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Economy to Sway 2010 Gubernatorial Races

The tax hikes that so many states levied to plug holes in their recession-ravaged budgets this year could endanger a few incumbent governors’ careers in 2010 when 37 gubernatorial contests are at stake.

The defeat Nov. 3 of one-term New Jersey Gov. Jon Corzine (D), who signed nearly $1 billion in tax increases this year after pledging earlier to cut property taxes, could be a bellwether. Experts caution against reading too much into one race. But a look back at the last big gubernatorial election year to fall in the midst of a state budget crisis—in 2002—showed voters were in a mood for change.

Four sitting governors were ousted in 2002, and party control flipped in 18 of the 36 governor’s seats on the ballot. The GOP lost the governor’s mansion in 10 states, while the Democrats lost in eight. Two open seats held by Independents went in 2002 to a Democrat and a Republican. Turnabouts occurred even where the incumbent’s party traditionally had been strong, including Georgia, Kansas, Maryland and Tennessee. The handling of the economic downturn was a major factor in many of the 2002 races.

In that election, 22 seats were open, compared to 21 gubernatorial races without incumbents competing in 2010 — a number that still could change if more governors decide not to seek another term. Just last week, Republican Gov. M. Jodi Rell of Connecticut opted against seeking re-election. She took over in 2004 after GOP Gov. John Rowland stepped down to face corruption charges, and she was elected outright two years later.

“Being governor may be the worst job in American politics right now just because of the budgets and the financial pressure that states are under,” said Jennifer Duffy, senior editor who tracks governor’s races for The Cook Political Report. The nonpartisan publication ranks 14 governor’s races in 2010 as tossups and lists four open Democratic seats at risk of switching to GOP hands.

This recession is deeper and longer and threatens to hit states far harder than the one in 2002. States already have closed more than $270 billion in budget gaps between projected spending and revenues since the recession started in December 2007—already surpassing the $263.8 billion in red ink states erased from fiscal 2002 to fiscal 2006 following the 2001 recession, according to figures from the National Conference of State Legislatures.

States with some of the deepest fiscal holes are on election handicappers’ lists of governorships that could change political hands in the biggest election year for state offices in the four-year cycle. Sitting governors in hard-hit Arizona, Nevada and New York are rated tossups on one or more of the lists, and open seats in California, Kansas, Oklahoma and Tennessee are prime takeover opportunities.

Of the 37 governors’ spots on the 2010 ballot, Democrats hold 19 and the GOP 18. All but a handful of the races are expected to be nail-biters, but 2010 provides at least one certainty: Nearly half the country will get a new governor because of term limits and retirements.

Congressional Quarterly Politics predicts six political turnovers with the GOP picking up open gubernatorial seats in Kansas, Oklahoma and Tennessee in 2010, while the Democrats have a strong shot at taking over in California, Hawaii and Vermont; seven other states are tossups. The nonpartisan Rothenberg Political Report puts eight governorships in 2010 as leaning toward a party switch (half Republican, half Democratic) while another 11 are deemed too close to call.

The GOP hopes its victories Nov. 3 in New Jersey and Virginia—the only gubernatorial contests this year—will provide momentum to regain a majority of the nation’s governorships. With these wins, Republicans will go into the 2010 elections with control of 24 governorships to the Democrats’ 26.
Experts say that in 2002, voters were in a testy mood, reacting to unpopular choices by lawmakers that included raising taxes, cutting services or emptying states’ rainy day funds.

Governors hoping to keep their jobs in 2010 are expected to face even tougher challenges as they campaign and may have to explain why they had to slash programs or raise taxes to balance budgets even with billions of federal stimulus dollars flowing into state coffers. The reality is they will have to write their fiscal 2011 budgets, which begin for most states on July 1, 2010, with fewer stimulus dollars, still-diminishing tax revenues and higher bills for health care and services for the poor and unemployed.

In the 16 states in which incumbents are running for governor again in 2010, taxes were raised at least nine for fiscal 2010, primarily cigarette and alcohol taxes (Arkansas, Colorado, Idaho, Illinois, Massachusetts, Nevada, New Hampshire, New York and Texas).

And even though the national economy and stock market appear to be rebounding, states are expected to face budget gaps for the next two years and possibly the next four.

