Cato: Hogan Gets A “C” For Fiscal Conservatism

The Cato Institute, a public policy research foundation focused on limited government, has released its white paper, “Fiscal Policy Report Card on America’s Governors 2016.” Cato indicates in the report’s executive summary that it used statistical data to grade all U.S. governors based upon their taxing and spending records, with governors who cut taxes and spending the most receiving the highest grades, and those who increased taxes and spending the most receiving the lowest grades. Governor Larry Hogan fell more or less right in the middle of the ranking, receiving a “C,” and ranking 20th on the list with a score of 54. (The scores ranged from 75 to 24.)

The report contains interesting data on state spending and taxation nationwide. Not surprisingly, Cato reports that the largest component of state and local government spending is employee compensation, accounting for 53 percent of all spending. Overall state general fund spending has steadily been increasing since 2010, growing 4.1 to 4.6 percent from years 2013 to 2015, and 5.6 percent in 2016. It states that increasing Medicaid costs are the largest component of state budgets and are a key driver in spending growth, accounting for 26 percent of total spending.

On the revenue side, the states enacted a net tax increase in 2016. Most tax increases were on cigarettes and gas: a dozen states have enacted cigarette tax increases since 2014, and about half of the states have increased their gas taxes since 2013.

From the report:

Larry Hogan won an upset victory in November 2014 in this Democratic-leaning state. Governor Hogan has gained a high favorability rating in polls, and he has nudged Democrats in the legislature toward spending restraint and tax relief. In one popular move, he repealed the “rain tax,” which was a new stormwater fee enacted by the prior governor. Another popular move by Hogan has been to use his executive authority to cut highway tolls and fees for many state services.

In 2016 Hogan proposed a package of tax cuts for families and businesses. The plan would have reduced taxes on seniors and low-income families, and also reduced business fees. Furthermore, it would have cut taxes on manufacturers, but in a complex way. New manufacturing firms in some regions would be exempt from the income tax for 10 years, and employees of those firms would also get tax breaks. The legislature did not pass the plan, and such micromanagement of tax relief is misguided. Hogan should instead focus on cutting taxes broadly by dropping Maryland’s 8.25 percent corporate income tax rate.

 

The five highest-scoring governors were Paul LePage of Maine, Pat McCrory of North Carolina, Rick Scott of Florida, Doug Ducey of Arizona, and vice presidential candidate Mike Pence of Indiana.

The full  report can be viewed here.

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