STATE AND LOCAL UPDATE

December 19, 2017

Policy and Politics

I. Trending Topics

Issue in Focus WHAT TAX REFORM MEANS FOR STATES: With Congress poised to overhaul the federal tax code, much of the impact on states has focused on changes to the state and local tax deduction. However, the Tax Cuts and Jobs Act could provide states with many other direct revenue opportunities and challenges to consider. For administrative simplicity, states conform to the federal code in different ways. On the individual income tax side, 27 states use federal adjusted gross income as their income tax base, while six states use federal taxable income and three states use gross income. Meanwhile, 41 states conform to federal definitions of corporate income, either before or after net operating losses. As a result, federal changes that expand the tax base (by eliminating or limiting certain tax deductions) could mean that states see an increase in revenue collections. The federal plan offsets the increase in revenue from broadening the tax base with lowered and consolidated tax rates, but states set their rates independently.

A. BUDGETS, TAXES, AND REVENUE

TRENDS IN STATE TAX POLICY: The Tax Policy Foundation writes that even as federal tax reform efforts took center stage this year, states continue to engage on tax policy, and certain trends are abundantly clear. State taxation of corporate income is well past its heyday, with states grasping for revenue alternatives from gross receipts taxes to broader sales tax collection authority. Taxes on capital continue to lose popularity and are widely regarded as uncompetitive, though their importance as a revenue stream has kept them in place—albeit under pressure—in many states. As public attitudes about marijuana change, states increasingly see legalization as an opportunity to grow state revenues. Perhaps the most important trend to watch in 2018, however, is one that has yet to begin. Should the federal government adopt substantial tax reform legislation, this will have an almost immediate effect on state budgets (in most cases, increasing revenue through broader bases), which is likely to emerge as the driver for state tax reform considerations in the year to come.

STATE REPUBLICANS REFLECT ON NATIONAL TAX PLAN: While Congress races to pass a massive tax overhaul by the end of the year, Republicans in state capitals across the country find themselves in a bind as they plan their own state budget requirements. On one hand, Republicans at the state level say their party must prove it is able to handle the responsibilities of leadership by notching legislative victories that voters will be able to judge next November. On the other, some legislative leaders say the tax package being pushed by congressional Republicans will undoubtedly impact their states in a negative way, foisting new uncertainty into the budgetary process as tax collections have already begun to sag.

RISING PENSION LIABILITIES: Douglas Offerman, senior director at Fitch Ratings, recently noted that a number of states with the highest pension burdens — Illinois, Kentucky, New Jersey and Massachusetts — help cover the cost of local teachers' pensions. Illinois' unfunded pension liabilities amounted to 22.8% of residents' personal income at the end of fiscal year 2016, compared to a median 3.1% for all states and 1%

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for Florida, the least burdened state. Illinois' net pension liabilities totaled $151.5 billion at the end of fiscal year 2016; New Jersey, $91.8 billion; Massachusetts, $48.9 billion; and Kentucky, $32.8 billion. For this year's report, Fitch used a 6% discount rate to calculate net pension liabilities, down from 7% last year. Forty-six states saw unfunded pension liabilities increase in 2016.

B. HEALTHCARE

HEALTH CARE NEWS YOU MAY HAVE MISSED IN 2017: To say it’s been a big year in health care is a bit of an understatement. From the back and forth of Congressional Republicans' attempts to repeal and replace the Affordable Care Act (ACA) and President Trump's executive orders on health care to the resignation of U.S. Health and Human Services Secretary Tom Price and the declaration of the opioid epidemic as a public health emergency, 2017 was unpredictable. But beyond those headlines that appeared in every news outlet -- big or small, conservative or liberal, online or on TV -- there was plenty more policymaking going on beneath the surface, particularly on the state and local level.

HOW BLUE STATES MIGHT SAVE OBAMACARE’S MARKETS: Blue state officials, who have been working to protect their insurance markets from the Trump administration's efforts to dismantle the health law, are beginning to grapple with strategies for preserving coverage. Those officials — in California, Connecticut, New Jersey and elsewhere — aren't ruling out a state-level requirement that residents must obtain health insurance. But even in the most Obamacare-friendly states, trying to implement an individual mandate could be politically risky, particularly in an election year.

16 Democratic AGs, led by NEW YORK ATTORNEY GENERAL SCHNEIDERMAN, filed comments with the U.S. Department of Health and Human Services (“HHS”) opposing an interim final rule which broadens the types of entities that can claim a religious exemption from the Affordable Care Act’s (“ACA”) requirement that employer-sponsored health plans cover contraceptive services for their employees. In the comments, the AGs argue that the interim final rule violates the Establishment Clause by allowing employers to use their own religious beliefs to discriminate against employees; the Equal Protection Clause by specifically targeting and harming women; and the Administrative Procedure Act by pushing through these new rules without proper factual and legal basis. Further, the AGs argue the interim final rule would force states to incur additional financial burden. As previously reported, 18 Democratic AGs sent a letter to HHS ACTING SECRETARY DON WRIGHT, U.S. DEPARTMENT OF LABOR SECRETARY ALEXANDER ACOSTA, AND U.S. DEPARTMENT OF TREASURY SECRETARY STEVEN MNUCHIN expressing similar opposition. Prior to last month’s elections, no polling had been done on Maine’s first-of-its-kind ballot initiative to expand Medicaid. Considering how controversial the health-care debate in Congress has been all year and the fact that the state elected a Republican governor, health policy experts were expecting a nail biter. But to their pleasant surprise, the vote was quickly called in their favor. The victory in Maine has re-energized Obamacare advocates hoping to replicate that success in other states.

Restrictive network plans such as health maintenance organizations and exclusive provider organizations have fewer in-network providers and fewer options across specialists than less-restrictive

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plans. Yet just 27% of plans in the 2018 marketplace are preferred provider organizations or point of service plans, which offer broader physician networks, a report from Avalere says.

STATES ADOPTING LIMITS ON OPIOID PRESCRIBING: Arkansas has joined at least 24 other states in adopting rules limiting the number and strength of opioid painkillers doctors can prescribe. Republican Gov. Asa Hutchinson, who urged the state medical board to adopt the regulations, called the move an important step in curtailing the “escalating danger” of opioid abuse in the state. The restrictions, based on 2016 guidelines from the Centers for Disease Control and Prevention, require doctors to take a variety of precautions when prescribing highly addictive opioid painkillers and limit prescriptions for acute pain from an injury or surgery to a seven-day supply. As in other states, Arkansas’ new limits do not apply to patients with cancer, in hospice or palliative care, or who are being treated in hospitals or during emergencies (more here).

CHIP REAUTHORIZATION: A bipartisan group of governors is urging Congress to act quickly to reauthorize funding for the Children’s Health Insurance Program. In a letter led by OHIO GOV. JOHN KASICH AND COLORADO GOV. JOHN HICKENLOOPER, the governors said their states are running out of money, and urged lawmakers to find a bipartisan solution. They are joined in making this call by GOVERNORS BILL WALKER OF ALASKA, JOHN BEL EDWARDS OF LOUISIANA, TOM WOLF OF PENNSYLVANIA, CHRISTOPHER T. SUNUNU OF NEW HAMPSHIRE, TERENCE R. MCAULIFFE OF VIRGINIA, CHARLES D. BAKER OF MASSACHUSETTS, BRIAN SANDOVAL OF NEVADA AND MARK DAYTON OF MINNESOTA.

The National Governors Association urged Congress to fund critical health-care programs — including the Children’s Health Insurance Program and community health centers — before the year ends. “These disruptions have not been without consequences, and we write to convey that further delay into 2018 will only compound the issues facing our states and vulnerable citizens,” the leaders of the NGA’s Health and Human Services Committee wrote in a letter to congressional leaders in both chambers on behalf of the association.

