who are you going to tell you no longer get medicaid? >> i think we're going to end up is having to trim back what medicaid provides to a more basic set of services. >> and make people pay more themselves? >> it's all of that stuff that your ma ma told you about some day you've got to be responsible for yourself. we're not in any danger of doing that this in this society. >> did you know my mama? >> a very nice woman. i thought she was a delight. but it seems to me that this whole discussion, and i've been through a lot of these redesigning government discussions. they all come down to how do we deal with the supply side of services. we never talk about how you're going to deal with the demand side. that, is, the public expectation. we assume that the expectation is there, it is our responsibility to meet it. >> you say health care is a right. but how much the individual pays for his or her own health care coverage is certainly a

flexible figure. >> i think we would save a lot of money for the american taxpayer by having a more efficient system with less monkey business by big insurance companies and hmos. that's why i supported the president's health care reform. our state had more insurance, health insurance recissions than california. what is a recission? some little girl at 8 years old gets braces, doesn't -- isn't on the form that she applies for insurance. and then when she gets pregnant years later the insurance company knocks her off the rolls. the federal government has passed a law to protect against this kind of insurance abuse and i think it is important to protect the health care of people who work and live from pay check to pay check. >> there are projections that show if you leave this in the federal government's hands without major changes in the way in costs and cost growth, you're looking at a few decades down the road, federal

government growing from 20% of gdp to 30% of gdp. maybe that's inetchtable, maybe that's something you're all comfortable. but the question i have is, there anything you can do as governors dealing with just one state to fundamentally change the health care costs equation? who thinks you can? >> i do. >> i'm not -- i think there are things we can do. i also think this is probably the single-most complicated public policy issue we face. it's important as education and transportation and these other issues are, i think health care is the most complicate. certainly there's we can focus on wellness and prevention, incredibly important. we can focus on the administrative costs, which people expect to be between 25% and 30%. it does seem to me until we figure out some kind of replacement for the fee for service model where the entire

health care system is compensated based on providing more procedures, more visits and the like as op pozzed to being compensated -- >> can you do that at the state level? >> i don't know. we've had conversations. it's certainly something that we've got to at least try to figure out. there have been places which have pilotted and have had some success. and vermont being one. we've got to figure out how we scale it up. >> we have had success. we've reduced our medicaid costs by about a quarter billion dollars over the last 5 years. and for my colleagues from big states, that's a lot of money for us. and we've done it by asking the federal government successfully for a super waiver to give us flexibility on how we administer the medicaid program. my complaint about medicaid historically is it's not a health care program, it's a sick care program. it pays for things after the fact. but we got permission to use these dollars for preventive care to make incentive payments to physicians who provide

hi-quality care. and, saturday, we're seeing some real savings. so it can be done. the federal government has to give us more flexibility. and in addition to our request for a couple of extra quarters of enhanced medicaid match, we've also asked for relaxation so states can design programs in a way that works for them. >> which is more important, the money or flexibility? >> we always say give us one or the other. this is a short-term request, two quarters for additional medicaid support during the time we're recovering from the great recession. >> money now and flexibility later. >> correct. >> governor. >> thank you. as one of the new governors on the block, i really do look at this as an opportunity for states that should have been at the table in the beginning of this discussion and taken the lead. my dismay was that we were kind of the last ones brought into the discussion. and i think that, really, states have a responsibility

and an opportunity in fact to lead the way on health care reform. whatever the definition of health care reform is. i think it means different things for different people. to a lot of people in utah it's lower cost. for others it's universal access. single pair systems. there's a lot of different definitions, and we come up washington, d.c. with a one-size-fits all approach where i would rather see a states out there, laboratories of democracy, trying to find their own ways to solve those health care reform issues. and in utah we do have one of the health care exchange windows out there that is having some success in bringing scapentition in a private sector setting with defined contribution as opposed to defined benefit for employers, where employees can go to a portal in the web and match up their needs with what's available in the marketplace with a defined contribution. i don't think it solves all the

problems, but it's a step down the right road. i think it will give us competition in a private sector setting. and i think that will help us to keep costs down and help give us access to health care. but my dismay is the states have not been from the very beginning at the front of this discussion helping lead the charge with goals and objectives set out by washington. >> governor. >> at the risk of redundancy, i want to tag on to what jack said. i truly believe that the single most significant thing that has not been done at least on a whole sale basis, although as governor douglas points out, it's been successful in some areas, is a systemic change in the way we pay for this stuff. and the systemic change most basic to a long-term resolution of some of these spirlinge and escalating health care costs is changing the way we pay for it and changing the whole fee for service model. it is absolutely fundamental

