The Pulse: Citizens League Issues Scan

"The Pulse", the Citizens League issue scan looks at topics of interest to members of the Citizens League (

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Saturday, December 28, 2002
Technology: Business Process Outsourcing as Big Payoff for Information Technology Investments? David Kirkpatrick wrote for FORTUNE.COM on Wednesday, December 18, 2002 the productivity gains achieved so far from information technology (IT) have not been proportionate to the scale of investment. Even though companies now spend, on average, 37 percent of their capital budgets on IT, U.S. productivity numbers have only crept up modestly over the past few decades, though they have accelerated markedly since 1995.Kirkpatrick offers a guess as to where the big savings will come from: business process outsourcing. But the cost-savings grow really huge when companies exploit the big discrepancies in labor rates between the U.S. and still-developing countries like India, and outsource entire business processes to operators far away. International business process outsourcing, or BPO, started a few years ago with call centers, and it's spreading to a wider variety of jobs. It may enable a quantum leap downward in labor costs. Such outsourcing can save companies up to 60 percent on labor. In an extensive recent feature, the online magazine Knowledge@Wharton assembles lots of new data on the nature and scale of international BPO (see For instance, an Indian national software association estimates that what it calls "IT-enabled services" provided in India for customers elsewhere will rise from $1.46 billion annually to about $17 billion in five years. By then over a million Indians could be engaged in these businesses. High growth rates are also expected in Eastern Europe and Latin America and the Caribbean. Countries with the biggest near-term opportunity are those with large English-speaking populations, such as Jamaica, Malaysia, the Philippines, and Singapore. The full article may be accessed at: (270)

Technology: Web Links -- FuturePundit is a weblog that covers future technological trends and their likely effects on human society, politics and evolution. The site also links to a large number of columns in science and technology in addition to original content. The site is at: (269)

State Budgets and K-12 Education. Seven States Move to Allow Four-Day School Week. T.R. Reid wrote a piece for the Thursday, December 26, 2002 ( Page A03) Washington Post on states moving to four-day school weeks for budget reasons. More than 100 school districts in seven states -- Oregon, Wyoming, Colorado, New Mexico, South Dakota, Arkansas and Louisiana -- are using the four-day week this school year, according to the National School Boards Association. Districts in an additional half-dozen states are considering the plan for next year, although some would require a change in state law to make the shift. Last week, Colorado Gov. Bill Owens issued a report card on each of the state's public schools. The results showed no difference in student achievement between four-day and five-day systems, the state said. The full article is at: (268)

Friday, December 27, 2002
Demographics and Labor Force. Labor Shortage Likely to Return to Minnesota. Kevin Featherly wrote: "The Coming Labor Shortage" for the December 2002 issue of Twin Cities Business Monthly. While the cooling economy has made it a "buyers market" for workers, this is not likely to last. The "bottom line" is that the labor shortage from 1997 to 2000 is likely to return with an economic recovery due to demographics among other factors. Retirees are projected to outnumber K-12 students by 2018. The state creates between 30,000 to 40,000 jobs per year but between 2001 and 2010 the state will add only about 20,000 workers per year. (Source: Twin Cities Business Monthly, December 2002, pp. 46-49). (267)

Thursday, December 26, 2002
State Budgets and Technology. Minnesota Seeks Budget Ideas Online. According to an AP story, the State of Minnesota, as well as Maine (Pulse weblog entry 263) is soliciting ideas for managing the large state deficit. The story may be read at: The website for offering suggestions on Minnesota's state budget is at: (266)

Transportation: An Even Better Car Deal -- Not Owning One. Kortney Stringer wrote an article for the Thursday, December 26, 2002 Wall Street Journal on rental car companies chasing drivers who want to avoid ownership hassles. The AAA says that owning a car costs about $625 per month. Other options include Flexcar offering 100 hours and 1,000 miles per month for $525 per month with limited plans starting at $35; Zipcar offering from $4 to $10 per hour for the use of a car plus mileage at 18 to 40 cents per mile; and Enterprise rental car offering $9.99 rental cars on the weekends with unlimited miles. Car sharing can make sense for occasional use and seems to be on the rise with hundred of locations in the U.S. already available. (265)