BLUE STATES TAKE IN BILLIONS WITH RED STATES ON THE SIDELINES: For years, red states have effectively been subsidizing part of health insurance for blue states. By declining to expand their Medicaid programs as part of the Affordable Care Act, many of those states have passed up tens of billions of federal dollars they could have used to offer health coverage to more poor residents. That means that taxpayers in Texas are helping to fund treatment for patients with opioid addiction in Vermont, while Texans with opioid problems may have no such option.

CHANGING FOOD STAMPS: The USDA is preparing to give states “new flexibility” in administering food stamps, which is properly called the Supplemental Nutrition Assistance Program (SNAP). In a letter to SNAP directors on Nov. 30, a USDA administrator promised increased federal cooperation with states to reduce fraud, promote employment, and improve customer service for food stamp recipients. In the letter, BRANDON LIPPS, ADMINISTRATOR OF THE USDA'S FOOD AND NUTRITION SERVICE, called states "laboratories of innovation" and invited their ideas on how to improve the nutrition program so long as proposed changes "do not increase costs to taxpayers or our various partners on the ground." The letter from Lipps is likely a prelude to changes

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Republican leadership in Congress and the White House will consider next year that remove people from the nation’s welfare programs.

C. ECONOMY AND TRADE

COMMERCE CLAUSE - STATES CHALLENGE CALIFORNIA EGG LAW: More than a dozen states have banded together to ask the U.S. Supreme Court to block a California law requiring any eggs sold there to come from hens that have space to stretch out in their cages. In a lawsuit filed directly to the high court, the states allege that California’s law has cost consumers nationwide up to $350 million annually because of higher egg prices since it took effect in 2015. The lawsuit argues that California’s requirements violate the U.S. Constitution’s interstate commerce clause and are pre-empted by federal law. MISSOURI ATTORNEY GENERAL JOSH HAWLEY, a Republican who is running for U.S. Senate in 2018, is leading the lawsuit. Other plaintiff states are Alabama, Arkansas, Indiana, Iowa, Louisiana, Nebraska, Nevada, North Dakota, Oklahoma, Texas, Utah and Wisconsin. All have Republican attorneys general except Iowa, which has a Democrat.

BGR Insight WEST VIRGINIA AND SOUTH KOREA – LINKED BY FREE TRADE: Frank Ahrens of BGR-PR looks at the U.S.-Korea Free Trade Agreement and writes: “But the truth is, South Korea has other trading partners. The U.S. is South Korea’s No. 2 trading partner, behind China. If this White House tries to renegotiate the KORUSFTA so it’s unfairly balanced against South Korea, or apply tariffs to individual South Korean products, Trump will have a trade war, but it will not turn out to be what he wants. South Korea will reimpose tariffs on U.S. imports, perhaps has high as 14 percent, former Obama White House economist Chad Brown told The Washington Post. This would impact folk all over Appalachia. South Korea’s Hyundai Motor and Kia employ thousands of American workers at their assembly plants in Birmingham, Ala., and West Point, Ga., respectively. The KORUSFTA has enabled these plants to get cheaper parts from South Korean suppliers, which helps keep down the price of your new Hyundai Santa Fe and Kia Sorento and enables the plants to keep their employees working fulltime. The same is true for the coming Samsung manufacturing plant set for South Carolina.”

U.S. TRADE DEFICIT IS WIDEST SINCE JANUARY: The U.S. trade deficit widened in October to a nine-month high on record imports that reflect steady domestic demand, Commerce Department data showed Tuesday. The surge in imports probably reflected merchants preparing for the holiday-shopping season. Consumer goods imports increased almost $800 million, including a $303 million gain in cell phones and other household goods, as well as more inbound shipments of furniture, appliances, toys and clothing. The shortfall in goods and services trade, if sustained, may weigh on economic growth in the fourth quarter after net exports added 0.43 percentage point to gross domestic product in the previous three-month period.

REPUBLICAN GOVERNORS MEET WITH PENCE OVER NAFTA CONCERNS: Republican governors from four U.S. states recently met with Vice President Mike Pence to voice deep concerns over proposed changes to NAFTA that could affect jobs and manufacturing in their states, officials who attended the meeting said. The meeting at the White House included Governors Kim Reynolds of Iowa, Rick Snyder of Michigan, Bill Haslam of Tennessee and Asa Hutchinson of Arkansas, as well as President Donald Trump’s Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer.

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STATES LOOKING TO TACKLE WORKFORCE SKILLS GAP: The National Federation of Independent Business found that 45 percent of small businesses have difficulty finding qualified job applicants. In the manufacturing sector alone, more than 2 million positions will remain unfilled over the next decade because workers lack the right skills. And the shortages are touching a variety of fields that offer reliable, middle-class wages, from automotive technicians to Web developers to insurance specialists. There is much to be said for apprenticeships and training programs, but these must be built on a solid early childhood and K-12 education system. If recent graduates lack reading, math, technology and critical and creative thinking skills, along with essential life skills, they will struggle to find success in a career. That’s where governors are taking action.

D. TECHNOLOGY AND PROCUREMENT

NET NEUTRALITY: Minutes after the FCC’s 3-2 vote, NEW YORK ATTORNEY GENERAL SCHNEIDERMAN announced he would form a multi-state coalition to “stop the illegal rollback,” while WASHINGTON ATTORNEY GENERAL BOB FERGUSON said he would file a petition in the next few days. “The FCC just gave Big Telecom an early Christmas present, by giving internet service providers yet another way to put corporate profits over consumers,” said Mr. Schneiderman in a statement. “Today’s rollback will give ISPs [internet service providers] new ways to control what we see, what we do, and what we say online. That’s a threat to the free exchange of ideas that’s made the Internet a valuable asset in our democratic process.”

STATES HELPING LOCAL GOVERNMENTS WITH CYBERSECURITY: Local governments, especially smaller cities, counties, police agencies and school districts, often don’t have the resources to evaluate their cyber defenses or deal with cyberattacks. Yet just like states, their networks contain vast amounts of information about residents and businesses, such as Social Security, bank account and credit card numbers. Some local governments say they can’t necessarily rely on states for cyber aid because many are busy trying to deal with their own cyber preparedness. But some states, including Washington, Michigan and Virginia, have decided to extend help to the locals. They’re providing training, sending in experts to uncover security vulnerabilities, or lending a hand if a local government has been hit in a cyberattack.

E. FEDERAL/STATE RELATIONS

BATTLE OVER CFPB: Pennsylvania’s Attorney General is leading the charge among his Democratic peers preparing to shore up protections for borrowers and savers while President Donald Trump follows through on a pledge to defang a powerful consumer finance watchdog. JOEL SHAPIRO is part of a group of Democratic attorneys general from powerful and large states such as California and New York who disagree with Trump’s call for financial deregulation. Since Trump’s inauguration in January, those top law enforcement officials have sued the administration at least 25 times over its crackdown on immigration and dismantling of regulations across a range of areas from energy to education. When it comes to financial consumer protection state attorneys general wield an additional potentially powerful weapon. A little-known provision of the 2010 Dodd-Frank law, which created the CFPB, gives them the authority to enforce the agency’s rules and its broad ban on “unfair, deceptive and abusive” practices beyond state lines.

18 Democratic Attorneys General filed an amicus brief in U.S. District Court for the District of Columbia supporting CFPB DEPUTY DIRECTOR LEANDRA ENGLISH’S motion for a preliminary injunction to challenge

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the Trump Administration’s appointment of MICK MULVANEY, THE OFFICE OF MANAGEMENT AND BUDGET DIRECTOR, as the Acting Director of the Consumer Financial Protection Bureau (“CFPB”), after FORMER DIRECTOR RICHARD CORDRAY resigned last month. In the brief, the AGs argue that President Trump did not have authority to appoint Mulvaney as Acting Director and, therefore, Deputy Director Leandra English should assume the role because the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), which created the CFPB, specifies that the CFPB Deputy Director becomes Acting Director if the Director resigns. A U.S. District Court judge denied English’s temporary restraining order to prevent Mulvaney from remaining Acting Director, while a hearing date for oral arguments is set for December 22, 2017.