for both getting a handle on the costs but i think it's also helpful for quality. >> and you think a state can do that on its own? >> i think a state can do that. and as far as i'm concerned it's much like other things. the federal government can lead follow or get out of the way. and i think that that's where you're seeing more and more governors go. now, we are ham strunk to some extent to the extent that you've got requirements, and that's the reason you're hearing some folks say and i know dave believes this, that we've got to get a handle on costs and we can't be hypocrites and ask the federal government to bail us out of everything and still decry deficit spending. you can be too hypocritical about -- well, you can be hip crtcal, period, about any of that. but i think governor douglas' point was a very short-term fix for a very short period oftime to help get through a problem that the states didn't create to begin with, with regard to

access and demands on our medicaid budgets. is a short-term solution. the longer term solution is the systemic change that's already been talked about. i think states can do it and ultimately i think states will do it. but part of that requires a little bit of the flexibility that governor douglas was talking about. >> just to follow along, federal government penalizings us for every time we cut medicaid or try to refashion it, they take away $3 for every dollar that we save and we don't get the benefit of the savings. so there's no incentive for savings. so establishing a partnership in terms of reworking it, the flexibility and maintenance of effort. if we did have that, i'm sure that we could compensate for the lack of revenues that we're looking for to some extent if it were phased out so that we would be in a better position. >> as a casual listener who doesn't spend all the time. the message is much more about give us the money than the

flexibility. >> but we cut. but we end up cutting -- we have to cut 300 million to get 100 million in state savings. and we just damaged more of the economy, and there's no sharing of that savings with the federal government so they don't have that incentive. >> governor. >> just from the perspective of what states can do. if this meeting had the c.e.o. of ibm, we had health care economist, they all said the same thing. the data was crucial to this. so a state, for instance, can pass legislation, which we have done in colorado that requires an all-payor data base. so you have a sense going into the data to see what people are paying. now, where the federal government comes in is that's not all that good if you don't have any access to payor information around medicare. so here the federal government has the data base that we need the access to, and why you're going to have to have sort of a shared solutions approach to that. but the starting point has to be for the state to be willing

to go in and do the hard work of gathering the data, and then trying to glean from that data where the savings are. your first question was about fmap. that was the short term thing. 30 states have balanced their budget youing that prom. but to solve this over time. if you look back to 1992, no other start of state government spending has increased as rapidly as medicaid. and so it is important for us to get our arms around that. we're not going to do that without cost containment being part of a health care strategy. and i think states have an absolute responsibility to start that conversation by gleeng whatever information you can by to see where cost containment can come from. >> i just want to be clear. many of states knew at the time they passed their budgets that the money probably wasn't going to cofplt >> i don't know that's accurate. you have the speaker of the house, you have the majority leader, the administration including secretary sebluss saying that it was, the house passed a version that included

an fmap version, the senate passed a version that included the f map version. i think there was a great deal of reason to hope and believe there would be that extension. and then one or two votes shy of cloture in the senate of getting there. so i don't agree that states should have known it wouldn't have come. >> governor, quickly, and then we'll leave health care because i know you have spent a lot of time on it. >> it's one of the reasons why you're probably hearing a lot about health care is it's a huge part of our budget. if you looked at what education was, in south dakota it's 49% of my general fund budget. medicaid and the associated costs evolved with it is right at 36 cents. but it didn't used to be that high. most of us are still suffering through revenue that is are about the 2008 or less level. and yet at the same time, our brudgets going up. last year, my budget went up in one area only and that was medicaid by $50 million on a

$1.1 billion general budget. >> governor, you talked last night i gather -- i wasn't here but i've seen the reports, talked about public employee benefits and the need to wrestwl that problem. does that rank on the same level with what we've been talking about here, health care, and is that one of the things that you can do? is it something that inevitably divides republican governors from democratic governors because of voting patterns? why is that so important? >> well, because at least in our state governor douglas said they have the second highest property taxes in america and that's why he thanks me, because we have the highest. and so if you're talking about affordability in the state, there's a finite amount of money which is getting smaller and smaller that's going to be raised by taxes because of the economy. and the public doesn't care whether you call it income tax or sales tax or property tax.

they know they're paying it. so from our per spective in new jersey, having the highest property taxes in america, the idea that there has been one sector of our population that has been completely and totally shielded from the recession is in my view an issue of fundamental fairness. >> that one sector? >> unions. >> teachers, firefighters. >> across the board. >> because in an era of the last few years with 0% inflation we've had average increases in teachers salaries in new jersey between 4% and 5%. we have the overwhelming majority of teachers in new jersey who pay nothing towards their health care. zero. from the day they're hired until the day they die. themselves and their families. we have the highest paid police officers in america. and we have the highest paid firefighters in america. and their salaries could continue to increase. so if you're to look for a divide, i don't think it's a republican-democratic divide.

