Building  Owners  and  Managers  Association  International

Building Owners and Managers Association International

Budgets and Elections to Dominate Agendas in 2012

​The action will be intense at the state and local levels in 2012 as policymakers continue to face tough fiscal challenges and many face reelections in the fall. State and local policymakers have spent the last few years grappling with budget concerns and are slowly inching towards solvency. Many are doing this through new business fees and taxes on the already sluggish commercial real estate industry. As a result, advocates will need to be even more vigilant this year to protect our industry’s interests. Here is a look at those issues.

Budgets
For the first time in four years, concerns over fiscal matters will not top legislative agendas in the states as economies are recovering, albeit at a slower pace than before the economic downturn. According to a report from the National Conference of State Legislatures, state fiscal conditions are improving, expenditures in most states are stable, and, in a significant departure from previous years, few states report new budget gaps opening since the current fiscal year began. However, state legislative fiscal officers remain concerned about global economic volatility, persistently high unemployment, long-term spending pressures, and congressional actions on federal deficit reduction. Any adverse development in any one of these areas could derail any progress states have made to correct fiscal imbalances.

While state fiscal conditions have improved slightly, the trickledown effect has not been good for the nation’s cities. State aid to municipalities has been severely cut, and many cities are unable to meet their obligations to employee-related health care coverage and pensions. Real estate markets are still struggling to rebound, meaning cities will face slower growth in future property tax collections through 2013. To offset these pressures, cities are cutting personnel and raising fees on a variety of services that impact commercial real estate.

Elections
This fall’s elections will not only be significant at the national level, but will also be tremendously important at both the state and local levels. Voters in 11 states will head to the polls to elect governors in 2012. Democrats are defending eight seats, as Republicans are defending three relatively safe seats in Indiana, North Dakota and Utah. Key states to watch will be Indiana, where the GOP's Mitch Daniels is term-limited; and North Carolina, where Republicans are hoping to follow up on their 2010 victory in the legislature by taking the governor’s office away from Democrat Beverly Perdue

In November, 64 percent of the country’s 1,971 state senate seats and 87 percent of the 5,413 state house seats are up for reelection. Heading into the fall, the GOP holds a commanding advantage in the total number of state legislative chambers in which it is the majority party. Republicans control 52 chambers, while Democrats control 31. Term limits are forcing many legislators from office, with 16 percent of the 1,591 state legislative seats up for grabs in the 14 states with such limits. Although the difference is marginal, Republicans are being impacted more from term limits than Democrats in this year’s election

Nationwide, many local governments will also have elections for a variety of offices in 2012. Some major U.S. cities that will be holding mayoral elections include Orlando, Portland and San Diego

Voters will also decide on a variety of ballot measures, some that could potentially impact commercial real estate. Advocates in California are already gearing up for a possible battle against a split roll property taxation initiative that would require, among other things, a commercial tax reassessment at least every three years.

Energy Performance Benchmarking
In recent years, many state and local governments have moved towards requiring commercial building owners to use the U.S. EPA’s ENERGYSTAR® Portfolio Manager rating system to benchmark their building’s energy performance. While BOMA International has worked with EPA to educate members on the benefits of benchmarking, it does not advocate for mandates of any kind. This trend has now moved beyond benchmarking and energy performance metrics will be made available to the public, which could greatly impact building sales. Austin, New York, San Francisco, and Washington, D.C. have such requirements, as does the state of California. Look for this issue to continue to surface in 2012.