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South Carolina

Mark Sanford, Republican

Legislature: Republican

First-Term Grade: B

rate of 7 percent down to 4.45 percent).

Mark Sanford spent his entire first term in

Unfortunately, Sanford lost that particular

a battle with a legislature controlled by his

battle--members of the legislature filibustered

own party. He has proposed budgets that have,

his income tax bill--but by 2005 he finally had

on average, reduced government in real per

a victory in the form of an income tax cut that

capita terms each year. The legislature, howev-

would slice the top tax rate to 5 percent (a 29

er, sent him back budgets that were much larg-

percent cut). He next set his eyes on a $151 mil-

er, spurring Sanford to finally veto the entire

lion income tax rebate and a property tax cut.

budget in 2006. That veto, like most of his 106

The latter, however, might be more appropri-

line-item vetoes the year before, was over-

ately called a tax shift since it was accompa-

turned by the legislature. Where Sanford really

nied by a sales tax increase. Overall, however,

excels is on tax policy. In February 2004 he

Sanford still ranks as one of America's best

unveiled a bill to reduce the state income tax

governors in terms of fiscal policy.

by 33 percent over 10 years (bringing the top

South Dakota

Mike Rounds, Republican

Legislature: Republican

First-Term Grade: B

sale alcohol tax increase (a 54 percent

Mike Rounds's grade is buoyed mainly by

increase), and a tax on telephone service. The

policies that were in existence before he came

legislature killed the alcohol tax but passed

to office. Gov. Bill Janklow's property tax cuts

the phone tax and a smaller-than-requested

are still so popular that they are untouchable

cigarette tax hike. While campaigning for gov-

by lawmakers. And the fact that South

ernor in 2002, Rounds proposed further

Dakota remains one of only a handful of

property tax relief and opposed an income

states that have no personal or corporate

tax. Yet he hasn't made a move toward cutting

income tax keeps that state's tax burdens low.

property taxes, and nobody seriously enter-

Rounds hasn't done much to jeopardize his

tains the notion of imposing an income tax in

state's low-tax status, but that doesn't mean

South Dakota. At least he and the legislature

he hasn't pursued some misguided policies.

have kept spending at a very tame pace. In all,

His 2004 budget included a cigarette tax hike

Rounds's first term was far from ambitious.

(almost doubling the tax per pack), a whole-

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