Gov. Greg Abbott has been criticized by Texas Democrats for not spending billions of dollars in federal funds sent to the state through the CARES Act. His decision to hang onto the money, however, has helped earn him top marks from a pair of conservative organizations.
“It’s tempting for governors to spend that money, but at best, if you spend the money, states are kicking the can down the road, and at worst, they’re becoming dependent on a stream of federal revenues that are not going to be there next year,” said Donna Arduin, who has served as a top budget official for several Republican governors.
Arduin is a co-author of a new study ranking the nation’s governors, released Tuesday by Laffer Associates, a consulting firm run by Arduin and the prominent conservative economists Arthur Laffer and Stephen Moore, and the American Legislative Exchange Council (ALEC), a group that brings together legislators and private-sector companies to draft model legislation.
Their criteria include tax policy, overall state spending levels, handling of COVID-19 funds, union regulations, health and welfare spending, and school choice and other education policies.
Abbott ranks first among governors, according to the Laffer-ALEC study. “Obviously, Texas has been an economic powerhouse among the states,” said Jonathan Williams, ALEC’s chief economist.
Williams notes that both their top 10 and bottom 10 include Republicans and Democrats. While technically true, Republicans were generally rated much higher. Only two Republicans fall within the bottom 10 – Mike Dunleavy of Alaska and Jim Justice of West Virginia, both dinged for high per capita state spending rates.
Jared Polis of Colorado is the only Democrat who makes it into the top 10, benefiting from the state’s nearly 30-year-old limit on spending known as TABOR (for taxpayer bill of rights).
“Polis tried to return taxes when they hit the limit, although the legislature wouldn’t go along with it,” said Laffer, still best known for popularizing the Laffer curve, which emphasizes the “supply side” benefits of cutting taxes. “That’s one of the reasons we rate him so high, his effort to lower rates.”
Gov. Jared Polis of Colorado is the only Democrat who makes it into the ALEC-Laffer top 10 ranking for governors. (Jason Connolly/AFP/Getty Images/TNS)
The top-scoring Republicans earn their badges through tight fiscal stewardship. During a conference call with reporters, the study’s authors emphasized the value of governors keeping state economies open during the pandemic. ALEC has argued against further federal relief for states, saying it would effectively punish states that had prudently built up reserves.
“The states that have opened up their economies have solved their fiscal problems as well,” Moore said. “They go hand in hand.”
The study notes that some of the most restrictive states, such as New Jersey and New York, still have the highest death rates from COVID-19. But those states now have coronavirus positivity rates that are among the lowest in the nation. The report, which cuts off its COVID-19 numbers in August, doesn’t account for the current spike in cases.
Kristi Noem of South Dakota is rated the nation’s third-best governor, with the authors praising her decision to keep the state economy open “without significantly different COVID-19 case numbers.” But the Dakotas currently have the highest per-capita coronavirus case numbers in the country, with South Dakota’s caseload up 64 percent over the past two weeks.
Even as the authors spoke with reporters, Pete Ricketts of Nebraska – who ranks fourth in their ranking – was announcing new restrictions regarding hospitals, gatherings and indoor venue capacity, due to rising COVID-19 numbers in the state. (Rounding out the top five are Georgia's Brian Kemp in second place and Gary Herbert in fifth.)
Some governors who fare poorly in the Laffer-ALEC study have among the highest approval ratings in the country, thanks largely to more aggressive public health policies. Still, the report looks at economic numbers that span a much longer timeframe than the current crisis.
The authors note that average personal income growth rates have been significantly higher in recent decades in states that lack personal income taxes. They also delight in highlighting the idea that people are “voting with their feet,” moving from high tax states to those with lower rates. They point out that renting a large truck to drive from Los Angeles to Houston costs five times as much as heading in the other direction.
"It breaks my heart to see what's happening in my home state of Illinois," Moore said. Referring to a proposed graduated income tax that's on the November ballot there, he said, "In my opinion, that would be the last nail in the coffin for the great land of Lincoln.
For the past 13 years, ALEC and Laffer have been putting out “Rich States, Poor States,” a report that looks at measures that help or harm economic competitiveness. There’s considerable overlap among the states they rank highly and the governors they like best.
The only Democrats, aside from Polis, who break into their top 20 are Roy Cooper of North Carolina and Tony Evers of Wisconsin. In both cases, the authors credit policies put in place by their predecessors, which the governors haven’t been able to undo, thanks to Republican-controlled legislatures.
Some of the top-ranking Republicans, similarly, are praised for continuing low-tax, low-spending policies that predate their tenures. Asked to react to his top score, Abbott acknowledged his role as steward rather than progenitor of Texas’ tight fiscal policies.
“The Texas model emphasizes personal freedom and fiscal responsibility because it is the proven method to spark innovation, encourage economic prosperity, and create a better quality of life,” Abbott said.