The 50 states may be “laboratories of democracy,” but sometimes their experiments go awry. Many of America’s newly elected governors will be inheriting severe budget deficits that demand root-canal fiscal adjustments. In several purple or blue states — including Michigan, Ohio, Wisconsin, and Maine — Republicans picked up the governor’s mansion and also gained full control of the legislature. The relative success or failure of the GOP governors in those states could have national implications. Here are four to watch.
Rick Snyder (Michigan). The 2000s were a lost decade for Michigan, a state that has become synonymous with Rust Belt decline. Prior to May 2010, it had registered America’s highest jobless rate for 49 consecutive months. Wolverine State policymakers cannot reverse the long-term structural forces that have reduced American manufacturing employment, nor can they undo the damage wrought by union excesses in the auto industry. But they can tackle the thorny issue of public-sector compensation — Mackinac Center scholar James Hohman and researcher Adam Rule have estimated that “Michigan’s state and local government full-time employees are getting $5.7 billion more in benefits than they would if they received benefits equal to those of private-sector employees” — and they can address the notorious Michigan Business Tax (MBT), which discourages investment.
Enter Rick Snyder, a wealthy venture capitalist who emerged from a crowded Republican gubernatorial field and then pummeled Democratic candidate (and Lansing mayor) Virg Bernero on November 2, winning election by more than 18 points. A moderate conservative who has jauntily labeled himself “one tough nerd,” the 52-year-old Snyder will take office with ambitious plans to transform the Michigan economy (and create “Michigan 3.0”) by promoting innovation and entrepreneurship. “He’s a businessman who knows how to delegate,” says veteran Michigan pollster Steve Mitchell. “He’s been very successful in everything he’s done.”
Snyder has proposed abolishing the MBT (which Mitchell calls “a really onerous tax”) and replacing it with a 6 percent corporate-income tax. “The MBT is a job killer,” he told the Detroit News in September. “It’s driven a lot of companies out of our state.” Yet implementing such a bold tax overhaul will be complicated by Snyder’s most immediate challenge: fixing a deep budget hole. The state deficit for fiscal year 2012 is projected to be anywhere from $1 billion to $1.6 billion. If Snyder can plug Michigan’s revenue gap and also establish a more business-friendly tax regime, that would be a monumental achievement.
John Kasich (Ohio). Michigan isn’t the only Rust Belt state that needs to revamp its tax system and curb its public-sector unions. In the Tax Foundation’s 2011 State Business Tax Climate Index, Ohio places a dismal 46th. A separate analysis shows that Ohio went from having the sixth-lowest combined state and local tax burden in 1977 to having the seventh-highest burden in 2008. (And for most of that period, there was a Republican governor in Columbus.) “The tax burden is the single most important obstacle to economic growth that the state government can deal with,” says Ohio University economist Richard Vedder.
Governor-elect John Kasich has signed Grover Norquist’s Taxpayer Protection Pledge (thereby vowing not to support tax hikes), as has incoming Ohio house speaker Bill Batchelder. Both are rock-ribbed conservatives. Kasich, 58, first gained national recognition during his tenure as House Budget Committee chief during the Clinton years, and he later worked as a Fox News host. Addressing a luncheon of lobbyists and special-interest bigwigs just days after his election, he delivered a stern warning: “We need you on the bus, and if you’re not on the bus, we will run over you with the bus. And I’m not kidding.”
Easier said than done. As the Columbus Dispatch notes, “More than 85 percent of the state budget is spent on Medicaid, K–12 education, higher education, prisons, local governments, and property-tax relief.” A massive fiscal shortfall ($8 billion) looms on the horizon, which means painful spending cuts are simply unavoidable. But the new governor will face huge resistance from Big Labor, and perhaps also some pushback from the GOP-controlled state senate, which will be, on balance, less conservative than Kasich and Batchelder. (“This is the national headquarters of RINO Republicanism,” jokes Vedder.) Buckeye conservatives hope that Kasich will become Ohio’s Chris Christie: an aggressive budget-slasher prepared to confront the unions.
Scott Walker (Wisconsin). After George W. Bush came tantalizingly close to winning the Badger State in 2004, Barack Obama carried it handily (by 14 points) in 2008. Two years later, however, Republicans easily defeated Sen. Russ Feingold (a three-term incumbent), captured the governor’s mansion, and flipped both chambers of the state legislature. Governor-elect Scott Walker, the Milwaukee county executive, is a “policy geek” who will inherit “a perfect storm of opportunities,” says University of Wisconsin political scientist Ken Goldstein. Moreover, his state has “probably the most powerful governor’s office in the country,” and he will enjoy broad veto authority.
The 43-year-old Walker will need all the help he can get. Wisconsin is staring at a $3 billion deficit, and it ranks a lowly 40th in the State Business Tax Climate Index. Walker has already sent a clear message by opposing the completion of a high-speed train line that would connect Madison with Milwaukee, dismissing the project as “a short-term fix that will cost the taxpayers of our state millions into the future.” Given his wonkish tendencies and passion for education reform, he may turn out to be a Wisconsin Republican in the mold of Tommy Thompson, who governed the state from 1987 to 2001 and was a true policy pioneer on issues such as welfare and school choice.
“Scott Walker’s got a really tough job,” Goldstein says. “But if he pulls it off, he becomes an important national figure.”
Paul LePage (Maine). How long has it been since Maine Republicans simultaneously held the governorship and both legislative chambers? The last time those conditions obtained, LBJ was president, the inaugural Super Bowl had yet to be played, and Neil Armstrong was still a few years away from making his giant leap for mankind.
Starting in January, the Pine Tree State governor will be a French-speaking Tea Party conservative with a mind-blowing personal story. Several decades before Paul LePage, 62, received “businessman of the year” honors from the Mid-Maine Chamber of Commerce and became mayor of Waterville, he was a homeless child navigating the gritty streets of Lewiston. His journey from the poorhouse to Augusta is far more implausible than anything Horatio Alger could have conjured up. In 2010, he benefited from a three-way gubernatorial race and squeaked past independent candidate Eliot Cutler.
Given his roots, LePage has unique credibility on the issue of welfare reform, which he has identified as a top legislative priority. While Maine’s overall poverty rate is below the national average, there are enormous disparities between the wealthy tourist hubs along the coast and the hardscrabble communities littered across the state’s interior. Many areas are plagued by the sort of post-industrial decay chronicled in Empire Falls, Richard Russo’s Pulitzer-winning novel. The Maine Heritage Policy Center reports that nearly 30 percent of state residents are enrolled in at least one of three welfare programs (Food Stamps, Medicaid, and Temporary Assistance for Needy Families).
Speaking to the Waterville Rotary Club in August, LePage excoriated the Maine welfare system as “humiliating and degrading.” He hopes to tighten eligibility guidelines, boost work requirements, and realign incentives. He also wants to improve Maine’s business environment by cleaning up its cumbersome morass of regulations. In a 2009 survey published by the Mercatus Center, political scientists William Ruger and Jason Sorens calculated that Maine offers less economic freedom than any state except New York.
A final note about LePage: His election will probably bring significant changes to Maine’s “DirigoChoice” health-insurance scheme, an Obamacare-like program that has become a costly mess. Indeed, should the Republicans get their way, Dirigo will look “radically different, if it still exists at all,” says Tarren Bragdon, co-chairman of the LePage transition team. If the new governor makes substantial progress on welfare reform and/or health care, he is bound to garner (and deserve) national attention.