunity for law enforcement. Iowa adopted a similar law that emphasizes racial bias and de-escalation training requirements for officers. The New York Legislature reconvened to pass a package of reform measures that included a repeal of a state law that kept police disciplinary records secret and enacting a statewide ban on chokeholds. And in Georgia, lawmakers passed a series of bills to allow voters in Glynn County to decide in a November referendum whether to abolish their police department. A state judge ruled the referendum unconstitutional, but lawmakers are expected to address it again in 2021.

How policing and criminal justice reform advances in 2021 state legislatures will be influenced by how proposed police policy and funding changes fare in these November ballot measures that will go before voters in Los Angeles, San Francisco, Portland, Philadelphia, Akron, and Seattle.

Los Angeles

The Los Angeles City Council voted to cut $150 million from the L.A. Police Department’s $1 billion budget, and the L.A. County Board of Supervisors trimmed $145 million from its $3 billion sheriff’s department budget. 

Los Angeles voters will vote on a “Reimagine L.A. County” ballot measure that would divert 10 percent of the county’s unrestricted general funds away from law enforcement, courts, and corrections and funnel it into job-generation, housing programs, alternatives to incarceration, and mental health and drug treatment services.

San Francisco

San Francisco voters will see a measure proposing to amend the city’s charter to remove a mandatory minimum of police officers that now requires the city to field 1,971 full-time officers. If adopted, there won’t necessarily be less police, but the police department would be required to submit a report and recommendation for the city’s police commission to consider when approving the department’s budget.

Portland

In Portland, the city council voted unanimously in July to allow voters to decide in November if the city should establish a new police oversight board with the authority to subpoena and impose disciplinary actions, including termination. 

Minneapolis

In Minneapolis, the city council in June unanimously adopted a plan to “dismantle” its police department in response to the George Floyd shooting and subsequent protests. However, it could not legally do so because, like San Francisco, its city charter sets a mandatory minimum staffing level. Voters are likely to see a 2021 referendum asking them to eliminate that mandatory minimum staffing requirement in the city charter.

3. Systemic Racism

Related to policing and criminal justice reform issues, legislatures in many states, if not all, will be presented with bills addressing systemic racism. 

Citing racial health disparities aggravated by the pandemic, Nevada Gov. Steve Sisolak in August issued a proclamation declaring racism a public health crisis. That same day, state lawmakers adopted a resolution supporting the governor’s proclamation and urged action in 2021 and beyond to address it. The resolution requests federal funding be distributed equitably in “direct proportion to disadvantages by individual racial category” and asks systemic racism and “structures of racial discrimination” be incorporated into the criteria lawmakers consider when pondering proposed bills.

In an executive directive, Michigan Gov. Gretchen Whitmer also defined racism as a public health crisis and directed the state’s Department of Health and Human Services to develop strategies to combat racism and health inequities. State lawmakers are expected to file and consider bills implementing those strategies in 2021.

Lawmakers in Arizona, California, New Jersey, and Ohio, introduced similar 2020 legislation that will carry over into 2021 and beyond. In New York and North Carolina, 2021 bills to establish commissions to study racism have been pre-filed.

Additionally, voters in five states will see proposed constitutional amendments on their November ballots. How these measures fare could portend how state legislatures address racism in ensuing 2021 sessions. They are:

Mississippi

State lawmakers in June voted to retire the last state flag in the U.S. bearing the Confederate battle emblem. In November, voters will be asked to adopt an “In God We Trust Flag" with a magnolia design. If the measure fails, another new flag design will be proposed, including a potential reinstatement of the former Confederate-themed flag. 

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California

In 1996, California voters approved an initiative outlawing affirmative action programs that give preference based on race and gender. In November, state voters will see Proposition 16, a proposed constitutional amendment to overturn the affirmative action ban. 

Rhode Island

Gov. Gina Raimondo has signed an executive order to remove the last three words of the state’s official name, “Rhode Island and Providence Plantations,” established more than 140 years before the American Revolution.

Nebraska and Utah

In nearly identical ballot measures, voters in both states will be asked to formally remove language from their state constitutions that provide exemptions to the ban on slavery. Although illegal and unimplemented for more than a century, there are still provisions allowing slavery as punishment for crimes.

4. Redistricing

While the 2020 presidential, U.S. House, and U.S. Senate elections garner much of the attention in the news cycle, state legislature elections will determine, among other things, how state legislative and congressional districts will be drafted and, in doing so, will determine the “field of play” for all elections for a decade.

