Markell administration responds to “F” grade from Cato Institute

The Cato Institute think tank gave Gov. Jack Markell an “F” for Delaware’s fiscal performance.

His administration fired back, taking note of the organization’s stance on ending the minimum wage and privatizing Social Security,.

In a previous survey the governor received a “D.”

The  12th biennial fiscal report card examined state budget actions since 2012. It uses statistical data to grade the governors on their taxing and spending records, according to the group.

Four governors were awarded an “A” on this report card: Pat McCrory of North Carolina, Sam Brownback of Kansas, Paul LePage of Maine, and Mike Pence of Indiana. All are Republicans.

Eight governors were awarded an “F”: Mark Dayton of Minnesota, John Kitzhaber of Oregon, Markell, Jay Inslee of Washington, Pat Quinn of Illinois, Deval Patrick of Massachusetts, John Hickenlooper of Colorado, and Jerry Brown of California. All are Democrats.

Delaware generally gets higher marks in fiscal reports, thanks to its Triple A credit rating, lower property taxes and no sales tax.

Chris Edwards, co-author of the study, said the state’s financial condition was not factored into the study, since all states, unlike the federal government,  have to balance the budgets by either cutting spending or raising taxes. He said this applied to high-ranking governors, such as Sam  Brownback of Kansas, who has been criticized for cutting taxes without making matching cuts in spending.

Brownback’s administration was counting on economic activity and related taxes  coming from the  tax cuts making to make up for the loss in government revenue. Fiscal policies can increase financial pressures, if agencies lower the  debt rating and investors receive higher rates, due to the fiscal risks.

The study also considered proposed tax hikes, such as the 10-cent-a-gallon proposal from the Markell administration, even though it was not enacted, Edwards said.

Edwards said a major reason in the “F” ranking was the administration’s decision to keep higher income and other tax rates, that were enacted during the  financial crisis of 2008 and 2009. The rates were temporary and slated to expire. However, the General Assembly agreed to keep the higher rates.

Markell spokesperson, Kelly Bachman, offered the following response:

“The rating is no surprise from a Washington think tank that believes the economy would be better if we got rid of the minimum wage and privatized Social Security. Only in their world would Delaware qualify for an F rating for being one of the few states credited for fiscal responsibility based on having a AAA bond rating and one of the highest ranked public pension funds,”

She continued, “We’re more concerned with the fact that Delaware has been recognized for the lowest tax burden in the country and has been ranked as the second best prepared state for the new economy. That’s all while having one of the fastest job growth rates in the country, outpacing the national average for more than a year and a half.”

Senate Republican Whip Greg Lavelle, north Wilmington, wrote in the weekly GOP Senate newsletter that Delaware’s problems go beyond taxing and spending. The newsletter took note of the  “F” grade.

“The overall economic policies that the state is pursuing are just not benefiting the middle class, and that’s what we need to work on,” he said.

“Virtually all of our efforts to promote proven ideas that have worked in other states to strengthen and improve economies have been rejected by Democrats. We need to come together and have a genuine two-way conversation about how to provide economic opportunity for Delawareans.” Lavelle has been mentioned as a candidate for governor.

Cato was in the news a couple of years ago when the Koch family, known for its support of conservative causes, filed suit against the organization.

A settlement was reached that led to the retirement of Cato’s long-time chief, who had battled the family, which wanted Cato to take a more activist stance on  economic policy and the growth of government.The family owns Koch Industries, which operates INVISTA, the former Nylon business of DuPont.