AGs SUE OVER FAILURE TO MEET CLEAN AIR ACT DEADLINE: A coalition of 15 Democratic AGs, led by NEW YORK ATTORNEY GENERAL SCHNEIDERMAN, filed a lawsuit against the Environmental Protection Agency (“EPA”) for allegedly failing to meet the Clean Air Act’s statutory deadline for designating areas of the country impacted by unhealthy levels of ground-level ozone or smog. As previously reported, the AGs sent the EPA a Notice of Intent to Sue for failing to meet the Clean Air Act’s statutory deadline in October 2017, which fulfilled the Clean Air Act’s requirement that parties provide a 60-day notice prior to filing a lawsuit. According to the AGs, the EPA’s failure to designate areas of the country with suboptimal ambient air quality standards by the October 1, 2017 statutory deadline violates a key agency obligation under the Clean Air Act designed to protect the public’s health. The AGs’ lawsuit seeks to declare the EPA in violation of the Clean Air Act, require the EPA to promptly perform the mandatory ozone designations, and award the states the costs of litigation and attorneys’ fees.

CENSUS CONCERNS: Census experts and public officials are expressing growing concerns that the bedrock mission of the 2020 census — an accurate and trustworthy head count of everyone in the United States — is imperiled, with worrisome implications. Preparations for the count already are complicated by a sea change in the census itself: For the first time, it will be conducted largely online instead of by mail. But as the Census Bureau ramps up its spending and work force for the 2020 count, it is saddled with problems. Its two top administrative posts are filled by placeholders. Years of underfunding by Congress and cost overruns on the digital transition have forced the agency to pare back its preparations, including abandoning two of the three trial runs of the overhauled census process.

II. Politics

DEMOCRATIC ADVANTAGE IN 2018: Democrats have their biggest advantage in congressional preference in nine years, according to NBC, citing to the latest NBC News/Wall Street Journal poll. Results from the poll show that 50 percent of registered voters say they want a Democratic-controlled Congress, compared to the 39 percent who prefer Republican-led. The NBC report notes the last time this poll awarded Democrats at least a 50 percent preference and a double-digit lead was in September 2008. The Democrats shortly after went on to win the White House, as well as a number of House and Senate seats. The results of this poll show that voters aged 18-34 prefer a Democrat-led congress by 48 points. Female voters give Democrats a 20 point lead and independent voters a twelve point lead. Meanwhile, white voters give Republicans a 2-point lead and

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white voters without college degrees a 12-point lead. The same poll shows President Donald Trump's job approval rating at 41 percent of all registered voters, up three points from October.

BGR Insight The 2018 election could be Democrats and impeachment vs. Republicans and good economy: BGR Group Chairman Ed Rogers opines on the 2018 elections in the Washington Post and writes, “Simply put, we could be headed for a midterm election defined by the Democrats’ call to remove Trump from office and the Republicans’ success in creating a good and growing economy. Impeachment vs. a vibrant economy is about as good a contrast between Republicans and Democrats that the GOP could hope for. But it is hard to imagine Trump becoming the symbol of a resurgent American economy. Instead, he is more likely to make noise, tweet indiscriminately and distract from the GOP’s messaging. With Trump, it is always one step forward, four steps back.

MILLENIALS NOW BIGGEST VOTING GROUP IN US, 2-1 DEMOCRATIC: A new Harvard University poll Tuesday is blaring a loud danger signal to the Republican Party after finding that millennials are now the largest generation of voters and they are overwhelmingly Democratic, by a two-to-one margin. The latest youth poll from Harvard’s influential Institute of Politics found that America’s 18-29-year-olds prefer Democrats 65 percent to 33 percent, in part because they don’t like President Trump and are “fearful” about the future. “American political institutions are at a tipping point,” said John Della Volpe, polling director at Harvard Kennedy School’s Institute of Politics. “Millennials are now the largest generation in the electorate. This poll and the Virginia election show that they are becoming more motivated — and I believe the fear that exists today about our future will soon be turned into the fuel that will reform our government. The only question is whether this comes from inside or outside the traditional party structure.”

DGA CHAIR SAYS DEMS WON’T HAVE TO NAME TRUMP IN 2018: WASHINGTON STATE GOVERNOR JAY INSLEE, the new chairman of the Democratic Governors' Association, believes President Trump will be so toxic by next November that down-ballot Democrats will not even need to mention him by name to ride a wave of backlash. In fact, the governor of Washington state — who previously spent eight terms in the U.S. House — is encouraging candidates across the country to stay focused as much as possible on core economic issues.

WASHINGTON STATE GOVERNOR JAY INSLEE is taking over as the chairman of the Democratic Governors Association ahead of a 2018 election cycle in which 36 governor's offices are on the ballot -- including 26 currently held by Republicans. The party's top pick-up opportunities could come in states with term-limited or retiring Republican governors: New Mexico, Florida, Michigan, Nevada, Ohio and Maine. Illinois Gov. Bruce Rauner is also a top target. Democrats are unlikely to win back the nearly 1,000 state legislative seats they lost in one election. But many governors have veto power over state legislative maps -- which means winning governor's races in 2018 would give Democrats some ability to block the Republican map-making process that allowed them to lock in their gains after the 2010 election for the rest of the decade.

RHODE ISLAND GOVERNOR GINA RAIMONDO is taking on a national role as the new vice chair of the Democratic Governors Association. “This is a once-in-a-lifetime opportunity this year because of the

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terrible price that the Trump effect will have on Republican candidates, like we saw in Virginia,” Inslee said in an interview with The Hill. But “the lead message for every Democrat running for governor is going to be economic growth and job creation for family-wage jobs,″ Inslee said. “They’re all going to have their independent and state-specific plans to do that.” Enter Raimondo who has cast herself as Rhode Island’s jobs governor, with a string of ribbon cuttings - and the big announcement just last week that software giant Infosys has pledged to bring 500 new jobs to the state over the next five years - to illustrate the results so far of her efforts.

RGA/DGA SPENT OVER $20 MILLION ON VA/NJ GUBERNATORIAL RACES: Two Washington-based groups struggling for control of America's statehouses put a combined $5.8 million into the race for New Jersey governor, as outside groups nearly equaled the total spent by Republican Kim Guadagno and the victor, Democrat Phil Murphy. The spending by the Democratic Governors Association and the Republican Governors Association illustrates the degree to which state races have become proxies in an increasingly heated national political environment. The associations spent a combined $15.8 million this year in the more competitive race for Virginia governor, which was won by Democrat Ralph Northam. The outside spending helped make this year's race the second-most-expensive in New Jersey history, according to a report by the Election Law Enforcement Commission. All told, independent committees including the two governors associations spent $15.4 million in the general election, compared to $20.3 million by the candidates themselves, the commission reported. The 2005 race between Democrat Jon Corzine and Republican Doug Forrester, millionaires who heavily funded their own campaigns, remains the most expensive in state history.

MODEL GOVERNORS: Tarren Bragdon writes in National Review: “State leaders such as [WISCONSIN GOV. SCOTT] WALKER AND [ARIZONA GOV. DOUG] DUCEY are stepping up to the plate when it matters most — not just during the campaign, but now, when their constituents desperately need solutions. Still, two isn’t enough. The number of people receiving welfare benefits — whether food stamps or Medicaid — has skyrocketed over the past decade. State budgets are at their breaking points, being squeezed for cash that they simply do not have. The answer should be simple: leaders who don’t just encourage work but implement smart policies that allow people to work. Leaders who see government dependency as a growing concern — and enact commonsense solutions to combat it. The answer should be simple, and it is: more state leaders who back up their promises with effective policy.”