In November’s state legislature races in 37 states, the party that holds the statehouse majority can control how electoral districts are drawn before 2022 congressional races. Up for election this year in those 37 states are all house representatives in 36 states (half in North Dakota), all state senators in 14 states, about half the state senators in 23 states, and governors in eight states. 

In six states, redistricting of state legislative districts is done by independent commissions. Seven states only have one congressional district each, rendering congressional redistricting unnecessary.

The Republican State Leadership Committee has focused on state legislative elections to sustain its REDMAP plan in place since before the post-2010 Census redistricting that helped Republicans to a decade of statehouse and congressional victories. Democrats’ overall goal is to break up GOP dominance of the process, particularly in Georgia, Florida, North Carolina, Ohio, and Texas. 

The North Carolina Legislature will be drafting districts via court-ordered maps. In Ohio, newly drawn legislative districts must receive bipartisan support or they must be redrafted within four years. 

There were at least seven prospective 2020 ballot proposals seeking to ask voters to create redistricting commissions independent of the legislature, but only these three could gather enough support during the pandemic to qualify:

New Jersey

Voters will decide whether to change the state’s redistricting timeline to coordinate with the state’s legislature elections. New Jersey is one of only two states with legislative elections in 2021. 

If passed, Public Question 3 would amend the state’s constitution to delay legislative redistricting to 2022 if the U.S. Census Bureau fails to deliver redistricting data to the state by Feb. 15.

Missouri

In 2018, Missouri voters overwhelmingly approved a wide-ranging “Clean Missouri” constitutional amendment that restricted gifts from lobbyists to legislators and capped individual campaign contributions for state legislature races. The measure also required the state demographer to redraw Missouri’s congressional and state legislative electoral districts when post-U.S. Census redistricting begins next year, making the Show-Me State the first in the nation where voters approved a redistricting plan that would be based on non-partisan mathematical formulas and demographics.

Amendment 3, one of two proposed constitutional measures on Missouri’s Nov. 3 ballot, seeks to amend “Clean Missouri” by asking voters to allow two bipartisan commissions appointed by the governor — one from the House and one from the Senate — to orchestrate the state’s redistricting plan as they had previously done.

Virginia

Voters will see Amendment 1 on their Nov. 3 ballots, which would ask them to remove the authority to redistrict from the state legislature, giving it instead to a bipartisan commission of citizens and legislators. 

5. Cybersecurity/Ransomware

According to the FBI’s Cyber Division, it receives an average of 4,000 cyberattack complaints a day. Broken down another way, that equates to 1.5 cyberattacks and 16,000 records compromised per “computer minute.” That pace has only accelerated during the pandemic, with so much government administration and school services now being delivered digitally.

The emergence of ransomware — cyberattacks that deny access to or “locks up” data until the victim pays an untraceable Bitcoin “ransom” — puts state governments, municipalities, utility districts, hospitals, critical infrastructure, and school districts in a vulnerable position. There were at least 1,000 ransomware attacks on public agencies and hospitals in 2019. School districts across the country were targeted at least 500 times. 

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During 2020 sessions, state lawmakers considered about 1,000 bills related to cybercrime with nearly 400 bills dealing directly with beefing up cybersecurity defenses against ransomware and malware attacks submitted in 35 states, according to the National Council of State Legislatures. Bills ranged from requiring government agencies to implement cybersecurity training, policies, and practices; increase penalties for computer crime; impose transparency requirements to ensure cyberattacks are reported; and create cybersecurity task forces.

The Florida Legislature, for example, has created the Florida Cybersecurity Task Force in 2019 and unanimously adopted at least two cybersecurity bills in 2020. At least four Florida cities, a sheriff’s department and a police department suffered 2019 ransomware attacks.

Outdated technology, mandated transparency, increasing integration, and lack of user training can mean public entity cybersecurity is only as effective as its weakest link. Hackers also know that governments can be particularly vulnerable because in a world where every police car has a computer, any paralysis of digital systems — such as traffic lights, transportation infrastructure, 911 systems — could cost far more than mere money. In 2018, a ransomware attack cost Atlanta $17 million and in 2019, Baltimore suffered an $18 million attack.

States are pushing Congress for federal funding and assistance in coordinating defenses against malware and ransomware. One proposed House bill — a component of a potential second federal pandemic bill — would set aside $400 million per year for states to tackle ransomware and other cyber threats. In the interim, expect state lawmakers across the nation to submit a wide range of cybercrime and cybersecurity legislation in 2021.

