As Governor, Romney Balanced Budget By Hiking Fees

Dec 14, 2011
Originally published on December 14, 2011 7:02 am

When it comes to taxes, the field of Republican presidential candidates is unified: Keep them low and certainly don't raise them.

In both his runs for the White House, Mitt Romney has hewed to this Republican line. But whether he cut or actually raised taxes as governor of Massachusetts is a subject for debate.

All politicians like to talk about cutting taxes. But at the state level during tough economic times, many end up cutting spending while raising taxes because they have to balance their budgets.

In 2003, when Romney became governor of Massachusetts, the cash-strapped state was going through a budget squeeze of its own. So did the Republican governor react by raising taxes?

Romney's current answer as a contender for the Republican presidential nomination is clear. "Nope. I don't believe in raising taxes. And as governor I cut taxes 19 times and didn't raise taxes," he said during a GOP presidential debate on Fox News this summer.

But is that true?

Tax Holidays

Mike Widmer, president of the Massachusetts Taxpayers Foundation, tells NPR that Romney raised state revenues more than he cut them. Widmer says most of those 19 tax cuts Romney talks about were pretty modest. Some were weekend sales tax holidays.

"He raised corporate taxes. He also raised fees very dramatically in his first year," said Widmer.

Widmer's foundation is a nonpartisan, nonprofit group that attempts to truth-squad policies that cost taxpayers money. He remembers eight years ago when Romney came into office facing a huge budget deficit.

"He put together a plan which included major spending cuts and significant tax and fee increases, which is the only thing he or any other governor could have really done," said Widmer. "I mean, there's no magic here."

Widmer says Romney didn't raise the state income tax. Instead he raised state fees.

A $3 Billion Shortfall

Romney hasn't talked about those fees much in recent debates. But back when he ran for president four years ago, he defended his fee hikes at CNN's 2008 Republican presidential debate.

"We had a $3 billion budget shortfall," Romney explained.

"We decided we were not going to raise taxes, and we found that some fees hadn't been raised in as many as 20 years. These were not broad-based fees for things like getting your driver's license or your license plate for your car, but instead something like the cost of a sign on the interstate and how much it was going to cost to publish a McDonald's or a Burger King sign on the interstate. We went from, like, $200 a sign to $2,000 a sign," said Romney.

But Widmer says the fees were broader than Romney suggests, adding that Romney's fee hikes were ones "the average citizen of Massachusetts would pay."

He says Romney proposed raising tuition at state schools. He raised the fees for when you buy a house and register the deed with the state.

Romney even proposed creating a fee for blind people, says Widmer: $10 to receive a state certificate of blindness. He also proposed boat registration fees and increases for state ice-skating-rink rentals.

Altogether, Widmer says, the former governor pushed through dozens of higher fees.

Romney increased corporate taxes too, together raising upwards of $700 million a year — a figure his GOP rival John McCain seized on four years ago.

Romney contends he raised only $240 million in fees. The Romney campaign didn't make anyone available for an interview for this story but in a statement said that Romney did not raise taxes as governor of Massachusetts.

As for raising corporate taxes, Romney says he was only closing tax loopholes.

Alan LeBovidge, who was the commissioner of revenue for Massachusetts when Romney was governor, agrees with this assessment.

LeBovidge says that under Romney the state was able to raise more than $100 million by closing a loophole for banks where "they could effectively take their income from real estate and pay no taxes on it."

LeBovidge says many banks were abusing the tax code with this loophole. And it was costing the state a lot of lost tax revenue.

"So I explained to the governor what the loophole was," LeBovidge recalled. "[Romney said] go ahead and I was able to settle with 30, 40 banks."

So in this case, Romney seems to have delivered on the image he paints of himself as the former corporate businessman coming in to rid the government of waste and inefficiencies.

And on the campaign trail Romney certainly talks about that, along with cutting spending, as a way to rein in the federal budget.

"We talk about all the waste in government and the inefficiency. And having spent 25 years in business, I know something about taking waste out of enterprises. I'd love to do that to the federal government. And there is massive waste," Romney said during a CNN Republican debate this fall.