WHAT WESTERN GOVERNORS THINK OF TRUMP: Some see a renewed relationship between the states and the federal government. Some see Cabinet members who are engaged and willing to work with the states. Others aren’t nearly as optimistic. And don’t get them started on those tweets. With President Trump now 10 months in office, we asked several Western governors to assess how he’s doing so far — the good and not so good.

PERSPECTIVE – WHERE HAVE ALL THE BLACK MAYORS GONE? Writing in “Governing,” Alan Greenblatt notes: “Last month’s elections brought a lot of diversity to city halls around the country. Minneapolis elected two transgender candidates to the city council. Hoboken, N.J. will have a Sikh mayor. Topeka, Kan., elected its first Latina mayor, while Charlotte and New Orleans both elected their first black women mayors. St. Paul, Minn., and a number of smaller cities elected their first black mayors ever, while Helena, Mont., is about to swear in its first black mayor since the 19th century. But, at least in terms of black representation, those wins run counter

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to the larger trend that’s seeing fewer black politicians elected to lead major cities. Until recently, Jacksonville, Memphis, Philadelphia and San Antonio all had black mayors. Now, they’ve all been replaced by white successors. Detroit Mayor Mike Duggan, who is white, defeated Coleman Young II, the son of that city’s first black mayor, to win re-election last month. The nation’s largest cities -- New York, Los Angeles and Chicago -- have each had just one black mayor, and that was some time ago. By 2000, 19 of the country’s 50 biggest cities had or would soon have black mayors, Forbes recently reported; by 2017, that number had fallen to six.”

State of the States ALABAMA

2018 COMPETITION FOR GOVERNOR IVEY? GOV. KAY IVEY, in the wake of the state’s special Senate election, is hearing criticism from both sides of the political aisle ahead of what could be a heated 2018 gubernatorial race. Ivey's Republican opponents, thus far, include Republicans such as EVANGELICAL YOUTH PASTOR SCOTT DAWSON OF BIRMINGHAM, HUNTSVILLE MAYOR TOMMY BATTLE, STATE SEN. BILL HIGHTOWER OF MOBILE, BIRMINGHAM BUSINESSMAN JOSH JONES AND ALABAMA COMMISSIONER OF AGRICULTURE AND INDUSTRIES JOHN MCMILLAN. On the Democratic side, TUSCALOOSA MAYOR WALT MADDOX AND FORMER ALABAMA STATE SUPREME COURT CHIEF JUSTICE SUE BELL COBB will be vying for the state's chief executive post.

ARIZONA

MOVING CLOSER TO IMPOSING MEDICAID WORK REQUIREMENTS: Rebuffed last year in his bid to impose a work requirement on Medicaid recipients, GOV. DOUG DUCEY is trying again. But his new proposal, to be submitted later this month, will be scaled back from the one federal officials rejected. The governor is offering new exceptions and a limit on how much time someone needs to spend on a job or in training each week to keep receiving benefits. And something else is different: The people who will review the plan in Washington, D.C. The new administrators at the Centers for Medicare and Medicaid Services, now under the direction of PRESIDENT TRUMP, have suggested they’re more amenable to the idea than was the Obama administration, said Christina Corieri, the governor’s health adviser.

ARKANSAS

NAFTA NEGOTIATIONS: Eliminating the North American Free Trade Agreement, as PRESIDENT DONALD TRUMP has threatened, would undermine Arkansas' economy, GOV. ASA HUTCHINSON told administration officials Thursday at the White House. The Republican was one of four governors at the hourlong meeting, which featured VICE PRESIDENT MIKE PENCE, COMMERCE SECRETARY WILBUR ROSS, AGRICULTURE SECRETARY SONNY PERDUE AND U.S. TRADE REPRESENTATIVE ROBERT LIGHTHIZER. Hutchinson was joined by three other Republican governors from states Trump carried last year: KIM REYNOLDS OF IOWA, RICK SNYDER OF MICHIGAN AND BILL HASLAM OF TENNESSEE.

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CALIFORNIA

COX ANNOUNCES BID FOR GOVERNOR: Republican venture capitalist JOHN COX called for an end to one-party domination of state politics and a smaller government as he made his pitch to be California’s next governor. Cox, 62, faces an uphill battle in a state where 1 in 4 voters is a registered Republican, but the Illinois transplant said he wants to ensure California is on a sustainable path for the next generation, which includes his 12-year-old daughter. The 2018 governor’s race to replace termed-out GOV. JERRY BROWN also includes four Democrats and one other Republican: LT. GOV. GAVIN NEWSOM, STATE TREASURER JOHN CHIANG, FORMER LOS ANGELES MAYOR ANTONIO VILLARAIGOSA, FORMER STATE SCHOOLS CHIEF DELAINE EASTIN AND ASSEMBLYMAN TRAVIS ALLEN. Newsom leads the pack at 23 percent, followed by Villaraigosa at 18 percent, according to a PPIC poll released last month. Thirty percent of likely voters said they are undecided. Chiang and Cox were both at 9 percent, Allen at 6 percent and Eastin at 3 percent. Cox, who lives in Rancho Santa Fe (San Diego County), has been a resident of California for eight years. He ran three times for elected office in Illinois and lost all three campaigns, including in 2003 when he dropped out of the U.S. Senate primary in a race that former President Barack Obama went on to win.

ERIC GARCETTI HOPES TO BE THE FIRST MAYOR TO MAKE IT TO THE WHITE HOUSE: Towards the end of an amusing few hours with Eric Garcetti, the mayor of Los Angeles, Lexington asked an abrupt question. Many Angelenos—in fact, every Angeleno he had consulted—appeared to view Mr Garcetti’s recent hints that he was mulling a run for president in 2020 with astonishment, hilarity even. Were they right to be surprised? The 46-year-old Democrat, who has found occasion to visit Florida, Louisiana and New Hampshire in recent months, paused a moment. “Probably,” he said, “I mean I would probably have been, if a mayor had said that.” More here.

UBER VIOLATED CALIFORNIA LAW SAYS LA CITY ATTORNEY: For more than a year, Uber Technologies Inc. concealed a massive hack that exposed the personal data of millions of drivers and riders, violating a California law that requires companies to promptly report such breaches, according to a lawsuit filed by LOS ANGELES CITY ATTORNEY MIKE FEUER. In October 2016, hackers stole the names, cellphone numbers and email addresses of more than 57 million riders across the world, as well as driver’s license numbers for 600,000 Uber drivers in the United States. Uber disclosed the hack last month. California law requires companies to report hacks “in the most expedient time possible” and “without unreasonable delay” when some forms of personal data, including driver’s license numbers, are compromised. The law is designed to help consumers fight identity theft.

CONNECTICUT

AG WON’T SEEK RE-ELECTION: CONNECTICUT ATTORNEY GENERAL GEORGE JEPSEN announced he will not run for re-election in 2018. Prior to his announcement, no Republican or Democrat had filed papers indicating they intend to run for the state’s top civil attorney. But after Jepsen’s announcement, the field suddenly swelled with potential candidates. Among the Democrats seriously considering a run are state REPS. WILLIAM TONG AND MIKE D’AGOSTINO. Another potential Democratic candidate, FORMER SECRETARY OF THE STATE SUSAN BYSIEWICZ, has launched an exploratory bid for state senate and is also considering a run for governor. Also

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considering entering the race is FORMER STATE SEN. SAM CALIGIURI of Waterbury. FORMER FEDERAL PROSECUTOR CHRIS MATTEI, another Democrat exploring a run for governor, deflected questions about whether he would shift his ambitions to the attorney general’s office. “Although his decision may fuel speculation among some, today is a day to honor George's service,’’ he said. On the Republican side, potential candidates include state REPS. CHRISTIE CARPINO and ROSA REBIMBAS. FORMER REPUBLICAN STATE REP. JOHN SHABAN has announced his intention to form a candidate committee.

