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North Dakota
Edward Schafer, Republican
Legislature: Republican
Took Office: 12/92
Grade: C
With his landslide victory in 1996, Edward Schafer be-
came the first GOP governor to be reelected in North Dakota
in nearly 40 years. Schafer was a private businessman who
had never before held public office. For the most part, his
governing philosophy has reflected that businessman's sensi-
bility. He has called for "rightsizing" and "streamlining"
state government. In his first three years in office, Scha-
fer succeeded in holding spending growth well below the
growth rates of population and personal income. However, in
1997 Schafer's proposed budget for the current biennium
called for increasing spending by 10 percent over the previ-
ous biennium. Schafer claimed such growth was necessary to
meet the state's "unmet needs." Referring to past budget
growth, he said, "We passed up spending in areas where we
should have invested in. . . . I feel this budget allows us
to catch up." Schafer's record on taxes has been less im-
pressive. Since North Dakota's personal income tax is cal-
culated as a straight percentage of federal income tax li-
ability, the 1993 Clinton income tax hike offered the North
Dakota treasury a bonus, more income tax revenue without
passing a state income tax hike. By not reducing the state
income tax rate, Schafer and the legislature allowed North
Dakotans to be hit with a stealth tax hike. The effective
top marginal state income tax rate climbed by nearly 30 per-
cent, from 4.3 percent to 5.5 percent. This while most
other states have been reducing their income tax rates and
while the state's more prosperous neighbor, South Dakota,
thrives without any income tax at all. In addition, Schafer
has raised the gas tax by 3 cents and the cigarette tax by
15 cents. Schafer has the right overall philosophy of
leaner, more responsive state government, but his execution
has sometimes fallen short.
Score
Grade
Rank
Overall Fiscal Policy Score
42
C
36
Spending Score
49
C
22
Revenue and Tax Rate Score
39
D
41
Amount
-0.8%
Average Annual Change in Real Per Capita Direct General Spending through 1996
-1.1%
Average Annual Change in Direct General Spending Per $1,000 Personal Income through 1996
2.4%
Average Annual Recommended Change in Real Per Capita General Fund Spending through 1999
0.1%
Average Annual Change in General Fund Spending Per $1,000 Personal Income 1996-98
2.1%
Average Annual Change in Real Per Capita Tax Revenue through 1997
-0.2%
Average Annual Change in Tax Revenue Per $1,000 Personal Income through 1997
0.8%
Average Annual Recommended Change in General Fund Revenue Per $1,000 Personal Income through 1999
1.1%
Average Annual Change in Real Per Capita General Fund Revenue 1996-98
0.4%
Average Annual Recommended Tax Changes as % of Prior Year's Spending through 1999
1.204
Change in Top Personal Income Tax Rate, proposed and/or enacted (% points)
0.0
Change in Top Corporate Income Tax Rate, proposed and/or enacted (% points)
16.0
1998 Combined Top Income Tax Rates (Personal plus Corporate) (*0.5)
0.0
Change in Sales Tax Rate, proposed and/or enacted (% points)
3.0
Change in Gas Tax Rate, proposed and/or enacted (cents per gallon) (*0.5)