the Governors

There are currently 14 Republicans who have officially declared that they are running for President, and Gov. Scott Walker and Gov. John Kasich are expected to join them. Most of them had been or currently are the Governor of a State. The other eight declared candidates include five who had been or currently are United States Senators and three from the private sector who have never been elected into office.

There is another way to differentiate these 16, and that is to observe which wing of the Republican party they represent. There is the Bush big government wing of the party represented by five governors and two senators. There is the conservative wing represented by three governors and three senators. There is some uncertainty by the Bush wing and conservative wing as to which wing the three from the private sector represent.

The CATO Institute prepares a Governor’s Report Card every two years, and the following are excerpts from these Report Cards. It’s not enough to hear what they these candidates are saying. We need to refresh our memory of what CATO reports about them as governor. We trust that you can read and decide for yourself the three in the conservative wing and the five in the Bush big government wing of the Republican Party.

Wisconsin
Scott Walker, Republican Legislature: Republican
Grade: B Took Office: January 2011
Governor Walker has reformed retirement plans and union rules for government workers. Act 10, passed in 2011, imposed restrictions on collective bargaining and required increases in worker contributions for health and pension plans. Those changes are saving money at both the state and local levels of government. In addition, Walker signed a law requiring a two-thirds supermajority in both legislative chambers to raise income, sales, or franchise tax rates. He approved individual income tax cuts in 2013, and followed up with further cuts in 2014. Wisconsin’s five income tax rates were reduced to four lower rates, going from 4.6, 6.15, 6.5, 6.75, and 7.75 percent to 4.4, 5.84, 6.27, and 7.65 percent. Those cuts, and other income tax reductions, will save Wisconsin residents more than $500 million annually. Walker has also approved substantial property tax relief.

He did not score as well on spending. His proposed increases have been a bit higher than the
average governor, and actual spending increased 4.2 percent in 2013 and an estimated 4.8 percent
in 2014. His strategy on Medicaid under the ACA is to provide broader coverage without increasing the overall cost. Wisconsin’s program already covered people with incomes up to the level required by the ACA. Wisconsin had previously capped the number of enrollees in Medicaid, which created a waiting list. Walker shifted some current enrollees with incomes above the poverty level to the federal health exchange and used the savings to cover new individuals under Medicaid.

Texas
Rick Perry, Republican Legislature: Republican
Grade: B Took Office: December 2000
In 2006 Governor Perry approved a business tax overhaul that replaced the corporate franchise
tax with a modified gross receipts tax called the “margin tax.” The new tax hit 180,000
additional businesses and greatly increased state-level taxes. The added state revenues were
used to reduce local property taxes, but the overall effect of the package was to centralize government power in the state.

Nonetheless, Perry has proposed reforms to reduce the harm caused by taxes. In 2013 he signed into law tax cuts of more than $700 million annually. The cuts included extending a $1 million exemption for small business under the margin tax, a temporary cut to the margin tax rate, and various sales tax exemptions for business purchases.

The way the numbers add up for this report, Perry scored well on spending. But looking at his whole tenure since 2000, the Texas general fund budget has gyrated substantially over the
biennium budget cycles. Also, total state spending has risen more quickly than general fund
spending, with growth coming in at an annual average of 5 percent since 2000. Perry has proposed
sound fiscal principles in his “Texas Budget Compact,” including budget transparency, a
constitutional limit on spending growth, opposition to new taxes, a strong rainy-day fund, and
cutting unneeded spending.

Louisiana
Bobby Jindal, Republican Legislature: Republican
Grade: B Took Office: January 2008
Governor Jindal proposed a dramatic tax overhaul in 2013, which would have eliminated personal and corporate income taxes in exchange for increasing the sales tax rate and broadening the sales tax base. The overall plan was revenue neutral, but would have simplified the tax system and encouraged economic growth. Unfortunately, he had to put the plan aside because of some design flaws and resistance to such a large-scale policy change. Hopefully, Louisiana will revisit tax reform in the near future.

Jindal has been tight-fisted on spending. His recent budgets have proposed spending increases
averaging just 1.9 percent a year. State government employment is down 18 percent since he came to office. He also opposes Medicaid expansion under the ACA.

New Jersey
Chris Christie, Republican Legislature: Democratic
Grade: B Took Office: January 2010
Governor Christie gained national prominence as a result of his battles with public employee
unions. He has tried to bring some fiscal sanity to Trenton, although he scores better on taxes
than spending. He signed into law substantial business tax cuts in 2011 and proposed a 10 percent
across-the-board income tax cut in 2012. He has repeatedly vetoed tax hikes on higher earners
passed by the legislature, insisting in 2014 that “income taxes being raised in any way, shape
or form will not happen while I’m governor—under no circumstances.” Like many governors,
however, he has a weakness for handing out narrow tax breaks and subsidies to businesses.

New Jersey has a large, unfunded pension liability that needs further reforms. A recent report
by Standard and Poor’s shows that New Jersey has the fifth-highest debt and unfunded pension
liabilities per capita in the nation. This year New Jersey was left with a substantial budget gap as a result of bad revenue projections, which prompted Christie to seek a delay on $2.4 billion
of pension payments. He has approved Medicaid expansion under the ACA, which will add to
New Jersey’s budget problems down the road.

