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Fiscal Policy Report Card on America's Governors: 2004 Cato Policy Analysis No. 537

Fiscal Policy Report Card on America's Governors: 2004 Cato Policy Analysis No. 537

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Published by Cato Institute
Executive Summary
As states continue to claw their way out of the worst state budget hole in years, this report presents the findings of the Cato Institute's seventh biennial fiscal policy report card on the nation's governors. The report card's grading is based on 15 objective measures of fiscal performance. Governors who have cut taxes and spending the most receive the highest grades. Those who have increased spending and taxes the most receive the lowest grades. Our analysis shows that states that keep tax rates low and restrain spending growth have the best economic performance and thus the best longterm fiscal health.

This year, four governors receive the grade of A: Arnold Schwarzenegger of California, Craig Benson of New Hampshire, Bill Owens of Colorado, and Judy Martz of Montana. Four governors receive Fs for their poor performance in dealing with the state fiscal crisis: Bob Holden of Missouri, Bob Taft of Ohio, Edward Rendell of Pennsylvania, and James McGreevey of New Jersey.

The grades of the governors of some of America
Executive Summary
As states continue to claw their way out of the worst state budget hole in years, this report presents the findings of the Cato Institute's seventh biennial fiscal policy report card on the nation's governors. The report card's grading is based on 15 objective measures of fiscal performance. Governors who have cut taxes and spending the most receive the highest grades. Those who have increased spending and taxes the most receive the lowest grades. Our analysis shows that states that keep tax rates low and restrain spending growth have the best economic performance and thus the best longterm fiscal health.

This year, four governors receive the grade of A: Arnold Schwarzenegger of California, Craig Benson of New Hampshire, Bill Owens of Colorado, and Judy Martz of Montana. Four governors receive Fs for their poor performance in dealing with the state fiscal crisis: Bob Holden of Missouri, Bob Taft of Ohio, Edward Rendell of Pennsylvania, and James McGreevey of New Jersey.

The grades of the governors of some of America

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Published by: Cato Institute on Mar 26, 2009
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 As states continue to claw their way out of theworst state budget hole in years, this report pre-sents the findings of the Cato Institute’s seventhbiennial fiscal policy report card on the nation’sgovernors. The report card’s grading is based on15 objective measures of fiscal performance.Governors who have cut taxes and spending themost receive the highest grades. Those who haveincreased spending and taxes the most receivethe lowest grades. Our analysis shows that statesthat keep tax rates low and restrain spendinggrowth have the best economic performance andthus the best long-term fiscal health.This year, four governors receive the grade of A: Arnold Schwarzenegger of California, CraigBenson of New Hampshire, Bill Owens of Colorado, and Judy Martz of Montana. Four gover-nors receive Fs for their poor performance in deal-ing with the state fiscal crisis: Bob Holden of Missouri, Bob Taft of Ohio, Edward Rendell of Pennsylvania, and James McGreevey of New Jersey.The grades of the governors of some of  America’s most populous states are Jeb Bush of Florida, B; George Pataki of New York, B; RickPerry of Texas, B; and Jennifer Granholm of Michigan, D.
 Fiscal Policy Report Card on America’s Governors: 2004
by Stephen Moore and Stephen Slivinski
_____________________________________________________________________________________________________
Stephen Moore is a senior fellow and Stephen Slivinski is director of budget studies at the Cato Institute.
Executive Summary 
No. 537March 1, 2005
Routing 
 
