Beyond Washington: Why State Capitals Will Define Policy Risk in 2027

October 29, 2026

As we approach the upcoming midterm elections, most of the attention has gone to one question: who will control the 120th Congress? But the part of the ballot that shapes the local operating environment for business may matter just as much. On November 3, 36 states will elect governors and voters in 46 states will choose legislators, covering 88 of the country’s 99 legislative chambers and more than 6,100 seats.

APCO convened five experts on state and local government to discuss how policy risk is no longer a single conversation in Washington, but dozens of conversations in state capitals, each with its own players, calendar and politics. Organizations that prepare now will be ready when the results come Tuesday.

States Are Taking on More of the Governing

Guest panelist Dr. Michael Bitzer, a professor of politics and history and director of the Center for North Carolina Politics and Public Service at Catawba College, opened with a simple point. When federal policymaking stalls, the states take up the slack. The panel noted that responsibility for programs and funding is also moving to state governments, with Medicaid and Supplemental Nutrition Assistance Program (SNAP) costs and disaster response as examples. That creates budget pressure and policy debates in state capitals that policymakers will soon address. Additionally, the lack of federal policy movement has spurred conversations on everything from healthcare to mergers and acquisitions, AI, energy and data center development.

Beyond policy debates, population shifts are continuing to reshape state demographics and the electorate. As the Sun Belt states grow, state capitals must also serve fast-growing metro regions and existing rural communities, many of which have competing priorities, at once.

Dr. Bitzer also pointed to educational attainment and generational change as leading indicators of where public policy is potentially heading, with a large “diploma gap” emerging between the two parties, which shapes their priorities, and young voters seemingly favoring center-left candidates. Dr. Bitzer concluded with his advice for companies operating in many states: have contacts who know each one because the dynamics differ substantially from state to state and hyperlocal intelligence matters.

Be Ready for Action the Day After the Election

Governors take office within weeks and move quickly on setting their agendas and budgets. Legislative leadership and committee chair races will begin immediately. The window to get on transition team and legislative radars runs from November to January, so ask for meetings before the holidays when new officials are eager to learn.

Here’s what your organization should have ready by the week of the election:

A place in the agenda. Look for ways to help solve a problem the governor or legislators campaigned on, offer expertise to a transition team and plan to be visible at inaugurations and other swearing-in ceremonies.
A clear ask. Know what you want from government and who you need to reach when the dust settles. Set policy, the plan and needed materials before the new year starts.
A localized story. When engaging, show the localized data and effect in the state. If possible, demonstrate local district impact to credential any ask: jobs, investment, patients or customers. Where possible, tie to campaign promises and issues such as affordability.
A short holding statement and messaging. For companies where ballot measures or anticipated regulatory changes in the new year may impact operations, develop the holding statement and messaging now. With more than 100 ballot initiatives this year, reporters and local stakeholders will ask for your company’s position. And when legislators tackle campaign issues, organizations should already be prepared.

Importantly, do not overlook agencies, where eligibility rules, contracts and vendor decisions are made. Watch what legislators are already discussing, too. For example, the panel noted that legislators in about a dozen states are reportedly looking at privacy rules for wearable devices, and AI will draw attention in many more.

Relationships Take Time, so Start Before You Need Them

Start with the people who run the process: leadership, committee chairs and their staff, the governor’s office and agency heads. Talk to members of both parties, then map the wider circle that influences officeholders, including chambers of commerce, unions and community groups. Build coalitions before a bill is introduced, because by the time one moves, it is often too late. And never make the first call an ask. As the panel put it, decisions are often made on comfort and trust—both of which take time to build.

This applies to voters, too. Companies dealing with consumer-facing issues should have a clear corporate narrative to avoid reputational risk. For example, voters want to know what will happen to their electricity rates, not hear another speech about affordability. Come with a clear line of sight on issues, provide solutions and keep the focus on the customers and stakeholders you serve.

Key Takeaways

Expect states to carry more of the governing: Medicaid, SNAP and disaster response costs, plus AI, energy and data center debates, are moving to state capitals.
Build contacts who know each state, because dynamics differ and hyperlocal intelligence matters.
Have a place in the agenda, a clear ask, a localized story and a short holding statement and messaging ready by the week of the election.
Request meetings with transition teams, legislative leaders, committee chairs and agency heads between November and January.
Build coalitions and relationships before you need them, and never make the first call an ask.

APCO’s Advocacy Campaigns and Public Affairs & Government Relations teams help organizations map state exposure, build scenarios and engage stakeholders in state capitals. Join us for our next briefings, Election Day recaps and analyses on the morning and evening of November 4 on what the outcomes mean for business in the United States and Asia.

Download our Elections Taskforce’s latest midterms recommendations for more. Watch recordings of previous sessions and read recaps here: https://apcoworldwide.com/26midterms/