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Inaugurating its 31st year, the Senate Presidents’ Forum met in Sarasota, Florida, on January 2-5, 2025. The Forum was welcomed by new Executive Director Caroline Carlson and by Board Chair Sen. Ron Kouchi (HI) before embarking on an ambitious program focused on state budgets, infrastructure challenges, and cybersecurity. The second day of discussions opened with a global perspective as the Forum considered the evolving U.S.-China relationship and its implications for the states. Subsequent sessions examined the challenges related to teacher shortages, the progress made in broadband access and digital equity, and the potential economic benefits of data centers.

State of the State Budgets

Joseph R. Crosby

CEO

MultiState

Joe Crosbyʼs Bio

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Joe Crosby, CEO of MultiState, reviewed the states’ economic forecasts, discussing the disconnect between consensus forecasts and actual growth in 2024 as well as projections for 2025 regarding GDP growth, inflation, unemployment, and the impact of immigration policies and tariffs.

To download Joe Crosby’s complete slide presentation, click here. 

State Budgets and Revenue Growth

Mr. Crosby noted that projections for U.S. GDP growth in FY2025 range from 1.9% to 2.5%, while the median growth in enacted fiscal 2025 budgets was 1.9% — albeit without California's budget changes because they significantly impact the national averages. Mr. Crosby also noted that 39 states had exceeded their original revenue estimates the previous year, while Arizona and California reduced their budgets after enactment due to lower-than-expected revenues. He mentioned that, for the 20 years prior to the pandemic, the growth for all ending fund balances was 9%; however, now, after using their COVID funds, some states’ face declining fund balances. He emphasized the importance of Rainy Day Funds and their usage in different states, noting that the average Rainy Day Fund account has increased to 14.4% of the state budget.

State Economic Outlook and Tax Reforms

Mr. Crosby highlighted the potential impact of the strong dollar on tourism states and the likely actions of the incoming administration regarding tariffs, tax reforms, immigration, and their budgetary implications. He also discussed the challenges faced by states with high Medicaid expenditures and the need for discipline in executing the program. The Senators discussed their respective state’s approach to tax cuts, property tax relief, and budgetary challenges. The conversation ended with a focus on the need for continued tax relief to foster economic growth.

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Discussion

The Senators commented on their budget situations. Their comments are paraphrased here for conciseness.

Sen. Gary Stevens (President of the Senate, Alaska):  

Alaskan oil production peaked in 1988 at 2 billion barrels per day; by 2000, Alaska produced less than one billion barrels of oil. Today, Alaska produces about 400,000 barrels annually, and 80% of revenue comes from investments generated by a permanent fund, which has over $80 billion in assets. Alaska has no statewide income, sales, or property taxes, and is able to pay residents an annual dividend. [Editor’s note: The constitutionally mandated Alaska Permanent Fund, funded by oil and mining revenues, is distributing $1,702 to eligible residents for TY 2024.] Alaska is in good shape.

 

Sen. TJ Shope (Senate President Pro Tempore, Arizona):

With a divided government, we knew we weren’t going to come to agreement on long-term spending and tax cuts; so, we spent down our surplus funds from COVID by giving each legislator funds to spend in their district. Despite our divided government, we provided a family tax rebate (which is in federal court because the federal government wants to tax the rebate) and put a three-year moratorium on raising board commission agency fees. Currently, revenues are $600 million above forecast and projected to reach $1 billion. The indicators are all good, and job growth continues to be pretty much off the charts.

 

Sen. Dafna Michaelson Jenet (Senate President Pro Tempore, Colorado):

Colorado is facing a significant budgetary challenge with a projected shortfall that could grow to $1 billion in FY2026. Further complicating the budget and efforts to address budget deficits is the Taxpayer Bill of Rights (TABOR), which limits the state's ability to increase taxes without voter approval. The TABOR's ratchet effect, which can limit revenue growth following a downturn, adds another layer of complexity.

 

The state has been exploring ways to work within these constraints, such as creating enterprises that are exempt from TABOR’s limits. However, attempts to modify TABOR through ballot measures have been unsuccessful, largely due to the required ballot language that emphasizes tax increases, which tends to deter voters.

 

In terms of budget priorities, there is a strong desire to protect funding for education and programs like the "I Matter" initiative, which provides free therapy for school-aged youth. Despite the financial challenges, there is a reluctance to dip into the Rainy Day Fund, as the legislature prefers to preserve it for more severe financial crises.

 

Overall, Colorado's situation highlights the ongoing tension between fiscal constraints and the need to fund essential services, a challenge that many states with similar taxpayer protection measures face.

 

Sen. David Sokola (Senate President Pro Tempore, Delaware):

The December forecast for the state’s FY2025 revenue increased by $100 million. In addition, there is $100 million of reduced expenditures in the current fiscal year because there are positions we can't fill. The state has had a triple AAA bond rating for a quarter of a century, and we take the fiscal responsibility to sustain this very seriously . We also have a 5% Rainy Day Fund, which is one of the smallest in the country. There are big differences in opinions of how we should be spending money.

 

Medicaid is one of the challenging areas. During the pandemic, we weren't allowed to take people off of Medicaid, and the program expanded; subsequently, we could only take people off the Medicaid rolls over a period of 10 to 12 months. But we're still having significant increases in Medicaid because the population is aging. Delaware is aging as fast as any state in the country because retirees come to Delaware for the very lowest property tax east of the Mississippi, lowest gas tax in the region, and no general sales tax. When people go into nursing homes and eventually exhaust their finances, then they go onto Medicaid. All the states will be facing this issue.

The new administration’s Department of Government Efficiency has the potential to reduce federal funding for the states’ Medicaid match and further restrict eligibility. States may have to fund Medicaid solutions for themselves.

— Joe Crosby

Sen. Ronald Kouchi  (President of the Senate, Hawaii):  

Following overly optimistic economic projections, Hawaii implemented historic income tax cuts; but the $125 million shortfall from projections has subsequently impacted state revenue forecasts. Despite this, the state managed to set aside half a billion dollars in its Rainy Day Fund. This financial cushion is crucial, especially in light of the Maui fires, which have affected state properties and tourism revenue, particularly from Lahaina, a significant contributor to Hawaii's tourism income. The state is awaiting a report on future mitigation and prevention strategies for such disasters, which will likely require substantial funding.

 

Despite these challenges, Hawaii remains in a strong financial position, partly due to anticipated federal assistance for Lahaina's recovery and a robust construction industry. However, the state faces ongoing budgetary pressures, including negotiations with government unions and the need to fund various initiatives. Additionally, because Hawaii's economy is heavily reliant on tourism, it is vulnerable to disruptions. The state is cautiously optimistic about its financial outlook but remains aware of the risks associated with its tourism dependency.

