RALEIGH — The 2021 governors’ report was released by the free-market-focused American Legislative Exchange Council in late March, and many conservatives were surprised that Democratic N.C. Gov. Roy Cooper received a better-than-average rating on his performance. Cooper had the fourth-best ranking for a Democrat and was 22nd overall among the 50 state governors. But analysts, including ALEC’s chief economist, were quick to point out that in the areas in which he did best, Cooper can hardly claim all the credit.
The ALEC report gave Cooper especially high ratings on “spending per capita” (third overall), “instate migration” (seventh), and “debt” (10th).
Areas where he did not score as high were “personal income tax” (46th), “corporate income tax” (31st), unemployment rate (31st), and “education freedom” (29th).
“The ALEC ranking appears to be a mixed bag,” Brian Balfour, the John Locke Foundation’s senior vice president of research, said. “They oddly give Cooper high marks for spending and debt, in spite of his vetoes of fiscally restrained budgets and his desire to issue more debt. Meanwhile, Cooper rightly receives poor marks on corporate and individual income taxes because he fights against the legislature’s tax cuts.”
ALEC’s chief economist, Jonathan Williams, spoke to Carolina Journal in early April to offer more details about why his team rated Cooper 3/5 stars on economic freedom despite the governor’s frequent vetoes of the Republican legislature’s free-market agenda.
“There are a couple elements to look at in our Grading America’s Governors Report,” said Williams. “One way this report measures the governors is how the economy has done during the years they are in office.”
Williams said that over the last decade, North Carolina has been a “free-market success story” and that much of the policy that helped bring this about occurred prior to Cooper’s tenure. Regardless, Cooper’s ranking would benefit from this strong economy.
“In fact, you could make the case that Gov. McCrory and his policies, as well as the free-market leaning legislature, which has been there for a good many years now, has been moving the ball forward tremendously,” Williams said. “So I think Gov. Cooper benefits, in a way, from that solid economic performance due to tax cuts even before he took office.”
Williams said people should not look at the governor’s ranking in isolation from how the state is doing as a whole. “In some cases in our governor’s report, the governors can either get credit for things that the legislators deserve credit for or get blame for things, in some states, that the legislators did that they just can’t stop or if their veto is overridden, for instance.”
ALEC did take into account the budget deal last year, and how during the long legislative session Cooper compromised on a couple bigger packages, Williams said. They especially looked at the phase-out of the corporate income tax, reducing other tax rates, and some school-choice elements.
“Those are things that wouldn’t have happened without the free-market legislature but still did happen under his tenure, so he deserves at least some credit for that.”
As an organization of legislators from across the country, Williams said ALEC is aware of how legislatures often lead the way on policy matters.
“A lot of how we grade governors here depends a lot on their interdependencies with the legislative branch, and even with the judicial branch.”
The ranking can become a bit more complicated on which free-market policies the governor gets credit for and which they do not. For example, Williams told CJ that Cooper received the high ranking of third overall in spending for a budget compromise that he signed, even if he initially opposed the more free-market Republican proposal. But he received low marks on personal income taxes (46th overall) for opposing lowering rates, even if they eventually were passed.
“If you look at that particular variable, we looked at public statements and opposition to additional tax cuts,” Williams said. “If it was just based on the rate, North Carolina would rank in the top 10 or 15 states.”
“Gov. Cooper should thank the free-market legislature from previous years and currently for keeping North Carolina’s economy strong and those policy elements in some of the most competitive shape in the country,” Williams concluded. “We’re just big fans of North Carolina’s tax-reform experiment in the past decade, and I think it has produced dividends. And now Gov. Cooper presides over a strong economy thanks to free-market reform.”
