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Virginia Governor Terry McAuliffe Earns a 'D' for 2015

The Cato Institute released their 13th biennial fiscal report card on America's governors yesterday. In the new “Fiscal Policy Report Card on America’s Governors,” Cato scholar Chris Edwards examines the tax and spending decisions made by U.S. governors since 2014.

Here's the report's executive summary:

"State governments have been in an expansionary phase in recent years. Even though U.S. economic growth since the last recession has been sluggish, general fund revenues of state governments have grown 33 percent since 2010. Some of the nation’s governors have used the growing revenues to expand spending programs, while others have pursued tax cuts and tax reforms.

"That is the backdrop to this year’s 13th biennial fiscal report card on the governors, which examines state budget actions since 2014. It uses statistical data to grade the governors on their taxing and spending records—governors who have cut taxes and spending the most receive the highest grades, while those who have increased taxes and spending the most receive the lowest grades.

"Five governors were awarded an “A” on this report: Paul LePage of Maine, Pat McCrory of North Carolina, Rick Scott of Florida, Doug Ducey of Arizona, and Mike Pence of Indiana. Ten governors were awarded an “F”: Robert Bentley of Alabama, Peter Shumlin of Vermont, Jerry Brown of California, David Ige of Hawaii, Dan Malloy of Connecticut, Dennis Daugaard of South Dakota, Brian Sandoval of Nevada, Kate Brown of Oregon, Jay Inslee of Washington, and Tom Wolf of Pennsylvania.

"With the growing revenues of recent years, most states have balanced their short-term budgets without major problems, but many states face large challenges ahead. Medicaid costs are rising, and federal aid for this huge health program will likely be reduced in coming years. At the same time, many states have high levels of unfunded liabilities in their pension and retiree health plans. Those factors will create pressure for states to raise taxes. Yet global economic competition demands that states improve their investment climates by cutting tax rates, particularly on businesses, entrepreneurs, and skilled workers.

"This report discusses fiscal policy trends and examines the tax and spending actions of each governor in detail. The hope is that the report encourages more state policymakers to follow the fiscal approaches of the top-scoring governors."

The entire 46-page report is here. Edwards' article, "Fiscal Grades for the Governors," about the report, which originally appeared at National Review Online yesterday, is here. Edwards post at Cato's blog, Cato@Liberty, is here. The NRO article is especially worth reading, and closes with the following advice:

"A possible recession is not the only storm cloud for state budgets. The states face rising health-care costs, and many states have large unfunded liabilities in their retirement plans. Liberals might think that these problems can be solved by more tax increases, but in today’s competitive economy businesses and skilled workers are footloose, so tax hikes will shrink the tax base and reduce economic growth.

"Look at Connecticut, which has suffered weak growth under the high taxes of “F” Governor Dan Malloy. General Electric essentially rebuked Malloy’s policies earlier this year when it moved its headquarters out of the state. GE head Jeff Immelt had warned that his company needed “a more pro-business environment.”

"We need more pro-business and pro-taxpayer environments in every state, and Cato’s “A” governors are leading the way on reforms."

With an overall score of 49, Virginia Governor Terry McAuliffe earned a grade of D (Table 1, page 4).

Table 2 (page 10) provides each state's debt per capita, pension liabilities per capita and OPEB liabilities per capita. Below are Virginia's per capita numbers along with the highest and lowest state's numbers:

  • Virginia's per capita debt was $7,919 (New York was highest at $17,584 and Wyoming was lowest at $3,420).
  • Virginia's pension liability was $2,902 per capita (New Jersey was highest at $12,656 and South Dakota was lowest at $778).
  • Virginia's average per capita OPEB liabilities are  $414 (Alaska's are highest at $20,699 and North Dakota's are lowest at $108).

The report contains two additional tables showing 1) spending and revenue changes, and 2) tax rate changes.

In addition, the report contains fiscal policy notes for each governor. Following are the notes for Governor McAuliffe (page 36):

"Terry McAuliffe is a businessman and long-time political operative. On this report, he scored below average on spending and above average on taxes. He has supported a smattering of tax in- creases and cuts. His best proposal has been to reduce the state’s corporate income tax rate from 6.0 to 5.75 percent. The governor said that he was motivated to cut the corporate tax because of North Carolina’s reforms: “In order to build the new Virginia economy, we have to make the commonwealth competitive in the global market.”97 McAuliffe has also proposed increasing re- search tax credits and increasing personal exemptions under the income tax. Unfortunately, the tax reductions have not moved through the legislature. The governor has appeared to tie the tax cuts to his proposal for Medicaid expansion, which the Republicans do not support."

Growls readers who are not satisfied with the fiscal performance score of Virginia Governor Terry McAuliffe are urged to write to Governor McAuliffe. Tell him Cato's "A" governors are leading the way to pro-business and pro-taxpayer environments. Click-on the following link:

E-mail Governor Terry McAuliffe here.

Growls readers who are concerned that Virginia is moving in the wrong fiscal direction are also urged to provide their comments to their state legislators. The following legislators represent Arlington County in the Virginia General Assembly: Senators (Adam Ebbin, Barbara Favola, or Janet Howell) and Delegates (Rip Sullivan, Patrick Hope, Alfonso Lopez, or Mark Levine). Contact information for members of the General Assembly can be found here  -- use one of the "quick links" to locate the senator and delegate who represent you.

And tell them ACTA sent you.

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