Bush stirs up battle on two fronts with SCHIP veto
 
Just as he said he would, President Bush vetoed the State Children's Health Insurance Program (SCHIP) reauthorization bill passed by Congress two weeks ago. (Please see "HOUSE PASSES SCHIP BILL" in Oct. 1 issue of SNCJ.) But neither Congress nor the states are taking the president's action lying down.
 
"Because the Congress has chosen to send me a bill that moves our health care system in the wrong direction, I must veto it," Bush said in his veto statement last week. 
 
Bush and other critics of the bill passed by Congress Sept. 27 boosting funding for SCHIP by $60 billion over five years to cover 3-4 million more children contend that it would shift the program away from its core purpose of insuring poor children toward insuring children of middle-class families. 
 
Bush expanded on that argument at a public appearance after issuing the veto. "It is estimated that if this program were to become law, one out of every three persons that would subscribe to the new expanded SCHIP would leave private insurance," he said, adding, "The policies of government ought to be to help poor children and to focus on poor children, and the policies of government ought to be to help people find private insurance, not federal coverage. And that's where the philosophical divide comes in." 
 
Congressional Democrats were quick to take up their side of that divide. "Today we learned that the same president who is willing to throw away a half trillion dollars in Iraq is unwilling to spend a small fraction of that amount to bring health care to American children," said Sen. Edward M. Kennedy (D-MASSACHUSETTS), chairman of the Health, Education, Labor and Pensions Committee. And Senate Majority Leader Harry Reid (D-NEVADA) said the "heartless veto" demonstrated how "detached President Bush is from the priorities of the American People." 
 
But it's not just Democrats who are on the opposite side of the divide from Bush. Republican Sen. Orrin G. Hatch (R-UTAH) said supporting the SCHIP bill was "the morally right thing to do" and that he believed "some have given the president bad advice on this matter." And Sen. Charles E. Grassley (R-IOWA), the bill's lead Republican sponsor, said Bush's alternative SCHIP plan — a $5 billion increase in funding over five years — "won't even cover kids on the program today, much less reach out to cover more kids." 
 
Grassley and other Republicans said they would work to overturn the veto. But while that might not be too difficult to accomplish in the Senate, where the SCHIP measure was approved by a veto-proof 67-29 vote, it will be much more of a challenge in the House, where the 265-159 vote fell about two dozen short of the two-thirds majority necessary for an override. 
 
House Republican Whip Roy Blunt of MISSOURI has said he is "absolutely confident" there is enough opposition to the SCHIP expansion bill in his chamber to sustain the veto. But supporters of the measure have given themselves a chance, forcing a postponement of the override vote until Oct. 18 to allow them time to round up votes. 
 
The threat of a veto override isn't the only challenge the president is facing on the SCHIP front, however. Last week, eight states filed suit against his administration, challenging the tighter eligibility rules for the program it implemented in August. 
 
NEW YORK Gov. Eliot Spitzer (D) announced at a news conference last Monday that ARIZONA, CALIFORNIA and NEW HAMPSHIRE would be filing amicus briefs, and ILLINOIS, MARYLAND and WASHINGTON would be joining the Empire State in a lawsuit alleging that the new rules, which limit SCHIP coverage to children living at or below 250 percent of the poverty level, except under certain circumstances, violate the intent of the federal law that established the program. At a separate news conference, NEW JERSEY Gov. Jon S. Corzine (D) announced that his state had filed a similar suit. 
 
"The Bush administration has gone far beyond its regulatory rights," Corzine said. "I think there is going to be major, major pushback." 
 
The Centers for Medicare and Medicaid, which administers SCHIP, seemed unperturbed by the news, issuing a statement saying, "We are confident that our requirements are appropriate and will be sustained in a court of law." (NEW YORK TIMES)

States take harder line on employee misclassification
 
According to recent studies, employers who intentionally misclassify workers as independent contractors rather than employees to avoid paying taxes and workers' compensation costs on those workers are costing their states and the federal government hundreds of million of dollars each year in lost revenue. In response, Congress recently took up SB 2044, which would enact clear federal rules for employee classification. But states are already tackling the issue. According to State Net, at least seven states considered legislation to bar willful employee misclassification in 2007, particularly in the construction trade. To date, governors in ILLINOIS and NEW JERSEY have signed those measures, and two similar bills are also in front of CALIFORNIA Gov. Arnold Schwarzenegger (R). NEW YORK Gov. Eliot Spitzer has also launched a task force to ramp up enforcement of current Empire State laws that bar the practice.

