U.S. Governors Urged To Keep Pace with E-Commerce

A number of software company owners, corporate executives and other key players in the technology landscape strongly encouraged U.S. governors to keep better pace with the new economy and electronic commerce at a weekend meeting of the National Governors’ Association (NGA) in Washington, D.C.

The common theme was that in order to remain economically viable, states must allocate funds and resources immediately for technology initiatives.

Some of the governors are taking aggressive steps, while others lag behind. In New Jersey, Governor Christine Todd Whitman has already proposed that $165 million (US$) be earmarked for technology-related enterprises, including Internet incubators to launch and foster start-up companies.

NGA Chairman and Utah Governor Michael O. Leavitt said that the choices for individual states are simple: “States can fight the changes and die, accept them and survive, or lead and prosper.”

Leavitt, who is also a member of the Advisory Commission on Electronic Commerce (ACEC), is spearheading a movement to make it voluntary for states to set up a simplified sales tax system for remote sellers using technology run by a third party.

States Struggle To Meet New Challenges

Leavitt cautioned the governors that what their states do during the next decade to respond to the rapidly changing electronic economy may spell success or failure.

“During the next decade, globalization will reshape governments more profoundly than the Industrial Revolution and the Progressive Era combined,” he said. “With today’s technology, the boundaries that have defined political jurisdictions for more than two centuries are becoming less relevant. The challenge facing today’s leaders is to create a dynamic new government that reflects today’s reality.”

Toward that end, the NGA announced a six-month plan to release a series of papers that focus on different aspects of the new economy. The first paper, “State Strategies for the New Economy,” calls for a radical restructuring of the methods states use to govern, deliver services and attract workers and businesses.

Some industry observers are already noticing a dearth of qualified technology employees in some Midwestern states, largely because many workers have relocated to the east or west coasts of the United States. To counter the loss of qualified workers, the NGA proposes that states support workforce training to raise the skills of new personnel and help them transition to higher paying jobs.

Although Governor Whitman has already encouraged the formation of Internet incubators on the state level, the paper encourages the entire NGA to strongly support and assist entrepreneurs and business start-ups through incubation and other means. Significantly, the NGA also proposes realigning tax systems to reflect the new economy and avoid discriminatory taxes on such related businesses as telecommunications.

States Ready to Address E-Commerce

While some industry analysts have criticized individual states for being too slow to embrace electronic commerce, the NGA meeting focused on the need to meet the challenges of an expanding Internet economy.

“Government is always the last to catch up,” said Illinois Governor George Ryan. “If we don’t invest now, we’re going to be behind.” For his part, Ryan has already announced his desire to invest $1.9 billion in technology over the next five years.

Not all states are dragging their feet in acknowledging the importance of e-commerce. In South Carolina, Governor Jim Hodges wants to spend $500,000 to add a chief technology officer to his cabinet. In California, Governor Gray Davis proposed $75 million to fund research on the next generation of technologies.

This weekend’s meeting marks the first time that the association has substantially addressed electronic commerce, with most governors discussing some form of spending initiative. In describing states’ responsibility to the new economy, Whitman said, “You can’t just let it happen. You’ve got to be driving it.”