Like the Republicans last week, Democrats are featuring governors at their national nominating convention. Because convention speakers are chosen as the parties’ ambassadors to new audiences during these TV spectacles, the state policy team at the Institute on Taxation and Economic Policy are providing quick sketches of current governors from both parties who have been leaders – for better and for worse – in state tax policy. Below are profiles of tonight’s speakers, in order of appearance, at the DNC in Charlotte, NC.
North Carolina Governor Bev Perdue: Governor Bev Perdue took over leadership of the Tarheel state in 2009 during the worst economic recession in modern history, which had caused revenues to plummet and budget gaps to widen. Perdue recognized the need for tax increases to be part of a balanced and sensible approach to solving North Carolina’s fiscal crisis. The final budget adopted in 2009 included two temporary taxes – a one cent increase in the state’s sales tax rate and a personal income tax surcharge on the state’s wealthiest residents. In 2011, revenues were still not fully recovered and Perdue proposed extending most of the temporary sales tax for another two years to prevent deeper cuts to education spending, but her proposal was blocked by the newly minted Republican majority in the state’s House and Senate. She tried again in 2012, but was once again stopped in her tracks. Perdue cannot be called the most progressive governor on taxes, but her strong commitment to public education gave her the courage to increase taxes early on and to later propose more, even in a politically challenging environment. North Carolina Governor Bev Perdue announced earlier in the year that she is not seeking reelection for a second term in office.
Illinois Governor Pat Quinn: Illinois Governor Pat Quinn’s record on taxes is a mixed bag. While he’s shown leadership in terms of advocating for personal and corporate income tax increases and increasing the state’s personal exemption and Earned Income Tax Credit, the Governor has too often offered handouts to companies threatening to leave the state. Under this Governor’s watch, Illinois also stopped funding a property tax credit designed to specifically help low-income seniors and the disabled. The Illinois tax structure is one of the worst in the country in terms of asking low-income people to pay far more than their fair share. So far, Governor Quinn has not stood up for real progressive policy changes and his piecemeal, situational approach to tax policy is only making his state’s tax code more complicated.
Rhode Island Governor Lincoln Chafee: Governor Lincoln Chafee, an independent, called for tax increases aimed at refilling Rhode Island’s depleted coffers during his election campaign in 2010. Chafee made good on that promise and earned the A+ for Effort at Sales Tax Reform award in Citizens for Tax Justice’s Governors Yearbook. In his first year in office, Chafee introduced a sensible tax reform package that would have modernized his state’s sales tax and raised revenue needed to mitigate spending cuts. Chafee also supported changes to the Ocean State’s corporate income tax, including combined reporting, a smart rule that levels the playing field for small business by preventing multi-national corporations from sheltering profits in other states, as well as an improved corporate minimum tax. Unfortunately, lawmakers rejected most of his proposal. Chafee is one of only a handful of governors over the past two years to propose tax increases in order to restore investments or prevent deeper cuts in education, transportation, health care and other spending priorities.
Massachusetts Governor Deval Patrick: Massachusetts Governor Deval Patrick has spent his six years in office largely punting on tax policy for the Bay State. With the exception of creating a Tax Expenditure Commission last year to examine the more than $26 billion in tax breaks the state hands out each year (which amounts to more money than the state is expected to take in this year!), Patrick has not proven himself to be a leader on improving his state’s tax system. Patrick has publicly supported making the state’s personal income tax more progressive by moving from a flat rate to a graduated rate, but also said he would not “pursue” it in his second term. The governor has supported some revenue increases in his two terms to prevent spending cuts, but mostly they have been low-hanging fruit in the form of excise taxes (alcohol, tobacco, etc) or have relied heavily on the sales tax. And last year, Patrick supported yet another annual sales tax holiday in his state despite admitting that he supported it, “frankly, not because it is particularly fiscally prudent, but because it is popular…. People want it."
Maryland Governor Martin O’Malley: Last but definitely not least, Governor O’Malley has been one of the nation’s boldest leaders in standing up to anti-tax forces and protecting critical public programs, which is why Citizens for Tax Justice gave him the Defender of Public Services award in our 2012 Governors Yearbook. While many governors across the nation were continuing to slash public services in order to expand unsustainable tax breaks, Governor O’Malley bucked the national trend and ushered in a progressive tax increase that allowed Maryland to stop further cuts to education, health services and other crucial state government services. Continuing his record, Governor O’Malley has also shown his willingness to stand up for good policy – even if it’s unpopular – with his advocacy of a responsible increase in the gas tax to improve Maryland’s transportation infrastructure.