The more things change-.

Even the coolest Washington insiders were stunned by year-end developments in the nation's capital; but it doesn't look as if state-federal relations will be much affected.

Political Science 101. Final exam. Multiple choice. (Check only one.)

(1) Which of the following recent events will affect the states' lobbying priorities in Washington, D.C., in 1999?

_____ The House impeachment proceedings against President Clinton.

_____ The Democratic gains in the House mid-term elections.

_____ Speaker Gingrich's resignation and the election of Congressman Livingston as the new speaker of the House.

_____ All of the above.

_____ None of the above.

If you checked "none of the above," you're probably right. Impeachment hearings are grave, nearly unprecedented and they preoccupy the news media. The political party of no previous president has ever gained seats in the sixth year of his term. And Congressman Gingrich's decision left Washington insiders gasping. But as dramatic as these events have been, they are unlikely to alter recent patterns in the relations between state officials and the federal government.

(2) Which of the following will characterize the states' lobbying concerns in 1999?

_____ Battling against federal attempts to preempt state authority.

_____ Renewing the fight against unfunded mandates.

_____ Ensuring fair treatment in federal budget negotiations.

_____ Getting ready for issues such as Social Security reform and tax reform, that may take several years to settle.

_____ All of the above.

If you chose "all of the above," you are right again. For the past two years, state officials have concentrated most of their lobbying resources on opposing federal proposals to preempt state prerogatives and authority. The first year of the 106th Congress, however, promises no dominant theme for state officials. The number of proposals to preempt state laws will not abate. If anything, there will be even more attempts to preempt in 1999 than there were in the last couple of years.

Added to the states' lobbying concerns in 1999, though, will be a resurgence in proposals to impose unfunded mandates on state governments, new funding constraints imposed by the 1997 balanced budget agreement, other budget-related issues and preparations for solving problems associated with the Social Security system, Internet taxation and other longer term issues.

WARDING OFF PREEMPTION 

The greatest current tension between the federal and state governments is over the question of national standards vs. state flexibility and adaptability. The pressure for federal preeminence - that is, preemption of state authority - is driven by several factors, including technological advancements, radical changes in the world marketplace and campaign fundraising. Opponents of federal preemption note the advantages of experimentation at the state level, the cultural and economic diversity among the states, and the responsiveness and accountability of state legislators.

New Hampshire Speaker Donna Sytek calls the past three years "the most successful lobbying period the National Conference of State Legislatures has ever had." She supports her claim with the role legislators played in devolving several major programs to the states including welfare, safe drinking water and work force training. "Equally important,though," she says, "is the overall success we've had in forestalling proposals to supplant state authority with federal standards."

In 1998 alone, state legislators helped thwart congressional efforts to preempt state authority in at least eight major areas. Bills to preempt state product liability laws and to remove property rights cases from state to federal purview met identical fates. Opponents, including state legislators, were able to garner enough support to cause Senate Majority Leader Trent Lott to pull them off the calendar.

A major overhaul of banking and insurance laws passed out of the House, moved out of the Senate Banking Committee, but, in the final days of the session, failed to muster enough support for approval. Negotiations to produce a bill that would federalize juvenile justice laws faltered during Congress' final week. Competing bills to preempt state managed care laws also died in the last hours of the 1998 session.

Maine's U.S. Senator Susan Collins and Massachusetts Senator John Kerry stymied efforts to include preemption of state anti-slamming laws in the omnibus budget bill. These are the laws that protect consumers from unauthorized switching of their long distance phone service. The omnibus budget bill also includes a section, advocated by Georgia Congressman Robert Barr and House Majority Leader Dick Armey, that keeps the Department of Transportation from issuing rules that would require states to use Social Security numbers on driver's licenses.

All of these attempts at preemption will be back in 1999, some with more steam than others. Registering lower on the steam gauge are the financial services, slamming, product liability and takings proposals. New York Senator Al D'Amato's November election defeat diminishes the prospects for rewriting the nation's banking and insurance laws. His successor as chair of the Senate Banking Committee, Texas Senator Phil Gramm, killed the 1998 version. Louisiana Congressman Billy Tauzin, sponsor of the 1998 anti-slamming preemption bill, says he has no intention of bringing it back this year. Long distance companies may attempt to resurrect it, presumably with another sponsor. With the smaller Republican majority, interest in resuscitating the product liability and takings bills will be reduced.