MICHIGAN CUTS SHUTDOWN SHORT: For the first time in its 140-year history, the MICHIGAN state government shut down last week — but only for a few hours. The halt of state services began at 12:01 a.m. last Monday, when the Legislature failed to approve a plan to plug a $1.75 billion hole in the state budget by its Sept. 30 deadline. But a flurry of activity over the next four hours, including the passage of an increase in the state income tax from 3.9 to 4.35 percent, an expansion of the 6 percent sales tax to tanning, carpet cleaning, landscaping and about 20 other services, and a 30-day emergency budget, was enough to convince Gov. Jennifer Granholm (D) to order state employees to report to work as usual. The temporary shutdown, however, may only be temporary. The Legislature was unable to pass one key component of the budget deal: $440 million in spending cuts. And lawmakers will now have only 30 days to do so. "General tax increases are behind us, but budget cuts are not," said Granholm. (DETROIT NEWS, DETROIT FREE PRESS) 
 
MISSOURI FAST-TRACKS BRIDGE REPAIRS: While MINNESOTA lawmakers battle over how to finance their state's backlog of much-needed transportation repairs in the aftermath of the I-35W bridge collapse, lawmakers in MISSOURI have come up with a plan to streamline that process, which is being touted as a model for the rest of the country. The Show Me State is going to contract a team of construction firms to complete $400-$600 million in bridge repairs and maintain the structures for 25 years, over which time the state will pay the companies back, with interest, using a portion of its federal bridge funds. Observers say the plan isn't perfect. It doesn't cover all of the state's bridges, and few companies have the resources to commit to such a project. But it does have its advantages. It won't require lawmakers to raise taxes or impose tolls, which has stalled transportation plans in MINNESOTA. And it will allow the state to make a lot of repairs in a short time. "With this innovative new approach to transportation, we will do in five years what would have taken us 20 years before," said MISSOURI Rep. Neal St. Onge (R). "We are getting maximum value for taxpayers and keeping the public safe as well." (STATELINE.ORG) 
 
BUDGETS IN BRIEF: VIRGINIA Gov. Timothy M. Kaine (D) said last week that the state will lay off 74 government employees and cut spending by $300 million as part of a plan to cover a $641 million budget shortfall. The governor also wants the Legislature to approve the withdrawal of $303.5 million from the state's reserve fund (VIRGINIAN-PILOT [NORFOLK]). • The FLORIDA Legislature convened in special session last Wednesday to grapple with the $1 billion hole in its state budget caused by the slump in the housing market and lagging tax revenues. The session is expected to last 10 days (SUN-SENTINEL [ORLANDO]). • The ILLINOIS House voted last week to restore most of the $460 million Gov. Rod Blagojevich (D) cut from the state budget. But it was unclear late Thursday whether the Senate would do the same (CHICAGO TRIBUNE).

DEMOCRATS WANT HOLDOUT RECALLED: During this past summer's budget impasse in CALIFORNIA, Democrats, who control both houses of the Legislature, plastered the district of Sen. Jeffrey Denham — one of the Republican holdouts who denied them the two-thirds majority they neededto pass their spending plan — with lawn signs threatening to recall him. When the budget was finally passed in late August, most Capitol watchers assumed all of the recall talk was over. 
 
But the Democrats evidently hold a grudge. According to campaign statements filed last week, they've spent more than $40,000 on a campaign to recall Denham through a PAC called the Voter Education and Registration Fund. 
 
"I do think a recall will appear on the ballot, and I do think the voters of the 12th (Senate) District will recall Jeff Denham," said Paul Hefner, a spokesman for both the committee and Senate President Pro Tem Don Perata (D), the committee's top fundraiser. The resources will be available to make that happen, he added. 
 
The Democrats will have their work cut out for them. Of the 118 state-level recalls that have been attempted since 1913, only eight actually qualified for the state ballot, according to the secretary of state's office. The odds improve quite a bit at that point, however. Five of those eight efforts ultimately succeeded, including the 2003 recall of then-Gov. Gray Davis (D), which swept Arnold Schwarzenegger (R) into the governor's office. 
 
