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Page 48

Michigan

John Engler, Republican

Legislature: Divided

Took Office: 1/91

Grade: B

After two terms in office, John Engler remains one of

the nation's most fiscally frugal governors.  He has also

been a preeminent policy pioneer at the state level in areas

ranging from welfare reform, to charter schools, to privati-

zation, to growth-oriented tax reduction.  There is almost

nothing not to admire about Engler's eight-year record.  The

$1.5 billion deficit he inherited has been erased and is now

a $500 million surplus.  The state government workforce was

cut by an impressive 5,700 workers between 1991 and 1997, an

8 percent drop.  The state unemployment rate, which was one

of the highest in the nation in the 1970s and 1980s, has

been below the national average for the past four years, and

Michigan firms now complain of a labor shortage.  Welfare

rolls have dropped by more than 80,000 since 1994.  While

the economy has surged, the overall state budget has grown

by less than inflation.  There have been 24 tax cuts, in-

cluding reductions in the personal income tax, the state un-

employment tax, and Michigan's notoriously high property

taxes.  The total savings over eight years to Michigan busi-

nesses and residents: $9 billion.  And Engler is not through

with his crusade to make Michigan more taxpayer friendly:

his latest budget calls for phasing in a half percentage

point reduction in the income tax rates.  The one major

blemish on the Engler record has been an infatuation with

pumping tax dollars into trendy industrial policy initia-

tives that mainly benefit big business.  Still the Michigan

Miracle under Engler's tenure shows no signs of abating.  It

is no wonder that he is considered a top-tier contender for

the presidency in 2000.

Score

Grade

Rank

Overall Fiscal Policy Score

59

B

9

Spending Score

69

B

7

Revenue and Tax Rate Score

54

B

10

Amount

1.2%

Average Annual Change in Real Per Capita Direct General Spending through 1996

-0.8%

Average Annual Change in Direct General Spending Per $1,000 Personal Income through 1996

-1.5%

Average Annual Recommended Change in Real Per Capita General Fund Spending through 1999

-4.8%

Average Annual Change in General Fund Spending Per $1,000 Personal Income 1996-98

1.8%

Average Annual Change in Real Per Capita Tax Revenue through 1997

-0.1%

Average Annual Change in Tax Revenue Per $1,000 Personal Income through 1997

-3.4%

Average Annual Recommended Change in General Fund Revenue Per $1,000 Personal Income through 1999

-3.5%

Average Annual Change in Real Per Capita General Fund Revenue 1996-98

-0.6%

Average Annual Recommended Tax Changes as % of Prior Year's Spending through 1999

-0.2

Change in Top Personal Income Tax Rate, proposed and/or enacted (% points)

-0.05

Change in Top Corporate Income Tax Rate, proposed and/or enacted (% points)

6.7

1998 Combined Top Income Tax Rates (Personal plus Corporate) (*0.5)

2.0

Change in Sales Tax Rate, proposed and/or enacted (% points)

4.0

Change in Gas Tax Rate, proposed and/or enacted (cents per gallon) (*0.5)