Battle of the Statehouses The policy stakes are wider than ever with Democrats set to gain.
https://www.wsj.com/articles/battle-of-the-statehouses-1540336650
While the battle for Congress is the main event this election, the fight for control of 36 governorships may be as consequential for American politics. Opposition to Barack Obama’s policies galvanized conservatives during the 2010 midterms and ushered in GOP control of statehouses from Arkansas to Wisconsin. In 2010 Republicans held majorities in 15 legislatures and 24 governorships. Today the GOP controls 32 legislatures and 33 governorships.
The result has been a remarkable record of reform and economic revival in many states. Eight years of conservative governance have bolstered state budgets and economies. (See the nearby chart on job growth.) But this year Democrats are riding anti-Donald Trump sentiment in a bid to sweep most of the big state governorships and many legislative chambers and move in a far different policy direction. The stakes are worth highlighting.
Start with tax reform. In 2011 Michigan Republicans replaced the state’s onerous business tax with a flat 6% corporate rate while eliminating myriad carve-outs. The Wolverine State has led the Great Lakes region in GDP growth over the last seven years as business investment has surged, prompting other states in the Midwest to cut taxes to compete.
Indiana Republicans slashed the state’s corporate rate to 5.75% from 8.5% in 2011 and plan to reduce it to 4.9% by 2022. Republicans in Ohio have cut the state income tax by 16% across the board and reduced the top marginal rate to 4.997% from 5.925%.
Iowa has long been the New Jersey of the Midwest with the nation’s highest corporate rate and a punishing 8.98% top income rate. Republicans this year made the Hawkeye State more competitive by putting the top income tax rate on a path to 6.5% by 2023. Over the next three years, the state’s 12% corporate rate is set to decline to 9.8%—assuming GOP Gov. Kim Reynolds isn’t defeated. Her Democratic opponent Fred Hubbell has warned President Trump’s trade brawls may compel him to hit pause on the tax cuts.
Other Democratic candidates are more candid about their tax ambitions. Tallahassee Mayor Andrew Gillum has endorsed a 2.25 percentage-point increase in Florida’s 5.5% corporate rate to finance free college tuition. Ohio’s former Attorney General Richard Cordray has called for “distributing the overall tax burden according to one’s ability to pay.”
Wisconsin schools Superintendent Tony Evers wants to soak the rich to increase education spending. He is also campaigning to repeal Gov. Scott Walker’s collective-bargaining reforms, which required public workers to pay more for their benefits, mandated annual union certification votes and prohibited employers from collecting dues.
The reforms have saved taxpayers billions of dollars and broken the government union monopoly. Membership in the Wisconsin Education Association Council has fallen by 60% since 2011. Republicans in Wisconsin are likely to keep control of at least the state Assembly, but Mr. Evers could give government unions a lift by refusing to enforce the reforms.
Also at risk are right-to-work laws in Wisconsin and Michigan, which give employees the choice of whether to belong to a union. If Democrats seize control of Lansing, public pension reforms that have shifted new workers into defined contribution plans could also wind up in the dustbin.
This year’s Democratic candidates are also more hostile to education choice than those of yore. Mr. Gillum wants to starve charter schools of funding and wind down the state’s private-school tax credit scholarship program that benefits more than 100,000 poor kids. Enrollment has nearly quadrupled during Republican Rick Scott’s eight years as Governor.
Mr. Evers has called for rolling back Milwaukee’s private-school voucher program, which was launched in 1990 and expanded significantly under former Democratic Gov. Jim Doyle. Mr. Cordray has vowed to make charters adhere to the same regulations as traditional public schools. That means union labor agreements.
Meantime, Democrats are marching in unison behind Medicaid expansion. Seventeen states including Florida, Georgia, Wisconsin and Kansas have resisted ObamaCare’s not-so-grand bargain of expanding Medicaid eligibility to 133% of the poverty line in return for the feds funding 90% of the costs for new enrollees.
Democrats say states are forgoing free cash, but higher Medicaid costs are starting to squeeze public services and will crush state budgets during the next economic downturn when revenues decline and enrollment increases. Insurers that administrate benefits are rationing treatment due to paltry government payments.
Republican legislators in non-expansion states may eventually buckle to political pressure. Kansas’s GOP legislature last year passed a bill to expand Medicaid that was vetoed by former Gov. Sam Brownback. Even if Republican legislatures resist, Democratic Governors could try an end-run as Louisiana’s John Bel Edwards and Alaska’s Bill Walker have done.
Courts are theoretically a check on executive lawlessness, but Democratic Governors could pack state judiciaries like Barack Obama did the D.C. Circuit Court of Appeals. The next Governor of Florida will replace three of the state Supreme Court’s seven justices who are retiring this year. Recall how a liberal majority on the Pennsylvania Supreme Court this year struck down the GOP legislature’s Congressional map as a partisan gerrymander and redrew it in a way that gives Democrats a shot at gaining five House seats. Redistricting for Congress and legislatures will also begin after 2020.
American politics ebbs and flows, and a change of parties after eight years is hardly unusual. The difference this year is that America’s national political polarization has notably filtered down to most states. A wholesale change in statehouses will mean a dramatic move to the policy left in much of the country.
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