it's a divide between the public sector unions and the private sector unions. because in my state, you've got 35 to 50% unemployment among the private sector. >> nebraska disagree with this? -- anybody disagree with this? >> let me just say that this isn't a partisan issue. because i think all of us have dealt in one way or the other with public employee pension benefits, health care benefits, in kentucky we passed pension reform that affected the pension benefits of every new hire. it's a lot more difficult and we've got a constitutional issue about affecting the benefits of current employees that way. but we reduce the benefits of all new hires. we are -- we negotiate every year a new health care contract and we don't have public employee unions in kentucky but we sit down with the employees

and work through with the amount of money we've got what the benefits will be. and the amount of money this year is going to be much less than it was in any previous year. and we'll sit down and we'll work out the best plans we can have. >> the entire conversation so far is basically been focused on cuts. >> i'm going to -- >> and, and everybody here has spent the last couple years cutting. in delaware we've had to reduce significantly the number of people who work for the state. we've had to move out of leased real estate, we've had to renegotiate leases. all of our state employees took a pay cut last year. it has been cut, cuts cut and we're going to be in this mode of trying to be cost effective and more efficient. but we also know we're not going to be in a position to cut our wait to a prosperous future. we're not going to be able to cut our way the only way is to

improve our economic climate. >> let's talk about that. governor, you made the same challenge. a crisis is also an opportunity. it may be hard to do when you're shrinking your budget but you don't have any choice. i would like to get you to tell me the one thing, not a list of things, just tell me the one thing that you have done as governor that you feel like has done the most to get your state where you think it is going to need to be five years from now or ten years from now for the kind of economic climate that you foresee in the future. and who wants to take that on first? >> i will take that on. go ahead. >> the single most important thing we've done is what jack was talking about here, and that is create jobs. because that's the way we're going to grow our way out of this recession. last year, we totally revised all of our economic incentive

packages and legislation that allows us to do economic incentives. before that, we could do a lot of things for attracting a new business to move into kentucky but once you were there we really said thank you for being here and we're going on to the next one. because of the changes, we now can work with our existing businesses and help them expand and grow also also provide incentives for that. and it has created during this last 15 months more economic activity in kentucky than we've had since the start of this recession. >> so more about trying to encourage? >> we're trying to grow what we have and we're trying to keep what we have. during this recession it's been just as important to keep the jobs that you have as it is to grow them. so we're now doing both.

>> very quickly, how do you do that? how do you make that change? >> we legislatively revised our incentive packages so that our economic development cabinet can sit down with our existing businesses as well as businesses from out of the state and work with them both. >> governor her borte. >> i know you're asking for one issue but i think it is more than one issue. i will tell you that four years ago we put together a ten-point plan for economic prosperity in the state of utah which includes tax reform, natural resource, tourism investment, research and development, education enhancement with emphasis on math and science and technology. but we also cut taxes from seven to five. again, we've created an atmosphere where the entrepreneur can have a chance to be successful. we tried to grow from within and you don't have to invent if i people. in fact, you've got a fertile field for the entrepreneur to come and plant his seeds and

expect to grow a crop. so at least in utah it seems to be working well. the fact that we did it here four years ago made it so we have had not had quite the crash landing that some have had because of that. but again, a key is to create a fertile atmosphere for business to prosper. >> let me let governor sanford in here. >> i just want to go back for one second to the larger notion of how do you create fertile environment for whether a kch coming from summer else or a company indiginous to your state. i still think that as states we're just scratching the tip of the surface on the spending issue. and i say that because in south carolina, for instance, we've seen a fall in the appropriate budget from about 8 billion down to about 5 billion. and that's the budget everybody talks about. but that's really one third of the pie. because the other two thirds are fees and federal transfers. and when you include fees and

federal transfers, actually we see the highest budgetry year we've ever seen, about $21 billion when you go all in. and i guess it was churchills quote that the beauty of the american system is always does the right thing, comma, after it's exhausted every other possible remedy. and i think the same holds true on this notion of government restructuring, government reform, budgetary can you tell us. none of us want to cut because there are constituencies that squeal and scream every time one tries to do so legislately because their stake holders in that which they invested in. but when you look at what's coming next year is the stimulus funds dry out, it is going to be the mother of all inventive years with regard to government restructuring and other -- or tax increases, one or the other. because you really are going to see in all 50 states a real seismic shift as those federal funds dry out.

