State of the States 2016

by Ted Lafferty, Jonathan Williams, Kati Siconolfi & Joe Horvath

Introduction

In 2016, 44 governors across America delivered State of the State addresses. These addresses included numerous economic policy proposals that will affect the states’ economic competitiveness. This report observes and analyzes the economic policy proposals discussed in each governor’s State of the State address. In those states where no State of the State address was given, the equivalent inaugural or budget address is discussed when applicable. Also included are special session addresses that had significant discussions of economic policy.

A number of different trends and priorities regarding economic policy were observed when reviewing these addresses. Following a similar trend observed in the majority of 2015 State of the State addresses, many governors focused a considerable portion of their addresses on the issue of tax relief. For the second year in a row, more governors proposed reducing taxes to facilitate economic growth than governors who proposed increasing taxes.

Aside from tax proposals, many governors discussed a number of different policy topics which, while less directly related, can still significantly affect state economies. Some of the most important of these issues included pension reform, expanding or shrinking Medicaid, changes to the state’s minimum wage and government efficiency.

The majority of governors seem to understand that lower tax rates and limited government give citizens and businesses a greater incentive to reside and operate in their states compared to others with higher tax rates and more regulations. This concept is further explored in the Center for State Fiscal Reform’s Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index, in which years of economic data and empirical evidence from each state are examined in order to determine what economic policies lead to prosperity. Generally, states with lower tax rates, fewer regulations and responsible spending habits outperform other states in terms of economic growth. Based on the observations made in reviewing the 2016 State of the State addresses, many governors are following these policies to help their states better compete for residents, jobs and capital.

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