Metropolitan Regional Development. Ten Mile University Avenue Corridor Shows Life. An editorial in the Twin Cities Star Tribune on December 26, 2002 highlights recent and overdue efforts to revitalize a ten-mile long corridor between the downtowns of the two core cities. The piece, entitled: "University Avenue / College town idea advances" describes some of the five projects that are emerging to leverage the concentration of higher education institutions on or near the corridor as an "anchor" for the redevelopment. Two recent reports by University UNITED, a coalition of nonprofit groups, show that a strong market is emerging and that at least eight potential sites exist that could add 3,000 units over a dozen or more years. The full article may be read at: (264)

State Budgets and Technology. Incoming Maine Governor to Get Online Budget Deficit Advice. Paul Carrier wrote a piece for the December 24, 2002 Portland Press Herald on incoming Maine Governor Baldacci's plan to use online consultation in coming up with ideas to cut the state budget deficit. The state faces a projected $1 billion shortfall in the two-year budget cycle that starts July 1, and Baldacci has said repeatedly that he wants to fill that hole without raising taxes. The Web site should be running January 8, but the link for public input on the budget may not be operational until later in the month, according to Lee Umphrey, Baldacci's spokesman. Robert Klotz, an assistant professor of political science at the University of Southern Maine and an expert on the use of the Internet in politics, said Baldacci's idea is noteworthy because it represents "a targeted effort to see if people want to provide input." Klotz said Baldacci's initiative also is commendable because it will help combat what he called "the standard complaint" about Web sites, which is that they are not sufficiently interactive. "A lot of officeholders are trying to figure out ways to use the interactivity of the Internet," Klotz said, and this is one way to do just that. After the new governor is sworn in January 8, a link to the budget site will be placed on, which is the home page of Maine state government. The full article may be accessed at: (263)

Wednesday, December 25, 2002
Elections, Campaigns and Technology: How the Web Will Change Campaigns. Matthew Hindman of the National Center for Digital Government at Harvard University wrote an opinion piece for the December 25, 2002 New York Times on the impact of technology on campaigns. The Web has had less impact on candidate to voter relationships than it has had on business to consumer. Research showed that in the last campaign most visitors to candidate websites were from supporters, the media and political opponents and candidate sites do not appear to reach mainstream voters. Websites may have allowed candidates to take more partisan positions and sling more "cyber mud" than other media. The piece concludes with the view that the Web will eventually be indispensable for elections since campaign finance reform is about to shut off a major supply of "soft money" for campaigns. The web can be a powerful tool to reach a niche audience to secure campaign contributions in a low cost manner. The full article may be accessed at: The National Center for Digital Government website is at: (262)

State Budgets. State and Local Budget Crisis Deepening. Dale Russakoff wrote a piece for the Washington Post, Tuesday, December 24, 2002 (Page A05) on a survey of state budget documents by the Center for Budget and Policy Priorities showing a deepening state and local budget crisis in the U.S.. The survey of preliminary budget documents in 42 states shows that the fiscal outlook for next year is no better. And most states already have exhausted billions of dollars put aside during the boom years as a cushion against recession. "The states have done the easier things first, and now they're left with much starker choices," said Robert Greenstein, executive director of the center, a liberal research group. The study found that 11 states have adopted or proposed plans to eliminate health coverage for 1 million people living near the poverty level. The study is based on preliminary figures taken from working documents used by governors and legislators, and could change if the economy improves before most 2003-2004 budgets are enacted in June. On average, the states surveyed were anticipating deficits of 13 to 18 percent of their general fund budgets, or more than twice the gap faced in the recession of the early 1990s.Officials of national organizations that monitor state fiscal health said it is impossible to pinpoint the anticipated deficits for 2004. But they generally agreed with the center's prediction of a continuing crisis for state governments, caused by plunging tax revenue and the steeply rising cost of Medicaid, which expanded dramatically in the 1990s to cover families leaving welfare. Minnesota's deficit is about 18.7% of the state budget. Some states -- including Alabama, Alaska, California, Nevada and Oregon -- face shortfalls close to one-fourth of their general fund budgets. Iris Lav, the center's deputy director, said that even deep cuts in basic services and tax increases probably would not overcome deficits of 25 percent. Only three governors have proposed or signed tax increases so far -- in New Jersey, Connecticut and Arkansas -- but Lav said that more than 40 states raised taxes in the 1990s recession, when deficits peaked at 6.5 percent of general fund budgets, far below next year's anticipated shortfalls. The report appeared likely to fuel debate over whether President Bush should include help for the states in his economic stimulus package. Sen. Max Baucus (Mont.), the ranking Democrat on the Finance Committee, has proposed directing $75 billion to states to relieve fiscal crises. Economists have warned that deep cuts and tax increases at the state level would dampen the effects of the president's proposed tax cuts. White House officials have responded in the past that the federal government faces its own deficits. But one official, speaking on condition of anonymity, said, "The president will continue to look at options for securing economic growth and constructive suggestions from the nation's governors will certainly be given consideration." Read the full story at: The Center for Budget and Policy Priorities report may be accessed at: (261)