so i think that next year may be an amazing year with regard to states moving towards some of the efficiency that is you've seen in the corporate world and, for instance, addressing public pensions. public pensions we have not yet scratched the surface on, whether it's state, federal, or -- >> and so, but let me get you to, you're talking about challenges that still lay ahead. i was still trying to get people to answer the question, what's the one thing that you've already done that you think has had the most effect on creating the kind of environment you want to create five, ten down the road? >> employment security reform, comp reform, tort reform. all those are thing that is accrue to the benefit of the startup in somebody's basement, a large company or mid-sized company looking to start a company in our state. >> the one thing was energy. in our state, we're the oil dependent state in the country. 86% of our energy needs are imported so we've gone more to

wind. we've done more renewable energy with biomass. we're the largest. so we've got a foundation for energy refishsy, renewable energy, domestic energy. and we think it's a national policy that's a winner for jobs. >> you're not going to stasm those? >> no. i was very disinterested in what he was saying. >> did you want to say something? >> one thing that we've done, our comparative advantage is the export of energy. so what we've concentrated on is the power lines and investment with the private sector in natural gas pipelines and rail roads simply because as an energy export state those are the underlying core infrastructure more so than highways, and the private sector has been willing to make the investment. and you can see that manifest itself in our current fiscal circumstance because we more than doubled the capacity to move natural gas, which has a revenue implication for us, which is one of the reasons

we're in pretty good shape. >> governor. >> you asked the one thing. i would say that we identified where is our economic future as the most trade-dependent state in the nation. and we also identified energy. so we've invested in research and development. we set a goal of energy jobs of 25,000 by the year 2020. we did an energy portfolio. we did tax incentives. we now are the fourth largest producer of wind power, the largest growing in terms of solar energy. biomass, and so on. again, the goal was 25,000 jobs by 2020 and we surveyed last year and we're at almost 100,000. so i would say that is not only giving us jobs, allowing us now with china to do some exports that we here to forehave not done. and we've identified it as the single industry where we can get four more jobs in any other single sector in the state of

washington. >> governor. >> in 2003, we did what we called the 2010 initiative, a business initiative that was designed to be a business plan like a private business. goal three was to become a recognized leader in research and development. we ended up creating ten specific research centers and creating 23 new phd programs. that may sound like you're creating these but the goal we had was to keep our young people in south dakota. and that meant diverse if iing an economy, and that meant bringing back in more research opportunities for those kids that otherwise would leave. i think that's going to change the landscape within our state. >> do you see it in your population trends? >> we do. we're keeping our kids here. we've got record enrollment at our university systems within the state. >> yes, sir. >> probably the two most important things we did, first really about a change in culture which is demonstrated

by a significant reduction in the amount of time it takes us to respond to inquiries from business, to as short as a day for approval. but a very predictable fast timeframe from our department of transportation, department of natural resource. we know that when businesses are waiting in line and filling out forms, they're not putting the people of delaware to work. that's one critically important. secondly, you cannot overstate how important education is so we believe that the race to the top competition was huge. and i do want to make sure everybody else knows that the economic development committee meeting after this one is going to focus on these very issues that is an advertisement for that as well. >> i think like other states we really staked our future on 21st century sustainable industries. and for us, energy is the lead among them. also, bioplants, arrow space have been significant. but in energy, i pass -- have signed 56 laws in four years

that have to do specifically with clean energy. it's been for us the ability to create an eco system. we joined all of our major research institutes with the national renewal laboratory. and with that laboratory, market of the state is research and development center for clean energy. that's attracted private sector research and development. conco phillips is going to build in colorado along with seemance coming there as well. and then we've seen big manufacturing jobs come as well. there's 2500 jobs, four manufacturing plants. estimate solar's inverters in colorado outside of germany and those are just examples of big companies, but also medium and small. so they're mfering. they're about innovation. and for our purposes we think that's the way forward for us as a country but certainly for us as a state. >> governor. >> we believe that the most important thing we can do for

our economy today and also the economy of our future is to invest in the innovative and creative capacity of our people. last year, we led all states in terms of job growth in our tech sector. we moved from fourth to second place in terms of biotech. we sit in the corridor of science and technological innovation, the likes of which is unrivaled. and u.s. chamber of commerce says we have one of the top most entrepreneurial and state economies. so the most important thing we've done is the investments of the education of our people and making college more affordable and connecting that innovation to the entrepreneurs that are creating the new opportunities and new jobs that allow us to have a rate of job growth twice what the nation has been for the last three months. >> governor, one thing. >> one thing that happened in new york that may be a little different is that obviously legislatures are very queasy particularly in election years about making some of the tough

decisions and creating these cuts. and in new york, apparently we didn't have to wait for a session to have that problem because the budgets were late, 25 out of the last 30 years. and in that period of time, what the state had done for a while would just borrow from its own general fund to keep the state functioning until a budget was passed. then we pass add law that would have an emergency appropriation that would keep the government running from week to week. so what we did this year after waiting -- our budget is the only budget that's passed in april in the country. and after six weeks of waiting and realizing the legislature wasn't going to do anything, we started putting the cuts into the emergency appropriation themselves so the legislature eatser had to pass or shut down the government. and what happened was it took the legislatures off the hook from having to make the decisions and place it squarely on the executive branch, and

