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This report presents the findings of the CatoInstitute’s fifth biennial fiscal policy report cardon the nation’s governors. The grading mecha-nism is based on purely objective measures of each governor’s fiscal performance. Those gover-nors with the most fiscally conservative records—the tax and budget cutters—receive the highestgrades. Those who have increased spending andtaxes the most receive the lowest grades.Two governors receive an A on our 2000report card: Paul Cellucci of Massachusetts andKenny Guinn of Nevada. Three governors receivean F: Tom Vilsack of Iowa, Gray Davis of California, and John Kitzhaber of Oregon.The recent governors of America’s most popu-lous states and their grades are George W. Bush of Texas, B; George Pataki of New York, B; Tom Ridgeof Pennsylvania, B; George Ryan of Illinois, D; BobTaft of Ohio, D; John Engler of Michigan, B; JebBush of Florida, B; and Christine Todd Whitman of New Jersey, C.Overall, we are concerned that the trend dur-ing the past several years of prosperity for stateshas been to ratchet up state budgets instead of returning revenue surpluses to taxpayers. By ourestimates, roughly two of every three surplus dol-lars in the state coffers since 1996 have gone tonew spending, not to tax reduction. Ironically,Republican governors were more aggressive incutting taxes in the early 1990s, when the stateswere in fiscal shortfall, than they are today withthe largest budget reserves in nearly two decades.The Republican governors tend to be touted asthe GOP’s policy stars, but our report card sug-gests that, although there are a number of tax-cutting fiscal conservatives among the group, fartoo many of those top state executives havebecome big-government Republicans.
Fiscal Policy Report Card on America’sGovernors: 2000
byStephen Moore and Stephen Slivinski
_____________________________________________________________________________________________________
Stephen Moore is a senior fellow and Stephen Slivinski is a fiscal policy analyst at the Cato Institute.
Executive Summary
No. 391February 12, 2001
 
Introduction
Herein we provide the results of the CatoInstitute’s fifth biennial fiscal policy reportcard on the nation’s governors.
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The study isa comparative analysis of the budget and taxrecord of 47 governors. (Mel Carnahan of Missouri is not graded in this study becausehe died in office in October 2000. Mississippigovernor Ronnie Musgrove assumed officetoo recently for us to be able to fully assesshis record. Tony Knowles of Alaska is exclud-ed because of peculiarities in Alaska’s budgetthat make interstate tax comparisons prob-lematic.) The report card provides an index of the fiscal restraint imposed by each governor.Those who cut taxes and spending the mostreceive the highest grades. Those who raisedtaxes and spending the most receive thepoorest grades.Table 1 presents the results. Two gover-nors receive an A on our 2000 report card:Paul Cellucci of Massachusetts and KennyGuinn of Nevada. Three governors receive anF: Tom Vilsack of Iowa, Gray Davis of California, and John Kitzhaber of Oregon.Several trends uncovered in our report war-rant special mention. First, there has been aclear trend toward more spending at the statelevel since our last report card in 1998. Thenational economic expansion has filled statecoffers with revenues, and many governors haverecommended using those windfall funds formodest to major new expenditures. For fiscal2000, roughly a quarter of all governors—bothRepublicans and Democrats—recommendedincreasing spending by more than 7 percent,almost three times the rate of inflation. Morethan half proposed increasing spending bymore than 5 percent. For the past three years,state spending has grown more than twice asfast as federal expenditures. Many governorshave proposed the same types of spending ini-tiatives that populated Bill Clinton’s budgetrequests. Hence, the talk of a fiscally conserva-tive trend in the states under Republican gover-nors seems to be exaggerated.It is also noteworthy that, as the nationaleconomy now shows signs of a slowdown,many of the states that hiked their budgetsthe most in recent years are talking of poten-tial fiscal crises in 2001. Those states includeNew Hampshire, Tennessee, North Carolina,and Virginia.Second, the governors elected in recentyears (in particular those elected in 1998)have tended to be more aggressive in cuttingtaxes than those first elected before 1997.Although many Republican governors elect-ed in the early 1990s—Christine ToddWhitman of New Jersey, George Pataki of New York, and Don Sundquist of Tennessee,for example—gained reputations as tax-cut-ting warriors when first elected, they havemore recently tended to shift their prioritiesfrom tax cutting to new spending. By con-trast, none of the recently elected governorshas pushed for income tax hikes in his or herfirst term, and most recommended tax cutsof one kind or another. In fact, the major taxcuts proposed by the new governors are, as aproportion of the budget, four to six timesbigger on average than those proposed by the“old” governors.Third, although states are still cuttingtaxes, the size of state tax reductions fell off sharply in 2000 despite record budget sur-pluses. We are now in the midst of thelongest sustained run of net state tax cuttingin American history, a run that began sevenyears ago. But in fiscal 2000, states cut theirtaxes by only $5 billion. That tax-cuttingeffort is minuscule, given that at the begin-ning of fiscal 2000, the states had a surplusof more than $30 billion. Moreover, tax cutshave not kept pace with the huge surge in taxcollections that have resulted from thenational economic expansion. When gover-nors have cut taxes, their emphasis usuallyhas been on income and property tax cuts.However, in 1999 and 2000 four states—Connecticut, Colorado, Minnesota, andWisconsin—offered tax rebates, and Florida,New York, Oklahoma, and Texas createdsales tax holidays. In Indiana governor Frank O’Bannon cut the state gas tax in response torising oil prices.
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The governorselected in recentyears (in particu-lar those electedin 1998) havetended to bemore aggressivein cutting taxesthan those firstelected before1997.
 
Table 1Overall Fiscal Policy Grades
GovernorStateScoreGrade
Paul Cellucci (R)Massachusetts76AKenny C. Guinn (R)Nevada74AGeorge W. Bush (R)Texas70BJohn G. Rowland (R)Connecticut68BGary Locke (D)Washington68BBill Owens (R)Colorado67BBenjamin J. Cayetano (D)Hawaii66BJeb Bush (R)Florida66BGary E. Johnson (R)New Mexico66BGeorge E. Pataki (R)New York64BJesse Ventura (I)Minnesota61BWilliam J. Janklow (R)South Dakota61BJohn Engler (R)Michigan60BFrank O’Bannon (D)Indiana60BTom Ridge (R)Pennsylvania59BPaul E. Patton (D)Kentucky59BTommy G. Thompson (R)Wisconsin59BBill Graves (R)Kansas59BEdward T. Schafer (R)North Dakota58CFrank Keating (R)Oklahoma58CLincoln Almond (R)Rhode Island58CChristine T. Whitman (R)New Jersey57CMike Johanns (R)Nebraska57CMike Huckabee (R)Arkansas57CRoy Barnes (D)Georgia56CCecil H. Underwood (R)West Virginia56CJim Hodges (D)South Carolina55CAngus S. King, Jr. (I)Maine55CDirk Kempthorne (R)Idaho55CJeanne Shaheen (D)New Hampshire54CJames G. Hunt, Jr. (D)North Carolina54CJim Geringer (R)Wyoming54CJames S. Gilmore (R)Virginia53CHoward Dean (D)Vermont53CMichael O. Leavitt (R)Utah51DMike Foster (R)Louisiana51DGeorge H. Ryan (R)Illinois51DBob Taft (R)Ohio51DThomas R. Carper (D)Delaware51DJane Dee Hull (R)Arizona50DMarc Racicot (R)Montana50DDon Siegelman (D)Alabama50DParris N. Glendening (D)Maryland49DDon Sundquist (R)Tennessee49DTom Vilsack (D)Iowa45FGray Davis (D)California41FJohn A. Kitzhaber (D)Oregon30F
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