Hi, I’m Jodi and I’m a Spendaholic

October 23, 2008

This year’s “Fiscal Policy Report Card on America’s Governors,” just issued by the libertarian Cato Institute, is not kind to Connecticut’s chief executive.

The document “grades the governors on their fiscal performance from a limited-government perspective.” Taxpayers who have been paying attention the last few years will not be surprised to learn that author Chris Edwards gave Governor M. Jodi Rell a grade of F.

On both spending and taxes, Rell performed well below the average of the 46 governors studied. (Alaska’s energy-based revenue excluded Sarah Palin from the analysis; the governors of Kentucky, Louisiana, and New York took office this year, so they were not scrutinized.) Cato didn’t examine Connecticut’s expenditures in minute detail, but the numbers on the four budgets approved by the Rell administration are downright depressing. Average annual growth has been 6.28 percent -- a spending surge that is impossible to justify, given a stagnant population and falling enrollment in the state’s government schools.

With declining household income, driven by fleeing businesses and lousy job opportunities, Rell hasn’t had enough money for her spending schemes. So she’s shepherded a number of tax hikes through a legislature eager to approve them, and in 2007, even pushed for an increase in the state’s income tax. (Unexpected revenue growth made the hike “unnecessary.”)

Jodi isn’t alone in her affinity for Big Government. Seven other governors -- five Democrats and two Republicans -- also have severe tax-and-spend habits. Fellow flunkers can be found in every corner of the republic: Idaho, Alabama, Oregon, New Jersey, Iowa, Illinois, and Maryland. But among New England’s governors, Rell wears the only dunce cap. New Hampshire’s John Lynch (a Democrat) and Vermont’s James Douglas (a Republican), received Ds. Deval Patrick, a Massachusetts Democrat and good buddy of the incoming community-organizer-in-chief, earned a C. Maine’s John Baldacci (a Democrat) and Rhode Island’s Donald Carcieri (a Republican), the best performers in the region, each scored a B.

Clearly, Jodi has a lot to learn. Her tutors should include the governors of Florida, South Carolina, and West Virginia, who received As.

Charlie Crist, the Sunshine State’s chief executive and at one time a possible Republican vice presidential pick, hasn’t just talked about property-tax reform -- he’s delivered. And on spending, Edwards notes, Crist “has promoted restraint -- his two budgets have proposed roughly flat spending and he has not hesitated in vetoing wasteful pork projects.”

The Palmetto State’s Mark Sanford is another fiscal star. (His performance has made him a national figure in the GOP.) Sanford has cut business, sales, and income taxes, and pushed for a real spending cap that would limit budget growth to the combined rates of inflation and population growth.

Democrat Joe Manchin of West Virginia “has enacted probably the most pro-growth tax reforms of any governor.” Cutting business-related taxes has been his priority, and Edwards considers Manchin’s spending record “very restrained.”

Unfortunately, most governors eschew the sound decisionmaking of Crist, Sanford, and Manchin and pursue Rellesque policies. Edwards warns that from coast to coast, public-employee giveaways, socialized healthcare, and massive debt are creating a “state fiscal crisis.” Medicaid expenses have been growing “at more than 7 percent annually this decade,” a trend that shows no sign of stopping. Unfunded pension and healthcare obligations for state employees run into the trillions of dollars. (In Connecticut, the figure is at least $40 billion.) And state debt has seen a “remarkable expansion” in recent years. Between 2000 and 2007, tax-supported borrowing by state governments surged from $230 billion to $398 billion, an increase of 73 percent. (Connecticut’s debt, both per capita and adjusted for personal income, is among the highest. Rell has done nothing to address this bill.) “Government debt is simply taxation that is imposed on the next generation,” explains Edwards, “and it is a particularly costly and non-transparent form of taxation.”

As for more visible taxes, cuts are desperately needed. “Few governors seem to recognize the importance of cutting marginal tax rates and pursuing broad business tax reductions,” laments Edwards. “Such supply side tax cuts are needed to respond to an increasingly competitive world economy, but that message has not yet penetrated most state capitols.” (It certainly hasn’t penetrated JodiWorld, a place where citizens appear willing to accept the nation’s highest tax burden without much complaint.)

“The states need a new generation of reform-minded leaders on fiscal matters,” Edwards concludes. It looks like Rell will seek another term in 2010. Her Democratic opponent will surely be no better on spending and taxes. Anybody game for a primary challenge?

D. Dowd Muska is a writer, commentator and lecturer. His website is www.dowdmuska.com.

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