Sen. Rod Bray (Senate President Pro Tempore, Indiana):

The state’s Rainy Day Fund is at 14% of the budget. Lawmakers have cut taxes 20 times in the last 10 years. By 2027, the income tax will be down to 2.9%. We have a goal to reduce property taxes, especially as assessments are up dramatically, leading to higher taxes and increasing risk of a property tax revolt. One of the big challenges is that Medicaid spending growth has been faster than revenue growth. In FY2023, Medicaid was the second largest expense (after K-12 education) at 16% of the budget. In FY2024, it is 19% of the budget. In fact, the Medicaid forecast was off by $984 million. Because of these rising expenses, if the income of a participant in our Healthy Indiana Plan exceeds our cap, they no longer qualify for the program.

 

Sen. Amy Sinclair (President of the Senate, Iowa):

Iowa has significantly cut taxes, which has led to a decrease in revenue forecasts for FY2026. However, this is a positive development, because the goal of lowering income tax rates is to reduce the amount of money collected by the state. Iowa has a 10% statutory Rainy Day Fund and a Taxpayer Relief Fund, which have facilitated these tax cuts. The state recently implemented a 3.8% flat tax, down from a previous high of nearly 9%. Additionally, Iowa, like other agricultural states, is experiencing revenue challenges due to declining commodity prices, which have halved over the past few years. That has significant impact on a state economy that draws 20% of its revenue from agriculture.

 

Sen. Ty Masterson (President of the Senate, Kansas):

Kansas is currently in a stable financial position, having used federal stimulus money to build a healthy Rainy Day Fund. The state has implemented significant tax cuts, including reductions in sales and income taxes, despite a divided government. However, there is concern about future budget projections as the stimulus funds deplete and tax cuts become permanent. The state has experienced a substantial increase in administrative costs under the current governor, Laura Kelly, which has contributed to a more expensive government. While Kansas has learned from past experiences of cutting taxes without reducing expenditures, the challenge will be maintaining fiscal balance once federal funds diminish.

 

Sen. Robert Stivers (President of the Senate, Kentucky):  

The state has established a methodology where the Budget Reserve Trust Fund must maintain a 10% reserve, and any tax cuts are contingent on revenue growth being twice the rate of expenditure growth, ensuring fiscal responsibility. The state has a $5.2 billion Budget Reserve Trust Fund, with a target of $2 billion under the 10% rule. The focus is on using surplus funds for non-recurring expenditures like infrastructure projects (roads, airports, water, sewer) to avoid creating ongoing expenses. The aim is to shift towards a consumption tax model to enhance economic competitiveness. Additionally, there is concern about potential changes in Medicaid match rates, which could increase state expenditures significantly, necessitating careful control of spending to maintain tax reduction efforts and economic competitiveness.

Sen. Regina Ashford Barrow (Senate President Pro Tempore, Louisiana):

Louisiana just went through a special session, and in a bipartisan agreement made some massive changes to the tax code. Some of them are dependent on constitutional amendments, which require ballot approval. The current budget is $44.2 billion, and the state has achieved its lowest unemployment rate in history. A special session was held to address a potential $587 million budget deficit, which, according to the state constitution, would have necessitated cuts to higher education and healthcare. To avoid this, several measures were implemented: the sales tax and use tax rate was raised from 4.45% to 5% and digital services are now being taxed. The state also has a Budget Stabilization Fund, or Rainy Day Fund, which is difficult to access and requires the state to be in a dire financial situation before funds can be withdrawn.

 

Sen. Thomas Pressly (Vice Chair, Senate Labor and Industrial Relations Committee, Louisiana):

Louisiana has undertaken a reshuffling of its tax code to address economic challenges and align more closely with other Southern states. Historically, Louisiana and Florida were similar in size, but Florida has since grown significantly, highlighting Louisiana's need for comprehensive reforms. The state has reduced its corporate tax rate by 2%, moving from the highest in the South to a more competitive 5.5%. This change aims to stimulate growth, especially given the competition with neighboring Texas, which has no personal income tax. Louisiana also faced a budget deficit due to the expiration of a temporary 0.45% sales tax increase. To address this, the state maintained the 0.45% increase and added more to reach a 5% sales tax rate. While this rate is low compared to other Southern states, local sales taxes make Louisiana's overall sales tax rate the highest in the country.

 

Sen. Bill Ferguson (President of the Senate, Maryland):  

The state faces a challenging year financially. A structural deficit of $2.7 billion is projected for the current fiscal year, primarily due to entitlement spending exceeding projections. Medicaid costs are about a billion dollars over budget, largely because patients are sicker and procedures are more expensive, despite stable enrollment numbers. Inmate healthcare costs have tripled, significantly surpassing budget expectations. Additionally, the childcare subsidy program experienced higher-than-expected utilization, resulting in costs about $550 million over projections. The upcoming session will focus heavily on budgetary issues to address these financial challenges.

 

Sen. Paul Newton (Senate Majority Leader, North Carolina):

Reducing taxes and regulations in North Carolina has created a "virtuous cycle" that attracts significant capital investments from companies. An example is a Toyota manufacturing facility that initially planned to invest $1.6 billion, but increased its investment to $13.9 billion. This demonstrates how companies are drawn to states they trust for long-term capital investments, highlighting the secondary benefits of tax reductions. However, revenue forecasts often fail to account for such dynamic growth, as they typically use static scoring systems.

 

Sen. James Manning, Jr. (Senate President Pro Tempore, Oregon):

There's a bit of a disconnect between the way economists predict positive revenue forecasts and the financial challenges Oregon is facing. Despite optimistic projections, the state has had to deal with significant expenses, particularly due to natural disasters like the wildfires that burned over 1.9 million acres — an area roughly the size of Delaware. This has required special sessions to allocate funds, such as the over $300 million needed for firefighting efforts.

 

Additionally, Oregon has a unique "kicker" program, which means that when the state receives a certain amount of revenue, it triggers a refund to taxpayers. This can create a situation where, despite having a positive revenue forecast, the state might still face budgetary constraints because a portion of the revenue is returned to taxpayers. In this case, over $100 million from corporate taxes is earmarked for school funding, which adds another layer to the financial picture. So, while the revenue outlook is bright, the immediate financial responsibilities and the kicker program can make it seem like the state is financially strained.

Sen. Hanna Gallo (Senate President Pro Tempore, Rhode Island):

With a deficit of $330 million, we're not going to fund anything, and nobody's going to get anything that they want. We have to do all we can to protect education and other essential services.

