News Release

February 12, 2001

Grading the governors: On fiscal policy, few top scores
Cato "report card" finds a surplus-fueled spending binge at state level

WASHINGTON—Only two of the nation's governors received an "A" on the Cato Institute's fifth biennial fiscal policy report card, released today. Govs. Paul Cellucci of Massachusetts and Kenny Guinn of Nevada won the top scores, and Cellucci earned the distinction of having the best record of reducing taxes and restraining spending growth. He spearheaded an initiative to reduce the state income tax from 6 percent to 5 percent and halved the capital gains tax, helping to soften his state's reputation as "Taxachusetts."

Many other governors were not so prudent. Nearly two of every three surplus dollars in state coffers since 1996 have gone to new spending, not tax reduction, according to Cato Senior Fellow Stephen Moore and Fiscal Policy Analyst Stephen Slivinski in the "Fiscal Policy Report Card on America's Governors: 2000." Three governors received an "F"-John Kitzhaber of Oregon, Gray Davis of California and Tom Vilsack of Iowa-and 10 governors got a "D," including seven Republicans.

Current or recent governors of America's most populous states and their grades are: George W. Bush of Texas, "B"; George Pataki of New York, "B"; Tom Ridge of Pennsylvania, "B"; George Ryan of Illinois, "D"; Bob Taft of Ohio, "D"; John Engler of Michigan, "B"; Jeb Bush of Florida, "B"; and Christine Todd Whitman of New Jersey, "C." Overall, 16 governors earned a "B" and 16 received a "C."

The fiscal report card is based on objective measures of fiscal performance. Those who cut taxes and spending the most receive the highest grades. Those who raised taxes and spending the most receive the lowest grades. (Three governors were excluded for methodological reasons.) Newer governors are more ambitious tax cutters than those elected before 1997, but state tax cuts fell off sharply in 2000 despite record budget surpluses. Contrary to expectations, the average grade for Republicans is only slightly higher than for Democrats.

"Ironically, Republican governors were more aggressive in cutting taxes in the early 1990s, when the state were in fiscal shortfall, than they are today with the largest budget reserves in nearly two decades," Moore and Slivinski write. "The Republicans governors are touted as the GOP's policy stars, but our report card suggests that, although there are a number of tax-cutting fiscal conservatives among the group, far too many of those top state executives have become big-government Republicans."

On a more positive note, The New York Times reported on Feb. 8 that revenue shortfalls have started to impose spending restraint on the states. "We hope governors learn the lesson: Surplus-fueled spending sprees can come back to haunt you," Moore said.

"Fiscal Policy Report Card on America’s Governors: 2000"