we're able in a series of weeks of doing this to basically pass a budget. and what i think it did was to change the culture, because now we found a way to address the issue of reductions without making people from both parties politically vulnerable as they would have been. >> we've had a number of economic and educational inventive packages over the years. but from a fiscal standpoint, the way we're able to balance the budget without anticipating any federal medicaid money, without accessing our reserves and cutting taxes at the same time is through something we call challenges for change. the legislature in vermont is of the other political party but we realized we had to find a bipartisan solution to get through this difficult time. and so working with the consultant, with the legislature hiferede, we passed this law that reduced the remaining budget gap, which was

about 4%, and without knowing exactly how we're going to do it. it's a leap of faith. but what we said is we've got to fundamentally restructure how we provide services of government. so we have instituted a performance-based contracting system. we've created what we call charter units where we say to an agency you don't have to follow the strict rules of personnel and purchasing and other kinds of things in state government. here's your appropriation, do it your way. where we're reducing our inmate population through transitional housing and community placements that protect public safety but reduce costs at the same time. so we've got to fundamentally rethink how we do things, not just go through traditional budget cutting. >> what i'm about to say is much more macro. >> about the one thing? >> yes, it is. >> but it infill traits the microro that everybody is talking about. and it is the one thing.

and for us in particular, some of these other folks may take it for granted but we don't. we have imbude a mind set and an attitude that links education and economic development inextrekably to the point that everybody thinks of it just like they think of breakfast now. and when i say that, and when i say where i'm coming from, i hope you'll appreciate this. governor o'malley brags about maryland being first in the education and he should brag about it. it is something that he should never take for granted. we're tenth. who would have believed a few years ago arkansas would be tenth in those rankings? and what's wha that's done is it's changed both inside and outside our state the image and the view. and the relationship and it's from high-tech, it's from the hewlett packards and the versance of the world and all those jobs to the manufacturing

sector where we've created over 25,000 new jobs in the midst of this recession. it is the combination that he was talking about. and increasing what we already have and not forgetting our existing businesses at the same time though that we try to attract new ones. it's all of the microthing that is everyone is talking about. it's what the governor was talking about about keeping your people in your state. but you've got to be able to educate them and provide the good jobs so they don't go to atlanta or baltimore to get a good job. it's all of the individual things that everybody is talking about. but the one thing to answer your question is the relationship between the understanding that it's education that's the key to economic development. and when i'm talking about education, i'm talking about cradle to grave, pre-can, k-12, eye dult education. workforce training and retraining. if you have one single thing that you can point to as a state where you're going to lead this country out of whatever mall lays it's in, it's the understanding by your

people and a buy-in by your people that the relationship between education of every type and economic opportunity for tomorrow are inextrickably linked. so we're back to education. yes. governor. before i go to you, just quickly for equal time reasons we know the number of one on the education week list was and we know who number ten was. any of you 2 through 9? if you were, raise your hand. [inaudible] >> i just want to point out that massachusetts has the top-performing opportunity achievement for three years running. >> i've started something now. anybody else have something else to say? >> we wanted to create the best business climate in the country. and we did a number of things. our process was out of whack and essentially we've cut by two thirds the permitting that

you have you need to put together whatever kind of business you need. secondly, we understood that government would not have the kind of funds needed for infrastructure development. we appriveed and are implementing right now the largest, most ambitious public-private partnership in the country. it's a program. it's not two or three projects. it's a whole program in every single area you can think of. thirdly, energy. and i agree with some of my colleagues, energy is key. and in our case, our economy is manufacturing. so just imagine how important the cost of energy is. when you live in an island as gove nor in hawaii, it is very tough to produce cost-effectively energy. and we are moving that with portfolio, tax incentives. and finally, because of all the tough decisions we made last year, we are cutting taxes

across the board this year. >> i want to change the question a little bit. i'm sorry. go ahead. >> just for our territory, we are so distant and remote and very much a microcosm as compared to the many states. our main stays have been tourism and department of defense with military installations there. but i tried to implement changes by investing in infrastructure, by building schools, investing in our community college, our university, our seaport, our airport, water prourt, waste water, roads, land fills have provided jobs in construction and the service industry. so that we would invest in foundational type of investments that would allow for growth in the future. also, tried to deal with as many long-standing issues of lawsuits, entitlement type

lawsuits against the government, federal unfunded federal mandates and the like that have really haunted us for decades. and trying to deal with the many fundamental issues. but it was mostly foundational types of approaches that i've tried to take in my two terms to build for the future. >> i want to get you in here before we move on. i'm going to ask you to tell me one thing but i'm going to acknowledge that we've had heard two, three, ten. i give up. tell me as many things as you want to tell me. >> having been governor just a little bit over 500 days certainly was a challenge when i came in because we were facing the largest deficit that the state of arizona had ever faced in its history. so we began certainly first and foremost by trying to get our budget balanced which i think is very, very important to the business community to know that you have a stabilized government. and we did that. we have a structural deficit going into the next year. but certainly, we did a