There's a bit of a disconnect between the way economists predict positive revenue forecasts and the financial challenges our state is facing. Despite optimistic projections, we've had to deal with significant expenses.

— Sen. James Manning, Jr. (OR)

Sen. Tom Alexander (President of the Senate, South Carolina):

Our ongoing efforts are to prioritize tax relief, particularly focusing on property and income taxes. The state has worked to stabilize property taxes by addressing both millage rates and reassessment processes, ensuring that property taxes do not increase by more than 3% over five years. Additionally, a shift was made to fund school maintenance and operations through an extra penny on the sales tax, rather than property taxes. This change was balanced by compensating counties for any lost revenue, ensuring they were not financially harmed. As property values have risen, these measures have helped prevent a property tax crisis. Now, the focus is shifting towards income tax relief.

 

Sen. Joan Huffman (Chair, Senate Committee on Finance, Texas):

Texas has a strong economy and significant budget surplus, which is expected to exceed $20 billion in the current biennium. The state also has $24 billion in its Rainy Day Fund, nearing its cap. This financial abundance has led to increased requests for funding, often in large amounts. Property taxes remain a major political issue, with bipartisan efforts to address them. While some advocate for eliminating property taxes, economists suggest this would require an impractical increase in the sales tax. Recent efforts have provided substantial property tax relief, estimated at $24 billion, benefiting many homeowners, especially those with lower-priced homes. However, the relief is less felt in suburban areas with rising property values. There are concerns about sustaining such relief during economic downturns, though Texas aims to maintain its competitive edge in attracting businesses and residents.

 

Sen. Stuart Adams (President of the Senate, Utah):

We continue to focus on efforts to prioritize tax relief to foster economic growth. We do not have a statewide property tax; instead, we rely on local property taxes for schools, municipalities, and counties. A system called "truth in taxation" is used, where if property values increase, the tax rate must be cut to keep revenue stable, except for growth. This strategy has helped manage property taxes effectively. Additionally, the state has focused on using General Fund money for one-time expenses like buildings and roads, rather than bonding, which provides budget stability. This approach allows flexibility in case of economic contraction, as funds can be reallocated from these projects if necessary. The state plans to continue cutting taxes to support economic growth.

The 2025 economic outlook remains positive.

— Joe Crosby


State Infrastructure, Part I
Roads & Bridges vs. Extreme Weather

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Garrett Eucalitto

Commissioner

Connecticut’s Department of Transportation (DOT) and

President, AASHTO

Garrett Eucalittoʼs Bio

Weather Impacts on Infrastructure Planning

Garrett Eucalitto, the Commissioner of Connecticut’s DOT and President of the American Association of State Highway and Transportation Officials (AASHTO), highlighted the importance of resilience and sustainability in infrastructure planning.  

To download Commissioner Eucalitto's complete slide presentation, click here. 

A resilient transportation network has the ability to adapt or recover from any adversity. A fiscally sustainable infrastructure requires an asset management approach to ensure it's the most hardened infrastructure but not more than we need; and that we can continue to support and maintain that infrastructure moving forward. But simply hardening or building walls is not going to stop water, for example. We need to look at other methods of absorbing inflows of water. What can we do to prevent fire impacts? What can we do to prevent mud flows and landslides? How are we adapting to the extreme swings in temperature?

Four steps to effective infrastructure security:

  1. Identify what critical infrastructure must be protected

  2. Assess potential risks/ vulnerabilities

  3. Make changes to protect that infrastructure  

  4. Be prepared to respond to any event

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Commissioner Eucalitto emphasized the need for state-level adaptation to extreme weather events driven by climate change and the importance of coordination between state and federal agencies during disaster responses. He also discussed the challenges faced by state DOTs in accessing federal funds for disaster recovery and the need for better coordination between state and federal agencies. The conversation ended with a discussion primarily focused on disaster response and recovery.

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Discussion

Comments are paraphrased for conciseness.

Sen. Robert Stivers (President of the Senate, Kentucky):  

Kentucky faced significant challenges from tornadoes in the west and flooding in the east, with the primary issue being FEMA's inadequate response. Their response was slow, disorganized, and lacking coordination, with different personnel providing inconsistent information daily. This affected the response in various areas, including roads, housing, businesses, and individual assistance. FEMA needs to improve its coordination and responsiveness, as some claims and discussions remain unresolved years after the events.

 

Furthermore, in any disaster, state government needs to be in charge and be listened to by the Federal officials, because we have local knowledge of the communities, where people live, and what they need. Can AASHTO get FEMA to be more responsive?

 

Commissioner Eucalitto:  

Quick response teams are under-resourced. There needs to be better coordination and communication. Technically, state governments are supposed to be in charge and FEMA is supposed to support them.

 

Rich Maloof (Moderator):

In the absence of an adequate federal response, is there a mechanism for coordinating with neighboring states? How might the senators in this room help facilitate that collaboration?

 

Commissioner Eucalitto:  

There are a number of Emergency Management Assistance Compacts (EMACs) between states, which are agreements facilitated by state emergency management coordinators to provide mutual aid during emergencies. These compacts allow states to send personnel and resources to assist other states in times of need, such as during natural disasters. For example, Florida and New York have compacts with Puerto Rico. It is also essential to consider the need for self-sufficiency when deploying aid, ensuring that teams are equipped with their own food, fuel, and resources to avoid burdening the host state. This approach aims to create self-contained, quick-response teams capable of effective disaster recovery efforts.

Adam Falk (Charter Communications, Inc.):   

The American Rescue Plan Act (ARPA) allocated $350 billion to the State and Local Fiscal Recovery Fund for infrastructure investments. But there are challenges related to infrastructure deployment, particularly in broadband, due to permitting issues from state departments of transportation, local organizations, and pole owners. ARPA imposes deadlines to commit funds by the end of 2024 and spend them by the end of 2026, but infrastructure projects may need more time to complete. Has there been any action to inform the federal government about potential impacts if the spending deadline is enforced?

 

Commissioner Eucalitto:  

While state DOTs did not receive substantial ARPA funds, they did get some transit funding. Still, in our discussions with contractors about the 2026 deadline, they cite delays in permitting as the barrier to completion. It would take an act of Congress to change the deadline. However, in other disasters, as deadlines approached, Congress moved the deadline out. It is not clear how the new administration will treat unspent funds. But these unspent federal dollars can be swept back for other uses. 

