While election night brought big wins for Democrats at the
federal level, the ultimate result was a return to the status quo. Democrats
control the White House and Senate while Republicans control the House.
That is a formula for continued gridlock absent bipartisan compromise.
That trend did not extend to state elections where Democrats racked up big
wins in statehouses flipping control of at least eight chambers they lost
during the Republican sweep in 2010 and garnering super-majorities in
Illinois and California. Republicans won four majorities and obtained a
supermajority in Tennessee. The end result is a historically low number of
split-party control states. One party controls both chambers of the
legislature in all but three states: Iowa, Kentucky, and New Hampshire
(Nebraska is unicameral and nonpartisan). And the governor and the
legislature are controlled by different parties in only six states: Maine,
Missouri, Arkansas, New Mexico, Montana, and Nevada. That means that in 40
states, one party is in complete control — many with supermajorities in the
legislature.
The results of this election will have dramatic implications for business
interests in legislatures across the country as new Democratic majorities
and supermajorities flex their muscles. Historically, the year after a
presidential election is when states entertain the most new tax proposals.
The trend toward hyper-partisan representation in state government also
means that bipartisan compromise becomes less important. This can be both
good and bad for business interests as natural roadblocks to passing
legislation are removed at the state level.
An analysis of the switching chambers and other key states follows:
New Democratic Control and Key States:
- Colorado:
Democrats retook the Colorado House where Republicans had held a slim
one-vote majority obtained in 2010. The Democrats emerge from Election
Day with a 37-26 majority. A backlash over the way the Republican
controlled House killed a civil marriage bill is reported to have been
a significant factor in the party control switch but Republican
Speaker Frank McNulty gave credit to the Obama ground game sweeping up
Democratic legislative candidates. Denver Democratic Rep. Mark
Ferrandino has already been tapped to be the new House Speaker
starting next session. The Democratic House means Colorado is once
again fully controlled by the Democrats.
- Maine:
Both the Maine House and Senate returned to Democratic control one
election after losing control of both in 2010. There are several
recounts pending in both chambers. The question, however, is not
whether Democrats will control but by how much. In the House they
could have as many as 87 seats in the 151-person chamber, a high-water
mark not seen since 1993. Legislative control is doubly important in
Maine because the legislature selects the Attorney General, Treasurer,
and Secretary of State. Each of those officers has been Republican the
last two years, and they will also switch to newly appointed Democrats
because of the new Democratic legislative majority. The Governor of
Maine remains Republican, making Maine one of the few split-control
states.
- Minnesota:
Both chambers in Minnesota reverted back to Democratic control on
election night. Just as the 2010 Republican switch of both chambers
took national observers by surprise, the switch of the House in 2012
was unexpected. Going into Election Day, it was believed the Senate
was in play but that Democrats would not be able to flip the House
back in one cycle. When the dust settled on Election Day, Democrats
picked up nine seats in the Senate and eleven seats in the House,
giving them comfortable majorities. They will join previously elected
Democratic Governor Mark Dayton in complete control of the state for
the first time in 22 years. Gov. Dayton had run on taxing the wealthy.
After his party obtained legislative control, he signaled his
intention to propose a comprehensive overhaul of the tax system next
session. Many of the new legislators from his party are pro-business
fiscal moderates from rural and suburban areas who may serve as some
check on his agenda.
- New
Hampshire: The 400-person New
Hampshire House switched back to the Democrats after only one cycle
under Republican control. While significant swings are not uncommon in
the very large chamber, Democrats 115-seat pickup was unexpected. The
result moves the chamber from a 293-105 Republican majority to a
217-177 Democratic majority. Democrats also won the Governor’s office,
but the Senate remains in Republican control.
- Oregon:
For the last two years, the Oregon House was tied at 30-30. On
election night, Democrats gained four seats to assume the outright
majority next session. In the tied House, the Republicans were
credited with pushing fiscal restraint and lower spending; including
leaving funds unbudgeted due to the worsening economy. Under
Democratic control the assumed Speaker Tina Kotek has already stated
she will be focusing on “education, jobs, and middle class families.”
