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Partners:
Good Times for Governors

By David S. Broder
Washington Post Staff Writer
Sunday, August 8, 1999; Page A2

ST. LOUIS, Aug. 7 In the first of his four terms as governor of Iowa, from 1983 to 1987, Republican Terry E. Branstad saw 68 banks close and land values drop 65 percent.

He was called home from his first meeting with fellow governors because a farmer facing foreclosure had shot and killed a prominent banker who held the mortgage on his land. A staunch conservative, Branstad was forced to ask the legislature for a 1-cent increase in the sales tax, just to keep schools open and essential government services going.

On Friday, when Branstad paid a brief visit to his former colleagues, gathering here for the annual meeting of the National Governors' Association (NGA), he noted that his successor, Democrat Tom Vilsack, has $800 million in cumulative budget surpluses and a "rainy day" fund of $450 million to cushion the current farm downturn.

"It is a great time to be a governor," Branstad said.

His comment applies to virtually all state executives. Gloria Timmer of the National Association of State Budget Officers said yesterday that the surpluses in state budgets are at an all-time high--averaging 9 percent of the latest state spending blueprints. "This is literally the best fiscal situation we have seen," she said.

But Timmer added that governors and legislatures "are being fairly cautious" about boosting spending and handing out tax cuts, remembering the bind they were in both a decade ago and in the early 1980s, when the economy was in a slump. A report issued earlier this summer by Timmer's organization and the NGA said governors were proposing spending increases of 4.2 percent for fiscal 2000, down from 5.8 percent in the current fiscal year.

Proposed tax reductions for next year total $3.8 billion, less than this year, but mark the sixth straight year of reductions, which have totaled $25.9 billion since fiscal 1994.

Not only are the governors enjoying prosperity, they are flexing their political muscles on Capitol Hill and in presidential politics.

Delaware Gov. Thomas R. Carper (D), the chairman of the NGA, noted at a news conference today that the association had persuaded Congress to pass an "ed-flex" bill allowing states much more discretion in the use of federal education aid and had blocked a move by the Clinton administration to recoup some of the billions of dollars states won last year when they settled their lawsuits against tobacco companies.

Just this week, President Clinton signed an executive order restraining federal agencies from preempting state regulations without consultation with governors and local officials.

"Working together on a bipartisan basis, we have been remarkably successful," Carper said. And Republicans, who occupy 31 of the 50 governorships, have helped one of their number, Texas Gov. George W. Bush, establish a commanding early lead in the race for the GOP presidential nomination in 2000.

The financial statistics translate into very good news for individual governors. Missouri Gov. Mel Carnahan (D), a challenger to Sen. John D. Ashcroft (R) in 2000, recently signed a $202 million tax cut, including the first boost in the personal exemption in more than 50 years. Carnahan can boast of $1.3 billion in tax cuts since his second term began in 1997--and will be mailing out rebates this fall and again in the election year.

Carper just signed a $69 million cut in Delaware property taxes, including an increase in the exemption--taking all families below the poverty line off the rolls and allowing homeowners over 65 to pay half what they would otherwise owe, which should help local communities pass bond issues by reducing the opposition from voters who no longer have children in schools. Carper's $2 billion budget had a $356 million surplus before the tax cut was voted.

Utah Gov. Mike Leavitt (R), who will succeed Carper as NGA chairman, is also sitting pretty. His state has not had to trim spending since the early 1980s or raise taxes in the past 12 years. Over the past six years, as the population has boomed, the state budget has nearly doubled, but taxes have been cut by a cumulative $1 billion, even while funding a 10-year, $2.8 billion freeway rebuilding and expansion program.

Ohio Gov. Bob Taft (R), in office only seven months, has handed out $1 billion to school districts in his state to repair old schools and build new ones.

In Pennsylvania, where the legislature and governor often have battled well into the autumn over how to slice a shrinking pie, this year Gov. Tom Ridge (R) signed a $19 billion budget passed by overwhelming bipartisan margins eight weeks before the June 30 deadline.

In Michigan, Gov. John Engler (R) has promised business a complete phaseout over the next two decades of a levy on revenue and payrolls currently costing them $2.7 billion a year.

There are similar stories across the country. In fact, things are so rosy that Stateline.org, the Web site that monitors state governments, reported that legislatures in 22 states have voted themselves pay increases this year. That's something politicians don't risk unless they already have made their constituents' wallets fatter.

There are controversies still. Maine Gov. Angus King, an independent reelected to his second term last year, ran into criticism for boosting the gasoline tax 3 cents a gallon when the state was showing a record surplus of almost $78 million. A nickel-a-gallon boost in Oregon also drew a negative reaction in a voters' poll.

But as Branstad noted, it's a far cry from what governors faced in the early 1980s, when a recession and federal aid cutbacks made the office a far less comfortable political address.

© 1999 The Washington Post Company

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