6. Genetic Data Privacy

State lawmakers have adopted a raft of bills over the last decade regarding data privacy rights, especially in relation to businesses’ and healthcare providers’ obligations in ensuring personal information is not disclosed without consent. That general pattern in developing privacy and data use protocols through legislation is expected to continue in 2021 and beyond with a new trend emerging in bills to protect genetic data, especially in reference to health insurance.

Direct-to-consumer DNA genetic testing companies such as 23andMe and Ancestry.com have grown dramatically within the last few years. People purchase these relatively inexpensive tests primarily to identify their ethnic origin, but they can also indicate genetic predispositions for diseases, such as different types of cancer and Alzheimer’s.

However, according to a 2018 study published in the Cornell Journal of Law and Public Policy, more than 40 percent of the 90 companies that offer direct-to-consumer genetic testing did not have policies regarding the use of the data they collect. In the absence of comprehensive federal genetic privacy regulation, state legislatures have adopted a wide-ranging matrix of laws that typically restrict third parties — such as insurers or employers — from accessing genetic data without consent.

California lawmakers in September adopted a privacy law to regulate direct-to-consumer testing companies in how they can use, sell, and share genetic information gleaned from these tests, as well as DNA information that can be obtained from tests in healthcare settings. California’s Senate Bill 980, the Genetic Information Privacy Act, was the second passed in 2020 related to genetic information. It was adopted in the wake of Florida’s precedent-setting legislation that blocks insurers from using DNA test results.

Federal law prevents health insurers from using genetic information in underwriting policies and in setting premiums. Florida’s House Bill 1189 extends those prohibitions to life, disability, or long-term care insurance coverage.

Insurers maintain information gleaned from genetic testing, such as a person’s medical predispositions, could lower insurance premiums across-the-board. But Florida lawmakers said the same rationale could be used to raise rates. Under HB 1189, insurers are prohibited from using genetic information to price policies and offerings. The bill blocks companies from requiring or soliciting genetic information from applicants and forbids DNA-testing companies from providing genetic information to insurers without customer’s permission. Individuals can still volunteer genetic information from third-party tests to insurers. 

California would require DNA testing companies to obtain a consumer’s “express consent” before collecting, using, or disclosing his genetic data. The consent would cover storage of the data and use beyond the primary purpose of the testing service.

Both bills have been hailed as “common-sense baseline privacy protections” by the Future of Privacy Forum. They are likely to be models for bills introduced in legislatures across the country in 2021 and beyond.

7. Occupational Licensing Reform

With an eye on post-pandemic economy recovery, state lawmakers are expected to sustain a trend in repealing or shaving back occupational licensing.

Nearly 20 percent of Americans work in a profession that requires some type of license issued by the state or local governments — a significant increase from a half-century ago when only 5 percent of the nation’s workers were required to do so. The Obama administration in 2015 acknowledged that occupational licensing was an impediment to employment and economic growth with requirements often imposed on relatively low-wage workers. Reform has been embraced largely by both parties.

Florida’s House Bill 1193, the “Occupational Freedom and Opportunity Act,” signed into law by Gov. Ron DeSantis in June, could prove to be a model legislation that lawmakers in other states can replicate. The 94-page bill reduces or eliminates regulatory requirements imposed by 18 state boards that licensed 440,000 Floridians working in a swath of professions, including barbers, real estate agents, certified public accountants, engineers, and auctioneers. The rollbacks will save licensees an estimated $2.176 million in the next three years in repealed fees and training expenses, according to the state’s Division of Business & Professional Regulation (DPBR).

The Florida bill also includes a universal license recognition provision for certain jobs so that certain professions, such as barbers and cosmetologists licensed in other states will be allowed to practice their trades in Florida without having to get re-licensed. 

Other states, however, have been more expansive, and full universal licensing bills are expected to be introduced in 2021 sessions in many states. More than 20 states introduced some form of universal license recognition legislation in 2020 with four states — Ohio, Louisiana, Mississippi, and Indiana — enacting universal licensing recognition legislation for military families transferred to bases in different states. 

This universal licensing trend began in Arizona in 2019 when lawmakers passed a bill to recognize licenses and certifications new residents earned in other states to be recognized in Arizona. Since then, six other states — Pennsylvania, Utah, Montana, Idaho, Iowa, and Missouri — have enacted similar universal recognition legislation permitting out-of-state license holders to get to work in their new states.

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