by Peggy Boyer Long

As early as 1932, U.S. Supreme Court Justice Louis Brandeis argued states are potential policy innovators. His evocative phrase, "laboratories of democracy," gained instant and durable fame. But these days, there's a more pertinent maxim for the challenges states face: "Necessity is the mother of invention."

And that's the theme of this edition. If, in his era, Brandeis believed states should be allowed to innovate, in this era of New Federalism, they're forced to do so. The requirement to devise policy, or to cover the costs of policy, has devolved to the states because, increasingly, the federal government can't do it or won't pay for it. State officials realize they'll need to be creative to survive.

This theme was captured on our cover by Kathleen Riley Young, who depicted the fraying connection with the federal government on social welfare policy. Across the country, state and local officials are looking for ways to cover the costs of feeding, housing and caring for the nation's poorest citizens — and weighing alternatives to keep those costs down.

But social welfare policy isn't the only arena spurring innovation. States also are rethinking ways to manage — and pay for — their infrastructure assets, including the airports and roads that constitute much of the nation's transportation network.

We offer examples in this issue. Pat Guinane, reporting from the Indiana Statehouse, assesses the move to lease state and local assets to for-profit companies. "Dubbed public-private partnerships," he writes, "these deals are gaining acceptance from states with major transportation needs but little start-up capital."

Chicago leased the Skyway toll road and is talking about leasing Midway Airport. California has opened the door to private companies running some of that state's roads. And some Illinois officials are talking about leasing this state's tollway system.

Pat, who has covered our legislature as Illinois Issues' Statehouse bureau chief, examines the larger trend and outlines the specific economics — and politics — of Indiana's tollway deal.

Privatization of infrastructure can be attractive to state and local officials, he notes. They're promised cash upfront; they can unload responsibility for maintenance; and they're shielded from voter anger over fee hikes.

Bethany Carson, who directs our reporting from the Illinois Statehouse now, examines another kind of public- private partnership: the move to keep health care costs down by increasing the number of citizens who carry medical insurance. The debate among states over health care costs stems from two realities: Federal officials don't appear ready to offer national policy solutions and they're cutting their share of subsidies.

Some states aren't waiting for Uncle Sam. Massachusetts became the first to require all of its citizens to carry medical insurance. A number of other states are weighing their options.

Illinois may not be ready to go as far as Massachusetts, Bethany writes, but a panel representing the health care industry, businesses and consumer advocates is debating a plan designed to increase Illinoisans' access to affordable health care. By December, "the panel will either support an approach that says, 'You're on your own, society,' or a commonwealth approach that champions 'Everybody in and nobody out.'"

Two other writers reflect on the impact of declining federal dollars. Jasmine Washington reports on the widening gap between the demand and supply of affordable housing. A University of Illinois at Chicago report on affordable housing issued in March offered this warning: "While federal resources targeting low-income populations have been steadily declining, the limited resources that are available continue to be diverted to support the development of mixed-income communities on former public housing sites."

Daniel Vock calculates the decline in federal support for community programs. A former Illinois Statehouse reporter, he now works for Stateline.org in Washington, D.C. "The Bush Administration," he writes in this issue, "is trying to tighten domestic spending, and several poverty-related programs are feeling the pinch." In fact, federal support for community programs has declined from $207 million in block grants two years ago to $177 million this year. Someone will have to pick up the difference.

And that appears to be the point of the New Federalism. Political scientist Kent Redfield here at the University of Illinois says some policy wags have a name for federal efforts to devolve unfunded programs to the states. They call it "shift and shaft."

Illinois Issues, June 2006

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