Monday, October 17, 2016

Cato Report Gives Governor Hogan Room for Improvement

Earlier this month, the Cato Institute published a report by Chris Edwards entitled Fiscal Policy Report Card on America’s Governors 2016.” The report analyzes state spending, taxation, and revenue policies and grades each governor on his or her record. Maryland Governor Larry Hogan received an overall grade of C, scoring a 54 out of 100. More specifically, he received a 49 for his spending record, a 48 for his tax rate record, and a 65 for his revenue record.
Although Governor Hogan’s scores are not outstanding, overall he was just one point below a B grade. And, notably, he ranked higher than all of Maryland’s neighboring governors. Delaware Governor Jack Markell received a 45 (D grade), Pennsylvania Governor Tom Wolf received a 24 (F grade and the lowest score of all the governors), Virginia Governor Terry McAuliffe received a 49 (D grade), and West Virginia Governor Earl Ray Tomblin received 45 (D grade). 
Despite Governor Hogan's “high C” overall score, Mr. Edwards’ narrative explanation was fairly positive:
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 In one popular move, he repealed the “rain tax,” which was a new stormwater fee enacted by the prior governor.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.
Less than two years into his term, Governor Hogan has time left to improve his first term fiscal record. He has shown great promise with several of his proposals, including his proposals to reduce taxes and fees and eliminate unnecessary regulations. With the help of some much needed compromises on the part of the Maryland General Assembly that evidence greater receptivity to Governor Hogan’s less taxing fiscal policies, his record likely will improve by the end of his first term.