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January 24, 2008

Gubernatorial Politics in "a Divided Economy"

posted by Josh Goodman

The nation's economic problems are hurting state budgets and roiling state politics. Just look what the office of Connecticut Governor Jodi Rell reported:

Governor M. Jodi Rell today announced that the state budget surplus now stands at approximately $263.2 million, up $163.1 million from last month. 

Net revenue from income taxes was up $173.1 million over last month.

Ok, bad example. But there are actually a bunch of bad examples like that out there. It's not that the problems facing the economy or facing state governments have been overstated, but rather that the pain is being felt unequally. Here's what the Washington Post reported last week:

A wide range of data from the government, private corporations and independent analysts paint a picture of a nation that is already in recession in some states and industries, while much of the nation and big parts of the economy have suffered little.

It is a divided economy, in which major Wall Street banks are recording multibillion-dollar write-downs even as most regional banks have endured little damage. While unemployment is rising and consumers are falling behind on their bills in such highly populated states as Florida, California and Michigan, most other states appear to be doing fine.

This dynamic has important political implications. In December, the Center on Budget and Policy Priorities stated that 25 states are expected to have budget shortfalls in Fiscal Year 2009.

One interesting thing about those 25 states: Only two of them, Vermont and New Hampshire, have gubernatorial elections this year. The other nine governors' races are in states that don't currently have shortfalls.

State budgets are, of course, a crude way to judge state economic health. I'm sure the economy will be a campaign issue even in those nine states.

Still, in ten of eleven states, the incumbent governor's party is favored to win again this year (the lone exception is Missouri, though North Carolina, Washington and Indiana should also be competitive). If a different group of eleven states were holding gubernatorial elections, I don't think the incumbents would be faring nearly as well. 


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