At the high end of the steam gauge will be managed care, Indian gaming and drivers' licenses. Over the past five years, many state legislatures have employed a variety of approaches to regulate managed care, especially to protect consumers. They let mothers stay in hospitals longer than 24 hours after giving birth. They ease access to emergency services. They let women designate ob/gyns as their primary care physicians. Despite this widespread state activity, Democrats and Republicans at the federal level want to impose national managed care standards. The Clinton administration has made a federal managed care law one of its top three or four priorities for 1999. Although House and Senate Republicans will have their own proposals, they are divided on the desirability of moving in this area.

In a post-election "Meet the Press" program, South Carolina Republican Congressman Lindsay Graham made managed care a "must pass" item. "We need to get HMO reform. We're not miles apart, we're yards apart from the Democrats."

Being close to the Democrats on this issue, though, made Indiana Congressman David McIntosh nervous. "If we fight on the issues that the president has laid out - like managed care, then we'll fall into the same trap we did last time where the president sets the agenda."

Congressman Barr's drivers' license fix is only temporary and provides time to develop support for an amendment to the immigration law passed in 1996. The 1996 law includes a section sponsored by Texas Congressman Lamar Smith that requires states to use Social Security numbers on drivers' licenses. The provision was intended to provide a tougher form of identification for illegal immigrants and to make it more difficult for them to find jobs.

Groups as diverse as Phyllis Schaffley's Eagle Forum, the American Civil Liberties Union and NCSL responded with outrage when the National Highway Traffic Safety Administration issued proposed rules to implement this section of the immigration law. The Eagle Forum and the ACLU voiced their fears about the section's privacy implications. NCSL raised cost concerns and noted it will preempt state laws, especially those that prohibit the use of Social Security numbers on licenses. The same coalition will work early in 1999 to remove the section and encourage Congress to find another way of identifying immigrants.

The irresistible attraction of positive headlines for congressional sponsors almost guarantees continued interest in juvenile justice legislation. North Dakota House Majority Leader John Dorso, though, points out that "most federal anti-crime bills pass in election years." If the 106th Congress holds to precedent, this preemption bill might not get serious attention until 2000.

Added to the list of preemption reruns is at least one major proposal that has gotten only cursory treatment in the past. Since 1995, 12 legislatures have restructured their states' electric utilities. Nine bills were introduced in Congress in 1998 that would impose a federal electric utility restructuring solution; and the Clinton administration unveiled its own deregulation approach. Most observers expect greater congressional attention on electrical utility restructuring this year.

Oklahoma State Senator Larry Dickerson, an advocate of his state's restructuring law, warns against federal action. "Most of these new state laws are just now taking effect. We know a lot of legislatures are watching and waiting to see how these initiatives are going to work. So why should the federal government step in this early without the benefit of learning from these state experiences?"

Dickerson notes, in fact, that federal preemption may never be desirable. "There are many legislatures - especially in states with low utility rates - that may never choose to deregulate. A federal law could easily force restructuring where the state's legislature has concluded it is not warranted."

PROTECTING AGAINST PREEMPTION

State Senator Steve Cohen of Tennessee warns there is a horror movie quality to all of these preemption proposals. "Like Freddy Krueger in Nightmare on Elm Street and its 17 sequels," he says, "preemption bills never completely die. Kill them one year, and they're back the next."

Speaker Sytek agrees. "Legislators could beat nine of every 10 preemption schemes - a phenomenal lobbying record. Yet, one loss a year means 10 losses in 10 years. That could translate into a fundamental shift of power between the state and federal governments over the course of a decade."

For that reason, state lawmakers hope to work with a bipartisan group of congressmen to move legislation in 1999 that would discourage preemption. This legislation would place procedural obstacles in the way of specific attempts at preemption. A centerpiece of the bill would be allowing a point of order during floor debate of bills that would supplant state authority - a device that has proved to be an effective deterrent against unfunded mandates.

