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do not yet have

the complete Census Bureau data with which

to fully assess

changes that have been implemented by the

seven governors

who have taken office since 1995.  There-

fore, for those

seven governors we rely strictly on general

fund budget and

revenue data and tax rate changes.

Grading Procedure

We examine 14 policy variables: 4 for spending, 5 for

revenue, and 5 for tax rates (2 of which have a weight of

only one-half).  However, for the seven governors who have

taken office since 1995, two of the spending variables and

two of the revenue variables--the ones that are based on the

Census Bureau data--are excluded.

For each variable we use a procedure to standardize the

results, such that the governor with the worst score (e.g.,

largest increase) receives a zero and the governor with the

best score (e.g., largest reduction or smallest increase) a

100.  We then assign an equal weight to each variable (with

the exception of the two tax rate variables that are

weighted at only one-half each, because we view them as of

less fiscal importance) and average the scores to obtain an

overall fiscal policy grade for each governor.  We obtain

separate grades for spending and for taxes by averaging the

scores earned in each category.

Policy Variables Examined

One objective of our analysis is to present a compre-

hensive picture of the budget and tax changes recommended

and approved by each governor.  To make meaningful compari-

sons of the levels of spending and revenue in the states, we

must first control for the substantial differences in the

size of the states' populations and economies.  To do that,

government spending and tax figures are typically expressed

as a ratio of one of two economic variables: population and

personal income.  All but one of the revenue and spending

variables we use in this report are expressed in this way,

that is, per capita or per $1,000 of personal income.  (The

one exception is the variable for recommended tax cuts or

increases as a percentage of prior year's expenditures.)

Adjusting for the size of state economies also allows

us to make more meaningful comparisons of the growth of

revenue and spending in the states.  For example, assume

that a tax rate reduction in a particular state fosters

higher economic growth, as we would expect.  The growth of

state revenue collections should rise as a result of that