Larry J. Sabato, director of the University of Virginia’s Center for Politics in Charlottesville, said incumbents will argue that things would have been much worse if they had not been in charge and taken actions they did. Meanwhile, challengers will argue prospects would be rosier with them in office. “I’m not sure voters will be convinced,” Sabato said. In his latest analysis, he sees all but a handful of the gubernatorial races as competitive.

Democrats face a tougher challenge because they are the party in power in Washington, D.C. With Barack Obama in the White House and Democrats in control of Congress, voters could punish the party up and down the ballot if unemployment levels are still high and voters’ pocketbooks are still pinched. Also at stake is control of Congress, with Democrats vying to retain the upper hand in both chambers as all 435 House seats and 36 U.S. Senate seats are on the ballot. For many, the 2010 midterm elections will be a referendum on Obama.

Sabato’s research shows that in the past 60 years, the party that wins the White House loses gubernatorial berths in the following midterm elections 75 percent of the time—an average of four seats. That proved true in 2002, when Democrats netted two extra gubernatorial seats after Republican President George W. Bush was first elected in 2000.

Fred Yang, a partner at the Garin Hart Yang Research Group, a Democratic polling firm, said the 2010 election won't be easy for any incumbent, but he is advising candidates to be blunt with voters. “Democratic governors can survive in this tough environment by positioning themselves as making painful but needed actions to help their states survive the worst economic downturn since the 1930s,” Yang said. “They obviously cannot sugarcoat things, but the electorate understands that much of what is happening is beyond the control of their governor.”

Corzine’s defeat could offer another lesson. Corzine had proposed raising tolls on the New Jersey Turnpike, Garden State Parkway and other highways, in some cases up to 800 percent, to help pay down the state’s debt, and he became the first governor in 60 years to cut state spending over the course of his first term. Before the election, Pennsylvania Gov. Ed Rendell (D) told The New York Times: “If Jon wins … I think a lot of other governors will say, ‘It’s OK to tell people the truth, it’s OK to give out some tough medicine,’” he said. “And I think more governors will be inspired to do that. If he loses, I think it will have a chilling effect.”

Voters in California already showed their disdain for higher taxes by overwhelmingly rejecting $6 billion in tax increases that the Legislature and governor put on the ballot this year to help balance the budget.

Tensions over taxes hikes and spending cuts already are swelling around some embattled incumbents. Consider:

• Arizona: Republican Gov. Jan Brewer is behind in early polls, including against State Attorney General Terry Goddard (D) and former Gov. Fife Symington (R), who resigned in 1997 following a fraud conviction. Brewer, who inherited the job when Janet Napolitano (D) joined Obama’s Cabinet, is expected to face a tough GOP primary as she battles her own party to push for a temporary sales tax hike to balance the budget.
• Nevada: The worst budget crisis in state history competes for voters’ attention with Republican Gov. Jim Gibbons’ messy divorce and other personal controversies. The governor could face Brian Sandoval, the first Hispanic federal judge, in a GOP primary. Gibbons’ approval rating has plunged to below 15 percent in some polls. Voters may not remember or care that the governor rejected lawmakers’$781 million tax increase, but the Democratic-controlled statehouse overrode his veto. The Democrats’ nominee could be Rory Reid, son of U.S. Senate Majority Leader Harry Reid.
• New York: Democratic Gov. David Paterson trails in polls pitting him in a primary against Attorney General Andrew Cuomo, who many observers, including the White House, think would be the stronger candidate. Paterson’s numbers plummeted earlier this year partly because of his handling of state budget negotiations, which raised taxes and fees by $6 billion, and partly because of his stumbling appointment of a U.S. senator to replace now-Secretary of State Hillary Clinton. Paterson also is facing voters for the governor’s job for the first time after taking over when Eliot Spitzer resigned in a sex scandal.
• Illinois: Tax hikes are at the center of a nasty debate primarily between Democrats. Gov. Pat Quinn (D) wants to keep the job he inherited in January when he replaced impeached Gov. Rod Blagojevich (D), but he first will have to best Comptroller Dan Hynes in the Feb. 2 Democratic primary. Hynes is running TV ads that take aim at Quinn’s proposal to hike the income tax from 3 percent to 4.5 percent to bridge what he said was an $11 billion shortfall over 18 months, but the House rejected it.

