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SEPTEMBR 1998

Think tank grades Pataki's fiscal stewardship: B

The Cato Institute, a conservative Washington-based think tank, has awarded New York Gov. George Pataki a grade of B on its fourth biennial "fiscal report card" for governors released Sept. 3.

The report strongly praised Gov. Pataki for major income tax cuts and noted that New York is "reversing the tax-and-spend policies of . . . [Gov.] Mario Cuomo." "Governor Pataki has continued his crusade to make New York's record-high tax system more pro-business and pro-investment by cutting the corporate income tax by 1.5 percentage points," the report noted.

Commenting on trends in all states, the Cato Institute report also noted "a clear trend toward more spending at the state level during the past two years," with many governors recommending budget increases of "more than 7 percent, roughly three times the rate of inflation."

The report card noted that Gov. Pataki's first two budgets in 1995 and 1996 called for zero growth in spending. This year's budget increases total spending by 8.3 percent. The Cato Institute report said this spending increase-which it called a "sophomore slump"-accounted for a decrease in Gov. Pataki's grade from A to B compared to his most recent grade.

Two governors received an A on the report card, and Gov. Pataki received the highest numeric grade among those who received a B. Other governors who earned a B grade include George W. Bush of Texas, Tom Ridge of Pennsylvania, John Engler of Michigan, and Christine Todd Whitman of New Jersey.

The Institute bases its grades on "purely objective measures" designed to give the highest grades to "governors with the most fiscally conservative records"-that is, tax and budget cutters. Confirming previous research by Business Council's research arm, The Public Policy Institute, the Cato Institute reported noted that "Americans voted with their feet in favor of tax-cutting states. Population gains were 4.2 percent in the tax-raising states but 7.4 percent in the tax-cutting states. The tax-cutting states gained 500,000 more people than did the tax increasers."

Moreover, business and jobs migrated to low-tax states in the 1990s. "From 1990 to 1995 the United States gained 7 million net new jobs. But in the 10 states that raised taxes, total employment did not rise at all--in fact, it fell slightly."

September 16, 1998