Sean Conner (Lowe's):   

I’m concerned about the role of the private sector in recovery after natural disasters. Some of us have supply chains that may be critical in an emergency. We need to be able to move things to where they are needed; for example, in a power outage, we may need to move generators to hospitals. Texas and Florida have implemented smart and strategic ways to move goods in an emergency. What are some best practices for the states to work with their private sector partners?

 

Commissioner Eucalitto:  

Our economic development partners have a seat at that emergency response table. They need to be hearing communications about disaster response, and we can be that voice during a disaster and during recovery. It is critical to include the private sector, such as trucking, railroads, and communications providers, because without the private sector there are no goods to support our states. 

AASHTO Resources

Preparation and response recommendations regarding threats, shocks, and stressors to the transportation system:

https://transportation.org/ctssr/resources/

 

AASHTO's 2021–2026 Strategic Plan, with recommendations for state DOT's:

https://www.aashtoplan.com


State Infrastructure, Part II
Securing Critical Infrastructure

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Kate Nichols

Deputy Regional Director (Region 4)

Cybersecurity & Infrastructure Security Agency (CISA)

Kate Nicholʼs Bio

CISA’s Kate Nichols highlighted the importance of cybersecurity and infrastructure security, and stressed the importance of a coordinated approach among the states to enhance protection of critical infrastructure against cyber threats. The Cybersecurity and Infrastructure Security Agency (CISA) is a component of the U.S. Department of Homeland Security (DHS) and is responsible for cybersecurity and infrastructure protection across all levels of government, coordinating cybersecurity programs with U.S. states, and improving the government's cybersecurity protections against private and nation-state hackers. CISA is America's Civilian Cyber Defense Agency (the Department of Defense covers military cyber defense) and also serves as the National Coordinator for infrastructure, security, and resilience.

Deputy Regional Director Nichols noted that there are 16 critical infrastructure sectors whose assets, systems, and networks, whether physical or virtual, are considered so vital to the U.S. that their incapacitation or destruction would have a debilitating effect on security, national economic security, national public health and/or safety. CISA’s mission is to work alongside state and local partners and critical infrastructure owners and operators to protect and defend the U.S. cyber and physical infrastructure from manmade and natural disasters.

16 Critical Infrastructure Sectors

 

1. Chemical      2. Commercial Facilities      3. Communications     
4. Critical Manufacturing     5. Dams      6. Defense Industrial Base     
7. Emergency Services      8. Energy     9. Financial Services     
10. Food and Agriculture      11. Government Facilities     
12. Healthcare and Public Health      13. Information Technology     
14. Nuclear Reactors, Materials, and Waste     15. Transportation Systems     
16. Water and Wastewater Systems

DRD Nichols stressed the challenges of shared risk due to interconnected systems, and the need for enhanced preparedness to handle disruptions to interconnected systems and assets. For example, CISA plays a role in identifying and eradicating Chinese intrusions into critical infrastructure. The conversation also covered the importance of information sharing and the role of CISA in providing security guidance and expertise. The conversation ended with a discussion on the potential for China to disrupt American products and the need for a coordinated response to entities such as Volt Typhoon.

Volt Typhoon

 

Volt Typhoon is an advanced, persistent cyberespionage threat reportedly on behalf of the People’s Republic of China. Volt Typhoon focuses on espionage, data theft, and credential access, and primarily targets U.S. critical infrastructure. The Chinese government denies the group exists.

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Discussion

Comments are paraphrased for conciseness.

Sen. James Manning, Jr. (Senate President Pro Tempore, Oregon):

Taiwan is the major source of semiconductors, including those embedded in U.S. fighter jets. With China threatening Taiwan, how will this impact the semiconductors in U.S. military applications? Do Chinese-made products that Americans already own pose risks?

 

Deputy Regional Director Nichols:  

The biggest threat China poses is to the military, and that is overseen by the Department of Defense. On the civilian side, there are known vulnerabilities because we source many components from China. I recommend that you review the list of known cyber vulnerabilities that are on the CISA site and connect with your CISA cyber advisors in each state.     

Sen. Paul Newton (Senate Majority Leader, North Carolina):

We met with CISA representatives in our state, and it was a really positive and informative experience. But I see two problems: first, in-fighting among the agencies, such as the FBI and DOE, and a lack of central coordination. The second problem is the fear that CISA will evolve from an advisory capacity to a regulatory agency.

 

Deputy Regional Director Nichols:

Cyber is an area of growing interest in the federal landscape, and everyone wants to be part of the solution. CISA has liaisons with the FBI, with law enforcement, and with other federal entities involved in cybersecurity. We share information among ourselves.

 

In 2022, Congress passed the Cyber Incident Reporting for Critical Infrastructure Act of 2022 (CIRCIA). Currently, reporting is voluntary. Some of CISA’s authorities under CIRCIA are regulatory in nature and require CISA to complete mandatory rulemaking activities before the reporting requirements go into effect. CISA developed a Notice of Proposed Rulemaking (NPRM), which was published on April 4, 2024 in the Federal Register and was open for public comment until July 3.  CISA is required to publish the Final Rule in October 2025.  

 

Joan Huffman (Chair, Senate Committee on Finance, Texas):

Is CISA examining the issues related to electromagnetic pulsing?

 

Deputy Regional Director Nichols:

This is a legitimate problem. The DOD monitors this risk at military bases in order to make risk-reduction decisions. However, because of connectivity, civilian assets such as a power plant may be supporting the base and also be a target. Connectivity exacerbates the vulnerability. CISA has emergency communications directors, and they can assist in addressing this issue.

 

Sen. Stuart Adams (Senate President, Utah):

If there is a cyberattack on our utilities — for example, water power or the electric grid — can they be manually controlled?

 

Deputy Regional Director Nichols:

Utilities certainly are target-rich assets, and while most utilities have a back-up system, it is particularly hard to protect older infrastructure. CISA does provide broad, best practices.

 

Jennifer Jura (Edison Electric Institute):

Our industry has a Cyber Vigilance Group, the CEO-led Electricity Subsector Coordinating Council (ESCC), which is the principal liaison between the electric sector and the federal government. The ESCC coordinates emergency response efforts following natural disasters and malicious attacks, facilitates critical conversations on the detection and mitigation of threats to the energy grid, and supports initiatives that improve the sector’s overall security and resilience posture.

 

Sen. Thomas Alexander (President of the Senate, South Carolina):  

What is the best action we can take to improve cybersecurity when we return to our Senates? Should there be one point person for cybersecurity? And does a “.gov” domain provide additional security?

 

Deputy Regional Director Nichols:

The key action is to connect with your state cybersecurity coordinator. Every state has one, whose job is to work with all the state agencies to protect your networks. In addition, larger cities also have a CISA coordinator, and CISA offers free cyber-scanning services. It is important for states to use the “.gov” domain because it is a very protected environment and is monitored. That is your first line of cyber defense. 