Tuesday, December 24, 2002
Transportation and Environment. G.M. to Offer Hybrid Power in 5 Models by 2007. Danny Hakim wrote a piece for the December 24, 2002 New York Times on a soon to be announced General Motors plan to offer five hybrid powered vehicle models by 2007. G.M.'s plan, which will be announced next month at the North American International Auto Show here, is an endorsement of hybrid technology, which improves gasoline mileage by supplementing the internal combustion engine with electric power. They will join already established Honda and Toyota hybrid vehicles on the market. Toyota has already said it plans to sell 300,000 hybrids a year worldwide, many of them in the United States, within five years. The Ford Motor Company plans to start selling a hybrid version of its Escape sport utility vehicle a year from now. DaimlerChrysler has said it will sell a hybrid version of the Dodge Ram pickup truck next year. The full story may be found at: (260)

Monday, December 23, 2002
Technology. Speech Recognition Progresses. Allison Fass wrote on speech recognition for the January 6, 2003 issue of Forbes magazine. She repeats the old joke that speech recognition by computers has been two or three years away for 20 years now. The voice recognition market should hit $695 million in 2002 up 10% from 2001. The vocabulary of voice recognition systems has grown to 100,000 words since 1985 and the price has fallen from $5,000 to $50 in the same period. Good speech recognition systems now have a 95% accuracy level. Amtrak's voice recognition system, Julie, paid for its $4 million cost in the first 12 to 18 months of use. (259)

Sunday, December 22, 2002
Energy and Environment. Wind Power Lights Up More Homes Than Ever Before. Cora Daniels wrote a piece December 18, 2002 for Fortune magazine on wind energy. According to her article, wind is the world's fastest-growing source of power. It's renewable, relatively inexpensive, and totally devoid ofemissions. Europe blows the U.S. away in the use of wind power (in parts of northern Germany, for example, wind generates 25% of the power; in the U.S. it's less than 1%). In 2002, wind farms in the U.S. generated a record-breaking ten billion kilowatt-hours of energy, enough to power one million homes. That's up from six billion kilowatt hours in 2001. Renewable energy tax breaks for Texas utilities have even prompted a wind-farm rush across dormant oilfields. And this year FPL Energy built the Stateline Energy Center on 50 square miles along the Oregon-Washington border. The modern windmills have sleek, fiberglass blades atop 160-foot poles and the 460 turbines offer clean electricity to 70,000 homes and businesses. Just 1,700 more wind farms like it would provide electricity for every home in the nation. See the full article at:,15114,399907,00.html. (258)

Metropolitan Regional Development. Twin Cities Metropolitan Council Approves Blueprint 2030. David Peterson wrote a story for the December 19, 2002 Star Tribune on the action taken on Wednesday, December 18, 2002 by the Metropolitan Council to approve the Blueprint 2030 plan despite objections from the Governor-Elect of Minnesota. The plan, which may be viewed at: covers a number of measures to reduce the amount of land being consumed as the population grows over the next three decades. The life of the plan may be short-lived as the chair and council serve at the pleasure of the new Governor coming into office in January 2003. The full story may be found at: (257).