Her party has previously pushed for increased revenue through
elimination of tax rebates. Oregon is now fully controlled by the
Democrats.
- New
York: It appears that the Democrats
have retaken the New York Senate although ultimate party control is
still unknown. The Senate adds a 63rd seat next session and Democrats
appear to have a 31-30 lead with two races outstanding where they
lead. However, a four person “Independent Democratic Conference” which
caucused with the Republicans last session could ultimately decide who
controls the chamber. A decision on final control is still probably
weeks away. If Democrats retain control, New York will join the large
majority of state governments with one-party control.
- California:
Despite hovering just under the 2/3rds level for several cycles,
Democrats were not expected to achieve the supermajority status they
earned in both chambers on election night. The supermajority is
critical because a 2/3rd vote is needed for any tax increases—giving
Republicans veto power over new taxes. That is no longer true as
Democrats, along with Democratic Governor Jerry Brown, can now pass
tax increases without seeking bipartisan support. Gov. Brown issued a
statement of restraint that he was not planning to use the new power
to raise taxes after election due to the passage of Prop. 30 and 39,
which combined will generate around $7.5 billion to the general fund.
- Illinois:
Democratic control of both chambers of the legislature was never at
issue in this election. But Democrats have much greater control over
policymaking after picking up a supermajority in the House and
increasing their supermajority in the Senate. This means that
Democratic legislators can now pass legislation without Republican
input at all, including overriding the governor’s veto if they like.
New Republican Control and Key States:
- Arkansas:
For the first time since reconstruction Republicans now control both
chambers of the Arkansas legislature. Arkansas had been a major target
of the party this cycle as it completes the switch of the Deep South
to complete Republican legislative control. In the House, Republicans
appear to have a 51-48-1 margin, but that is subject to a recount in
one race decided by 44 votes on Election Day. In the Senate, new
Republican Senate President Michael Lamoureux will enjoy a 21-14
majority.
- Wisconsin:
In what appears to be the last chapter of the recall wars that rocked
Wisconsin the last couple of years, Republicans took back control of
the Senate they lost this summer. This is the third time control of
the chamber has switched in the last two years. This result was widely
expected given the redistricting maps Republicans drew after taking
power in 2010. The Democrats short-lived majority, achieved during
recall elections in June was an empty victory as they weren’t able to
conduct any real business before they lost control in November.
Republicans will have a 17-15 majority and join the Republican House
and Republican Governor Scott Walker to provide total Republican
control of Wisconsin state government.
- Alaska:
The Alaska Senate has had
one-party in control for almost a decade thanks to caucuses of Senators
not based on party, but the Republicans won a 13-7 majority with one
seat still counting with the Democrat up by 300 votes. Republican
Senator Charlie Huggins has already been elected the new Senate
President and has laid out an agenda of cutting spending, reducing oil
taxes, and encouraging in-state use of Alaska’s oil.
- Tennessee:
Republicans garnered a supermajority in both the House and Senate with
margins of 67-24 and 24-9, respectively. These numbers mean that
Democrats can no longer stop legislation from passing. Republicans
have reached a high-water mark in seats held not seen in 147
years.
- Other
Races: Republicans netted one
Governor’s office, flipping North Carolina. This leaves them holding
30 Governor’s Seats, giving them a strong majority nationwide. The
parties traded attorney general pick ups with Democrats flipping
Washington and Pennsylvania and Republicans picking up Montana and
West Virginia. Pennsylvania is notable in that it will be the first
time since the office has been chosen by partisan election that it
will be held by a Democrat. In West Virginia five-time incumbent
Darrell McGraw was unseated ending 20 years in office.
Orrick’s Public Policy group is deeply involved in state
legislative and federal affairs. For more information about these
developments and how they might affect your business, please contact Jeremy Kudon at
(212)
506-5343 or jkudon@orrick.com, or your Orrick relationship lawyer.
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