State tax revenues
rest took office in 2005 and 2007. This report
Introduction
rates the governors on their tax and spending
increased at an
actions back to 2003, or to their first year in
average annual
Governors play a key role in the fiscal poli-
office after 2003. The report excludes the gov-
rate of about
cymaking of state governments. They propose
ernors of Kentucky, Louisiana, and New York
budgets, recommend tax changes, and sign rev-
because they entered office just this year. And,
6.5 percent
enue and spending changes into law. During
as in prior report cards, the governor of
between 2003
booms when revenues are rising rapidly, they
Alaska was excluded because of peculiarities
can cut tax rates to sustain economic growth,
in that state's budget that make interstate
and 2008.
or they can use surpluses to expand govern-
comparisons problematic.
ment programs. During slowdowns when bud-
The report card grades the governors on
get deficits appear, governors can restrain
their fiscal performance from a limited-gov-
spending or they can increase tax rates to fund
ernment perspective. The governors receiving
continued program growth.
an "A" are those who cut taxes and spending
This report card covers the period from 2003
the most, while the governors receiving an
to 2008, and thus includes periods of both eco-
"F" raised taxes and spending the most. The
nomic growth and slowdown.1 State tax rev-
grading mechanism is based on seven vari-
enues increased at an average annual rate of
ables, including two spending variables, one
about 6.5 percent between 2003 and 2008.2
revenue variable, and four tax rate variables.
State general fund spending rose at an average
Tax and spending data for the report came
annual rate of about 6.2 percent between 2003
from the National Association of State
and 2008.3 However, with the slowing U.S.
Budget Officers, the National Conference of
economy, spending growth is expected to be
State Legislatures, the Tax Foundation, the
much lower in 2009, as shown in Figure 1.
budget agencies of particular states, and
Of the 50 current governors, the largest
news articles in State Tax Notes and www.state
group took office in 2003, and most of the
line.org.
Figure 1
State General Fund Spending
$693
$686
$700
$653
$599
$600
$554
$523
$508
$500
$400
$300
2003
2004
2005
2006
2007
2008
2009
Source: National Association of State Budget Officers, "The Fiscal Survey of States," June 2008, and prior issues.
Fiscal years. Fiscal 2008 and 2009 are NASBO estimates.
2