Government of Alberta Tops all Provinces and 34 U.S. States in Fiscal
Performance
Contact: Dr. Michael A. Walker,
Executive Director, The Fraser Institute, or
Mrs. Isabella Horry,
Research Economist, The Fraser Institute
(604) 688-0221
Release Date: January 6, 1995
Vancouver, British Columbia>>> The Fraser Institute today released the results of
the first ever attempt to create a general international fiscal performance ranking of
junior governments in North America. The Fraser Institute Fiscal Performance Index ranks
34 U.S. states and the 10 Canadian provinces according to their taxation and spending
policies. Two Canadian provinces, Alberta and Prince Edward Island, took the top two
positions, while Saskatchewan was tied for third place with Virginia in overall fiscal
performance scores. Alberta's score of 81 percent was far ahead of the second place
government, that of Prince Edward Island, which scored 66 percent. Saskatchewan and the
state of Virginia both scored 62 percent.
The fiscal rankings released today are part of The Fraser Institute's on-going program of
assessing the tax and expenditure behaviour of governments in Canada. The method of
constructing the index is taken from a U.S. study, conducted by the Cato Institute, of the
fiscal performance of 47 American governors. Stephen Moore and Dean Stansel, "A
Fiscal Policy Report Card on America's Governors: 1994," Policy Analysis, No. 203,
January 28, 1994, Washington D.C.: The Cato Institute.Note The Cato Institute is
simultaneously releasing the results of the index in the United States.
Three indices are constructed using data on each provincial and state government in office
In Quebec's case, the terms of office of Mr. R. Bourassa and Mr. D. Johnson are
combined.Note as at July 31, 1994. Twelve variables on revenues and spending are used to
construct the indices. The first index examines to what extent the governments have
controlled spending during their term of office. The second looks at how taxes and
own-source revenues have been restrained over the same period; and the third index
presents an overall measure of fiscal performance. Since all but two state governments
have either legislated or constitutional balanced budget requirements, provincial deficits
are added to provincial revenues to force budget balance on the provinces and hence make
provincial and state revenues comparable.
The Cato Institute's study uses two sets of variables due to limitations in data
availability; one set for the governors elected before 1992 and a second set for those
elected after 1992. The variables used in the Canadian analysis are comparable only with
those of the governors elected before 1992 and therefore only 34 U.S. States can be ranked
in the 1995 index. The Cato Institute also makes use of two variables which could not be
assembled for Canada.
The Fraser Institute Spending Index is composed of five variables:
1.Total spending per family of four in 1992 for the states and 1993 for the provinces (in
1992 dollars). All state variables are converted to Canadian dollars.Note
2.Average annual real increase in spending per family of four (in 1992 dollars) for the
period since taking office and 1993 for the provinces and 1992 for the states.
3.Average annual real change in spending per $1,000 in personal income for the period up
to and including 1993 for the provinces and up to 1992 for the states.
4.Average annual real increase in spending for the period up to and including 1993 for the
provinces and up to 1992 for the states.
5.The increase in budgetary spending per family of four between 1993 and 1994 in the
provinces (in 1993 dollars) and the increase in state general fund spending per family of
four between 1992 and 1994 in the states (in 1993 dollars).
The Fraser Institute Tax Index is composed of seven variables:
1.The average annual real increase in taxes for the period in office up to and including
1993 for the provinces and up to 1992 for the states.
2.The average annual real increase in own source revenues per family of four over the
period up to and including 1993 ( up to 1992 in the states) (in 1992 dollars).
3.The average real change in own source revenue per $1,000 in personal income over the
period up to 1993 in the provinces and up to 1992 in the states.
4.The percentage point change in the combined top marginal (corporate and personal income)
tax rates since coming into office and 1994.
5.The combined top personal and corporate income marginal tax rates in 1994.
6.The change in the gasoline tax rates (cents per litre) since coming into office and
1994.
7.The percentage point change in the provincial/state sales tax for the period up to 1994.
Each variable is standardized such that the lowest score is zero and the highest score is
100. The variables are then assigned a weight and summed across their respective
categories. The variables which deal with tax rates are given a weight of 0.38 (for
consistency with the CATO Institute's study), and the others are given a weight of one.
The index showing the overall fiscal performance is obtained by averaging the
"spending," and "tax and revenue" indices.
Only one provincial government, Alberta, received an A (80 percent or better) for its
fiscal performance. Two provincial governments received Cs (60 to 69 percent): Prince
Edward Island and Saskatchewan. Two received Ds (50 to 59 percent): British Columbia and
Nova Scotia. Five provincial governments scored less than 50 percent and therefore
received Fs: Manitoba, New Brunswick, Quebec, Ontario, and Newfoundland. No province or
state received a B (70 to 79 percent).
Click here to view Table 1: Budget Performance Index Components
Click here to view Table 2: Spending Index Variables
Click here to view Table 3: Revenue Index Variables
Click here to view Table 4: Deficit and Debt Index Variables