It is important for states to use the “.gov” domain because it is a very protected environment and is monitored. That is your first line of cyber defense.

— Kate Nichols

Sen. Regina Ashford Barrow (Senate President Pro Tempore, Louisiana):

How often does CISA intercept and stop attacks? A month ago, we requested federal help to watch for a single driver attack. Tragically, the New Year’s Day attack was not stopped.

 

Deputy Regional Director Nichols:

This is an issue for the law enforcement community, while we are focused on cyber-attacks. However, CISA provides trained personnel at mass events to provide cyber monitoring.


U.S.-China Relations: What’s at Stake?

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Rush Doshi

Director of the China Strategy Initiative

Council on Foreign Relations

Rush Doshiʼs Bio

The next decade will be decisive in determining the global leader, forewarned Rush Doshi, Director of the China Strategy Initiative at the Council on Foreign Relations. He highlighted China's ambition to surpass the U.S. in various policy and trade arenas, and outlined subsequent implications for the U.S. including potential technological, economic, and military disadvantages. Dr. Doshi also stressed the importance of coexistence, given China’s likely continued presence on the global stage. In conversation with Forum members, he discussed the continuity and debates within the U.S. political parties regarding China policy, particularly in economic and technological areas.

U.S. affluence will be at risk if we don’t get the Chinese economic and political relationship right.

— Rush Doshi

U.S.-China Relations and Semiconductor Control

Dr. Doshi considered the potential implications of the Trump administration's China policy, noting the “team of rivals” within the emerging administration who have conflicting views on tariffs and economic relations. He predicted three possible outcomes: a massive increase in tariffs, a phased increase, or a threat followed by no action (except possibly meeting at the negotiating table). Dr. Doshi also addressed concerns about China's potential control over technology in U.S. fighter planes and the importance of the semiconductor industry. He emphasized the need for the U.S. to maintain control over the legacy semiconductor industry to avoid economic dependence on China. He stated that the next decade is critical for the U.S. to regain control over the semiconductor industry and prevent China from gaining an advantage.

 

U.S. Competitiveness and Trade War

Focusing on the potential impact on inflation and the need for the U.S. to maintain competitiveness, Dr. Doshi discussed the ongoing trade war with China. He highlighted the importance of the U.S. controlling Artificial Intelligence (AI), as it could give the country an advantage in the future.

 

Dr. Doshi also emphasized the need for the U.S. to improve its power generation capabilities, particularly through nuclear power, to reduce dependence on China. He suggested that the U.S. should streamline its regulatory processes to facilitate the development of nuclear power and other energy sources. Dr. Doshi also touched on the importance of state-level policies in driving competitiveness and the need for the U.S. to invest in data centers.

 

The Arctic has become a source of competition for critical minerals and shipping access, and Dr. Doshi highlighted China's increasing interest in the region. He explained that China views the Arctic as a strategic theater and is investing in icebreakers to assert its presence there.

 

Demographic Challenges

Dr. Doshi also described China's demographic challenges, including an aging population and low birth rates, which could impact their economic growth. He suggested that China's focus on AI and robotics could help them overcome related challenges, such as augmenting the workforce with AI robots. He warned the Forum about the potential risks of cyber infiltration and the need for better cybersecurity measures.

 

Role of the States

Dr. Doshi stressed the importance of state-level competitiveness in the U.S., drawing a parallel to China's provincial competition. In China, each province competes with others, particularly in industries like car manufacturing or power generation, where state support and intense competition coexist. This competitive environment leads to innovation and resilience.

The states are where the magic needs to happen. In our 50 states, we have 50 laboratories for expanding our competitive edge.

— Rush Doshi

The U.S. can harness similar competitive advantages at the state level, particularly in areas like power generation, to enhance national competitiveness. State-level bodies are key to fostering this environment, as it is crucial for maintaining and enhancing the country's competitive edge. Dr. Doshi emphasized the importance of state-level solutions to address these challenges and concluded by urging the need for more competitive governance and investment in the U.S. to maintain its edge over China. The state level is where the U.S. can win, he said. The U.S. has every advantage: more space, fewer people, better resources, more alliances, more incentive for innovation, and a rich tradition of entrepreneurship. In our 50 states, we have 50 laboratories for expanding our competitive edge. 

 

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Discussion

Comments are summarized for conciseness.

Sen. James Manning, Jr. (Senate President Pro Tempore, Oregon):

China seems to be buying up land in Panama, Australia, South Korea and Africa, and poses a risk to Taiwan. Taiwanese semiconductors are in U.S. fighter jets. If China takes Taiwan, does this pose a risk to our fighter planes?

 

Dr. Doshi:

China is buying ports all around the Panama Canal through joint investments, and this can provide them a strategic advantage. Concerning the semiconductor and microchips issues, semiconductors are the basis of all of our modern technology. Today, Taiwan Semiconductor Manufacturing Co. (TSMC) makes 98% of advanced semiconductors. In terms of the legacy chips, the U.S. developed the technology for older semiconductors and then outsourced manufacturing to Taiwan. China today is buying DUV machines that can make the legacy semiconductors cheaply and quickly. One of the concerns is that half of the chips used in the U.S. defense applications are Chinese-manufactured, and this is a vulnerability.

Half of the chips used in U.S. defense applications are manufactured by China.

— Rush Doshi

Sen. Robert Stivers (President of the Senate, Kentucky):

You outlined three possible scenarios from the new Administration: first, that immediately on taking office President Trump would put a large 60% to 100% tariff on Chinese goods and revoke its “Most Favored Nation” status; second, a phased-in approach would be taken where, say, a 10% tariff per month would be imposed; or, a third scenario where a tariff would be announced, but not enacted, in order to leverage a deal. What is the potential impact of each of these scenarios on U.S. productivity?

 

Dr. Doshi:

The trade war could lead to inflation in two ways: self-inflicted through tariffs or through China's retaliatory actions, such as export controls. The incoming administration is focused on managing these dynamics, as China might try to increase inflation in the U.S. as a form of economic retaliation. During the first term of the Trump administration, tariffs were initially strong but included an exclusion process to mitigate inflationary effects. The idea was to strategically apply tariffs to maximize economic pressure on China while minimizing negative impacts on American consumers and inflation.

 

The crash of China's housing sector has caused Chinese investments to shift towards manufacturing to dominate global markets. This shift gives the U.S. some leverage, as China relies on exporting goods to the U.S. The strategy would be to target high-end Chinese goods with tariffs, which would affect China more than American consumers, who primarily purchase China’s low-end goods.