Quinn, Paterson and Brewer are among five governors on the ballot in 2010 who inherited their jobs when their bosses stepped down for various reasons, including accepting appointments in the Obama administration. The others are Alaska Gov. Sean Parnell and Utah Gov. Gary Herbert, both Republicans.

In 2002, the economy worked against both parties, but Democrats were harder t as three sitting governors lost their posts.

Alabama then had the closest governor’s race in the nation when Republican U.S. Rep. Bob Riley defeated Democratic Gov. Don Siegelman, who had said he would raise business taxes to make up for expected revenue from a lottery proposal rejected by voters. Riley won by running against any tax increase (although he famously went back on that pledge and tried to get voters the next year to accept a tax increase for education, only to be rebuffed.)

In both Georgia and South Carolina, the incumbent governors antagonized voters before the 2002 contest with controversial moves involving the Confederate flag, but tax issues also were prominent. Then-state Sen. Sonny Perdue became the first Republican governor in Georgia since Reconstruction by ousting incumbent Roy Barnes (D) with a promise to abolish income taxes for Georgians over age 62, which did not happen. (Barnes is exploring a run in 2010 to reclaim his old job.) And South Carolina Gov. Jim Hodges (D) got the boot when voters opted for Republican Mark Sanford, who proposed phasing out the income tax over 18 years. Sanford, who in 2009 fended off impeachment charges after admitting to an extramarital affair, is term-limited.

In Maryland’s open governor’s race in 2002 Republican U.S. Rep. Bob Ehrlich defeated Lt. Gov. Kathleen Kennedy Townsend by successfully blaming Townsend and the outgoing Democratic governor, Parris Glendening, for the state's $1.7 billion budget shortfall.

But Democrats had their wins in 2002, too, including the taking of three Midwestern states (Wisconsin, Illinois and Michigan) that had been under Republican governors for years, including ousting one incumbent. In Wisconsin, Democratic Attorney General Jim Doyle beat Republican Gov. Scott McCallum with ads that declared, “State government is a mess right now, caucus scandals, misuse of state planes, $2.8 billion deficit, rising taxes. This has got to change." Trailing in the polls, Doyle has decided not to seek a third term in 2010.

Democrats in 2002 also retook the Tennessee governorship. Phil Bredesen won, in part by vowing to keep the state free of an income tax. He defeated Republican U.S. Rep. Van Hilleary in the race to succeed the term-limited Gov. Don Sundquist (R). Bredesen kept his promise, and the state still has no income tax. Hilleary’s election hopes weren’t helped when Sundquist went back on a pledge and tried to enact an income tax, leading to raucous, stone-throwing protests at the capitol. “Every Republican in the state distanced themselves from him (Sundquist) when he floated during his second term the idea of a state income tax. This destroyed whatever future he had politically,” said Anthony J. Nownes, a political science professor at the University of Tennessee.

Once again, anti-tax advocates vow to make tax hikes a litmus test in 2010 governor’s races. “In 2002 and 1994, people didn’t turn out all incumbents; they turned out incumbents who raised taxes,” said Grover Norquist, founder of the Americans for Tax Reform and major advocate for limited government.

California, in a league of its own for fiscal dysfunction, has experienced what can happen when voters revolt. While California voters re-elected Gov. Gray Davis (D) in 2002, they ousted him less than a year later in an unprecedented statewide recall election. A tripling of the car tax and Davis’s handling of spiraling budget deficits were partly to blame.

Republican Arnold Schwarzenegger, who replaced Davis as governor in 2003, is barred from running for another term, but pundits say that displeasure over California’s historic budget deficits and his low approval ratings could help return the governor’s seat to the Democrats. California Attorney General Jerry Brown (D) is leading in polls against several Republican candidates—including former eBay Chief Executive Officer Meg Whitman—in the race to succeed Schwarzenegger, putting Brown in a position to reclaim the job he held from 1975-1983.

But raising taxes is not always the kiss of death in politics. Democrat Mark Warner raised sales and cigarette taxes as Virginia’s governor from 2002-2006 and campaigned for two regional sales tax increases to fund transportation that voters rejected. Warner’s popularity helped elevate his lieutenant governor, Tim Kaine, as his successor. (Virginia is the only state that limits its governors to one term.) Warner now represents Virginia in the U.S. Senate. In the other governor’s race in 2009 besides New Jersey, Republican Bob McDonnell won back Virginia.