yowman's job considering the fact that we had about i think it was about 8.2 billion revenue stream with a 10.3 billion cost of budget. so we did get the budget balanced. we went out to the voters for a temporary sales tax of which they responded overwhelmingly in the state of arizona to give us a one cent sales tax increase for three years and it passed by 64%, which again helped us get through the bad times. >> and they did it to pay for? >> for education. >> they were willing to do it for education. >> which was very, very important to me because we understand that the top of everybody's issues in regards to jobs and that leads me to where we are today. i think it's very, very important. and we have addressed probably everything in those 500 days that you all have talked about. we have been on it and we have been successful. and but the bottom line is i

think that business needs to know that they have a stable government, that they have a well educated workforce, and then it was one of my big goals is to make it easier to do business in arizona. and that meant to me putting the moratorium on all rules and regulation, and helping the people that are looking to come to arizona to get thri the red tape and the green tape to reach out to them and to help those businesses that are already here in arizona. so it could be stabilized. and we have been successful. we have brought in over $1 billion of capital assets into the state and thousands of jobs. we're proud of that. in 500 days we've accomplished a lot. >> and for you, has this immigration mess been a distraction from that agenda? >> well, you know. >> but do you, because that's a very clear focus, this is what we want to do. do you regret the fact?

did you know it was going to be this big? >> i did not know it was going to be this large. i knew it was going to have a tremendous effect on of course on the state of arizona. but i think the people realize that what happens in arizona affects their states, too. and it's an impossible situation they're living with. the feds aren't doing their job. and if they are not able to doit, then we in arizona feel that it's our responsibility to step up and help them do it. >> and if you had a do-over, would you put that one off? >> absolutely not. >> ok. a different question now, this time i'm going to hold you to one. i would like each of you to tell me the one thing that you didn't do that you really wish you had. a lot of you are leaving office this year or early next year. and will be succeeded by someone else, maybe the one thing you wish you had done and you hope your successor does do. some of you will be back for more punishment.

and so it might be the one thing that you haven't been able to do. but again, the one thing that you haven't done that you wish you had done to put your state in the position it needs to be for the next five to ten years. and we're running out of time so i'm going to keep you to one. >> i'll start. i think one thing that i wish i could have more of and that's tax reform. we're going to move forward with that in respect to jobs. >> ok. >> control property taxes. as i indicated earlier, they're very high. it's tough for a lot of families whose incomes are below the national average to find a decent place to li. we have the lowest vacancy rate in rental housing in the country and very low for owner-occupied as well. and we've seen a decline in our student population of about 13% over the last decade. but property taxes and local school spending keep going up. so that needs to be addressed.

>> we proposed eliminating the income tax in south carolina. we were unsuccessful in that. i think because we have that large deer bait we were able to cut the marginal income tax rate for the first time in our state's history, from 7 to 5 for llcs, partnerships, et cetera. so it was a step in the right direction. but if you want to free entrepreneurial talent you have to go to the root cause, can which in part is income tax. >> and to what extent is that about your competitive position vis-a-vis other states? because all of us know this is something words focusing on here in the last few minutes, that we're discussing, we know what the situation of this country is, the degree to which we've relied on consumers, have racked up large deficits, have imported from the rest of the world. and if you're going to turn that around in the next ten years as a country we have to export. it can't be about moving the jobs around. >> i think it's very -- we buy wholely into the notion that the world is flat, you've got

6.5 billion people scattered cross planet earth and capital is fluid and it will go to where it is encouraged. so it is looking at a state like florida that has no income tax. >> that's why lebron james went down there. >> i think that's it. >> one thing. >> i think the most important thing is to empower the voters, strengthen voters. i believe in initiative, referendum, recall. we have recall on the ballot in illinois this year. but i would like to see more opportunity for consumers and taxpayers to enact laws by direct petition and referendum. so that's why. >> while i wish governor schwarzenegger was here because they have that power in california and it creates a mess. does anybody disagree with that? who wants to take it on? >> well, you get a situation i referred to earlier. when you have a vote of the people, it may look appealing on the ballot to vote for reducing class size and

increasing teachers pay, but it isn't free. and there was no revenue that came with it whatsoever. so -- >> the you feel you're anti-democracy? >> by no means. by no means. i just think the same scrutiny that goes in the legislative process ought to go into the initiative process to include vetting it publicly the pros and the cons, asking how you're going to pay for it putting a fiscal note, doing all the same sort of rigor that you do in any form of legislation. it still ought to go through that process. >> do you have anything to say on that? >> no. >> quick, g ahead quickly. >> certainly. i believe that we must make government responsive to our constituents. and one way to do that is through e-government. we don't discuss it that much. using --