 

American productivity has been strong compared to other regions; however, repatriation of U.S. capital from China could become difficult. The overarching theme is the economic tug-of-war between the U.S. and China, with inflation being a key battleground.

The trade war could lead to inflation in two ways: Self-inflicted through tariffs or through China's retaliatory actions.

— Rush Doshi

Sen. Stuart Adams (President of the Senate, Utah):

Economically and militarily, whoever controls AI will control the world.  AI requires power for data centers; but U.S. regulatory processes impede the U.S. ability to produce power such as developing new nuclear sources, and make it harder to acquire critical minerals. We have basically strangled ourselves and given China the edge to out-produce us on AI and related technology.

 

Dr. Doshi:

Concerning power: The U.S. pioneered the development of a new nuclear technology, the 4th generation nuclear reactor, but shared this advanced technology with China. China, leveraging its significant manufacturing capacity, now plans to build numerous nuclear reactors, including small modular reactors (SMRs), potentially achieving energy production per capita equivalent to the U.S. Also, power in China is cheaper than anywhere in the U.S. Despite China's advancements, however, the U.S. has advantages such as natural resources and space, but faces challenges with regulatory processes and permitting. Reforming these processes could enhance U.S. competitiveness by enabling more efficient building, investment, and resource management.

 

Concerning AI and military applications: The future of warfare is towards greater precision, greater lethality, and greater range. With AI, you can target carefully, hit exactly what you want to hit, and do this without being geographically close.

 

Sen. Rod Bray (Senate President Pro Tempore, Indiana):

What is the current state of China’s economy? It seems President Xi is keeping the government involved in it, which may be holding it back in some way.

 

Dr. Doshi:

China’s economy is in real trouble. Every country in the world is having problems right now with debt levels, immigration, low power generation, etc. The significant challenges facing China's economy include demographic issues, economic policies, and technological investments. China's population is aging rapidly, with predictions that it will be less than half its current size by 2100. This demographic decline is compounded by the legacy of the one-child policy, which has resulted in a smaller generation to support the aging population.

 

China's economic policies, such as interference in industries like the tech sector, have been counterproductive, restricting new IPOs. However, China's substantial investments in artificial intelligence and robotics suggest that China is betting on technology to offset its demographic challenges. China is the largest investor in industrial robotics, with significant automation in sectors like electric vehicle manufacturing.

 

China's economic strategy involves a high-stakes bet on technology to maintain prosperity and competitiveness. While there are risks of policy missteps that could harm the economy, the outcome of this bet remains uncertain. The competition in AI and robotics is crucial for future prosperity, making it a critical area of focus for global economic competition.

To effectively compete with China, the U.S. system must become more competitive in governance, permitting, deregulation, investment, and worker training. But it's not only about competing with China. It's about making ourselves more prosperous, more competitive, and making ourselves govern better.

— Rush Doshi

Sen. Dafna Michaelson Jenet (Senate President Pro Tempore, Colorado):

In terms of robotics and AI, there are worries about robotics replacing people. Where do the unions stand in this battle, and do they have the capacity to slow us down?

 

Dr. Doshi:

With AI and robotics, new jobs become available, and there is opportunity for retooling existing skills. However, in terms of comparisons to China, China has no unions and is rife with worker exploitation, lack of safety, and no social safety net. Chinese workers are not happy with that situation, but they have no power to change it. China is focused on production while the U.S. focuses on consumption. If the Chinese go far in the direction of focusing on production and supply and don't take care of demand and consumption, the quality of people's livelihoods will diminish. China has advantages in production but disadvantages in political stability.

 

Bob Watkins (State Farm Insurance):

We've seen Chinese incursions into the U.S. through academics, property ownership, corporate ownership, spy balloons, satellites, and technology. How concerned are you about the level of infiltration? And what does it mean for this competition?

 

Dr. Doshi:

There are significant concerns about China's access to American critical infrastructure, including gas, water, power, transportation, and telecommunications. We need improved cybersecurity measures to protect against espionage and infrastructure threats — for example, implementing a national firewall, similar to China's, that could help mitigate these risks. State-level actions are important, such as Nebraska's legislative efforts to keep Huawei out of sensitive military and nuclear areas and the potential for state-level foreign agent registration systems.

 

Sen. Gary Stevens (President of the Senate, Alaska):  

Why is China so concerned about the Arctic? Alaska makes us an Arctic nation but we have only a small slice of the Arctic. The U.S. has one light icebreaker. China has many. Why are we so behind here?  

 

Dr. Doshi:

China's interest is focused on four new frontiers: the Arctic, deep sea, space, and cyberspace. The Arctic is particularly important to China for its unspoiled resources, potential trade routes that bypass traditional choke points, and strategic military significance. China is investing in icebreakers and military operations in the Arctic to secure these advantages. China has tried to buy 1% of Iceland, including a former U.S. military installation, a former military installation in Greenland, a former submarine base in Sweden, and another former military installation in the Arctic. Despite challenges and some failed investments, China sees strategic opportunities in these frontiers, aiming to expand its influence and mitigate reliance on existing trade routes. The U.S. and its allies are also working to counter these moves, particularly in icebreaker technology and military presence.

China is focused on four new frontiers: the Arctic, deep sea, space, and cyberspace.

— Rush Doshi


Rebuilding the Teacher Workforce

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Ryan Saunders

Deputy Director of State Policy

Learning Policy Institute

Ryan Saunders' Bio

Teacher Shortages

Ryan Saunders of the Learning Policy Institute discussed the severe teacher shortages in the U.S., highlighting the negative effects on millions of children. He emphasized the importance of teacher preparation, certification, experience, and stability for student achievement. The teacher shortage leads to increased class size — which can impact students’ opportunities and ability to learn in supportive learning environments — and decreased extracurricular offerings as well as student services.

To download Ryan Saunders' complete slide presentation, click here. 

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Source: Franco, M. & Patrick, S. K. (2023). State Teacher Shortages. Learning Policy Institute.

Mr. Saunders recommended that Forum members access the interactive map developed by The Learning Policy Institute highlighting the key factors that reflect and influence the supply and demand for teachers in each state. Factors such as teaching conditions at work and equitable access to qualified teachers help to signal whether states are likely to have an adequate supply of qualified teachers to fill their classrooms as well as the extent to which students in different contexts have access to qualified teachers.