FLORIDA

MOODY’S AG BID WON’T BE STRAPPED FOR CASH: FORMER HILLSBOROUGH CIRCUIT JUDGE ASHLEY MOODY got the support from incumbent Florida Attorney General Pam Bondi before she even officially announced for the job. Even with three other Republicans in the race — JAY FANT, ROSS SPANO, FRANK WHITE AND ONE LONG-SHOT DEMOCRAT, RYAN TORRENS, it's clear that Moody seems to be the clear favorite. her campaign reminded everyone of this, announcing a statewide finance committee of heavy hitters, including top lobbyists Brian Ballard, Dean Cannon and Michael Corcoran. This campaign won't be cash starved.

100-PLUS PROPOSALS TO CHANGE STATE CONSTITUTION: More than 100 proposals to change Florida’s Constitution — ranging from restoring convicts’ civil rights to a ban on “vaping” in public places — are being vetted by a powerful commission that only meets once every 20 years. Not all of the proposals — and more than likely few of them — will wind up on the 2018 ballot. While some deal with smaller issues, such as repealing a defunct high-speed rail provision, others could dramatically affect the rights of many Floridians. Proposed amendments would ease class-size requirements in public schools, make it harder for lawmakers to raise taxes and colleges to raise tuition, expand charter school access, impose term limits on school board members and create bills of rights for crime victims and patients.

GEORGIA

DEM, FEMALE WINS IN GA: Though Democrats and women made gains in the Georgia General Assembly after the recent runoffs, they remain significant minorities at the Capitol. The Georgia House and Senate will remain dominated by Republicans and men during the 2018 legislative session, even after Democrats and women flipped three seats each. As a result of this year’s special elections, the state’s legislative bodies will be less than two-thirds Republican and almost three-quarters men when the annual lawmaking session begins Jan. 8.

MAYORAL RACE CERTIFIED IN ATLANTA: Election officials have certified the results of Atlanta's mayoral election runoff, finally making the numbers official in KEISHA LANCE BOTTOMS' victory over MARY NORWOOD.

HAWAII

AG ANNOUNCES RUN FOR US CONGRESS: HAWAII ATTORNEY GENERAL DOUGLAS CHIN, who has been fighting President Donald Trump’s travel ban and other policies over the past year, has announced he will run for U.S. Congress. Chin, a Democrat, seeks to replace HAWAII U.S. REP. COLLEEN HANABUSA, who is running

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for governor. Hanabusa is also a Democrat. Several Democratic lawmakers have also announced they would run for the seat, including STATE SEN. DONNA MERCADO KIM AND REP. KANIELA ING.

IDAHO

LAWMAKERS CALL FOR MORE TAX CUTS: Even as Idaho politicians continue to call for tax cuts, a new state study shows Idaho’s overall taxes are the lowest in the region and rank 48th in the nation. The annual Tax Burden Study, which the Idaho State Tax Commission has prepared each year since the 1970s, shows that Idaho’s total state and local tax burden per person ranks 48th among the 50 states plus the District of Columbia, and falls 29.6 percent below the U.S. average. It’s the lowest among 11 Western states. The state’s tax burden relative to income — an important difference because Idaho incomes are much lower than most states — still ranks 37th nationally and 10th among the 11 Western states. It comes in 11 percent below the national average.

ILLINOIS

STATE REP. IVES JOINS GUBERNATORIAL RACE: STATE REP. JEANNE IVES filed petitions to get on the March 20 primary ballot, taking on GOV. BRUCE RAUNER, who she believes hasn’t upheld GOP principles. Rauner’s petitions were filed a week earlier, and as of the close of filing, there were seven Democratic candidates for governor. That number could be reduced if petitions submitted by some of them are found to be lacking.

INDIANA

HOLCOMB TALKS NAFTA: INDIANA GOVERNOR ERIC HOLCOMB, accompanied by representatives from Subaru, Fiat Chrysler, Honda, General Motors and Toyota met with VICE PRESIDENT MIKE PENCE to discuss NAFTA last week. In a letter to U.S. TRADE REPRESENTATIVE ROBERT LIGHTHIZER in October, Holcomb urged the administration to safeguard the trade relations with Canada and Mexico, especially in the car industry. He emphasized that the auto industry represented about $2 billion in exports and 100,000 jobs in Indiana in 2016.

IOWA

CARLIN SCORES NARROW WIN: REPUBLICAN STATE REP. JIM CARLIN narrowly defeated DEMOCRAT TODD WENDT in a special election for a vacant state Senate seat where GOP voters dominate. In unofficial results with all precincts reporting, Carlin, of Sioux City, outlasted Wendt, of Le Mars, by 603 votes in the district, which includes the western two-thirds of Plymouth County and northern and western areas of Woodbury County, including Sioux City's Morningside neighborhood. Carlin totaled 3,591 votes, or about 54 percent, to 2,988 votes, or about 46 percent, for Wendt. MCGUIRE OFFERS 7-POINT MENTAL HEALTH PLAN: Democratic gubernatorial candidate ANDY MCGUIRE unveiled a seven-point plan that she hopes would serve as a “starting point” for combating what she called

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Iowa’s mental health, substance abuse and addiction epidemics. McGuire, a doctor and former chairwoman of the Iowa Democratic Party, said she is proposing a strategy that addresses both short- and long-term care for children and adults and funding for improvements and programs. She said her plan would increase treatment capacity and ensure Iowans have sufficient treatment options, attract and retain more mental health providers, expand and emphasize support for children and teenagers and seek to remove the stigma from mental illness and substance abuse and addiction.

LOOMING SPENDING CUTS: When the Iowa Legislature returns in January, lawmakers will likely be faced with making $45 million to $90 million in budget cuts for the fiscal year that ends June 30, the state's chief budget officer said. The grim news came after a three-member Revenue Estimating Conference issued a forecast that calls for revenue of $7.237 billion in the current budget year, which represents a 2 percent increase over the previous fiscal year after reserve fund transfers are excluded. The increase amounts to less than was forecast earlier in the year, when the Legislature developed its budget for the current fiscal year. For the 2019 state fiscal year, which begins July 1, 2018, revenues are estimated $7.527 billion, up 4 percent over the current year.

REYNOLDS DEFENDS PRIVATIZED MEDICAID: GOV. KIM REYNOLDS defended Iowa's privatized Medicaid program the day after state officials announced that some Medicaid recipients again will see a change in their coverage options. State officials said they would assume oversight of Medicaid benefits for about 10,000 Iowans who could not gain coverage through the two remaining managed care companies participating in Iowa's program. Iowa shifted to a privatized Medicaid system in 2016 under FORMER GOV. TERRY BRANSTAD, hiring three private companies to manage benefits and coordinate care for Iowans. Last month, AmeriHealth, the largest of those three companies, threw a wrench in the system when it announced it would withdraw from the program. That left 215,000 Medicaid recipients looking for coverage from one of the two remaining companies: Amerigroup and UnitedHealthcare.