>> e-government. >> exactly. in europe and other places they really have come a long way and i believe we can do more. and we have an initiative but i want to do a lot more there. >> to get more response. >> exactly. so people from their homes or business ks actually do a lot of what they normally do with government. and even having to move from their desks or homes. >> in our case, i think the initiative that we've undertaken but have yet to complete is with the information technology. there's a lot of data and information out there, but harvesting that data and ensuring that it's used properly gathered and used to make informed decisions i think is critical. so we've taken undertaken major initiatives in trying to develop the architecture for government, but i hope my successor completes that as again with data and information that's accurate and efficient you can make informed decisions. >> governor patterson, the one

thing that you didn't do. your one of the governors, it's a record year by the way. right? we know at least 4 governors will be out of office -- 24. what's your big regret the one thing you wish you had done? >> appoint myself to the u.s. senate. [cheers and applause] >> the most concise answer of the day. who is next? come on. somebody will follow that. >> in my case, i think i wished i would have found a scheme for actually funding higher ed that is a dedicated scheme of some kind, simply because we do think that it is so tied to

economic development and in deep, deep recessions like this it is very vulnerable. higher education is. it's not caseload driven. we spend 97% of our budget on five years. so the two areas that aren't totally caseload driven, k-12 and higher ed, and higher ed is the more vulnerable of the two. so you're doing something very counter productive to economic development in the long run to make it through what seemed like a short-term recession it's longer than i think most people thought it would be. but we need some scheme schematic in our state to make sure that we adequately fund higher ed. >> governor, you can go now. >> i wasn't going to tell you anything. i didn't want to follow patter son. the wung thing i regret and hopefully we'll finish it given the opportunity, didn't completely remove sales tax on food. we were one of those states that taxed food to the highest

extent of our regular sales tax. it was 6%. they've been talking about it for 50 years, republicans and democrats alike from huckabee to clinton nobody did it. we knocked four of the six off. it took two years to get it done, but we're down to 2 cents. i regret we haven't gotten rid of the 2 cents but hopefully we're not done. >> governor. >> well, hopefully i'm going to be around for a few more years but i would say this. we passed the largest tax package in the history of the state. we still need to lower taxes more if you're going to be competitive in the job market both domestically and internationally so lower taxes. >> and can you afford to do that? >> can you afford not to do it. i think you have to. >> the one thing i wish we had had the flexibility to do more of is targeted tax credits for innovation, the r and d tax

credits, the biotech tax credits, the thing that is are in our strength, i think those have ripple effects i think they pay themselves back. and we have increased it somewhat. and i think those are the one areas. >> you don't worry that gets the government into picking and choosing industrial policy? >> distorting economic effects if you have tax credits for certain activities and not others? >> i think if you do a survey of your states and do it in an honest, open and transparent way, you can identify your competitive strengths and it makes them stronger and allows you to make the tide rise for service industry and other things not even connected to it. we've been very successful in that. it hasn't hurt us. that's why we had the rate of job growth that is better than most states in those sectors. >> do you want to respond to sna >> i want to build on that because i hear this argument all the time. i think we ought to have a robust and modern and above all simplified tax system for to

encourage business development. but i think playing to your strengths and our strengths are unique from state to state and also reflecting that focus in the tax policy is right. we have a life sciences initiative here. $10 billion initiative over -- $1 billion initiative over tenyears. it has some targeted tax incentives as a port that have nishti and it's one of a handful of industry that is is the reason we have not gone as deep into recession as the rest of the country and why we're coming out faster than the rest of the country. clean tech is another area. it is another area. these are areas where this whole innovation economy is a sweet spot for us here in the commonwealth and it's what we have focused on and is why i think the philadelphia fed report that is we're outperforming 48 other states. >> and your one big regret. >> my one big regret is this. although i said i have the honor we'll get to this in the

second term. we spent a lot of time and effort trying to address a concern businesses raised about one-stop shopping when it comes to dealing with state government. someone who takes them by the hand and walks them through a simplified regulatory process. we made a lot of good progress there. but it turns out poor people want the same thing. they want one-stop shopping when they present for a human services needs they don't want to have to be sent to multiple different offices. they want the same simplicity in dealing with their government. i think governor fort no's about e government is one way, but for a lot of those access to the internet is a problem. so we want that for the regular person. >> governor christy. >> i've been six six months. >> what's -- i've been here six

months. >> what's the big one for next year? >> the big plan for next year? >> yeah. what's the one regret? come on. >> the big plan for next year is for new jersey, given that we're so noncompetitive from a tax perspective, is to continue to reduce spending in a way which is going to allow us to become more competitive with our neighboring states, because we're not. and so we have to be on the long-term plan over the next four years to be able to do that. and we dug this hole for ourselves. put aside the national recession. by our policies that we picked in new jersey over the last decade, we dug this hole for ourselves and we're going to have to dig out. >> one of the most frequent concerns i hear from small businesses especially throughout the state has to do with an ability to access credit in any kind of affordable way. and while we did create a program that has facilitated to some degree, so far we've not

