Michigan
Jennifer Granholm
Elected: 2002
Rating: 
Michigan has the dubious distinction of being one of only three states to record a net loss of jobs last year--and the only one that couldn't blame its troubles on Hurricane Katrina. In July, Michigan's jobless rate surged to 7 percent. This is bad news for Granholm, who faces a tough reelection bid. Her opponent, Dick DeVos, is an entrepreneur and former Amway and Orlando Magic executive.
Many business groups are lining up behind DeVos, for obvious reasons. Still, a number of Granholm's initiatives are smart. She closed a $4 billion budget deficit by cutting spending. She then invested $2 billion to boost tech transfer. She added entrepreneurship to the curricula in Michigan's grade schools and universities. She created a novel 401(k)-like savings plan for business owners, and put all applications for business permits online. She even successfully lobbied Google to move its AdWords division (and 1,000 jobs) to Ann Arbor.
The big black mark on the governor's record is that she vetoed the legislature's efforts to expedite the repeal of Michigan's grotesque single business tax, which penalizes employers for each additional worker they hire. Granholm's concern that the state had to find a way to cover the $1.9 billion hole created by the early repeal was valid but, even so, the burial of this tax was long overdue. "Entrepreneurs are like weeds," says Mark Clevey, of the Small Business Association of Michigan. "You don't really need to stimulate their growth, you just need to stop pouring weed killer on them." That said, Clevey asserts that, "on balance, she's done better than any other governor I've seen."
Minnesota
Tim Pawlenty
Elected: 2002
Rating:
Minnesota's economy is bustling. The number of new jobs created jumped 2.7 percent from 2005 to 2006, almost double the national average of 1.4 percent. This has helped Pawlenty rack up Minnesota's first budget surplus since 2001. In terms of his small-business policies, he led the largest delegation ever fielded by a U.S. state on a trade mission to China and created tax exemptions for businesses beyond the Twin Cities. He also created the Smart Buy Alliance to help employers pool resources and drive down health insurance costs and approved a state-sponsored website that helps Minnesotans order prescription drugs from Canada. These initiatives, along with the thriving economy, have endeared Pawlenty to business owners. Regrettably, he cut funding for higher education, causing tuition to rise by 33 percent on average at state universities--even though a highly educated population is among the state's chief assets.
Nebraska
Dave Heineman
Elevated: from lieutenant governor to governor in 2005
Rating:
Heineman has been on the job less than two years, having taken over from Mike Johanns when the latter was named U.S. agriculture secretary in January 2005. Heineman is often called a big-business candidate, but his record as governor is too short to say for sure. The cornerstone of his small-business agenda--which the Nebraska legislature passed in 2005--provided a sales tax refund on small-business equipment purchases, property tax exemptions, and income tax credits, by lowering the qualifying thresholds. To support rural communities, the package created tax incentives for small businesses located in towns of 15,000 or less.
Heineman also won approval this year for a three-year $300 million tax cut, primarily on personal income. His critics carp that Nebraska still has high property and corporate income tax rates for the region. If elected in his own right, Heineman says he will push to repeal the state estate tax and restructure the income tax.
New Hampshire
John Lynch
Elected: 2004
Rating:
Two years ago, Lynch defeated Craig Benson, a former Inc. 500 CEO, to become governor. This year, he faces Jim Coburn, yet another Inc. 500 alumnus, in his race for reelection. (New Hampshire elects governors every two years.) Lynch is himself a former CEO. He took over the furniture maker Knoll in 1994 and had restored it to profitability by the time he left in 2001.
During Lynch's first term, Boston-area companies have continued to move to the Granite State for the tax rates, the lowest in the country.
Lynch's main achievement has been replacing a three-year-old health plan that resulted in higher premiums for many businesses. "The old law allowed insurers to discriminate [against employers] on the basis of health or geography of their workers," says Lynch. The new system doesn't let insurers consider these factors and limits premium increases to 20 percent per year. The state's entrepreneurs don't seem to mind these price controls.