KENTUCKY

PENSION REFORM, TAXES AND THE BUDGET – MATT BEVIN REACHES HIS DEFINING MOMENT AS GOVERNOR: Drowned out amid the uproar over pension reform and stunning allegations of sexual harassment in the legislature this fall has been a public policy message that will have a far greater impact on the lives of Kentuckians: The next state budget has a $1 billion hole to fill, and if there is no new revenue, massive cuts to programs are coming when the legislature convenes to tackle the problem. How the state deals with this intertwined mix of legislation — the long-simmering pension crisis, the 2018-20 state budget, and possibly tax reform — stands as the defining moment of the administration of Matt Bevin (more here). STATE CONTINUES TO STRUGGLE FROM ECONOMIC DOWNTURN: The poverty rates in nine Eastern Kentucky counties were among the 30 highest in the nation in 2016, according to new U.S. Census Bureau estimates. Several have been hit hard by a sharp downturn in the coal industry, which has wiped out more than two-thirds of the coal jobs in Eastern Kentucky since 2011. The estimates illustrate the challenge as officials, educators and business people work to diversify the economy and counteract the downturn.

STATE AND LOCAL UPDATE

LOUISIANA

GOVERNOR OFFERS TAX IDEAS TO CLOSE $1B BUDGET GAP: Gov. John Bel Edwards outlined his tax proposals for closing a $1 billion budget gap, offering a list that will form the basis of negotiations with House Republicans who have previously blocked many of his tax ideas. The latest recommendations, largely modeled on the suggestions from a nonpartisan study group created by lawmakers, would raise taxes on certain businesses and some middle- and upper-earning taxpayers. The governor said the recommendations would create a more balanced tax policy that would stabilize state finances and offer predictable, long-term revenue streams to pay for government expenses—doing away with temporary taxes in place for the past two years and what he called the “yo-yo effect” of constant budget crises.

TEMPORARY TAXES NEAR EXPERATION: Louisiana lawmakers are scrambling to find a long-term fix for a looming fiscal crisis and avoid deep spending cuts, before $1 billion in temporary tax measures expire next year. DEMOCRATIC GOV. JOHN BEL EDWARDS'S coming budget proposal will have to include "devastating cuts," said JAY DARDENNE, THE GOVERNOR'S CHIEF BUDGET OFFICER. That would add to deep reductions the state has made in recent years to higher education and to child-welfare and other state agencies, unless lawmakers strike a deal to replace the lost revenue to help fill a budget hole that is estimated to reach $1.5 billion when the new fiscal year begins. At issue is the end of a series of temporary taxes put in place two years ago to stave off a fiscal emergency. While these measures prop up state revenue, lawmakers have yet to figure out how to replace them. Time is running out on a long-term fix. Louisiana law prevents legislators from adding new revenue in next year's regular legislative session, starting in March, so Mr. Edwards would like a special session to finalize a deal before then.

MARYLAND

HOGAN, DEMOCRATS FEUD OVER FAILED SICK LEAVE NEGOTIATION: Maryland’s debate over paid sick leave has devolved into a series of accusations and counteraccusations between GOV. LARRY HOGAN and Democratic legislative leaders. Indeed, the decisive battle will come when the legislature reconvenes in January and Democrats vote on whether to override Hogan’s veto and enact their preferred sick-leave bill, which would affect more businesses more quickly than what the governor is proposing, without tax credits to offset the impact. The measure passed the majority-Democratic legislature with exactly the number of Senate votes needed for an override, and with two votes to spare in the House.

MASSACHUSETTS

FITCHBURG REPUBLICAN DEAN A. TRAN emerged the victor in a recent special election for the open state Senate seat in the Worcester and Middlesex District, ahead of LEOMINSTER DEMOCRAT SUSAN A. CHALIFOUX ZEPHIR, as well as an unenrolled and Green Party candidates.

STATE AND LOCAL UPDATE

MICHIGAN

SNYDER SIGNS MEDICAL MARIJUANA RULES: GOV. RICK SNYDER signed emergency rules allowing medical marijuana dispensaries to stay open after Dec. 15 without affecting their chances of getting a state license in certain circumstances. Under one of dozens of new medical marijuana administrative rules Snyder approved, marijuana pot shops that were approved by their local municipal government prior to Dec. 15 can stay open until the state issues or denies them a license. That’s the same date dispensaries, growers and other pot enterprises can submit applications to the state to operate legally.

MINNESOTA

HEALTHCARE IS TOP ISSUE IN GUBERNATORIAL RACE: More than a dozen DFLers and Republicans are running for governor next year, and nearly all of them agree on at least one thing after months on the campaign trail: Health care is the issue that voters throughout Minnesota want to talk about most. With nearly a year until the election, few candidates have issued detailed health care plans. But most are ready to offer strong opinions about slowing the rise of insurance premiums, expanding coverage in greater Minnesota and stabilizing the state's health care market amid uncertainty in Washington, D.C. On the campaign trail, Republicans have pushed for the dissolution of MNsure, Minnesota's individual health insurance market, and a shift to health care policies where customers can pick and choose what's covered. DFLers have lined up behind single-payer health care, in which the state would take the lead in providing more expansive coverage.

REPUBLICAN LT. GOV IN DEM ADMIN: MINNESOTA SENATE PRESIDENT MICHELLE FISCHBACH expects to move up the ranks next year to become a Republican lieutenant governor in a Democratic executive branch. She plans to keep her current position as well. State Republicans say Fischbach has a right to serve in both positions. But GOV. MARK DAYTON said she couldn't occupy both roles at the same time. He asked the attorney general for a formal opinion. Fischbach's promotion came by default when Dayton appointed his lieutenant, TINA SMITH, to replace U.S. SEN. AL FRANKEN. The Minnesota Constitution outlines succession order for the governor and lieutenant governor.

STATE PROJECTED TO HAVE $188 MILLION DEFICIT: Minnesota lawmakers may be faced with solving a budget deficit when they return to St. Paul next session, according to the latest budget forecast. Minnesota Management and Budget announced it is forecasting a $188 million budget deficit in the current two-year budget. That deficit is projected to grow to $586 million for the 2020-21 budget. In a news release, the agency states the budget shortfall is a result of "reduced U.S. economic growth forecast and impacts of enacted legislation during the 2017 session." MMB also cautioned that" unknowns in federal policy and the current economic expansion, one of the longest in U.S. history, create significant risk for this forecast." The state budget agency will do an updated forecast in February. That will be the number relied upon by the governor and lawmakers when crafting budget bills.

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MISSOURI

NEW LAW COULD LICENSE SPORTS FANTASY WEBSITES: Missouri could issue its first licenses to fantasy sports websites FanDuel and others this week under a 2016 consumer protection law passed by the Legislature. The Missouri Gaming Commission could approve the applications of FanDuel, Fantasy Draft and SportsHub Technologies when it convenes Wednesday morning in Jefferson City. The state has spent more than a year investigating their license applications as required under the new law, known as the Missouri Fantasy Sports Consumer Protection Act.

FEDERAL ID WAIVER: Missouri residents will be able to board airplanes and enter federal installations using their current driver’s licenses and identification cards following a decision by the federal government. The Missouri Department of Revenue said the state has been granted a nearly yearlong waiver to begin complying with the federal REAL ID Act. Without the waiver, airports could have turned away Missourians attempting to board planes using their IDs beginning in January. The extension is the latest step in a lengthy tussle between Missouri and the federal government over tougher security features for driver’s licenses that were rolled out in the wake of the 2001 terrorist attacks in New York.

NEW JERSEY

GREWAL NOMINATED FOR AG: NEW JERSEY GOVERNOR-ELECT PHIL MURPHY, a Democrat, named GURBIR GREWAL as his choice for AG. Governor-elect Murphy was elected in November to succeed term-limited REPUBLICAN GOVERNOR CHRIS CHRISTIE. Grewel currently serves as Bergen County prosecutor, a position he has held since being nominated by Governor Christie in 2013. He had been the county’s acting prosecutor since 2010. Prior to serving as Bergen County’s top law enforcement official, Grewel was Chief of the Economic Crimes Unit at the U.S. Attorney’s Office for the District of New Jersey. Upon taking office on January 16, 2018, Governor-elect Murphy’s Attorney General nomination will be sent to the state Senate for approval.