been able to take it to scale. that's probably one of the things i would like to focus on. >> who haven't we heard from? >> like governor christy, i haven't been here that long. it's been about a year so i have no regrets. i think we're doing what we need to be doing in utah. but what as i've learned here that's become self-evident is that every state has unique challenges, unique opportunities, and need to find unique solutions of their own particular situation. we have states that have very little public lands, some of us in the west have a lot of public land. we're blessed with natural resources and traditional fuels . make it more difficult to be on the renewable side as the only source of energy. i have a state that is one of the fastest growing states in in america and has the highest birth rate of any place in america so my education challenge and paying for education is way different than some of the other states. some have in migration some have out migration border state

challenges, inland state challenges. the challenge for me and all of us going forward is to express to our constituency what we are in fact doing to address those unique challenges. we sometimes get drowned out by what's happening in washington, d.c. and some of the national challenges, and people don't realize they may be national challenges but they're maybe not the same unique challenges we face as states. and i will start where i ended up where i begin. and i think states need to be taking the lead on a lot of these issues. i believe in federalism. i believe there should be a balanced approach to how we govern in the state with washington, d.c. having a role but states having a balance and counter balance to what's happening in washington, d.c. and this organization i think is an organization that can really lead out in governance in our own unique ways. >> let me follow up on that and ask, get a few people to weigh in before we go here.

we've covered health care pretty thoroughly what you want from washington, don't want in terms of health care. but health care aside, health care aside, what sit that you would like to see from washington that would make your jobs better, would enable you to do what you want to do over the course of next -- enable your state what it needs to do over the course of the next, five, ten years? >> i would follow up on my colleague from utah's point. the point of view people who have public lands, what we would like is a lot less attention from the federal government and a lot more capacity to actually integrate the development of those properties with the remaining economy in the state. i mean, it's like living with a 900 pound gorilla that just flails around. >> anyone else? >> i would ask -- go ahead. >> i would say sustainable

fiscal policy in washington. i think that's the giant elephant in the room when you think about policy in washington. because the store of value of one's currency at this point is eroded based on international expectations, i think of what comes next. >> the interest rates are low, currency is still holding up pretty well. >> for the time being. and so i think that there's a lot of contingent liability, if you want to call it that, from the standpoint of us as states being able to trade with a whole bunch of other places in the world based on the trajectory we're on in washington. >> let me get gove nor -- >> the one thing would be flexibility out of washington, true flexibility and true partnership for the states. i think we can help them to solve a lot of problems. we don't need the money as much as we need the flexibility. we made this point both in governor meetings and privately. the regulators have made it very difficult for small businesses to get access to credit even when it seems like

they should given their history. and we appreciate the need for different type of regulation, the financial system, but it feels to me like they crimp the system and really the wrong place, in a state like colorado, heavily relies on small businesses for our economy. they're a very big part of the economy. and yet it has crimpled our ability to grow because there's just not access to credit. we put together our own program called a small owner reserve and it works, but it works at this mirne scare compared to what the federal government could do if in fact they appreciated small businesses, the role they play in the economy, and the regulators taking a more rational view towards the needor them to have access to it. and not to overregulate or to overcrimp it in places they shouldn't. >> i agree with everything that's been said on the access for small business credit access. but i would add that the transportation investment, the

infrastructure investments, the things we used to do as a major league country that our competitors in china and europe are doing. we've got to make those investments in infrastructure 234 order to have a better future for our kids. >> opening up as many export markets as possible. >> no unfunded mandates. >> in our case, i speak for the inslar areas of the territories, that there be a quality or equity. many times in our federal programs in medicaid, med carke, preexisting conditions as currently existing with this mrk that apply to the states but not equally to the territory. so there's inequity. as federal policies relate to territories. >> ok. we've crammed a lot of information into an hour and a half. i'm going to ask you one last question, show of hands. given all the pain of the last couple of years, if you had to do it all over again, would you do it? and we've already heard from

governor patterson on this, but if the answer is yes, let me see your hands up. it's slow but they're getting there. they're getting there. ok. thank you very much. thank you. i've enjoyed it. [applause] >> thank you so much. and thank you colleagues for your participation. the economic development committee is going to continue perhaps on some of the same theems at 3:00, so please join them. we're adjourned.

>> coming up, washington journal. we'll take your questions and comments. following that, we'll have lie coverage of the closing session of the national governors association annual conference. coming up today on the washington journal, jill lawrence of politics daily.com. she talks about the summer meetings of the national governors association going on in boston this weekend. also, a discussion of the current situation in iraq. our guest is ali ala wi, former

aq