Governors fail fiscal restraint test

Sept. 20, 2002 at 6:29 PM
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WASHINGTON, Sept. 20 (UPI) -- Only two of the nations' governors -- Republicans Jeb Bush of Florida and Bill Owens of Colorado -- received an "A" for fiscal conservatism in an annual report card released Friday by the Washington-based CATO Institute.

Spending has surged in nearly all states in the past decade, even in states with supposedly conservative governors, the report by the conservative think tank found.

While Republican governors cut taxes and state budgets more often than Democrats, neither group showed much fiscal discipline this year, the report said. The average grade for Republican governors was "C-," compared to the average grade of "D+" for the Democrats.

"The ethic of fiscal restraint and tax reduction among the G.O.P. governors has waned in recent years," wrote authors Stephen Moore and Stephen Slivinski. "Most Republican governors have fiscal records more closely resembling that of Nelson Rockefeller than that of Ronald Reagan."

The sixth annual report was issued against the backdrop of the worst state budget crunch in years. State governments faced a combined budget gap of more than $40 billion in 2002.

While federal government spending rose 19 percent from 1996 to 2001, state spending soared 39 percent. Budget shortfalls more often led to tax hikes instead of spending reductions, the report found.

Owens received the highest marks for cutting taxes and restraining spending. His fiscal policy was in part due to Colorado's Taxpayer Bill of Rights, a state constitutional amendment passed by in 1992 that requires tax refunds when state revenue growth exceeds the growth rate of the population plus inflation. But the report said he also proactively sought tax cuts, bringing the state's flat income tax rate down to 4.63 percent.

Just two Democratic governors merited a "B" on the survey: Roy E. Barnes of Georgia and Gary Locke of Washington. Barnes supported property tax cuts and cut the unemployment insurance tax, and taxes also went down under Locke.

The failing grades were split evenly between the two parties. Democrats Gray Davis of California and John Kitzhaber of Oregon and Republicans Don Sundquist of Tennessee and Bob Taft of Ohio each received an "F."

Kitzhaber earned the lowest raw score -- a 30 out of 100 -- for increasing spending by 30 percent in his first term and supporting income and luxury tax hikes. Taft came in second to last for presiding over a budget increase of 10 percent and spending part of his state's tax refund account.

The report card grading system was based on a comparative analysis of 17 spending, revenue, and tax variables.

The report's authors believe that reducing taxes and cutting budgets increases the fiscal health for states. It therefore awarded the highest grades to governors who sliced taxes and budgets most deeply.

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