See the Learning Policy Institute’s interactive map of the states:

Teacher Attractiveness Rating

Visit their homepage:

The Learning Policy Institute

Teacher Turnover

Mr. Saunders also pointed out that teacher shortages have high costs for schools. Often, there is higher turnover among schools serving more students of color or students from low-income households. Students have lower achievement gains when they attend schools with higher teacher turnover because higher turnover can lower trust and supportive relationships among teachers and their students. School improvement efforts can be stymied by turnover because high levels of staff turnover can disrupt norms, structures, and knowledge-building that are essential to implementing new reforms or improvement efforts. Additionally, there are significant financial costs of turnover — nearly $25,000 per teacher in large school districts.

 

Strategies for a Stronger Teacher Workforce

Mr. Saunders suggested strategies for states to support a well-prepared and stable teacher workforce. Key among them are service scholarships and loan forgiveness programs; high-quality mentoring for all beginning teachers; bolstering net compensation; and investing in teacher residencies. He concluded by encouraging states to focus on new teacher mentoring and induction, as it can improve teacher longevity in the workforce in addition to numerous benefits for both new and experienced teachers.

Four actions to strengthen the teacher workforce:

1. Comprehensive pre-service preparation

2. Early career mentoring

3. Positive working conditions

4. Competitive compensation

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Discussion

Comments are summarized for conciseness.

Sen. Dafna Michaelson Jenet (Senate President Pro Tempore, Colorado):  

Given the financial limitations imposed by the state’s TABOR, how do we attract teachers to Colorado, especially to rural and mountain schools?

 

Mr. Saunders:

It's not just about whether your data systems are good. It's not just about whether you're increasing teacher preparation programs to better recruit. It's a whole suite of things from mentorship to salaries, and Colorado has tackled that. There still are challenges to get teachers into Eastern and rural mountain districts.  By providing financial incentives such as small stipends for student teaching in a rural community, teachers may find they like the community and be willing to stay.

 

Sen. Hanna Gallo (Senate President Pro Tempore, Rhode Island):

Rhode Island invested significantly in a Science of Reading and Structured Literacy program. Initially, there was controversy due to the significant time commitment required from teachers, with many needing to dedicate around 50 hours, often after school. Despite the initial resistance, those who participated found that it significantly improved their teaching abilities and positively impacted literacy rates. This is crucial because students who aren't proficient in reading by the third grade are at a higher risk of dropping out and facing behavioral issues.

The mentoring of new teachers helps develop skills that keep them in the profession.

However, the funding for this initiative is nearly depleted, and there's uncertainty about securing more. Efforts have been made to collaborate with community colleges to offer free tuition for students meeting certain academic criteria. Despite these efforts, gaining additional financial support from legislators and other stakeholders is challenging, as they demand tangible results before committing more resources.

 

What initiative would you prioritize that has compelling data on outcomes? How do we retain teachers?

 

Mr. Saunders:

Teacher induction is a program that provides support and guidance to new teachers and administrators during the early stages of their careers. I would focus on new teacher mentoring and induction, because ultimately, even if a teacher did not have comprehensive preparation, new teacher mentoring induction will provide targeted help to develop their skills and keep them in the profession. We also have good evidence of the effectiveness of teachers who get certified by the National Board of Certification, so it’s important to provide support for certification and for teacher leadership programs.


Next Steps to Universal Broadband

Kathryn de Wit

Project Director

Broadband Access Initiative

The Pew Charitable Trusts

Kathryn de Witʼs Bio

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Ms. de Wit of The Pew Charitable Trusts led a discussion on the topic of universal broadband access, highlighting the progress made by states to date and the need for further understanding of access and affordability. Ms. de Wit provided insights and best practices, acknowledging the complexity of the topic. The discussion aimed to educate participants on the why, how, and what of broadband policy.

 

Broadband Access and Digital Equity

Ms. de Wit discussed the progress made in broadband access and digital equity in the U.S., particularly in the context of the American Rescue Plan Act. She highlighted the shift in perspective from viewing broadband as a tool for accessing general information to recognizing its role in economic development and community connectivity. This shift has resulted in more targeted policy.

 

Ms. de Wit also emphasized the importance of digital skills and utilization, noting that 92% of jobs require foundational digital skills — though a third of the labor force lacks those skills. She mentioned the flexibility of the Capital Projects Fund and how it allowed states to scale their existing investments and address specific community needs. Ms. de Wit also pointed out the need for better data collection and interagency coordination to ensure the effective use of federal funds. All states agree that affordable access to broadband and the skills to use it are requirements for economic wellbeing, she noted.

92% of jobs require foundational digital skills, but a third of the labor force lacks them.

Digital Equity and Workforce Development

Ms. de Wit discussed the importance of digital equity and the need for states to invest in workforce development and telehealth. While she highlighted the progress made in connecting everyone and the need to focus on the ROI of these investments, Ms. de Wit also emphasized the importance of collaboration between state broadband offices, private sector partners, and community organizations. She mentioned that some states are leading in this area, calling out Maryland and Maine. Additionally, many states are working with community health centers and faith communities to provide digital skills training. It is not only access that is required, Ms. de Wit noted, but also the skills to take advantage of the access.

Five Actions for Optimal Broadband Deployment

  1. Know your state’s broadband office and what they need to succeed

  2. Engage in Public-Private Partnerships to access private sector data, share access to workforce training options

  3. Bridge siloes in state government – ensure collaboration between DOT and the broadband office to facilitate permitting and construction

  4. Share learning and educate your Congress

  5. Look ahead – consider universal servicing and affordability

State Role in Digital Equity

The states have a key role in accelerating broadband deployment  through the Broadband Equity Access and Deployment (BEAD) program and the Digital Equity Act. These programs focus on improving broadband access, skills, and community connectivity. They have higher standards than previous federal initiatives, emphasizing wired connections, and involving state broadband offices in fund deployment. While both programs aim to enhance broadband access, BEAD specifically targets closing the access gap for unserved or underserved households.

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Discussion

Comments are paraphrased for conciseness.

Sen. Ronald Kouchi  (President of the Senate, Hawaii):

Today, almost all jobs require an online application, including landscaping and housekeeping jobs in the hotels that support Hawaii’s tourist economy. Additionally, access to health care is a challenge in our rural areas, so telemedicine is a good solution. We have to train parents and families to be able to access telemedicine. Fortunately, in rural areas with an electric co-operative, there is access to capital for broadband that electric cooperatives can deploy to upgrade access in rural areas.

 

Sen. Bill Ferguson (President of the Senate, Maryland):   

What programs are most effective both for access and for the soft skills, and the delivery targeting certain communities?

