Economy is overriding issue in governors' races

Then came the catastrophe on Wall Street. Now the economy has become the overriding issue that is tightening governors races across the nation. In Indiana, for example, Gov. Mitch Daniels faces an unexpectedly close race against a Democratic challenger who has blasted his economic policy.

The economy is "going to be the No. 1 reason someone keeps their job or loses it," said Del Ali, who has conducted polls in several governors' races.

Eleven states elect governors this fall, offering Republicans a chance to reduce the Democrats' current 28-22 majority of governors' seats.

And this year is only a prelude to 2010, when three of every four states will elect a governor. The winners of those races will have a crucial edge when it comes time to redraw electoral maps based on the 2010 census.

Earlier in the year, gubernatorial candidates talked about education and health care, along with the economy.

Then came soaring gas prices, a drumbeat of negative news about state budgets and Wall Street's unprecedented meltdown. The faltering economy now trumps other topics in several closely watched governors' races.

The financial meltdown "puts an exclamation point on the challenges we're facing and every state is facing now," said Vermont Gov. Jim Douglas, a Republican seeking his fourth two-year term in office.

Some states are already reporting problems accessing credit markets for short-term borrowing. The number of states with deficits is increasing. Tax revenue is flat or falling, and many states' unemployment compensation funds are dangerously low.

In Missouri, Republican Gov. Matt Blunt declined to seek a second term, clearing the way for the contest between Hulshof and Democratic Attorney General Jay Nixon. The economy was the top issue in recent polls that showed slight gains for Nixon.