10-2-14 – CATO Rates Governors. Shumlin Gets “D”

Posted by Rob Roper

The CATO Institute just released its 2014 Fiscal Policy Report Card on America’s Governors. The report grades governors on their fiscal responsibility from a small government/free market perspective, taking into account seven variables regarding spending, taxing, and revenues. In a nutshell, those who cut taxes and reduced spending did well. Those who didn’t, not so much.

Overall, four governors got A’s and eight got F’s. Our own Peter Shumlin just squeaked over the line and earned a D. His summary reads:

Peter Shumlin, Democrat

Legislature: Democratic

Grade: D

Took Office: January 2011

Governor Shumlin scores quite poorly on spending and taxes. In 2013 he signed into law an increase in fuel taxes, and in 2014 he approved an increase in cigarette taxes of 13 cents per pack. To his credit, he opposed an income tax increase passed by the Vermont House in 2013.

Shumlin’s budgets have proposed spending increases of more than 5 percent annually the past three years. On health care, he signed a 2011 law creating initial steps for the “first single-payer system in America.” By 2014, however, the plan’s implementation was falling behind schedule and political support was waning.

As for what’s possible elsewhere, here’s what’s happening in states where governors received A’s….

■ Pat McCrory of North Carolina signed into law a major tax reform package in 2013, which replaced three individual income tax rates (6.0, 7.0, and 7.75 percent) with a single rate of 5.8 percent, falling to 5.75 percent in 2015. The package also cut the corporate tax rate, repealed the estate tax, and broadened the sales tax base. These reforms have substantially improved North Carolina’s tax competitiveness. Governor McCrory approved further tax cuts in 2014 and he has kept a tight rein on spending.

■ Sam Brownback of Kansas has spear- headed major tax reforms. In 2012 he signed into law a package that reduced the number of individual income tax brackets from three to two and cut the top tax rate from 6.45 to 4.9 percent. The reform also increased the standard deduction, reduced taxes on small businesses, and repealed numerous narrow tax breaks. Brownback approved additional changes in 2013, including further income tax rate cuts, broadening the income tax base, and increasing the sales tax rate. The governor has also been a frugal budgeter since 2012, overseeing just small increases in general fund spending.

■ Paul LePage of Maine pushed through major income tax cuts in 2011, and he has supported further tax and spending reforms in recent years. General fund spending has been roughly flat the past three years, and state government employment has fallen. LePage signed into law cost-cutting reforms to welfare and health care programs. In 2013 LePage vetoed tax hikes passed by the legislature, but he was overridden. This year LePage proposed matching $100 million in new tax cuts with $100 million in spending cuts.

■ Mike Pence of Indiana has been a champion tax cutter, and he has held the line on spending. He signed into law a 2013 tax package that cut the individual income tax rate from 3.4 to 3.23 percent and repealed the state’s inheritance tax. In 2014 he approved cuts to the corporate income tax rate and to business property taxes, both of which will be phased in over time.

{ 2 comments… read them below or add one }

Ivan Smith October 3, 2014 at 12:33 am

Kansas has a deficit, and it’s economy is suffering in spite of the tax cutting.
There is irony in the fact that it gets an A.

Reply

jim bulmer October 3, 2014 at 9:45 pm

Shumlin has a fiscal problem? His approach is simple – spend as much as you want reguardless of what the nea sayers say, then face up to reality – THE MONEY JUST AIN’T THERE!!!!! All the more reason to vote REPUBLICAN in November. THROW THE BUMS OUT!!!!!

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The Ethan Allen Institute is Vermont’s free-market public policy research and education organization. Founded in 1993, we are one of fifty-plus similar but independent state-level, public policy organizations around the country which exchange ideas and information through the State Policy Network.
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