And Wayne Johnson, Denham's political adviser, said, "If you pay enough money to put enough people on enough street corners, the history suggests you can talk enough people into qualifying most anything," which is not likely to be encouraging news to his client. 
 
But Senate Republican leader Dick Ackerman said his party "will do what it takes to see that (Denham) stays in the Senate." 
 
"If someone thought they would recall one of our members to influence their budget vote, they would be sadly mistaken," he said. (SACRAMENTO BEE) 
 
DEMS URGE INVESTIGATION OF ELECTORAL COLLEGE MEASURE: Two weeks ago, backers of a ballot measure to change the way CALIFORNIA awards its electoral votes to benefit GOP presidential nominees announced they were abandoning their effort. (See CA ELECTORAL REFORM MEASURE FOLDING in Oct. 1 issue of SNCJ.) But that news hasn't ended the controversy over the issue. 
 
Last week, a Democratic group announced it had filed a complaint with the Federal Elections Commission alleging ties between the measure and GOP presidential candidate Rudy Giuliani. The group, Californians for Fair Election Reform, urged the commission to refer the matter to the Justice Department to determine whether federal election laws had been violated. 
 
"We have a real serious concern here ... (that) this is a direct threat to the 2008 election," said Chris Lehane, a spokesman for the group. 
 
The billionaire hedge fund executive Paul Singer, who is a major fundraiser for Giuliani, has admitted he was the sole source of funding for the electoral reform measure. But aides for Giuliani said they had no connection with the ballot measure campaign. (SAN FRANCISCO CHRONICLE) 
 
INDIVIDUAL POLITICAL DONATIONS UP: Billionaire Jerrold Perenchio, the former chief executive of Univision Communications Inc., set a record in the 2005-2006 election cycle. The $5.6 million he gave to the CALIFORNIA Republican Party — which amounted to nearly 9 percent of the party's budget — was more than any individual donor had ever contributed to a state political party. 
 
But Perenchio isn't the only big spender on state politics. According to a new report by the National Institute on Money in State Politics, the top 10 donors to state parties contributed a total of $24.6 million in the last election cycle, up over $15 million from the last midterm election cycle, in 2001-2002. And the 100 state parties raised $117 million from 60,000 donors overall, compared to $90 million and 80,000 donors in 2001-2002. 
 
The giving was concentrated in CALIFORNIA — six of the top 10 donors are from the Golden State — but not confined there. Houston home builder Bob Perry, who helped fund the Swift Boat Veterans for Truth campaign against Democratic nominee John Kerry in 2004, for instance, gave nearly $1 million to the TEXAS Republican Party. 
 
Eight of the top donors are Republicans but the Democrats have some deep-pocketed friends too, including No. 2 on the list, Sacramento real estate developer Angelo Tsakopoulos, who gave $3.7 million to CALIFORNIA's Democratic Party. 
 
One contributing factor in the rise of individual donations to state parties has been the ballot initiative passed in CALIFORNIA in 2000 limiting the amount that can be contributed to the campaigns of individual candidates but placing no restrictions on donations to the state's parties. 
 
"The role of the party has been permanently elevated by putting contribution limits on individual campaigns," said CALIFORNIA Republican Party Chairman Ron Nehring. (WALL STREET JOURNAL) 
 
NH PREFILES ROLLING IN: Folks wanting to get a handle on what NEW HAMPSHIRE lawmakers will be dealing with next year got a sneak peek last week as the first 2008 pre-files began to roll in. The bills won't have text until January, but topics heading for the docket include the recycling of plastic shopping bags; health insurance for K-12 and post secondary enrollment; contracts with illegal immigrants; and divestiture from Sudan. (STATE NET)

OTTER SAYS IDAHO SHOULD GO NUCLEAR: IDAHO Gov. C.L. "Butch" Otter (R) said last week that the Gem State should turn to nuclear energy because renewable energy sources like wind and solar are too expensive and cannot provide enough return on investment. Otter, who made his comments to a meeting of the University Presidents Council, a collection of presidents and other representatives of the state's universities and colleges, said that nuclear power could eventually produce $7 billion in annual revenue for the state. 
 
