In terms of education, Napolitano's signature achievement is an $80 million package, included in the 2007 budget, to provide all-day kindergarten across the state. She also won funding for a new medical school in Phoenix and a pay raise for teachers.
Thanks to the state's relatively low taxes, booming economy, and expanding population, Arizona's business climate could hardly be better. But the big test for the governor, should she win reelection, will be immigration. Napolitano, who once did legal work for pro-immigrant groups, has taken a hard-line stance on illegal immigration as governor, calling for tougher border enforcement and higher penalties for employers who hire undocumented workers. By bashing Washington Republicans over lax border control, she has bolstered her political fortunes at home.
California
Arnold Schwarzenegger
Elected: 2003, after a recall
Rating: 
He hasn't been the revelation that some people had hoped for, but the Governator's biggest business-related priority coming into office was reforming the state's onerous workers' compensation system, and he's done it. The new system dictates how doctors and lawyers measure the extent of worker injuries, something that had been subjective in the past. Since the law passed in 2004, businesses have seen their workers' comp costs fall by 40 percent on average, and the state has added 580,000 jobs, second only to Florida. "The importance of his work can't be overstated," says Michael Shaw, of California's NFIB chapter.
Connecticut
M. Jodi Rell
Elevated: from lieutenant governor to governor in 2004
Rating:
Rell is popular, and Connecticut is a rich state, boasting the second highest household income in the country behind New Jersey. In two years in office, she has focused on good government measures such as making state contracting more transparent. This impulse is understandable, given that her predecessor, John Rowland, resigned from office under indictment for corruption. But Rell could be more proactive when it comes to small-business policies, because Connecticut may well find itself at a crossroads in the coming years. The state routinely struggles to balance its budget. Cities such as Hartford and key industries such as manufacturing and insurance are in decline. Housing costs are high, which makes Connecticut an unappealing destination for younger workers. And even with some bright spots, such as the hedge fund industry, job creation is flat.
Georgia
Sonny Perdue
Elected: 2002
Rating:
Perdue is generally well liked by Georgia's business community. On his watch, the state streamlined its cumbersome corporate tax structure. Perdue also created tax credits for businesses that hire new workers and for small businesses that purchase capital equipment. And he spread economic development resources at the grassroots level among 22 small communities.
Assuming he is reelected, Perdue's second term could, like Janet Napolitano's (see above), turn on the immigration question. A new law that he championed allows the state to strip companies of government contracts and tax credits in the event they are found to employ undocumented workers. It's the toughest measure of its kind in the country and is disliked by many members of the state's Hispanic population--which is growing at the third-fastest rate of any Hispanic state population in the country--not to mention by employers, some of whom think it targets them unfairly.
Hawaii
Linda Lingle
Elected: 2002
Rating:
Scenic it may be, but Hawaii is also the most expensive state to do business in, and not just because it's located far from the mainland. In addition to predictably high gas taxes and utility costs, residents pay 5.67 percent of their total income in sales and excise taxes (the second highest amount in the U.S.), and workers' compensation premiums are, at $3.73 per every $100 in wages paid, the fourth highest in the country. "Our state historically had a poor business reputation," admits Lingle, a former mayor of Maui, who has made providing relief to small businesses a priority.
In the face of a combative Democratic-led legislature, however, few of Lingle's proposals have become law. Most notably, the legislature rebuffed her bid to cut taxes by $285 million--despite a $574 million budget surplus for 2005. She has thus been compelled to advance her agenda through a series of administrative orders. After fruitlessly pushing to reform the workers' comp system, for example, she focused on streamlining the workers' comp hearing process at the agency level. Similarly, she launched an initiative to get state agencies to run new regulations past a review board when the rules affect small businesses, an existing requirement that officials had previously ignored.
