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financial officers.  In that capacity, the governors have a

substantial effect on the fiscal and economic health of

their states.

Another reason to focus on governors' policies is that

the occupants of the statehouses are hugely influential po-

litical figures in America today.  Today a governorship is

regarded as a solid stepping stone to the White House, as

Jimmy Carter, Ronald Reagan, and Bill Clinton have proven.

Moreover, Republican Governors Bush of Texas, Wilson of

California, Engler of Michigan, and Thompson of Wisconsin

have all been mentioned as top candidates for the Republican

nomination for president or vice president.

Governors are also leading public policy innovators.

The states are increasingly fulfilling their roles as incu-

bators for untested policy proposals and as "laboratories of

democracy."  Currently, Thompson of Wisconsin is recognized

as a pioneer on welfare policy; Engler of Michigan is the

preeminent architect of a government downsizing agenda; Bush

of Texas crafted a pioneering tort reform bill; and Whitman

and Pataki are the driving force for supply-side tax cuts.

The Cato Institute's "Fiscal Policy Report Card on the

Governors" is unique in that it is overtly based on criteria

of fiscal restraint and tax reduction.  Conventional meas-

ures of governors' success are based on their level of gov-

ernment activism.  Under that measure of success, governors

who are willing to spend money to1 solve problems are touted

2

as the best and most successful.

The purpose of the "Fiscal Policy Report Card on Amer-

ica's Governors" is to assess the policies of each governor

from the taxpayers' perspective.  There are currently dozens

of prominent taxpayer rating systems for members of Con-

gress.  To our knowledge, this is the only objective analy-

sis of the fiscal performance of governors.

Limitations of the Report Card

This is the fourth "Fiscal Policy Report Card on Amer-

ica's Governors"; the first was published in 1992.  As we

have with each report card since the first, this year we

have made minor refinements in the methodology in order to

improve the results.  Nonetheless, at the outset we acknowl-

edge several unavoidable problems in grading the fiscal per-

formance of the governors.