"Alternative energy, clean energy — those are all great ideas," Otter said, "But when you take a look at the impact they have and the subsidy they need, solar and wind both are tremendously subsidized. I think there are other clean energy alternatives. I think nuclear is one of them. I'm behind nuclear." 
 
But nuclear energy opponents contend that nuclear energy also requires significant public subsidies while also producing lethal waste products that cannot be recycled. 
 
Earlier in the week, Otter told another meeting of scientists brought together to discuss climate change that government has a duty to react to the public's perception that the climate is warming, "no matter what theory you accept or what evidence you recognize." But Otter, who has not previously accepted that climate change is caused by humans, added that dealing with climate change is really just a matter of having better energy policy. Any policy, he cautioned, must also have economic benefits, saying that "We as policy makers must think about adapting to a changing climate in ways that the public and the marketplace accept." (IDAHO STATESMAN [BOISE]) 
 
PATRICK PONDERS MERGING TRANSPORT AGENCIES: MASSACHUSETTS Gov. Deval Patrick (D) is quietly talking with key legislators about the possibility of merging several of the Bay State's transportation bureaucracies as a way to save money and create a more efficient system. The plan could include merging the MASSACHUSETTS Turnpike Authority with the state Highway Department and creating a board that would also oversee the MASSACHUSETTS Bay Transportation Authority. If adopted, such a plan would centralize the state's major roads, subways and rail systems under the power of a single board, which would ultimately give the governor much greater power to set state transportation policy. Any official announcement, however, is likely months away. (BOSTON GLOBE) 
 
BLAGO CUT DEALS WITH GOP: ILLINOIS Gov. Rod Blagojevich (D) recently guaranteed Senate Republicans numerous high-dollar building projects for their districts in exchange for their support of his $13 billion construction package. But GOP lawmakers weren't taking the governor at his word, insisting that Blagojevich put his promises in writing. The governor complied by issuing a memorandum of understanding (MOU) that detailed the specific projects the bill would fund. Republican Sen. Larry Bomke (R), however, was not moved by Blagojevich's assurances, even if they are in ink. "The guy is a jerk," said Bomke. "The governor's credibility is just nothing." But Republicans like Sen. Dave Syverson (R), said that getting it in writing was better than just taking Blagojevich at his word. "The MOU is just a little bit more of a safeguard that's in there," said Syverson. "This is as good as you can get." (JOURNAL-REGISTER [SPRINGFIELD]) 
 
GOVERNORS IN BRIEF: WEST VIRGINIA Gov. Joe Manchin (D) warned video lottery parlors not to take too much advantage of a recent federal court ruling that lifts the state's ban on those establishments advertising. Manchin said that a sudden splurge of neon signs or other high profile advertising would lead lawmakers to take a hard look at many other laws that regulate the gambling industry in the Mountain State (CHARLESTON DAILY MAIL). • ALASKA Gov. Sarah Palin (R) unveiled a proposal to raise the state's tax on oil profits from 22.5 percent to 25 percent. The bill would also remove oil companies' ability to claim a tax deduction for equipment-maintenance repairs that stem from an "unscheduled interruption or reduction in the rate of oil or gas production" (ANCHORAGE DAILY NEWS). • KANSAS Gov. Kathleen Sebelius (D) last week urged all state agencies led by other statewide elected officeholders to emulate her recent executive order that makes it illegal to discriminate against state employees in the workplace because of their sexual orientation and gender identity (LAWRENCE JOURNAL-WORLD). • OREGON Gov. Ted Kulongoski (D) proposed the Beaver State adopt a two-tiered driver's license: one for those who can prove their citizenship and another for those who can't. Kulongoski said he is considering following the UTAH model, which allows for a "driving only" license to those who can't prove they're legal residents of the state. Any such policy would have to be endorsed by lawmakers (OREGONIAN [PORTLAND]).

