Hawkeye Reporter

In a grading report of American governors released by the Cato Institute on Oct. 5, Iowa Gov. Kim Reynolds was commended on her 2020 fiscal policies, and further praised by the Tax Education Foundation of Iowa (TEF) and Iowans for Tax Relief (ITR). 

The institute scrutinizes governors' efforts to limit taxes rather than raise them, and their histories of being spending-conscious with state funding. 

In Cato's review of Reynolds, who received an A grade, the institute said that she has carried "her stated beliefs in limited government and personal responsibility into fairly lean state budgeting."

Cato also cited Reynolds' 2018 major tax reform bill, which historically reduced tax rates for Iowans by more than $300 million per year, according to the institute. 

Reynolds was joined in the grade-A category by Republican governors Chris Sununu of New Hampshire, and Pete Ricketts of Nebraska. 

Seven American governors were rated as failing in fiscal policy by the Cato Institute, all of whom are Democrats. 

Chris Ingstad, President of IRT, told Hawkeye Reporter that his organization was pleased to see the recognition of the governor's work to "reduce the burden of government and deliver more opportunity to Iowans."

Reynolds has signed key laws into effect, slashed red-tape taxes and brought reform to the state's tax systems, Ingstad said. 

Ingstad and Cato both stated that the governor had been working on additional tax-cutting legislation before the coronavirus pandemic halted all statehouse activity. 

"Iowa passed a very responsible budget in the midst of the COVID pandemic and that's really because we've followed sound budgeting principles in the years leading up to 2020," said Ingstad. "Iowa didn't try to impose tax increases or new revenue schemes to support a bloated budget like we've seen in so many other states."

John Hendrickson, the policy director at TEF, agrees that Iowa's economy out-performs those of "tax-and-spend states." 

"I think what the rating from the Cato Institute shows is that Gov. Reynolds has been leading in a fiscally responsible way, in comparison with our neighbors in Illinois, whose financial health was collapsing even before the pandemic," Hendrickson said. "Illinois is still in bad shape, and what a lot of policy leaders don’t understand is that you cannot tax and spend your way to prosperity, and I think Gov. Reynolds understands that."

In government, just like in a business or in a household, lawmakers have to make tough decisions and budget responsibly—which is what Iowa tax policy advocates like Ingstad and Hendrickson feel Reynolds has been doing. 

"I think if you look at states that have kept taxes low, or they’re working to reduce taxes or reduce spending, those states' economies are doing a lot better than the 'tax and spend economies,' like Illinois, New York and New Jersey," Hendrickson said. 

The policy director said that the Iowa governor has been doing well by adhering to a policy of fiscal conservatism, and hopes to see the cautious revenue estimates and pursuit of minimal tax rates continue. 

"That will help more Iowans keep more of their hard-earned dollars and make our state more competitive," he said. 

The tax policy experts feel that Reynolds has navigated the COVID-era economy commendably. 

"Gov. Reynolds signed a budget that was crafted like so many household budgets are right now during COVID," Ingstad said. "Priorities were funded and difficult decisions were made about where to hold the line or even reduce state spending. There was no knee-jerk reaction to dip further into a taxpayer's pocket."

With the pandemic continuing to take tolls on Iowa's public health and economy, Ingstad pointed to the state's coveted unemployment rate of 4.3% in September. 

"We're glad to see so many people getting back to work in Iowa," he said. 

Hendrickson agreed that Iowa's economic outlook is positive. 

"Certainly, the economy is recovering," he said. "There is still uncertainty from COVID, but our unemployment rate continues to go down. We are starting to make improvements. If the governor and legislature keep doing what they have been doing, spending low and cutting tax rates, I think that's the way forward, prudence in navigating the economy during COVID-19. [Gov. Reynolds] has done a good job of keeping our economy as open as possible while keeping our citizens safe from the virus."