The story goes when John Kasich served as U.S. House Budget Chairman back in the late 1990’s he kept the CATO Institute’s Handbook for Congress at his desk. Perhaps his thinking has changed since serving in Washington or perhaps the book was just there for show, but that same CATO Institute recently released its “Fiscal Policy Report Card on America’s Governors 2014” and John Kasich earned a disappointing “D”.images-1

The study looks at the effects governors have had on their state budgets since 2012 analyzing both the spending and revenue sides of the equation.  Governors are scored on a scale from 0 to 100 with a score of 100 awarded to those governors who have embraced the most small government oriented policies.  Scores are then converted to letter grades.

CATO writes that the economic landscape has changed in the U.S. since the 2007-09 recession which was a major blow to state budgets.  These days states are having an easier time balancing their budgets, but trouble looms on the horizon for some states. CATO explains,

“With the economy currently growing, governors and legislatures are having few problems balancing their budgets in the short run, but the states face major budget challenges down the road.  Many retirement plans for state workers have high levels of unfunded liabilities, and the Medicaid expansion under the 2010 Affordable Care Act will increase stress on state budgets.”

Ohio is certainly poised to face increasing budgetary pressures in the future thanks to Governor Kasich’s expansion of Medicaid, and CATO notes, Ohio is in the top ten of states with the highest combined debt and unfunded pension liabilities on a per capita basis according to an S&P analysis.

So let’s look at Govenor Kasich’s results on CATO’s report card.  The Governor earned a dismal 16 on the spending side with state spending increasing 8 percent on a per capita basis.  Kasich did much better on the revenue side receiving a score of 77 reflecting his efforts to reduce income taxes. Kasich’s combined score was 44 tying with Snyder of Michigan as the lowest scoring Republican governor.

In their report, CATO provides a recap of each governors’ fiscal policy making.  Here is what CATO had to say about Governor Kasich:

“Governor Kasich scored higher on taxes than on spending, as he has proposed and signed into law numerous tax cuts.  The biggest reform was a package in 2013 that cut income taxes and increased sales taxes.  It cut individual income tax rates by 10 percent, with the top rate falling from 5.93 to 5.33 percent by 2015.  The Reform also exempted a portion of small business income from taxation.  To partly offset the revenue loss, the plan raised the sales tax rate from 5.5 to 5.75 percet and broadened the sales tax base.  This was a sensible pro-growth reform package which cut Ohio taxes by about $1.2 billion annually.”

“Kasich followed up this success with another round of tax cuts in 2014. The income tax rate reductions were accelerated and personal exemptions were increased.  However, he also proposed tax increased in 2014, including an increase on cigarettes of 60 percent per pack, an increase in the Commercial Activities Tax, and an increase in taxes on the shale oil and gas industry.  Those increases would be swapped for further reductions in indvidual income taxes.”

“His score was dragged down by his spending increases.  The general-fund budget grew an estimated 13.6 percent in 2014.  State goverment employment is up more than 3 percent since Kasich took office.” 

“Governor Kasich pushed to expand Medicaid under the ACA, which the legislature opposed.  Indeed, the legislature passed budget language prohibiting Kasich from expanding Medicaid unilaterally, but the governor vetoed that item and went ahead and expanded Medicaid anyway.” (Emphasis added.)

Of the 28 Republican governors, 23 earned a  grade of “C” or above leaving only five Republican governors with a “D”. Nearly half earned a “B”.

McCrory of North Carolina, Brownback of Kansas, LePage of Maine, and  Pence of Indiana received ‘A’s”.

Kasich’s most likely 2016 rivals for the Republican nomination, Christie of New Jersey, Perry of Texas, and Jindal of Louisiana, all earned “B’s”.

Read the CATO Institute’s “Fiscal Policy Report Card on America’s Governors 2014” HERE.