The Leaflet – The State of the States

Published January 26, 2012

This week was President Barack Obama’s State of the Union address, and in many states the governors’ State of the State addresses. The main focus remains rebooting the economy. While the proposed solutions vary from executive to executive, in many cases there is a lot of overlap between the issues brought up by the president and those raised by governors in their addresses.

Hydraulic fracturing, tax reform, and education reform were consistent themes of these addresses across the country. Heartland has some guiding principles to offer when examining these issues.

* Hydraulic fracturing regulation should be based on sound science, protect intellectual property, and avoid placing undue regulatory and financial burdens on responsible natural gas development.

* Tax reform should be pro-growth and focus on reducing tax rates across the board by eliminating special carve-outs like those being considered in Kansas and Oklahoma. This would help encourage job creation.

* Education reform should focus on empowering parents with bi-partisan solutions such as the parent trigger and other school choice mechanisms.

On these three issues and many more, The Heartland Institute has an abundance of educational resources as well as legislative specialists to help policymakers develop sound free-market policies. Please don’t hesitate to reach out to us.

This week’s edition of The Leaflet features research and commentary addressing financial sinkholes, college bubble, SOPA, MSU’s energy plan, Florida’s CAT fund,  and exchange sunset provisions.


John Nothdurft
Director – Government Relations
The Heartland Institute



Lead Story 

Forty-Five States Are ‘Financial Sinkholes’
Budget & Tax

Heartland’s Budget & Tax News looks at a new report by the Institute for Truth in Accounting (IFTA) that has found 45 states to be “financial sinkholes.” This groundbreaking report explains how current government accounting standards are misleading taxpayers and lawmakers about how bad their states’ debt problems actually are.

According to the article, “The IFTA has identified the top five ‘Sinkhole’ states, each with a per-taxpayer burden exceeding $23,000. Connecticut’s taxpayer’s burden is $41,200; New Jersey’s is $34,600; Illinois’s is $26,800; Hawaii’s is $25,000; and Kentucky’s is $23,800.

“In contrast, the IFTA identified five ‘Sunshine’ states. Nebraska, North Dakota, Utah, and Wyoming each have a per-taxpayer surplus because they have more-than-adequate assets available to pay their obligations. Although taxpayers in South Dakota are burdened by past spending for which they will have to pay, South Dakota is included as a ‘Sunshine State’ because it has the smallest deficit among the other states.”

The IFTA’s Financial State of the States report can be downloaded from the organization’s Web site:



What We’re Working On

Research & Commentary: The College Bubble

U.S. student loan debt has increased 500 percent since 1999, and the cost of college has risen 400 percent since the 1980s. Both have far outpaced overall inflation and price increases on such items as homes, new cars, and prescription drugs.

Heartland Institute Tech Experts React to Death of SOPA/PIPA Bills in Congress

Rep. Lamar Smith (R-Texas) said he will not take up the Stop Online Piracy Act (SOPA) anytime soon, saying he would “wait until there is wider agreement on a solution.” Senate Majority Leader Harry Reid (D-NV) also announced he was cancelling a scheduled cloture vote on the Protect IP Act (PIPA).

The moves essentially kill the bills in this Congress, after a “blackout” by popular sites such as Wikipedia and Reddit drew national attention to the legislation critics say would squelch free speech and enterprise on the Internet in the name of fighting piracy.

Michigan State University should not increase costs on students with unrealistic energy plan

Legislative Specialist John Monaghan reacts to MSU’s plan to run the university exclusively on renewable energy. This plan will fail to live up to its environmental goals and could lead to greater student tuition increases. John explains, “Instead of recognizing this deficiency and planning accordingly, the report simply assumes future energy storage projects will be cost effective. This is not a fair assumption given the current pace of development in that field and will result in the university investing in technologies that may never be able to meet its energy needs.”

Research & Commentary: Florida Hurricane Catastrophe Fund
Finance, Insurance, and Real Estate

As in all states with significant hurricane risks, windstorm coverage is expensive for people in Florida. To control the costs of this coverage, Florida’s legislature has established the Florida Hurricane Catastrophe Fund, a massive government-owned reinsurance entity. All private insurers operating in the state are required to buy coverage from the Cat Fund (as it’s commonly known), and the Florida Citizens Property Insurance Corporation buys only Cat Fund coverage.

In theory, the Cat Fund provides reinsurance (insurance for insurance companies) at below-market rates and thereby produces savings they can pass on to consumers. This system, however, poses enormous risks to Florida’s fiscal future.  In this Research & Commentary, Legislative Specialist Matthew Glans examines the financial foundations and implications of the Florida Hurricane Catastrophe Fund.

Research & Commentary: Health Insurance Exchange Sunset clauses
Health Care

In this Research & Commentary, Legislative Specialist Kendall Antekeier describes why sunset clauses in health insurance exchange legislation do not fully protect states from the Patient Protection and Affordable Care Act. She explains, “A sunset clause acts only as ‘political cover,’ making it appear a state does not agree with the federal health law while willingly choosing to implement it. States that truly oppose the law will refuse implementation of its health insurance exchanges.”



Heartland’s Emerging Issues Call

Topic: State Chemical Regulation

Wednesday, February 1, 2012 at 1:00 pm EST

Heartland Policy Advisor Rich Trzupek, author of the book Regulators Gone Wild: How the EPA Is Ruining American Industry , will be our featured speaker.

Phone number: 218/936-6581

Pin: 37661

RSVP by emailing Robin Knox at [email protected]

Did you miss our call about health insurance exchanges?

You can listen to it here



Policy Newspaper

School Reform News

The January 2012 issue of School Reform News reports on the defeat of proposed education tax hikes across the country, including a 64–36 “drubbing” in Colorado. That state’s voters simply didn’t believe a tax hike was necessary or that any funds raised would be effectively “earmarked” for schools.


Quick Hits

Killing drilling with farcical ‘science’  

FIRE Podcast- Robert Detlefsen: Litigation finance could impact insurance claims