MURPHY’S LIBERAL AGENDA MAY BE TOO MUCH FOR NJ DEMS: Even as GOV.-ELECT PHIL MURPHY positions himself as a liberal star in a leaderless national party seeking to combat the Trump administration, intra-party feuds at home and a tight fiscal situation threaten his agenda. Instead of waiting for Murphy to take office, Senate Democrats have pushed through dozens of CHRIS CHRISTIE-nominated appointees to judgeships, agencies like the Delaware River Port Authority, county tax boards, and prosecutors’ offices. While a certain amount of deal-making is par for the course in transition periods, and a number of appointees were Democrats, Murphy is said to be less than thrilled with the developments. The episode may test his relationship with SENATE PRESIDENT STEVE SWEENEY, who controls which nominees get consideration, and George E. Norcross III, his political benefactor and childhood friend.

NUCLEAR POWER LIFELINE: New Jersey became the latest state to consider subsidizing nuclear power with a $320 million-a-year plan to keep struggling reactors from going out of business. The state’s two plants would get extra payments for providing emission-free power under legislation introduced recently in Trenton. The move follows similar efforts by New York and Illinois and comes amid pressure from Public Service Enterprise Group Inc., which owns and operates the reactors in New Jersey. Nuclear reactors, which

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struggle to compete with low natural gas prices, offer a singular advantage in the fight against global warming because they produce round-the-clock electricity without emitting greenhouse gases. The debate over bailing them out has reached the national stage, with Energy Secretary Rick Perry calling for reactors to be rewarded, alongside coal plants, for their ability to stockpile fuel on site. Critics argue the move would undermine competitive markets.

NEW MEXICO

STATE SEES REBOUND IN TAX REVENUES, OIL SECTOR: Surging state tax revenues and a rebound in the oil and natural gas sectors are propelling a rapid turnaround in New Mexico government finances, state economists told a panel of lawmakers recently. State government income for the fiscal year starting on July 1, 2018, is expected to surpass current annual spending by $199 million, economists told the state's lead budget-writing committee. The forecast signaled that state government is emerging from two years of austerity measures that resulted in slashed spending at state universities and colleges, while threatening funding for classrooms, courts and museums.

NEW YORK

COMPTROLLER, ANALYST PREDICT GROWING STATE DEFICIT: State tax receipts are lower than projected, threatening some of the biggest deficits in nearly a decade, according to the state comptroller’s office and a fiscal watchdog. “New York faces serious fiscal challenges,” said STATE COMPTROLLER THOMAS DINAPOLI. “Projected budget gaps, weaker than expected personal income tax collections and cuts to federal programs combine for a triple threat of budgetary risks.” DiNapoli, a Democrat, said any new federal funding cuts “could force difficult decisions regarding the funding of important programs and services.” In past years, when budget deficits were as much as $10 billion, cuts were made to health care and education, the biggest spending areas of the budget.

LEGISLATION WOULD BAN SECRET HARASSMENT SETTLEMENTS: New legislation introduced by a pair of Republican state senators would prohibit courts from accepting secret settlements in sexual harassment cases, ban mandatory arbitration to deal with harassment complaints and allow independent contractors to file complaints against an employer and its direct employees. More here.

OHIO

GOP CANDIDATES DIFFERENTIATING FROM KASICH: Republicans running for governor are not only vying against Democrats in their hunt for the party’s nomination but are seemingly running against one of their own, incumbent GOV. JOHN KASICH. They express their respect for the GOP governor and note how much he cares about Ohio. But such expressions are often followed with a “but.” Even LT. GOV. MARY TAYLOR, who has the governor’s endorsement, has sought to distance herself from her boss rather than present herself as a logical extension of his administration. When asked recently if they were running against Mr. Kasich, the newly formed MIKE DEWINE-JON HUSTED ticket was quick to praise the governor. However, as Mr. DeWine announced the new ticket, he rattled off numbers about the state’s weak job growth in recent years, the same

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statistics cited by Democrats that conflict with the economic picture the Kasich administration has painted. The Democratic field includes DAYTON MAYOR NAN WHALEY, STATE SEN. JOE SCHIAVONI (D., BOARDMAN), FORMER AKRON AREA CONGRESSMAN BETTY SUTTON, FORMER CINCINNATI STATE REP. CONNIE PILLICH, FORMER FEDERAL CONSUMER WATCHDOG RICHARD CORDRAY, AND OHIO SUPREME COURT JUSTICE WILLIAM O’NEILL.

CINCINNATI CITY COUNCIL MEMBER AMY MURRAY will serve as lieutenant governor running mate to U.S. REP. JIM RENACCI in his bid for the Republican nomination for governor. The other candidate, LT. GOV. MARY TAYLOR, has not yet announced her running mate.

OKLAHOMA

MEDICAID EXECUTIVE ORDER: GOV. MARY FALLIN'S executive order issued late Friday lists just one subject the Legislature can consider: providing enough funding to avoid a Medicaid rate cut. Unlike the previous special session call in September, Fallin did not ask lawmakers to provide long-term fixes to the state budget or consider a teacher pay raise. Her executive order also doesn't say where the money should come from, which could make it a quick special session. Earlier efforts to raise revenue ended with a legislative stalemate that lasted weeks. Appropriation bills require far fewer votes than measures that raise tax revenue and lawmakers can simply draw existing funds from elsewhere instead of raising new money.

RHODE ISLAND

DEBT AFFORDABILITY STUDY INCLUDES STATE, MUNICIPAL PENSION OBLIGATIONS: In May, Rhode Island released a new debt affordability study, a policy tool that analyzes a state’s ability to repay its debt liabilities. The state is one of 29 that regularly examine how much debt it can prudently issue, according to research by The Pew Charitable Trusts. This year’s study marks a new approach to evaluating the state’s debt and is notable because it: (1) Analyzes the debt of quasi-public agencies such as the Rhode Island Turnpike and Bridge Authority; (2) Incorporates both state and municipal pension obligations into its analysis, making Rhode Island the only state to do so; and, (3) Examines the debt of every municipality and many special districts—over 100 entities altogether. Pew’s research has found that taking a broad look at a state’s liabilities can help policymakers gain a fuller understanding of their state’s financial obligations and make better-informed decisions about future issuances. Rhode Island’s new debt affordability study has helped advance those goals.

SOUTH CAROLINA

GOP STATE REP LAUNCHES ATTORNEY GENERAL BID: Republican STATE REPRESENTATIVE TODD ATWATER has declared his candidacy for South Carolina Attorney General in 2018. Atwater was first elected to the South Carolina House of Representatives in 2010 and currently serves on its Labor, Commerce and Industry Committee and Rules Committee. He earned his law degree from University of South Carolina Law School. Atwater will face incumbent ATTORNEY GENERAL ALAN WILSON in the Republican primary for South Carolina AG. Currently, no Democrat candidate has filed to run.

STATE AND LOCAL UPDATE

OPIOID CRISIS DECLARED PUBLIC HEALTH EMERGENCY BY GOV. MCMASTER: Gov. Henry McMaster declared a statewide public health emergency Monday to combat opioid deaths and signed an executive order limiting initial post-hospital prescriptions for the addictive drugs to five days. "There's a silent hurricane going, and it's getting worse," McMaster said in announcing the creation of an "Opioid Emergency Response Team." The group, which will meet monthly for the next six months, includes state and federal law enforcement offices, state health and regulatory agencies and health care providers.

