The fiscal news has finally turned goodfor most state policymakers. The improvingnational economic condition has reversedthe fiscal fortunes of most states. Gone arethe reports of massive budget deficits thatequaled $265 billion in total between 2001and 2005. This year at least 42 states will endthe fiscal year with a budget surplus. In total,states are estimated to be in the black by $28.9 billion.
But is this good news for taxpayers? Itdepends, of course, on what each governorand state legislature plan to do with themoney. Some plan to spend most or all of thewindfall, while others are planning to give itback to those who produced it: the taxpayersof their state.Such is the context for the Cato Institute’seighth biennial fiscal policy report card on thenation’s governors. The study is a comparativeanalysis of the budget and tax records of 46governors. (Three governors—James Risch of Idaho, Jon Corzine of New Jersey, and TimKaine of Virginia—were excluded because they assumed office too recently for their records tobe fully assessed. The governor of Alaska wasexcluded for technical reasons.)
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.The grading mechanism is based on 23objective measures of fiscal performance. Thesources of the tax and spending data in thestudy are the U.S. Bureau of the Census, theNational Association of State Budget Officers,the National Conference of State Legislatures,and the budget offices of each governor andlegislature.
Appendix A to this report discusses somecaveats to keep in mind while reading thisreport card. Appendix B provides a detaileddiscussion of the report card’s methodology and the 23 policy variables that it examines. Appendix C contains the tables that outlinethe grade each governor receives in eachbroad fiscal policy category—spending, rev-enue, and tax rates. Appendix D provides a summary of the record of each governor inthis year’s report.
Tables 1 presents the grades for each gov-ernor. Governors have been graded on theirperformance during their current term inoffice. Past Cato report cards awarded gradesto governors on the basis of their cumulativerecord in office—from their inauguration tothe present day. This year, the methodology has been changed to award grades to gover-nors on a term-by-term basis. That will assistreaders in tracking how the quality of a gov-ernor’s fiscal stewardship rises or declinesover time.Only when governors leave office will they receive a cumulative overall grade—an aver-age of all their term grades—to reflect theirperformance during their entire governor-ships. The overall grades for each of the eightincumbent governors who are leaving officein 2007 are given in Table 2. Also bear in mind that some governorsgraded this year were inaugurated in January 2005 or after. Therefore, they have been award-ed “midterm” grades. Those governors havebeen noted with an asterisk in Table 1.This year only one governor receives a grade of A: Matt Blunt of Missouri. Nine gov-ernors receive Fs. In alphabetical order, they are Kathleen Blanco of Louisiana, MichaelEasley of North Carolina, Kenny Guinn of Nevada, Christine Gregoire of Washington,Mike Huckabee of Arkansas, Ruth AnnMinner of Delaware, Janet Napolitano of Arizona, Bob Riley of Alabama, and BrianSchweitzer of Montana.
The governor with the best fiscal record isMatt Blunt of Missouri, who is currently in
Governors whocut taxes andspending themost receive thehighest grades.Those who raisedtaxes andspending themost receive thelowest grades.