Broadband Policy Resources

 

Internet For All 
(NTIA) 

 

Capital Projects Fund allocation map 
(Dept of the Treasury)

 

Pew's Broadband Access Initiative  

 

Learn the Basics of Broadband 
(an email course from Pew)

 

Targeted last-mile solutions 
(Pew) 

 

The Role of Broadband in Rural Economic Growth and Resilience 
(Center on Rural Innovation, 2024)

 

Recommendations to states, agency leads on actions for cybersecurity, technology 
(Tech Talent Project et al.)

Ms. de Wit:  

Maryland, Maine, Indiana, and Michigan are standouts in different ways, as are other states. These states are working directly with university partners to think in a forward-leaning way about understanding needs, what data collection can be done, and also how to extend the use of public funds.  Rather than building out a huge apparatus within state government, they capitalize on the assets, resources, and partnerships available, which extend to industry. That means they also have really robust data to clearly understand the problems. Iowa is working with their community healthcare centers and placing trained people there to teach folks how to sign up for Internet access, gain basic skills, and learn telehealth applications. States are also working with faith-based communities, veterans’ organizations, and organizations for aging Americans.

 

Sen. Bobby Joe Champion (President of the Senate, Minnesota):  

What are effective strategies to increase access in urban cores?

 

Ms. de Wit:  

Initially, we thought the challenge was access in rural areas versus adoption in urban communities. But we found that it was really an income issue. In lower-income communities, the availability of Internet was significantly lower, because for-profit companies prioritized areas with a strong business case for investment. Now states are using granular data to identify available assets and work with providers to expand urban connectivity. States are also examining costs, barriers to permitting, and alternative solutions like different uses of wireless deployment.

Initially, we thought the challenge was access in rural areas versus adoption in urban communities. But we found that it was really an income issue.

— Kathryn de Wit

Sen. Tom Alexander (President of the Senate, South Carolina):

In South Carolina, I convened a group of stakeholders and folks that issue permits to get them all on the same page. We included the railroads because they were holding out on issuing the permits. By having everybody at the same table and agreeing to a process worked extremely well to get lines built.

 

Ms. de Wit:  

Getting all the stakeholders, especially the railroads, to the table helps to reduce both delays and costs. South Carolina has done exceptional work in the last few years, particularly because they had a very specific data collection and engineering approach, and were able to adapt when federal funds came in.


Policy Hotspot: Data Centers

Chris Koopman

CEO, Abundance Institute

Center for Growth and Opportunity

Utah State University

Christopher Koopmanʼs Bio

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Data Centers: Economic and Energy Stability

Mr. Koopman discussed the emerging importance of data centers in the modern economy. Contrary to current concerns, data centers are not a threat to the electric infrastructure and do not drive-up rates, he reported. They can instead be seen as utility-scale batteries that can stabilize the electricity grid and, ultimately, reduce household rates.

 

He used the example of a winter storm in Nebraska where data centers were able to redirect electricity, preventing outages. Development of data centers is, arguably, a virtual cycle. The increased power, usage, and availability to meet data center energy demand will attract more industrial users; in turn, this will lead to economies of scale with lower prices, more residential adoption, and an increased tax base.

Economic benefits of data centers:

 Generating tax revenue

Creating jobs

 Contributing to power grid stability

Economic and Environmental Impact

Mr. Koopman pointed out the economic benefits of data centers, emphasizing their role in generating tax revenue, creating jobs, and contributing to grid stability. He highlighted the potential for data centers to become mini power plants, generating their own energy and potentially reducing reliance on traditional power sources. He also addressed concerns about energy consumption, noting that despite the proliferation of computers, their energy usage has remained relatively low due to increased efficiency.

 

Role of the States

He suggested that states should adopt a more welcoming approach to data centers, offering incentives and streamlined permitting processes to attract these businesses, citing the recent trend of large data center investments in various states. A few years ago, the average data center investment was $750 million; today, four data centers are being built with a price tag of $10 billion each. He emphasized that data centers can be built anywhere and serve populations far from their physical locations. 

There are 1-billion-dollar bills sitting on the sidewalk waiting for a state that is creative enough to pick them up and welcome a data center.

— Chris Koopman

Mr. Koopman concluded by emphasizing the importance of water usage in the context of data centers and the potential for these centers to become contributing partners in water conservation efforts. Though people worry about water consumption, Mr. Koopman said, the average data center uses about 450,000 gallons of water a day. “It sounds like a lot until you realize that's how much water is used to produce 160 pairs of denim jeans or to water 17 acres of turf grass,” he concluded.

 

Recommendations

Mr. Koopman recommended the following to attract data centers:

  1. “First mover” and early-adopter advantages in jobs, technical expertise, quality of life, and driving economic development await the states that are most welcoming to data centers.

  2. Permitting reform is essential, and state policies can change this to reduce the time to build.

  3. Favorable tax treatment can be justified, as data centers are factories of the economy.

  4. Streamlining timelines for interconnections and identifying pre-approved sites for data centers create Opportunity Zones.

  5. Explore new funding mechanisms based on demand/response.

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Discussion

Comments are paraphrased for conciseness.

Sen. Stuart Adams (President of the Senate, Utah):

Data centers require a gigawatt of power. To avoid this power drain, we required our data center to produce 1.2 gigawatts of power by itself and contribute the excess into the grid. This reduced the cost from 9 cents to 7 cents per kilowatt hour. We would like to add nuclear power generation to our energy mix but cannot due to regulatory barriers.

 

Mr. Koopman:

The nuclear revolution is being driven by the AI revolution, and a lot of co-location is happening. We need massive federal reform and state reform. There are numerous regulatory barriers that lay in the way of developing these little mini power plants that are also data centers.

 

Sen. Ty Masterson (Senate President, Kansas):

How close do data centers need to be to the users?

 

Mr. Koopman:

They can be built anywhere and don’t need to be near the population they serve. State incentives can be used to get data centers built nearby. However, companies want them to be spread out, both for security reasons and outage concerns.

 

Sen. Rod Bray (Senate President Pro Tempore, Indiana):

What are the advantages to having a data center located in your state?

 

Mr. Koopman:

There are four principal benefits of data centers:

  1. Property taxes – Data centers are a $10 billion plant; Microsoft is planning an $80 billion plant.

  2. Sales taxes – Plants spend money. They require server refreshes every 3-5 years.

  3. Construction materials and supplies– For round numbers, 1,000 workers may be required over a two-year period to build a plant that is the size of seven football fields.

  4. Worker spending  –  Plants employ 150-300 people, with salaries that are 70% over the local median. Skills, such as those of oil and gas workers, are transferable. A plumber becomes a “coolant specialist” with a $175,000 salary.

2025 Winter Forum

Sarasota, Florida

January 2-5, 2025

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