SOUTH DAKOTA

MONEY IS TIGHT FOR THE STATE BUDGET: SOUTH DAKOTA GOV. DENNIS DAUGAARD said that money will be tight for South Dakota's current and upcoming budget years ahead of his yearly budget address to the state Legislature. Lawmakers will revise this year's budget and shape the next one during the 2018 legislative session. Recently released state figures show that revenues for the first four months of the current budget year are roughly $8.3 million, or 1.5 percent, below expectations due in large part to short sales tax receipts. Sales tax is the state's main revenue source. The figures through October also show that a tax imposed on construction contractors has brought in roughly $2 million, or 4.6 percent, less than lawmakers had previously anticipated, while tobacco taxes and an insurance company tax are also among the state receipts down from projections.

TENNESSEE

PENCE DONATES TO BLACK’S GUBERNATORIAL CAMPAIGN: Republican gubernatorial candidate DIANE BLACK can count VICE PRESIDENT MIKE PENCE among her supporters. The Black campaign received a letter of praise from Pence — and a $4,000 check from his political action committee. The vice president in the letter cites the congresswoman from Gallatin for her "strong stand with our administration." Black is one of five major candidates seeking the Republican nomination to succeed term-limited GOV. BILL HASLAM. The others are FORMER STATE SEN. MAE BEAVERS, STATE HOUSE SPEAKER BETH HARWELL AND BUSINESSMEN RANDY BOYD AND BILL LEE.

TEXAS

LAWMAKERS SAY STATE BUDGET HIT FROM HARVEY COULD COST BILLIONS: Senate leaders warned that Hurricane Harvey could put a billion-dollar hole in Texas' budget, a growing number that could affect how much money is available for other state programs. Updated numbers provided to the Senate Finance Committee show the state has spent more than $1.7 billion so far in state funds, along with billions in federal assistance. Legislative Budget Board officials said as much as $2 billion in additional state funds may be needed in 2019 to cover hurricane-related school costs.

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VIRGINIA

CONTROL OF VIRGINIA STATE HOUSE AT STAKE AS RECOUNTS BEGIN: Virginia officials started recounts on Wednesday in the first of four state House of Delegates races, a process that could lead to a Democratic takeover of the chamber after the party’s historic election gains last month. Republicans have a narrow 51-49 majority in the House after Democrats erased a two-to-one advantage in November, part of the party’s first big wave of victories since Republican Donald Trump won the White House last year. Four of the legislative races were close enough to lead to recounts. If Democrats gain one seat in the House, the chamber would be tied 50-50 with no tiebreaking mechanism.

A SINGLE VOTE LEADS TO A RARE TIE FOR CONTROL OF THE VIRGINIA LEGISLATURE: A recount for a Virginia House of Delegates race flipped the winner from the Republicans to the Democrats, creating a 50-50 split in the legislature. Election officials in Newport News recounted ballots cast in the 94th District and determined Democrat Shelly Simonds defeated Republican incumbent David Yancey by one vote. The results will be officially certified on Wednesday.

WITH UNOFFICIAL ONE-VOTE RECOUNT WIN, DEMOCRATS BREAK VIRGINIA GOP HOUSE MAJORITY. WHATS NEXT?: This situation is not entirely without precedent, so while there are few hard and fast rules governing the situation, we have a pretty good idea of what will happen when the Virginia House is evenly split between the parties. This history indicates that one of the following scenarios will come to pass: (i) Republicans try every tactic and trick in the book to delay seating Shelly Simonds until they can elect Republican House Leader Kirk Cox as speaker. Democrats will howl in righteous outrage, and both parties will enter a power-sharing agreement similar to the 1998 template; (ii) Democrats and Republicans somehow agree to elect a compromise House speaker, whose power will likely constrained by specific rules, and then enter into a power-sharing agreement; (iii) ANARCHY.

NORTHAM TAPS HEALTHCARE LOBBYIST AS LEGISLATIVE DIRECTOR: Ahead of his push on health care, GOV.-ELECT RALPH NORTHAM has selected an industry lobbyist as his legislative director. Northam announced that the post will go to MATT MANSELL, currently vice president of government and regulatory affairs for the Virginia Health Care Association-Virginia Center for Assisted Living. The organization represents nursing homes and assisted living centers. Additional appointments include:

• JENNIE O’HOLLERAN, policy director for McAuliffe, will retain that role in the Northam administration. She previously has served as a deputy secretary of Education and senior policy adviser to McAuliffe.

• CARTER HUTCHINSON will be deputy policy director. Hutchison currently holds the lead policy position on Northam’s transition team and served as research director and policy lead during his campaign for governor.

• RUSHAWNA SENIOR will be senior policy analyst for Northam. She has been assistant secretary of Veteran and Defense Affairs and previously served as senior assistant to Richmond Mayor Levar Stoney.

• CARRIE CAUMONT will serve as director of scheduling. She has been director of government relations and member services at the Council of Independent Colleges in Virginia. She previously was a

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scheduler for McAuliffe; Ed Ayers, then president of the University of Richmond, and then-Govs. Tim Kaine and Mark Warner.

• BRIAN COY, McAuliffe’s communications director, will keep that role under Northam. He previously held that role for the Democratic Party of Virginia.

• HEATHER FLUIT, deputy communications director for McAuliffe, will retain that role in the Northam administration. She was press secretary at the U.S. Department of Housing and Urban Development during President Barack Obama’s administration.

• OFIRAH YHESKEL, press secretary during Northam’s campaign, will hold that role in his administration. She presently is press secretary for Northam’s transition and inaugural committees. Yheskel previously was Wisconsin press secretary for Hillary Clinton’s 2016 presidential campaign.

VERMONT

LAGGING INCOME TAX REVENUE: State finance officials say personal income tax revenues have fallen about $6.4 million below target through the end of October, dampening the state's general fund. In October, according to the Agency of Administration, the state took in $5.7 million less than expected from personal income taxes. For the first four months of the fiscal year, state officials say the general fund is running about $3.1 million below target. Transportation and education revenues are close to expectations, while meals and rooms taxes are about $800,000 above target.

WASHINGTON

TAPPING RESERVES TO MEET COMPLIANCE: GOV. JAY INSLEE proposed tapping the state's reserves to comply with a final timeline required for Washington state to come into compliance with a state Supreme Court mandate on education funding, and he wants a new tax on carbon emissions from fossil fuels to ultimately backfill that withdrawal. The governor announced the proposal during the unveiling of his supplemental budget proposal, which makes tweaks to the current $43.7 billion, two-year state budget that was adopted earlier this year. Inslee's plan proposes spending $950 million to fully implement the state's salary allocation for teachers and staff starting with the September 2018 school year. Even after that spending, more than $2 billion will remain in total reserves.

WYOMING

WIND TAX BILL COMING BACK – AGAIN: As Wyoming looks at new approaches to reach the long-sought goal of diversifying its economy, the wind energy sector shows the greatest potential toward that effort, with estimated planned investments at more than $10 billion in coming years. But REPUBLICAN SEN. CALE CASE sees things differently, and his passion for the issue is tireless. The long-time Wyoming lawmaker is very disturbed by the potential impact on Wyoming's viewsheds. Within years, proposed developments could affect a significant portion of Wyoming's landscape, covering its vistas with windmills visible during the day and red blinking lights at night on land that will be difficult to reclaim should they become inoperable. The Wyoming Legislature's Joint Revenue Interim Committee defeated Case's proposal to increase the wind tax by 400

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percent - from $1 per megawatt hour to $5 - earlier in the interim. But as the committee meets to look at advancing some draft bills to generate revenue during the 2018 budget session, Case plans to reintroduce the measure. Even if that draft bill is not sponsored by the Revenue Committee, Case said he has sponsors prepared to introduce it in the House of Representatives during the session. All revenue-generating bills must be introduced in the House. And the issue won't be dead for Case if it fails there.

STATE GOVERNMENT ASSOCIATIONS EVENTS (2017)

DECEMBER 2017

• 29: NLGA Business Meeting, St. Thomas, U.S. Virgin Islands • 29: CSG Western Legislative Academy, Colorado Springs, CO