“Democrat Joe Manchin has enacted probably the most pro-growth tax reforms of any governor.”
Joe Manchin has led a fiscally responsible administration that has overcome serious budgetary issues since taking office,
and his brand of politics is a unique balance that fits West Virginia very well. The point of this discovery is not to question political motivations of CATO or West Virginia. However, a broad look at our current Governor highlights a combination of four aspects that positioned his administration to achieve such CATO supported recognition: progressive policies, building from a broken system, strong Conservatism in West Virginia, and personal business practices.
Governor Manchin believes in progressive fiscal policies that can help West Virginia’s economic climate, perhaps given substantial flexibility with strong approval ratings. In 1999 Governor Underwood initiated the Commission on Fair Taxation, which proposed ground-breaking reforms for fairer, more appropriate taxation. Through the Wise administration, these recommendations gained little traction from the Executive and Legislative branches - until Governor Manchin took office in 2004 and deviated from this trend by establishing the 2005 Tax Modernization Project.
Since 2005, Governor Manchin has been a leader in bureaucratic reform. This administration has seemingly taken real action to support West Virginians like WVU Economics professor, Dr. Russell Sobel, who published “Unleashing Capitalism”. After releasing his analysis of West Virginia’s economic growth, Sobel was invited to present his case to the Governor and his cabinet. Ironically, Dr. Sobel offered this same “Unleashing Capitalism” presentation to South Carolina governor, Mark Sanford, who joins Manchin as two of the three ‘A’ ratings from CATO. Governor Manchin looks at the current system with a progressive lens, spending money responsibly while eliminating much waste and inequality. Economic reform efforts continue to prosper under this governor, including the recently appointed Independent Commission on Judicial Reform that will analyze the state’s legal system. An unbiased bench certainly contributes to economic stability.
Second, Governor Manchin has achieved such success because his administration assumed a broken fiscal policy that was loaded with potential. At the outset, West Virginia had a tangled system of worker pensions, mounting unfunded liabilities, and stale progress from the 1999 tax commission. However, with Manchin’s reversal back to responsible fiscal policies in 2005, this Governor is leading a charge that pursues a strong economic climate. Future reforms will surely deal with regressive taxes that discourage business within West Virginia, a taxation system that treats everyone fairly, and a simpler system that is easily understood and accepted. As Sobel states, more economic freedom among West Virginia residents correlates to higher per capita wages and increased business productivity.
Third, outside of Republican/ Democrat labels, West Virginia generally holds conservative values. Last election, the Charleston Daily Mail highlighted a Mark Blankenship poll that found 45% of voters described themselves as conservative. Today, Governor Manchin still holds many conservative values, and aligns with at least 45% of the state (but probably much more than that since his approval ratings exceed 50% and received 66% of the vote in 2008). With his CATO recognition, Manchin aligns with much of West Virginia when he initiates action to help small business, decrease the size of government, privatize certain industries, and create a stronger small-business climate in pursuit of truly being “open for business”. Having a strong base that supports the governor’s plans and ideals is critical to running a fiscally responsible state that looks for budget cuts instead of tax increases and deficit spending.
Last, close friends say previous business practices support many of Governor Manchin’s initiatives, such as creating a better economic climate. From the coal industry, Manchin subscribes to the “Six Sigma” style of management, a business operation that ensures product quality, and identifies defects that detract from profitability and success. Shifting to his “Open for Business” campaign, Manchin wanted to ensure that the state’s economy could support and attract business growth, enacting tax reductions alongside business incentives. Since West Virginia commerce depends on the products it sells, the entire economic and judicial climates must be stable and prosperous to attract and retain various businesses. This reliance on a quality business atmosphere led Manchin to enact several pro-growth tax reforms that receive CATO’s critical acclaim.
Here are the facts, according to the Chris Edwards at the CATO Institute. Nationally, states continue to add billions of dollars to their respective debts – West Virginia has incrementally paid down much of its unfunded liabilities. CATO research shows that state spending increases incrementally since 2004 – West Virginia spent, proportionately, 8%, less of its total revenue in FY2007 than FY2009. Unfortunately, general revenue continues to increase, along with rising government spending. Also since 2004, WORKFORCE West Virginia reports that the number of state government employees has decreased 5.4%.
While Governor Manchin’s recent recognition is a sign that West Virginia’s fiscal climate is improving, much more can be done to further correct the state’s culture of regressive business policies. Manchin has combined these four factors to bring himself and CATO to a point of agreement – that a better business climate requires less taxes and less government expansion into fiscal policy. Great strides toward a more responsible fiscal environment have corrected some previous burdens and liabilities, while setting the stage for future reform. The continuation of this administration, and those of future governors, can achieve much more to support a business friendly culture with fiscally responsible CATO criteria: tax cuts, budget restraint, and responsible spending.