Fiscal Policy Report Card on America’s Governors 2024
Oct 15, 2024
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Chris Edwards, a scholar from the Cato Institute specializing in fiscal policy, dives into the Fiscal Policy Report Card on America’s Governors for 2024. He evaluates how governors' tax and spending choices impact their grades, revealing a divide between fiscally conservative and liberal approaches. Edwards highlights notable tax reforms by women governors like Kim Reynolds and Sarah Huckabee Sanders. The analysis further uncovers trends in budget strategies, the shift to flat tax systems, and the role of school choice in state fiscal health.
The Fiscal Policy Report Card evaluates governors by assessing their tax cuts and spending decisions independent of legislative influences.
Universal school choice programs are emerging as a cost-effective alternative to traditional education funding, promoting fiscal efficiency and competition among states.
Deep dives
Methodology of Fiscal Ratings
The report card evaluates governors based on their tax and spending decisions, providing clear rankings that separate their influence from the legislature. A governor's performance is assessed by examining their proposed budget spending increases, tax cuts, and veto decisions without attributing any influence to legislative actions. This approach allows for a nuanced understanding of each governor's fiscal policy choices, with notable examples highlighting both successful and struggling governors. For instance, South Dakota’s Kristi Noem maintained fiscal conservatism by keeping state spending flat while reducing sales tax, exemplifying effective governance despite external legislative pressures.
Trends in School Choice and Income Tax Cuts
School choice programs have gained popularity across states, driving fiscal efficiency by allowing for budget savings when compared to traditional public education funding. These universal programs often allocate fewer resources per student while providing alternatives, encouraging competition among states to improve educational choice. Additionally, a significant number of governors have implemented personal income tax cuts, transitioning from multi-rate to flat tax systems that simplify taxation and can stimulate interstate migration towards low-tax states. Overall, this creates a virtuous cycle where states aspire to adopt effective fiscal policies by observing successful models established by their peers.
Long-term Fiscal Conservatism among States
Certain states exhibit enduring trends of fiscal conservatism, often reflected in the consistent performance of their governors over time. For example, Florida and New Hampshire maintain low spending levels and lack a personal income tax, showcasing their commitment to fiscal responsibility. Comparisons between states reveal stark contrasts in spending and bureaucratic staffing, with New York spending nearly twice as much as Florida on state and local services. These systemic differences suggest that the electorate in these states values fiscal conservatism, contributing to long-term governance strategies that prioritize reduced taxes and spending.
How did your governor perform on various fiscal policy metrics? Cato's Chris Edwards details the Fiscal Policy Report Card on America’s Governors 2024.