Empowering State and Local Governance

Empowering State and Local Governance Year in Review

The Hoover Institution is committed to the idea that policy research should seek to identify solutions at the state and local levels, where governments are best positioned to improve educational outcomes, stimulate economic growth, spur innovation, and respond to citizens’ needs. To accomplish this goal of empowering states and localities across America, the Hoover Institution partners with a diverse range of state agencies and lawmakers. This line of effort continued to expand in 2024. The aim of collaborations with state and local partners is to produce data-driven policy recommendations on key issues such as economic development, public-sector pensions, energy policy, tax and fiscal policy, and other policy areas. This approach leverages the strengths of America’s federal system of government to advance effective policy reforms.

Convening State and Local Leaders for Policy Discussion

On May 20–21, the Hoover Institution convened 20 chiefs of staff and senior advisors to US governors, as well as members of the National Governors Association, for a State and Local Leadership Forum. Hoover Institution director Condoleezza Rice welcomed the group and spoke with them about what she believes are the most pressing challenges America faces today. Other presentations included Distinguished Visiting Fellow Ben Ginsberg speaking about safeguarding the US election system. Participants received an introduction to the Stanford Emerging Technology Review by Senior Fellow Herb Lin; they also were able to tour Stanford’s Synthetic Biology Lab with Hoover science fellow and Stanford associate professor of bioengineering Drew Endy. Senior Fellow Larry Diamond and Distinguished Research Fellow Glenn Tiffert concluded the conference with a discussion about Beijing’s influence operations in the United States.

The Hoover Institution welcomed state legislators and representatives of the National Conference of State Legislatures on November 18–19 for another presentation of the State and Local Leadership Forum. The bipartisan gathering included 18 state legislative leaders from all regions of the country. Because legislative leaders are facing new challenges with international investment and influence in their states, the agenda primarily addressed the international landscape, as well as developments in emerging technology. Speakers included Director Condoleezza Rice, senior fellows Drew Endy, Philip Zelikow, and Russell A. Berman, and a number of other Hoover scholars. Topics included how to handle influence efforts by Chinese diplomats, the rise and risks of generative AI, NATO, and opportunities for research collaboration with Hoover researchers.

Indigenous students and young professionals hoping to foster robust economic activity in their local communities gathered for the Indigenous Student Seminar at the Hoover Institution on August 5–9. The fifth annual weeklong gathering brought together students and recent graduates from the United States, Canada, New Zealand, and Australia to reinvigorate the entrepreneurial spirit demonstrated by Indigenous peoples for millennia, propel regulatory changes to help Indigenous groups chart their own economic paths, and discuss the seemingly endless array of colonial barriers to development. The seminar is part of the Renewing Indigenous Economies Project at the Hoover Institution, directed by Hoover senior fellows Terry Anderson and Dominic Parker and administered and moderated by Gonzaga University professor of entrepreneurship Daniel Stewart.

Understanding State and Local Government Finances

Using variation in federal pandemic-era fiscal aid to states driven by the strength of political representation, Hoover fellows Jeffrey Clemens, Oliver Giesecke, and Joshua D. Rauh found that incremental pandemic-era fiscal aid to states was most likely to end up in the categories of general administrative service spending and employee pension benefit funding. The authors concluded that “pension contribution increases are driven by the states where public employees have above-median representation on state pension fund boards, where over 14 cents of each marginal dollar went to pension funding.”

In June, Joshua Rauh wrote in the Los Angeles Times about the trajectory of California’s budgets and spending. With the state facing a massive budget deficit for the coming fiscal year, Gov. Gavin Newsom’s revised state budget for 2024–25 addresses the $45-billion gap. Even as the state legislature debates the governor’s proposals, which include significant cuts to such priority areas as homelessness spending, the question remains whether California can reset itself on a sustainable fiscal path.

Strengthening Federalism

In a publication released in September, renowned experts from a range of disciplines, including economics, political science, history, and law, joined practitioners in policymaking to lay out the key priorities in evaluating and reinvigorating America’s federal system of governance. In American Federalism Today, the volume’s editor, Senior Fellow Michael J. Boskin, and its contributors examine the Founders’ intent for the federalist system and its ramifications for current issues, including infrastructure, education and healthcare financing, and public opinion on trust in government.

Michael Boskin discussed American Federalism Today with Distinguished Policy Fellow in Journalism Bill Whalen on his podcast Matters of Policy & Politics. Boskin explained the urgent need for policy reforms to address government waste, plus what makes for effective government commissions. Boskin, former chair of the White House’s Council of Economic Advisers, chaired a federal commission on the Consumer Price Index in the mid-1990s and has advised several prominent officials, including presidential candidate Ronald Reagan, on tax policy. Boskin and Whalen also discussed how federalism affects spending and investment in important policy areas like the construction of infrastructure.

Looking at the reasons why Washington habitually spends more than it takes in, Senior Fellow John F. Cogan wrote in the Wall Street Journal in November that since the 1950s, the cause is largely federal spending on things that should be primarily the responsibility of state and local governments. “My analysis of federal budget data shows that the chronic federal budget deficits since the 1950s are due to the federal government’s failure to raise tax revenues required to finance its spending on state and local activities,” he wrote. He argued that the federal government needs to get out of the practice of funding a large share of certain state and local activities and focus its efforts on what it is responsible for, such as issues affecting multiple states and national defense.

Addressing Regulation to Promote Economic Freedom and Growth

Wisconsin Public Radio cited a recently published study by Dominic Parker and colleagues, which found that despite American Indian tribes’ being deprived of rich natural resources by the US government, they have been left with lands favorable for wind and solar development. In an interview about the study, Parker explained that “tribes and their members would forgo a lot of money that could be earned from renewable energy development” if they continue to miss out on the opportunities to host solar and wind projects that privately held neighboring lands enjoy. This loss could translate to a range of $7 billion to $19 billion. Parker maintained that tribes should be empowered to pursue clean energy projects, free from federal government intervention, including regulatory permitting processes imposed by the Bureau of Indian Affairs.

At his Grumpy Economist, Senior Fellow John H. Cochrane wrote about price gouging as Vice President Kamala Harris and fellow Democrats on the 2024 campaign trail spoke about legislating against it. As was noted in another 2024 post from Cochrane, the mechanism for this proposal would have been regulatory agency action against alleged price gougers. At multiple points in the piece, Cochrane acknowledged that to the consumer in a moment of need for a particular limited-supply good, especially in the context of a disaster or other emergency, price gouging does feel unfair. However, the “Grumpy Economist” showed how this personal feeling of inconvenience is not a good guide toward a truly moral policy on price gouging. The broader supply, demand, and market-entrance incentive structure has to be considered. Instead of banning or penalizing the practice, Cochrane suggested we “pass a new federal law, one that overrides the many state laws against price gouging.”

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