In Either Party, It’s a Capital Time to Be a Governor

Liberal and conservative, Democrat and Republican, the governors who gathered here for their summer meeting this week can agree on one thing: This is a very good time to be a governor.

State treasuries are bulging, welfare caseloads and crime rates are plummeting, medical costs are moderating, and tax cuts are proliferating. After years of hard choices and painful budgets, the governors, convened here for their annual meeting, now find themselves awash in cash--and options.

“When it starts to fit together,” says Republican Gov. John Rowland of Connecticut, “it’s awesome.”

In the states, just as in Washington, prosperity is promoting a politics of ideological convergence.

President Clinton and the GOP reached a budget deal this week largely because surging revenue allowed them to meet key priorities of both sides’ core constituencies. Likewise, the rising revenue tide is allowing many governors to fulfill traditional Republican demands for tax cuts while nourishing traditional Democratic priorities such as expanding access to health care.

“You can do both of those things,” says Republican Gov. Christine Todd Whitman of New Jersey. “You can cut taxes and still prioritize in areas that need it.”

With the economy revving, governors’ approval ratings are surging: Jeanne Shaheen, the new Democratic governor of New Hampshire, comes in at 65%; Arkansas Republican Mike Huckabee is at 67%; and Republican David Beasley in South Carolina is zipping along at 72% in a new private poll.

All of this is very good news for governors seeking reelection. And that’s good news for Republicans, who hold 24 of the 36 gubernatorial seats at stake next year.

“If the economy is good,” Rowland says bluntly, “why would they throw you out?”

This placid political environment inverts the early 1990s, when many governors were forced to raise taxes or cut services to cope with massive budget deficits. But almost all of the trends that hammered governors then are now moving in a positive direction.

Most important has been the steady growth in the economy, which has swelled state revenue and boosted state efforts to move welfare recipients into the work force. As welfare populations have declined--by 40% or more in some places--states have received an unexpected windfall because their federal welfare payments under the new block grant are pegged to the much larger caseloads they had during the early 1990s.

Greater use of managed care has significantly slowed the growth of state expenditures on Medicaid. And the states have kept a sharp eye on other spending, particularly since 1994 when Republicans seized control of most of the governorships. Total state spending grew by less than 2% after inflation in each of the past two years.

Yet within that overall pattern of spending restraint, the surging revenue stream is allowing even conservative governors to fertilize key programs with increased funds, almost entirely without asking for more money from voters.

In Massachusetts, for instance, Republican Gov. William F. Weld--who resigned Monday to fight for his stalled nomination as ambassador to Mexico--recently signed tax cuts for parents, homeowners and low-income families while pouring $128 million into a new health insurance program for children.

In Ohio, Republican Gov. George Voinovich’s latest budget provides health insurance for an additional 99,500 children, funds Head Start for all the state’s eligible children, and sends taxpayers a 4% rebate on their income taxes--just one year after they received a 6.5% rebate.

In Indiana, Democratic Gov. Frank L. O’Bannon increased spending on roads, bolstered the state’s contribution to its public pension fund and provided property tax relief, after the state reported a stunning $1.8-billion budget surplus.

Just as in Washington, the breadth of these agendas suggests how good times encourage each party to occupy space usually held by the other.

With the funds pouring in, Brian Kennedy, executive director of the Republican Governors’ Assn., is actively encouraging GOP governors to preempt next year’s Democratic challengers by launching their own education and health care initiatives.

At the same time, Vermont Gov. Howard Dean, the head of the Democratic Governors’ Assn., is urging candidates to offer their own targeted tax cuts to compete with Republican governors.

But it isn’t all coming up sevens for governors. Demands for greater equality between rich and poor school districts continue to complicate the budget equations in about half the states.

And if the economy turns sour, governors could once again quickly find themselves squeezing.

So on both the new spending and tax-cutting side, most governors are proceeding cautiously--suggesting they haven’t forgotten the storms of the early 1990s even as they enjoy today’s sunshine.