Sundquist Gets Failing Fiscal Grade
The respected Cato Institute has given Gov. Don Sundquist a grade of F in its Fiscal Policy Report Card on America’s Governors for the year 2002.

I've quoted heavily from it below, but if you want to see the full 65-page Fiscal Policy Report Card on America’s Governors: 2002, you can download it here in a PDF file.

Of Sundquist's fiscal policies, the Cato report had nothing good to say. Here is Cato's one-page summary of the fiscal legacy of Gov. Don Sundquist:

No one can explain why he did it, but Governor Don Sundquist created a needless four year political civil war regarding income taxes. Tennessee has never had an income tax. The voters overwhelmingly do not want one. Sundquist promised never to propose one. But after his successful reelection bid, he pulled an about-face and became a huge supporter of the tax he had earlier disavowed. Sundquist had said before that an income tax was not needed because "new taxes would dampen the fire of enterprise and investment and job creation."

The broken tax pledge incited a ferocious tax revolt in Tennessee. Every time the tax has come to a vote in the past four years, armies of enraged citizens have converged on the capital with cars honking to shut down business inside the legislature. The good news is that the income tax was defeated on every occasion. This past summer, Sundquist forced a shutdown of the government until the legislature would agree to his tax scheme, but when the votes did not emerge, Sundquist finally backed down.

In subsequent elections, Sundquist cronies who favored the income tax were voted out of office, and it appears that that is the end of the tax threat for now. Sundquist is serving out his final months in office as perhaps the most disliked governor in America. Why did Sundquist want an income tax? He argued that it was needed to keep the budget in balance. But for more than a century Tennessee has balanced its budget without an income tax. Indeed, Tennessee has a huge competitive advantage by not taxing income. Budget problems were the result of Sundquist’s own spending excesses. Per capita state spending soared under Sundquist. In the 1990s, tax receipts grew by 55 percent, twice the rate of population plus inflation.

A key source of the budget problem is the state’s disastrous big government health care program called TennCare. In Sundquist’s first six years in office, TennCare’s cost surged more than twice as fast as the cost of Medicaid. Sundquist did not create TennCare, but he has been a big defender of the program and he has shunned talk of reforming it.

When legislators refused to accept his income tax plan, Sundquist proposed raising many other taxes - the car tax, the gross receipts tax, the sales tax, professional licensing fees, taxes on alcohol and cigarettes, and driver’s license fees. Sundquist browbeat the legislature into a $1 billion tax hike this year - one of the biggest tax increases in any state in percentage terms - which included a hike in sales, alcohol, and tobacco taxes.

No governor in recent memory has had a four-year period more hostile to taxpayers than Don Sundquist.

Now, compare that to the record of Colorado Gov. Bill Owens, who got a grade of A, summarized by Cato this way:

Bill Owens was recently praised by National Review as "America’s best governor." We agree. Over four years, Owens has amassed a sterling record of fiscal accomplishment. He has strongly supported the state’s tax and expenditure limit (known as the Taxpayer’s Bill of Rights, or TABOR), which restricts the growth of tax revenue to the growth of Colorado’s population plus inflation. That has led to four straight years of tax rebates to Colorado taxpayers and prevented the state government from spending the budget surpluses of the late 1990s. Consequently, spending has not exploded under Owens as it has in almost all other states in recent years. That restraint has allowed the state to avoid tax increases in the current economic slowdown, and the budget crisis that has hit most states has not hit Colorado as heavily.

The tax rebate checks during Owens’s tenure have been quite large, with about $6 billion rebated, or more than $1,500 per family. In addition, Owens has argued successfully that if taxes are to be rebated, then income tax rates should be cut to grow the economy. That way, excess taxes would not have to be collected in the first place. He cut the income tax rate from 5 to 4.63 percent; slashed taxes on capital gains, interest, and dividends; and gave businesses property tax relief. He has led the charge against the Internet tax that many of his gubernatorial colleagues support. He has refused to join other states in demanding help from Uncle Sam to balance the state budget.

"The states have an overspending problem, not a revenue problem," he notes. Colorado’s economy has flourished under Owens’s sound fiscal management and his support of policies to stimulate Colorado investment and growth.

The good news: The disastrous Sundquist era is almost over. Tennesseans will elect a new governor this fall. And therein lies Tennesseans' opportunity to restore fiscal sanity to their state.

One of the two main candidates believes in and has a track record of fiscal restraint and opposition to higher taxes. It isn't Phil Bredesen, whose record is one of higher taxes and big spending. Only one of the two main candidates firmly opposes the income tax. It isn't Phil Bredesen, whose position on the income tax is best described as "moveable."

Only one of the two main candidates favors adding a Colorado-style Taxpayers Bill of Rights provision to the Tennessee constitution, to guarantee sensible fiscal policies in the future. It isn't Phil Bredesen. He opposes any restraint on taxes or spending.

Both candidates talk the talk on fiscal restraint. But only one walks the walk. He is Van Hilleary.