Leavitt: IT the Key as States Transform Government Services

By Steve LeSueur, Staff WriterThe new chairman of the powerful National Governors' Association is setting an agenda that calls for the nation's governors to exploit information technologies as a key means for reinventing government and strengthening their state economies.Utah Gov. Mike Leavitt this month began his yearlong term by announcing "a new frontier of federalism" in which technology has diminished the significance of political boundaries and increased the role of states in the new global economy.The rise of the Internet, personal computers and related technology is leading to a shift in power from the national government to state governments. "During the last 60 years, our government has operated almost like a mainframe computer, but the power of the 21st century is the networked PC," Leavitt said.Describing himself as a "federalism geek," Leavitt said he wants to help the states prepare for an era of "networked governance" that is characterized by central coordination but local control.The Republican governor outlined his agenda Aug. 10 at NGA's annual meeting in St. Louis. As chairman of the governors' association, he will have a national platform to promote his ideas and influence policy on the theme he has selected for the year: "Strengthening the American State in a New Global Economy."New technologies, he said, are playing an important role in creating both the opportunities and the challenges facing governors. "We can use the tools of technology to solve the problems that technology presents us with," he said.Each state can act as a center of technological innovation, said Maryland Gov. Parris Glendening (D), the new NGA vice chairman. "If we do our best, we innovate on a decentralized basis," he said. "That's what the technology today is all about."Glendening said most states are moving aggressively to adopt new technologies to improve government operations and services. Maryland, for example, has embarked on a number of projects, such as enabling companies to renew business licenses online and establishing a fiber-optic network to link all regions of the state, he said.Leavitt's emphasis on federalism will be supported by a number of technology-related subthemes, such as reinventing government with technology, investing in telecommunications infrastructure and simplifying the sales tax.As a member of the Advisory Commission on Electronic Commerce, Leavitt has a special interest in the impact of sales taxes on the development of the Internet. That commission, which consists of 19 public- and private-sector representatives, is examining for Congress whether state and local governments should tax Internet transactions and, if so, how to do it.At the first commission meeting in June, Leavitt voiced concerns that Internet transactions, if allowed to continue free of traditional sales taxes, would drain state and local governments of needed revenue. Even if the impact of e-commerce on tax revenue is not significant today, it soon will be, he said.But the Utah governor also recognizes that to force Internet companies to comply with hundreds of different state and local tax requirements creates an onerous burden that likely would stifle online commerce. Simplifying the sales tax would provide another avenue for resolving this difficult issue.Similarly, Leavitt wants to examine other problems faced by companies that do business in many different states. In the financial services business, for example, companies must be licensed separately in each state, each with different forms, jurisdictional rules and bureaucracies, he said.With some state coordination, government officials could develop a central Internet portal for obtaining licenses without surrendering local autonomy to monitor these businesses. "You could have a single portal to get in, but each state could still control whether to let businesses in," Leavitt said.Leavitt said that if the states do not come together voluntarily to make these changes, people will look to the federal government for a one-size-fits-all solution. "We have to find ways of streamlining the process so that business organizations, non-profits and governments are no longer dealing with 50 disparate states," he said.Industry executives said they have observed the shift in power to the states that Leavitt described. "The federal government is mandating a lot of new programs, but it's the states that are implementing the programs," said Ron Cuneo, vice president and general manager of the state and local group for Oracle Corp. of Redwood Shores, Calif.He pointed to the federally mandated welfare-to-work initiative that has state governments scrambling to move welfare recipients into the work force. Many states are trying to tie together information systems that track job opportunities and training with their welfare registers to create a unified case management system, he said."The basic services that are provided to the citizens, such as education and law enforcement, come from the states," said George Newstrom, president of Electronic Data Systems Corp.'s Government Industry Group in Herndon, Va. He said Leavitt and other governors were "on the right track" in trying to move government services online.State and local governments that take the lead in promoting and facilitating electronic business can impact significantly economic development within their jurisdictions, said Todd Ramsey, general manager of global government industry for IBM Corp., Armonk, N.Y. He emphasized that governments should adopt consistent policies across local, state and country boundaries, and create an environment that enables businesses to understand the rules and implement innovations quickly."Without consistent policies on issues like taxation, digital signatures and intellectual property, businesses will have a difficult time capitalizing on the potential of the Internet," he said.Leavitt has been governor of Utah since January 1993 and has helped the state push forward on a number of technology fronts. Utah was one of the first states to pass a digital signature law and is moving to put more government services online. It also is home to a fast-growing information technology industry. Leavitt and Glendening will carry their agenda to the states through a series of meetings across the nation, they said. In addition, NGA will meet in Washington in February 2000 and again next summer in Pennsylvania.