Facing Big Deficits, a Dozen New Governors Rule Out Tax Hikes

New Jersey Governor Chris Christie swept into office last year promising to erase a $10.7 billion deficit — about a third of the state’s overall annual spending — without raising a penny in new taxes. Instead, Christie ordered dramatic cuts — from reductions in K-12 education to the cancellation of the nation’s largest public works project — that have made him a deeply polarizing figure nationally.

Spending cuts of the magnitude Christie ordered in New Jersey soon could become common elsewhere, too. A Stateline analysis of the governors’ races decided Tuesday (November 2) finds that at least 12 of the nation’s new governors have ruled out tax hikes, even as they face billions in collective deficits. All of them are Republicans except New York Democrat Andrew Cuomo.

In addition, two incumbent Republicans who won on Tuesday, Alaska’s Sean Parnell and Texas’ Rick Perry, also took firm anti-tax stands on the campaign trail this year. Almost all of those vowing not to raise taxes have signed a written pledge with Americans for Tax Reform, an influential anti-tax advocacy group headed by Grover Norquist.

These new or returning anti-tax governors will be under heavy political pressure to keep their campaign promises and balance their budgets by slashing spending in ways that could resemble what Christie, a Republican, has spent his first year doing in New Jersey. The pressure could be even greater since Christie helped elect some of them, visiting 15 states in the run-up to the election and reportedly raising more than $8 million for his fellow GOP candidates.

“The governors who ran on no-tax pledges would be well-advised to follow (Christie’s) example,” says Curtis Dubay, a tax policy analyst at the conservative Heritage Foundation. “States have been so profligate in their spending for so long that this correction was inevitable.”

Can cuts alone close shortfalls?

But many other budget experts worry that states cannot simply cut their way out of the budget problems they face today, particularly in some of the states where anti-tax candidates were successful this week.

In Nevada, for example, governor-elect Brian Sandoval will face a deficit that could be as much as $3 billion — or half the state’s two-year budget — when he is sworn in next year. Texas Governor Rick Perry has vowed not to raise taxes even if the voters themselves agree to it, but he faces a two-year shortfall that could be as big as $21 billion. Two heavily populated political battlegrounds, Ohio and Florida, also expect multi-billion dollar budget shortfalls and elected Republican governors who have ruled out tax hikes.

In Pennsylvania, another huge state picked up by the GOP, Governor-elect Tom Corbett may have a unique challenge. He will face a shortfall of up to $5 billion next year, but he has ruled out fee increases — such as those paid for car registration — to go along with his pledge against tax hikes. Corbett has been particularly outspoken about his opposition to placing a severance tax upon the rapidly growing natural gas industry, despite Republican support for the idea in the General Assembly — and the fact that Pennsylvania is the largest gas-producing state without such a tax. Corbett believes it will stifle business development.

New York’s Cuomo stands alone among Democratic winners on Tuesday who reject tax hikes, even though the state faces among the biggest budget challenges in the nation. Cuomo’s 252-page “plan for action” includes a promise to freeze taxes.

INCOMING GOVERNORS VOWING NO NEW TAXES

Alabama Republican Robert Bentley

Alaska Republican Sean Parnell*

Florida Republican Rick Scott

Georgia Republican Nathan Deal

Maine Republican Paul LePage

New York Democrat Andrew Cuomo

Nevada Republican Brian Sandoval

New Mexico Republican Susana Martinez

Ohio Republican John Kasich

Oklahoma Republican Mary Fallin

Pennsylvania Republican Tom Corbett

South Carolina Republican Nikki Haley

Texas Republican Rick Perry*

Wisconsin Republican Scott Walker

Note: Governors marked with an asterisk (*) are incumbents. All but three of those listed signed the Americans for Tax Reform pledge against tax hikes. New York’s Andrew Cuomo, Nevada’s Brian Sandoval and New Mexico’s Susana Martinez separately promised not to raise taxes
Source: Americans for Tax Reform ; Stateline reporting

Nationally, according to a Stateline analysis, 40 percent of the U.S. population will be represented starting next year by governors who have vowed not to raise taxes — and that excludes Illinois, the nation’s fifth most populous state, where anti-tax Republican Bill Brady was locked in an undecided race as of Wednesday evening (November 3). Although exact budget gaps for next year aren’t yet known, the National Conference of State Legislatures estimates a collective national shortfall of $72 billion. That figure could grow significantly if the nation’s economic recovery continues at a slow pace.

It remains to be seen whether the incoming class of anti-tax governors will actually follow in the budget-slashing footsteps of Christie or whether they will be forced to reconsider their campaign pledges. At this early stage, at least, many Republicans view Christie as a shining example.

“Chris Christie is the primo example of how you turn around government,” Scott Walker, Wisconsin’s governor-elect, told The Wall Street Journal in October. “He tells it like it is, and it’s time for that,” says Iowa’s Terry Branstad, who will return to office after serving four terms in the 1980s and 1990s. Pennsylvania’s Corbett told Stateline in an interview in August that Christie “has made a very good example” for what should be happening in his own state.

Broken pledges not uncommon

Not all new governors, of course, are vowing outright to reject all tax hikes. Many of them have staked out more nuanced positions that could allow them to adapt to circumstances once they are in office. For example, South Dakota’s incoming governor, Republican Dennis Daugaard, has said he will raise taxes only in an emergency. In Colorado, Democrat John Hickenlooper has floated the idea of a voluntary tax hike on oil and gas companies.

Other candidates who won on Tuesday took the unusual position of pledging to raise taxes. Victorious Rhode Island independent Lincoln Chafee wants to add a sales tax to items that are now exempt. Minnesota Democrat Mark Dayton, who was locked in a too-close-to-call race against Republican Tom Emmer, wants to raise income taxes on the wealthy.

Governors who have promised not to raise taxes and did it anyway wouldn’t be the first to break such a pledge. Washington State Governor Chris Gregoire, a Democrat, was repeatedly attacked over taxes during her reelection campaign against Republican Dino Rossi two years ago, and she defended herself by ruling out tax hikes. About a year later, she said the state’s budget situation had gotten so bad that tax hikes would have to be on the table. Relying solely on cuts, she said, “would force us to abandon the values that define this state: fairness and compassion.”

Republicans Arnold Schwarzenegger in California, Mitch Daniels in Indiana and Gary Herbert in Utah are among the other current governors who have violated a no-tax pledge, while Iowa’s Branstad has his own experience of disappointing fiscal hawks. Branstad ran on a no-tax pledge in his successful first gubernatorial campaign in 1982, only to raise the state sales tax the following year.