BUSINESS: The UTAH payday lending industry says it will no longer offer loans to members of the U.S. military. The industry enacted the policy after the Beehive State approved legislation that caps interest rates on the short-term loans at 36 percent for military personnel. That rate is well below the average 521 percent margin lenders previously were able to charge (DESERET MORNING NEWS [SALT LAKE CITY]). • The U.S. Supreme Court declines to hear a challenge to a 1998 ALABAMA law that bars the sale of sex toys in the Heart of Dixie. The plaintiff contended that the law is unconstitutional (MONTGOMERY ADVERTISER). • The ILLINOIS Senate overrides Gov. Rod Blagojevich's (D) veto of a proposal to raise the speed limit for trucks traveling on rural highways to 65 mph, up from 55. The matter now rolls on to the House (QUAD CITY TIMES [DAVENPORT]). • Still in ILLINOIS, Blagojevich signs HB 429, legislation that allows small Prairie State wineries to sell directly to restaurants and liquor stores rather than making them go through licensed alcohol distributors. The measure also allows both in-state and out of state wineries to sell up to 12 cases a year directly to ILLINOIS consumers (CHICAGO TRBUNE). • The MASSACHUSETTS House approves legislation that would do away with a current state law that bars sports ticket vendors from selling tickets for more than $2 over face value. The measure also requires professional ticket agents to register with the state, wear identification and pay a $1,000 fee. It moves to the Senate (BOSTON HERALD). • CALIFORNIA Gov. Arnold Schwarzenegger (R) announces he will sign SB 223, which would bar licensed appraisers from being unduly influenced by someone with an interest in a real estate transaction, or from being paid based on the value of a property they evaluate. Schwarzenegger says he will also sign SB 385, a measure that will make state-regulated mortgage lenders and brokers subject to federal guidelines on nontraditional mortgages (SACRAMENTO BEE). • A FLORIDA Senate committee endorses SB 40C, a proposal to revive the Sunshine State's no-fault auto insurance law. Under the legislation, every driver would have to carry $10,000 in personal-injury protection, which would be used to cover 80 percent of medical costs, lost wages and a death benefit. The measure moves to the full Senate (SUN-SENTINEL [ORLANDO]).  
 
CRIME & PUNISHMENT: The TEXAS Criminal Appeals Court issues a stay of execution for a condemned Lone Star State killer, the second court-ordered reprieve since the U.S. Supreme Court agreed last week to hear a challenge to the constitutionality of lethal injection. The high court blocked another TEXAS execution until they reach a decision in that case (AUSTIN AMERICAN-STATESMAN). • A MINNESOTA court rules that special circumstances — in addition to evidence of alcohol consumption — are constitutionally necessary for blood to be taken without a warrant or the driver's consent and used in a criminal vehicular prosecution. The state is expected to appeal (MINNEAPOLIS STAR TRIBUNE).  
 
EDUCATION: The ILLINOIS Senate overrides Gov. Rod Blagojevich's (D) veto of SB 1463, a measure that would require Prairie State classrooms to observe a moment of silence at the start of each school day. The bill moves now to the House (QUAD CITY TIMES [DAVENPORT]).  
 
ENVIRONMENT: The U.S. Department of Energy designates nearly all of Southern CALIFORNIA, parts of ARIZONA and much of the northeast as "national interest" energy transmission corridors, allowing federal regulators to approve new high-voltage towers and letting private utilities condemn homes and land even if a state agency won't (LOS ANGELES TIMES). • INDIANA officials adopt the Federal Clean Air Mercury Rule, which will require the Hoosier state to reduce mercury emissions from coal-fired power plants by 66 percent by 2018. However, the state won't actually meet that goal until 2025 because of a provision that allows plants that stay below their mercury cap to bank or sell emission credits to plants exceeding their cap (INDIANAPOLIS STAR). 
 
HEALTH & SCIENCE: The U.S. Supreme Court declines to hear a challenge to a 2002 NEW YORK law that requires Empire State health plans to cover birth control prescriptions. Religious groups had challenged the law, contending that it violates their constitutional right to free practice of religion (ASSOCIATED PRESS). 
 
IMMIGRATION: A federal judge in CALIFORNIA places a temporary hold on a new federal policy to crack down on employers who hire undocumented workers. Under that policy, employers who are notified by the Social Security Administration that an employee's identity information does not match the agency's records have 90 days to either clarify the mismatch or fire the worker. Failure to do so could result in the employer being prosecuted for knowingly employing an illegal immigrant (SAN FRANCISCO CHRONICLE).  
 