UNFUNDED MANDATES ON THE COMEBACK TRAIL?

The Unfunded Mandate Reform Act became law in 1995. Since then, not coincidentally, the flow of unfunded mandates from the federal government to state and local governments has abated significantly. The new Congress may see more bills that would impose new costs on state governments. It will also have a chance to reverse a couple of recent decisions that constitute unfunded mandates.

Several of these bills relate to health care. The Clinton administration is planning to initiate a new round of nursing home reforms. Concerned about reports of patient abuse, the administration will propose stricter requirements on states to make background checks on nursing home employees.

The Clinton administration will resurrect its annual budget proposal to cut the amount of money it will reimburse states for their administrative costs associated with the Medicaid and food stamp programs. The administration may also attempt to restrict once again the use of provider taxes for funding the state portion of the Medicaid program.

BUDGET CUTS RISKY BUSINESS FOR STATES

The historic agreement reached in 1997 to balance the federal budget delayed many of the hard decisions until the "out years" of the five-year plan. In FY 2000, the out years arrive.

Of greatest importance to state officials is a cap on discretionary spending that requires a $28.1 billion spending cut. Many state-federal programs will be high on the list for cuts. Particularly troublesome for some legislators will be suggestions to reduce block grant funds, including Temporary Assistance for Needy Families and the social services block grant.

Michigan Senator Joanne Emmons argues that any reductions in TANF would betray the agreement state officials reached with the federal government when the welfare system was revamped in 1996. "We exchanged entitlements for block grants. We got the flexibility we needed. We did not bargain for block grants that would be subject to budget cutting every year."

The administration's FY 2000 proposed budget almost certainly will advocate mandating Social Security coverage for state employees currently not in the system. Twenty-two states have substantial numbers of their employees in alternative pension systems and not in the Social Security system. Administration officials view mandating coverage as a short-term budget savings and as a way of extending the life of the Social Security system.

Maryland House Majority Leader John Hurson, co-chair of a special NCSL task force on Social Security reform, says legislators hope to convince Congress not to "unilaterally abrogate the decisions these states have made." He says Congress should look instead at "more fundamental Social Security reforms and not this stopgap partial solution."

The November 1998 settlement of state lawsuits against the four largest tobacco companies raises a different kind of budget issue. The U.S. Department of Health and Human Services claims that states owe the federal government a portion of the settlement funds. Its position is that states are recouping money they paid out of Medicaid over the years to patients with tobacco-related illnesses.

In 1998, Texas Speaker Pete Laney, Florida Speaker Daniel Webster and Mississippi Speaker Tim Ford led an aggressive campaign in support of legislation that would deny their recoupment claim. The bill, co-sponsored by Florida Senator Robert Graham and Florida Congressman Michael Bilirakis, died at the end of the session, despite state lawmakers' efforts and support from Senate Majority Leader Lott. Washington Attorney General Christine Gregoire, the lead state negotiator in the November settlement, says the new agreement, which includes money for the 46 states that had not already settled, "makes passage of the Graham-Bilirakis bill absolutely imperative."

PREPARING FOR THE LONGER TERM

1999 will also see Congress and the president beginning to address issues whose resolution is likely to be a year or more away. Two of these are of particular interest to state legislatures.

Clinton made saving Social Security the centerpiece of his negotiations over the FY 1999 federal budget. Two weeks after the mid-term elections, Congress accepted the challenge, starting with a high-powered Ways and Means Committee hearing featuring former senior advisers to Presidents Nixon, Carter, Reagan and Bush. None mentioned the impact that various reform proposals would have on state governments.

NCSL's special task force on Social Security reform, co-chaired by Delegate Hurson and Colorado Senator Norma Anderson, will examine the proposals from the states' perspective and attempt to raise the visibility of state legislatures in the reform discussions.

Included in the omnibus budget bill was a compromise version of the Internet Tax Freedom Act. It places a three-year moratorium on new state and local taxes on Internet activities. It creates a commission of eight state and local officials, eight industry representatives and three cabinet secretaries who will develop recommendations regarding taxation of the Internet. The law allows the commission to address sales taxes on transactions that take place over the Internet and on other remote sales, including catalogue sales. The commission's recommendations could have a fundamental and long-term effect on the nature of state and local tax systems.