Introduction
These have not been fun times to be a gov-ernor.State governments have just started to raisetheir heads above water after one of the worstfiscal crises to hit the state capitals in 20 years.The states were slammed with a perfect stormof bad economic and financial news, explod-ing costs of key services such as health care,and increased demand for expenditures forhomeland security in the wake of the attacksof September 11, 2001. After nearly a decade of prosperity, rising tax receipts, and healthy budget surpluses, the states quickly sank in a sea of red ink during the recession. For exam-ple, in late 2002 the total California statedeficit forecast for fiscal years 2004 and 2005reached a record $35 billion.
1
The GoldenState’s fiscal crunch, which was caused largely by the ineptitude of then-governor Gray Davis,was the major contributing factor to Davis’sbeing recalled by California voters andreplaced with Arnold Schwarzenegger.Some governors addressed the fiscal melt-down by enacting major tax hikes. Othersenacted belt-tightening measures. In FY03state expenditures adjusted for inflation actu-ally fell for the first time since the early 1980s.
2
Only in the last nine months have states final-ly begun to see better times ahead.It is in the context of the state fiscal crisisthat we present the results of the CatoInstitute’s seventh biennial fiscal policy reportcard on the nation’s governors.
3
The study is a comparative analysis of the budget and taxrecords of 42 governors. (Six governors wereexcluded because they assumed office toorecently for their records to be fully assessed.The governors of Alaska and Wyoming wereexcluded for technical reasons.)
4
The reportcard provides an index of fiscal restraint foreach governor. Governors who cut taxes andspending the most receive the highest grades.Those who raised taxes and spending the mostreceive the lowest grades.
2
Some governorsaddressed thefiscal meltdownby enactingmajor tax hikes.Others enactedbelt-tighteningmeasures.
Table 1SeniorClass Governors—Overall Grades
GovernorStateScoreGradeBill Owens (R)Colorado77AJudy Martz (R)Montana75AJeb Bush (R)Florida66BGeorge Pataki (R)New York63BJohn Hoeven (R)North Dakota57BGary Locke (D)Washington57BRick Perry (R)Texas55BMichael Easley (D)North Carolina53CDirk Kempthorne (R)Idaho52CTom Vilsack (D)Iowa50CMike Johanns (R)Nebraska49CBob Wise (D)West Virginia43DRuth Ann Minner (D)Delaware42DKenny Guinn (R)Nevada40DMike Huckabee (R)Arkansas37DBob Holden (D)Missouri35FBob Taft (R)Ohio30F
 
The grading mechanism is based on 15objective measures of fiscal and economic per-formance and follows the methodology of pre- vious Cato fiscal report cards. The sources of the tax and spending data in the study are theU.S. Bureau of the Census, the National Association of State Budget Officers(NASBO), the National Conference of StateLegislatures (NCSL), and the budget office of each governor.
5
 Appendix A of this report discusses thepurpose of the study and contains somecaveats. Appendix B provides a detailed dis-cussion of the report card’s methodology andthe 15 policy variables that it examines. Appendix C contains detailed tables. Appendix D provides a summary of the recordof each governor in this year’s report.
Main Results
Tables 1 and 2 present the main results of the study. Because more than half of the gov-ernors graded this year were inaugurated in January 2003 or after—so we could awardthem only “midterm” grades—the governorswere grouped in two classes and graded rela-tive to other governors in those classes.Because the senior and freshman governors
3
Only in the lastnine months havestates finally begun to seebetter timesahead.
Table 2Freshman Class Governors—Midterm Grades
GovernorStateScoreGradeArnold Schwarzenegger (R)California84ACraig Benson (R)New Hampshire82AMark Sanford (R)South Carolina70BTim Pawlenty (R)Minnesota69BBill Richardson (D)New Mexico69BJohn Baldacci (D)Maine68BMike Rounds (R)South Dakota68BPhil Bredesen (D)Tennessee68BDon Carcieri (R)Rhode Island66CJames Doyle (D)Wisconsin66CMitt Romney (R)Massachusetts66CLinda Lingle (R)Hawaii66CBrad Henry (D)Oklahoma65CRobert Ehrlich (R)Maryland64CJames Douglas (R)Vermont64CRod Blagojevich (D)Illinois 59DTed Kulongoski (D)Oregon58DJennifer Granholm (D)Michigan58DSonny Perdue (R)Georgia57DMark Warner (D)Virginia56DKathleen Sebelius (D)Kansas53DJanet Napolitano (D)Arizona52DBob Riley (R)Alabama51DEdward Rendell (D)Pennsylvania48FJames McGreevey (D)New Jersey 42F

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