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Look To State Capitols Instead of Our Nation’s Capitol For Solutions

We now have 30 Republican Governors, and most of them are new to the office. There are 18 Republican governors who first took office in January 2011, 1 Republican governor who took office in January 2012, and 2 Republican governors who will take office in January 2013 out of 30 Republican governors. This column features how well the 18 have fared according to the Cato Institute Fiscal Policy Report Card on America’s Governors 2012. We encourage reading the full report. The report covers 48 governors. It excludes Mississippi’s governor because of his short time in office, and it excludes Alaska’s governor because of peculiarities in that state’s budget.

Cato Institute is especially tough on the governors with respect to tax rate score compared to spending score. The highest score awarded for tax rate score is 80, and the highest spending score is 96. Both of these scores were awarded to two of the 18 new Republican Governors. All of the 18 governors are diverse. They are not all from low population right to work southern states with a Republican legislature. What they do have in common are conservative leadership abilities that enable them to achieve and receive better scores.

Here are some key elements from this Cato report.

  • Tax Incentive Disease
    While some governors are pursuing broad-based tax reforms, others are trying to micromanage their states’ economies with “tax incentives.” These narrow, special-interest tax breaks have spread like a contagious disease over the last decade or so. Most states now offer dozens of tax incentives targeting favored types of businesses and activities.

    Tax incentives favor companies and industries that have good lobbyists or that politicians find sexy and appealing. Film production tax breaks are the poster child for tax incentive disease. These breaks were first enacted in the 1990s and are now provided by more than 40 states. In 15 states, these credits are “refundable,” meaning that businesses receive a cash benefit whether or not they actually paid any taxes. When governors bestow special benefits on film production, it affords them the chance to have press conferences with famous Hollywood stars. But such credits inefficiently tilt investment toward the film industry—which often features temporary jobs and fly-bynight companies—and away from more durable but unsexy industries that have to pay the full burden of state taxation.

  • Health Care Provider Taxes
    Like tax incentives, taxes on health care providers are a bad tax policy idea that has nonetheless spread across the country with bipartisan support. Forty-six states have implemented taxes on hospitals, nursing homes, and other health providers to fund their Medicaid programs. The purpose of these taxes is not to raise money from the health care industry, but for the states to grab more “matching funds” from Washington.

    An Oregon legislator added: “When people look at the hospital provider tax, they sometimes miss the key point . . . This is not a tax. It doesn’t cost them a penny. We’re making them completely harmless. For every dollar the hospitals get assessed, they get
    it right back. We just use the hospital tax to get the federal match.”

    But that is the Santa Claus theory of government. Of course these policies raise taxes — they raise federal taxes. All those “federal dollars” showered on state health programs ultimately have to come from taxpayers who live in the 50 states. There is no free lunch when the states spend federal money, but the current federal-state structure of Medicaid makes state policymakers act as if there is.

  • What takes place in these State Capitols over the next few years will be where to look for solutions instead of what takes place in Washington DC. Too many people in Washington DC adhere to the Santa Claus theory of Government.

    Below are listed the 18 Republican Governors in the order they placed. The numeric score is in ( ) next to the letter grade.

    1st Kansas
    Sam Brownback, Republican Legislature: Republican
    Grade: A (69) Took Office: January 2011
    Spending Score: 40
    Tax Rate Score: 66

    2nd Florida
    Rick Scott, Republican Legislature: Republican
    Grade: A (69) Took Office: January 2011
    Spending Score: 87
    Tax Rate Score: 51

    3rd Maine
    Paul LePage, Republican Legislature: Republican
    Grade: A (65) Took Office: January 2011
    Spending Score: 45
    Tax Rate Score: 59

    4th Pennsylvania
    Tom Corbett, Republican Legislature: Republican
    Grade: A (65) Took Office: January 2011
    Spending Score: 83
    Tax Rate Score: 51

    7th North Dakota
    Jack Dalrymple, Republican Legislature: Republican
    Grade: B (62) Took Office: December 2010
    Spending Score: 38
    Tax Rate Score: 80

    8th Alabama
    Robert Bentley, Republican Legislature: Republican
    Grade: B (61) Took Office: January 2011
    Spending Score: 80
    Tax Rate Score: 51

    10th Wyoming
    Matt Mead, Republican Legislature: Republican
    Grade: B (58) Took Office: January 2011
    Spending Score: 70
    Tax Rate Score: 51

    11th Ohio
    John Kasich, Republican Legislature: Republican
    Grade: B (58) Took Office: January 2011
    Spending Score: 61
    Tax Rate Score: 56

    13th Michigan
    Rick Snyder, Republican Legislature: Republican
    Grade: B (57) Took Office: January 2011
    Spending Score: 60
    Tax Rate Score: 53

    15th Wisconsin
    Scott Walker, Republican Legislature: Divided
    Grade: B (57) Took Office: January 2011
    Spending Score: 53
    Tax Rate Score: 51

    16th Nevada
    Brian Sandoval, Republican Legislature: Democratic
    Grade: B (57) Took Office: January 2011
    Spending Score: 96
    Tax Rate Score: 51

    17th Iowa
    Terry Branstad, Republican Legislature: Divided
    Grade: B (55) Took Office: January 2011
    Spending Score: 57
    Tax Rate Score: 51

    18th South Carolina
    Nikki Haley, Republican Legislature: Republican
    Grade: B (55) Took Office: January 2011
    Spending Score: 39
    Tax Rate Score: 51

    19th Oklahoma
    Mary Fallin, Republican Legislature: Republican
    Grade: B (55) Took Office: January 2011
    Spending Score: 51
    Tax Rate Score: 55

    22nd New Mexico
    Susana Martinez, Republican Legislature: Democratic
    Grade: C (54) Took Office: January 2011
    Spending Score: 48
    Tax Rate Score: 51

    24th Georgia
    Nathan Deal, Republican Legislature: Republican
    Grade: C (53) Took Office: January 2011
    Spending Score: 53
    Tax Rate Score: 51

    25th South Dakota
    Dennis Daugaard, Republican Legislature: Republican
    Grade: C (53) Took Office: January 2011
    Spending Score: 55
    Tax Rate Score: 51

    40th Tennessee
    Bill Haslam, Republican Legislature: Republican
    Grade: D (43) Took Office: January 2011
    Spending Score: 24
    Tax Rate Score: 51

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

    4 COMMENTS

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    4 COMMENTS

    1. I agree, PIlgrim. We should roll our lives back to 1850, when the national government mattered naught. Oh, don’t worry, they’ll overreach and come after us anyway, but it will be on our turf. If not as we wanted them, the next four years will still be interesting.

      • I wasn’t intending to slight the 9 states who had a Republican governor first take office before January 2011. Virginia placed 31st on the list, and Bob McDonnell scored a C (50). I’m not sure if Virginia’s next governor will be included in the 2014 Cato report because of his short time in office.

    1. I agree, PIlgrim. We should roll our lives back to 1850, when the national government mattered naught. Oh, don’t worry, they’ll overreach and come after us anyway, but it will be on our turf. If not as we wanted them, the next four years will still be interesting.

      • I wasn’t intending to slight the 9 states who had a Republican governor first take office before January 2011. Virginia placed 31st on the list, and Bob McDonnell scored a C (50). I’m not sure if Virginia’s next governor will be included in the 2014 Cato report because of his short time in office.

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