Fiscal Policy Report Card on America’s Governors 2014

by Nicole Kaeding and Chris Edwards, CATO Institute, October 2, 2014

The recession of 2007–2009 knocked the wind out of state government budgets, but revenues and spending have grown steadily in recent years. As revenues have risen, some governors have pursued reforms to reduce tax burdens on families and make their states more competitive. Other governors have used rising revenues to expand programs.

That is the backdrop to this year’s 12th biennial fiscal report card on the governors, which examines state budget actions since 2012. It uses statistical data to grade the governors on their taxing and spending records—governors who have cut taxes and spending the most receive the highest grades, while those who have increased taxes and spending the most receive the lowest grades.

Four governors were awarded an “A” on this report card: Pat McCrory of North Carolina, Sam Brownback of Kansas, Paul LePage of Maine, and Mike Pence of Indiana. Eight governors were awarded an “F”: Mark Dayton of Minnesota, John Kitzhaber of Oregon, Jack Markell of Delaware, Jay Inslee of Washington, Pat Quinn of Illinois, Deval Patrick of Massachusetts, John Hickenlooper of Colorado, and Jerry Brown of California.

With the economy currently growing, governors and legislatures are having few problems balancing their budgets in the short run, but the states face major budget challenges down the road. Many retirement plans for state workers have high levels of unfunded liabilities, and the Medicaid expansion under the 2010 Affordable Care Act will increase stress on state budgets. At the same time, global economic competition is making it imperative that states improve their investment climates, particularly by cutting tax rates on businesses and entrepreneurs.

This report discusses those trends and examines the fiscal policy actions of each governor. More state policymakers should be encouraged to follow the reform approaches of the top-scoring governors.

read ... Entire Report

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Spending and Revenue Changes

State Hawaii

Governor Neil Abercrombie (D)

Spending Score 22

Proposed Changes in Per Capita Spending 5.5%

Actual Changes in Per Capita Spending 6.5% 

Revenue Score 48

Changes in Revenues from Proposed and Enacted Tax Changes 0.1%

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Hawaii

Neil Abercrombie, Democrat

Legislature: Democratic

Took Office: December, 2010

Grade: D

Governor Abercrombie received an “F” on the last Cato report card, partly because of his large tax increases. He signed into law higher taxes on rental cars, reduced income tax deductions, and increased excise taxes. In recent years, he has shown more tax restraint, although he did support an increase of the soda tax in 2013.

One constant during Abercrombie’s tenure has been his support for large spending increases.  The general fund budget rose from $5.5 billion in 2012 to an estimated $6.4 billion in 2014. He has proposed spending increases averaging 6.5 percent in recent years, which is more than double the national average. But Hawaii taxpayers can now breathe easier because he was defeated in the Democratic primary for the 2014 gubernatorial election.

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2012: "Some of these Governors are Schizophrenic:" Abercrombie Among Worst Cases