Spending Variables
State employee benefits are generally much
1. Average annual percentage change in
more generous than private sector benefits,
per capita general fund spending pro-
and the costs of those benefits are growing
rapidly.21 Despite all these known problems,
posed by the governor.
2. Average annual percentage change in
some states continue to add to worker bene-
actual per capita general fund spending.
fits and expand expensive programs such as
Medicaid.
Revenue Variable
To make matters worse, rising federal gov-
3. Average dollar value of proposed and
ernment debt and unfunded obligations for
enacted tax and fee changes. These are rev-
Social Security and Medicare are set to crush
enue changes due to proposed and enact-
taxpayers in coming years unless major reforms
ed legislation, not the regular changes in
are made. Policymakers at all three levels of gov-
state revenues that occur due to econom-
ernment have done a great disservice to young
ic growth and other factors. Each change
Americans, who are threatened by huge tax
is measured by the annual dollar amount
increases to pay for the irresponsible political
of the change when it is fully phased-in, as
promises of the past.
a percentage of total state tax revenues.25
The states need a new generation of reform-
Unless
minded leaders on fiscal matters. The days of
more governors
Tax Rate Variables
governors coming into office and busily ex-
4. Change in the top personal income tax
panding programs and raising taxes to fund
aspire to the
rate.
new initiatives needs to end. Unless more gov-
approaches taken
5. Change in the top corporate income tax
ernors aspire to the approaches taken by this
by this year's
rate.
year's A governors, state taxpayers face a bleak
6. Change in the general sales tax rate.
future.
A governors,
7. Change in the cigarette tax rate.
state taxpayers
Appendix A:
The two spending variables are measured
face a bleak
Report Card Methodology
on a per-capita basis to adjust for the fact that
future.
state populations are growing at different
This study computes a fiscal policy grade for
rates. Variable 1 is measured through fiscal
each governor based on his or her success at
2009, and variable 2 is measured through fis-
restraining the growth of taxes and spending.
cal 2008. Each of the 46 governors graded in
The spending data used in the study comes
this report have been in office long enough to
from NASBO, as supplemented by data from
have proposed at least two annual budgets.
the budget documents of individual states.22
For all variables, the results are standard-
The data on proposed and enacted tax cuts
ized with the worst scores near zero and the
comes from NASBO, the National Conference
best scores near 100. The score for each of the
of State Legislatures, and hundreds of news
three categories--spending, revenue, and tax
reports in State Tax Notes and www.stateline.org.23
rates--is the average of the variable scores
The tax rate data comes from the Tax
within the category. One exception is that the
Foundation, as updated for changes through
cigarette tax rate variable is half-weighted
August 2008.24
because that tax is usually a smaller source of
This year's report card uses a somewhat dif-
state revenue than income and sales taxes.
ferent methodology than prior Cato report
The average of the scores for the three cate-
cards. This year, each governor's performance is
gories produces the overall grade for each
measured using 7 policy variables: 2 for spend-
governor.
ing, 1 for revenue, and 4 for tax rates. The over-
All variables measure state-level tax and
all score is calculated as the average score of
spending, and generally do not include the fiscal
activities of local governments.26 Furthermore,
these 3 categories.
8