Florida
Jeb Bush, Republican Legislature: Republican
Final-Term Grade: C
Final Overall Grade: B
Jeb Bush leaves office with a well-deserved reputation as one of the most aggressive taxcutting
governors in the nation. He has proposed and signed into law a tax cut virtually every year of his tenure, ranging from cuts in property taxes to a phaseout of the intangibles tax—a levy on certain financial assets like stocks and bonds that makes Florida’s tax code hostile to capital formation. It is the strength of his tax cutting that has sustained his grade through the past eight years; he received an A on this report card for his first term. What has finally caused his grade to drop to a C this term was explosive growth in state spending, spurred largely by some big-spending schemes proposed by Bush himself, such as the grant of $310 million in taxpayer money to the Scripps Institute to lure it to Florida from La Jolla, California. Real per capita general fund spending has grown an annual average of 5 percent over the past two years, making Bush one of the biggest spending Republican governors in this report card. Bush is seen by many as an attractive candidate for higher office. He certainly has a solid record on taxes. But the one glaring question that his second-term budget record has produced is whether he’s turned into a biggovernment Republican.

Ohio
John Kasich, Republican Legislature: Republican
Grade: D Took Office: January 2011

Governor Kasich scored higher on taxes than on spending, as he has proposed and signed
into law numerous tax cuts. The biggest reform was a package in 2013 that cut income taxes and
increased sales taxes. It cut individual income tax rates by 10 percent, with the top rate falling
from 5.93 to 5.33 percent by 2015. The reform also exempted a portion of small business income
from taxation. To partly offset the revenue loss, the plan raised the sales tax rate from 5.5 to 5.75 percent and broadened the sales tax base. This was a sensible pro-growth reform package, which cut Ohio taxes by about $1.2 billion annually.

Kasich followed up this success with another round of tax cuts in 2014. The income tax rate
reductions were accelerated and personal exemptions were increased. However, he also proposed
tax increases in 2014, including an increase on cigarettes of 60 cents per pack, an increase
in the Commercial Activities Tax, and an increase in taxes on the shale oil and gas industry.
Those increases would be swapped for further reductions in individual income taxes. His score was dragged down by his spending increases. The general-fund budget grew an estimated 13.6 percent in 2014. State government employment is up more than 3 percent since Kasich took office.

Governor Kasich pushed to expand Medicaid under the ACA, which the legislature opposed.
Indeed, the legislature passed budget language prohibiting Kasich from expanding Medicaid
unilaterally, but the governor vetoed that item and went ahead and expanded Medicaid anyway.

New York
George Pataki, Republican Legislature: Divided
Final-Term Grade: D

Final Overall Grade: C
George Pataki started out as a tax-cutting, small-government governor. He ended up as a big spender seemingly hell-bent on overturning anything good he had done in his first term. Among his leading first-term accomplishments were his $3 billion, 25 percent income tax cut and a substantial cut in the capital gains tax and inheritance tax. But by his second term, he was proposing multi-billion dollar bond initiatives for roads and pork-barrel environmental projects. He raised the cigarette tax to $1.50 per pack. He raised taxes, on net, by more than $3 billion his final term in office. This year, perhaps in anticipation of a run for the GOP presidential nomination, Pataki tried to convince people that the tax cutter they knew and loved was back. But most of the tax cuts he proposed wouldn’t even kick in until after he’s left office and are too small to reverse the billions of tax hikes he’s already inflicted. Meanwhile, general fund spending has ballooned by more than 25 percent in the Empire State during Pataki’s final term. If he runs for the Republican presidential nomination on a record like that, it’s going to be very hard for him to convince the small-government advocates who vote in the GOP presidential primaries that he’s still one of them.

Arkansas
Mike Huckabee, Republican Legislature: Democratic
Final-Term Grade: F

Final Overall Grade: D
Thanks to a final term grade of F, Huckabee earns an overall grade of D for his entire governorship. Like many Republicans, his grades dropped the longer he stayed in office. In his first few years, he fought hard for a sweeping $70 million tax cut package that was the first broad-based tax cut in the state in more than 20 years. He even signed a bill to cut the state’s 6 percent capital gains tax—a significant progrowth accomplishment. But nine days after being reelected in 2002, he proposed a sales tax increase to cover a budget deficit caused partly by large spending increases that he proposed and approved, including an expansion in Medicare eligibility that Huckabee made a centerpiece of his 1997 agenda. He agreed to a 3 percent income tax “surcharge” and a 25-cent cigarette tax increase. In response to a court order to increase spending on education, Huckabee proposed another sales tax increase.

Huckabee wants to run for the GOP presidential nomination next year. He’s already been hailed as a viable big-government conservative candidate by some. That seems about right: Huckabee’s leadership has left taxpayers in Arkansas much worse off.

pilgrim

I am retired after 36 years of being a state of Indiana employee. I enjoy writing and reading conservative blogs.