KEEP AN EYE ON CONGRESS

Impeachment hearings and a new Republican House leadership team certainly will monopolize headlines in the early weeks of the 106th Congress. As consequential as these events are, state legislators will be equally concerned with the stories that will not make the headlines - preemption, the budget, Social Security and taxation of the Internet. How these issues are settled in 1999 will have their own consequences for the standing of the states in the federal system as the country approaches the next century.

HOW'S YOUR EX-LEGISLATOR IQ?

Legislators are our best lobbyists" is the tag line for NCSL's work in Washington, D.C. State legislators are good lobbyists, in part because they are so well connected to members of Congress. These connections begin with the fact that a significant portion of the members of Congress formerly served in state legislatures. The following multiple choice quiz examines your knowledge of this linchpin in the relations between state legislatures and the federal government.

(1) Approximately what fraction of the members of Congress once served in a state legislature? (Choose one.)

(a) _____ One-third (b) _____ One-half (c) _____ Three-fifths (d) _____ Two-thirds

(2) How does the new congressional class compare to the overall membership of Congress? Is the percentage of former state legislators in the new class:

(a) _____ Significantly lower than that in the overall membership? (b) _____ About the same? (c) _____ Somewhat higher? (d) _____ Significantly lower?

(3) Which of the following new members of the Senate and House were legislative leaders during their previous careers?

(a) _____ Michael Crapo, Idaho (b) _____ John Larson, Connecticut (c) _____ Michael Simpson, Idaho (d) _____ Jim Bunning, Kentucky (e) _____ All of the above

(4) Which new member of the U.S. Senate has moved directly there from a state legislature?

(a) _____ Michael Crapo, Idaho (b) _____ Blanche Lambert Lincoln, Arkansas (c) _____ Jim Bunning, Kentucky (d) _____ Peter Fitzgerald, Illinois

(5) Which members of the new House Republican leadership formerly served in a state legislature?

(a) _____ Speaker Bob Livingston, Louisiana (b) _____ Dick Armey (c) _____ Tom DeLay, Texas (d) _____ J.C. Watt

(6) Who was the last speaker of the U.S. House to have served in a state legislature?

(a) _____ Newt Gingrich, Georgia (b) _____ Bob Livingston, Louisiana (c) _____ Tom Foley, Washington (d) _____ Sam Rayburn, Texas (e) _____ Carl Albert, Oklahoma (f) _____ Jim Wright, Texas

(7) Which of the following current members of the U.S. House are former presidents of the National Conference of State Legislatures?

(a) _____ Congressman Martin Sabo, Minnesota (b) _____ Congressman David Hobson, Ohio (c) _____ Congresswoman Karen McCarthy, Missouri (d) _____ Congressman Vern Ehlers, Michigan

ANSWERS: 1 = b. Just under half (49.4 percent) of the combined membership of the House and Senate formerly served in a state legislature. 2 = c. Twenty-three of the 40 new House members are former legislators (58 percent) and five of the eight new members of the U.S, Senate once served in their legislature. 3 = e All of the above Senator Crapo was president pro tempore of the Idaho Senate; Congressman Larson was president pro tempore of the Connecticut Senate; Congressman Simpson just concluded his third term as speaker of the Idaho House; and Senator Bunning, in addition to pitching a perfect game for the Philadelphia Phillies in 1964, also has served as minority leader of the Kentucky Senate. 4 = d. Senator Fitzgerald was state Senator Fitzgerald from 1993 until his election to the U.S. Senate in 1998. 5 = c. Only Congressman DeLay formerly served in his state's legislature. 6 = f. Speaker Wright was a member of the Texas House of Representatives from 1947-48. 7 = a and c. Congressman Sabo was NCSL's third president (1976-77), and Congresswoman McCarthy served a half term as NCSL president just before her election to Congress in 1994.

Carl Tubbesing, NCSL's deputy executive director, heads the Washington, D.C., office.