WASHINGTON - A libertarian think tank slapped Ohio Gov. Bob Taft with an F for his fiscal policies on Friday - and charged the Republican with being the highest-taxing governor in America recently.

        Taft spokeswoman Mary Anne Sharkey fired back at the Cato Institute: “We rate your report "Incomplete.”' She said the governor had cut taxes in his term, but in the past year had been caught between a requirement to balance the budget and stubborn recession.

        The Cato Institute's biennial report card on the nation's governors, unveiled at a news conference Friday, shredded Mr. Taft for being what it called a prodigious spender, for raising business taxes by $349 million and for raising cigarette taxes by 31 cents.

        He was one of four governors, evenly split between Democrats and Republicans, to get a failing grade from the think tank, which supports low taxes and small government. Kentucky Gov. Paul Patton and Indiana Gov. Frank O'Bannon, both Democrats, got Cs.

        “I don't think you need the Cato Institute to tell you Bob Taft gets an F for fiscal policy and fiscal management,” said Austin Jenkins, spokesman for Democrat Tim Hagan, who is running against Mr. Taft in the November elections.

        “He's been in office for four years, and he's bankrupted this state. That's his greatest accomplishment,” Mr. Jenkins said.

        Political analyst Eric Rademacher said Cato's report was not going to erase Mr. Taft's sizeable lead in the race, though Mr. Hagan and Independent candidate John Eastman likely will use it as ammunition.

        “Voters are ultimately going to judge to vote for Taft or Hagan or Eastman based on how ... it will impact their own pocketbooks, as opposed to what a report or analysts tell them,” said Mr. Rademacher, director of the University of Cincinnati's Ohio Poll. Its poll, released Wednesday, showed Mr. Taft leading Mr. Hagan 53 percent to 35 percent.

        Mr. Taft and Republican lawmakers this year faced a $1.9 billion deficit. They created a new state tax on income from trust funds, raised the cigarette taxes and let Ohio join a multistate lottery.

        Ms. Sharkey said much of what Cato considered extra spending the governor saw as investment - spending money on new schools, cleaning up polluted industrial sites or creating open spaces.

        “He raised some taxes, but he also cut spending,” she said, ordering 15 percent cuts in many state agencies.

        “Due to the recession, Ohio's particularly hard hit because it's an industrial state,” Ms. Sharkey said. “It's one of the first in and last out of a recession.”

        She said criticism from Mr. Hagan has made the opposite point of the Cato Institute: that Mr. Taft has cut too much.

        A liberal-leaning think tank, the Center on Budget and Policy Priorities, came out with its own report Friday that said most states already had exhausted the easy ways of fighting fiscal troubles.

        They've frozen hiring, dipped into rainy day funds and cut administrative costs.

        The Cato report's authors believe that all problems can be solved by cutting taxes and spending, said Nick Johnson, head of the state fiscal project at the center. But states have already cut into important programs, such as health insurance for children.

        Cato senior fellow Stephen Moore said the fiscal crises states face is the legacy of unprecedented state-spending splurges in the 1990s.

        States faced a combined budget gap of more than $40 billion this year, and the figure for 2003 budgets could be $50 billion.

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