SOCIAL POLICY: A CALIFORNIA appeals court rules that registered domestic partners have the same right as spouses to accept or inherit real estate from one another without facing a property tax increase. Golden State law allows property to be reassessed at full market value only when it is sold or changes owners, but transfers to children or between husbands and wives at death or divorce are not considered ownership changes and are thus protected from tax hikes (SAN FRANCISCO CHRONICLE).  
 
POTPOURRI: The U.S. Supreme Court refuses to hear a case in which a CALIFORNIA religious group wanted justices to rule that local officials may not exclude "religious services" from public buildings. The case in question involved a church group that wanted to use a public library to hold religious services (LOS ANGELES TIMES)

IF THEY SEE IT, THEY WILL COME: Which is exactly what ALASKA officials fear could happen in the wake of a new Hollywood blockbuster set in some of the state's most rugged country. The movie, Into the Wild, tells the true story of Chris McCandless, a young man who ditched his wealthy East Coast upbringing to explore the nation's natural environs. Sadly, his idealism outweighed his backwoods acumen, resulting in his death from starvation on Alaska's remote Stampede Trail. Already the subject of a bestselling book, the story has inspired hundreds of looky-loos to venture to the spot where McCandless died. Now, as reported by the Fairbanks Daily News-Miner, state and local officials are fearful Hollywood's input will inspire hordes of similar macabre pilgrims, many of whom may not be prepared for the reality of being "in the wild." So while state tourism officials are promoting the movie in order to encourage folks to visit the state, concerned local officials from Healy, the town nearest the site, have successfully lobbied for including warnings to remind people that the Last Frontier ain't no freaking Disneyland. 
 
PRESIDENT NAPOLITANO? Yes, but it's not what you might be thinking. Although ARIZONA Gov. Janet Napolitano has been mentioned in the past as a possible presidential running mate, the president in this case is Italian President Giorgio Napolitano. As the Tucson Citizen notes, the Napolitanos met up on the governor's recent trip to Italy to celebrate her 50th birthday. The gov wanted to meet the pres to determine if that whole name thing meant they were somehow related. Alas, they're not — Napolitano is a fairly pedestrian name in that part of the world — but they had a nice conversation anyway. Turns out the Italian Napolitano speaks pretty fair English, a good thing considering the American Napolitano doesn't speak any Italian.  
 
A REAL FLASH DRIVE: OHIO state Rep. Mathew Barrett likes talking to school kids about the machinations of state government. But a recent presentation he gave to students at a Columbus high school had a little more bite to it than usual. According to the Toledo Blade, the whole thing started when Barrett's personal computer went on the fritz. No problem, Barrett thought. Since he had all of his visual support on a portable flash drive anyway, he simply switched over to using a school computer in order to show a Power Point graphic on how a bill becomes law. But rather than revealing the sausage grinder of public policy, Barrett's flash drive revealed a series of photos of nude women. School officials and local authorities are looking into the matter. Here's hoping they find the naked truth.  
 
HIGH CRIMES AND MISSED MEETINGS: The ongoing 13-week budget standoff in WISCONSIN is clearly making frustrated pols a little edgy. According to the Wisconsin State Journal, Badger State Democrats last week introduced a bill called the Budget Deadline Enforcement Act, a measure that would allow state police to arrest any lawmaker who skips out on a budget negotiation. Wayward lawmakers would then face a punishment far worse than jail: they would be forced to attend the very meeting they were trying to avoid. Talk about scared straight.  
 
BLOOD'S STILL THICKER THAN WATER: CALIFORNIA Gov. Arnold Schwarzenegger recently called a special legislative session to deal with two of the Golden State's most pressing issues: health care reform and, perhaps even more important, what to do about the state's antiquated water supply system. But with the session lagging and only two weeks left in the annual bill signing period, the Sacramento Bee reports that the Governator dropped everything last week to whisk off to China to appear at the 2007 Special Olympics World Summer Games. It is hard to find too much fault with Schwarzenegger, however, when you consider that the Special Olympics were started by his late mother-in-law, Eunice Kennedy Shriver, and the program is still a high priority cause for his wife, Maria Shriver. We married guys totally get that.