While governor, Romney says he found $2 billion in loopholes, waste, and inefficiencies in his first budget.

But Widmer says the rhetoric here — at the state or national level — often overreaches. He says that only a small fraction of that $2 billion was really waste and inefficiency.

The rest was plain old spending cuts and tax or revenue increases. At least at the state level, that's often the cornerstone of balancing a budget.

Copyright 2017 NPR. To see more, visit http://www.npr.org/.

RENEE MONTAGNE, HOST:

Republican voters continue their courtship with presidential candidates, and they must make a commitment soon. Mitt Romney is still straining to get that commitment, and his critics and supporters alike point to his record as governor of Massachusetts. They question whether he cut, or actually raised, taxes while in office.

Here's NPR's Chris Arnold.

CHRIS ARNOLD, BYLINE: All politicians like to talk about cutting taxes. But during tough economic times - at the state level, anyway - many still end up cutting spending and raising taxes because they have to balance their budgets. And it was during such a budget squeeze in 2003 that Mitt Romney became governor of Massachusetts. So did he raise taxes?

(SOUNDBITE OF SPEECH)

ARNOLD: At least, that's what Romney has said in recent televised debates. But is that true?

MIKE WIDMER: No, it's not really a true statement.

ARNOLD: Mike Widmer is the head of the Massachusetts Taxpayers Foundation. He says that most of those 19 tax cuts that Romney talks about were pretty modest. Some were weekend sales-tax holidays, for example. And he says that Romney raised state revenues more than he cut them.

WIDMER: He raised corporate taxes. He also raised fees, very dramatically, in his first year.

ARNOLD: Widmer's foundation is a nonpartisan and nonprofit group that researches and tries to truth-squad policies that cost taxpayers money. And he remembers back eight years ago, Governor Mitt Romney came into office facing a huge budget deficit.

WIDMER: More than 2 billion. And so he put together a plan, which included major spending cuts, and significant tax and fee increases - which is the only thing he, or any other governor, could have really done.

ARNOLD: Widmer says that Romney didn't raise the state income tax. Instead, he raised fees. Romney hasn't talked about those fees so much in recent debates. But back when he ran for president four years ago, he defended his fee hikes.

(SOUNDBITE OF SPEECH)

ARNOLD: But Mike Widmer, with the Taxpayers Foundation, says the fees were more broad-based than Romney suggests. He says that Romney proposed raising tuition at state schools. He raised the fees for when you buy a house and have to register the deed with the state.

WIDMER: So those were fees that the average citizen of Massachusetts would pay.

ARNOLD: Widmer says that Romney even proposed creating a fee for blind people: $10 to receive a state certificate of blindness. Altogether, Widmer says that Romney pushed through dozens of higher fees, and he increased corporate taxes. Together, that raised upwards of $700 million a year. And that's a figure that Romney's rival John McCain seized on four years ago.

(SOUNDBITE OF SPEECH)

ARNOLD: Romney contends that he only raised $240 million in fees. The Romney campaign didn't make anyone available for an interview but in a statement, said that Mitt Romney did not raise taxes as governor of Massachusetts. As for raising those corporate taxes, Romney says he was only closing tax loopholes. Alan LeBovidge was the state commissioner of revenue for Massachusetts when Romney was the governor.

ALAN LEBOVIDGE: The banks had come up with a tax strategy whereby they effectively could take their income from real estate and pay no taxes on it - just pay no taxes.

ARNOLD: LeBovidge says many banks were basically abusing the tax code with this loophole, and it was costing the state a lot of lost tax revenue.

LEBOVIDGE: So I explained to the governor what the loophole was, and he authorized me to go ahead. And I was able to settle with maybe 30, 40 banks.

ARNOLD: And how much money were you able to raise by...

LEBOVIDGE: Over a hundred-million.

ARNOLD: Really?

LEBOVIDGE: Yeah.

ARNOLD: So in this case, Romney seems to have delivered on the promise of the former corporate businessman coming in to rid the government of waste and inefficiencies. And on the campaign trail, Romney certainly talks about that, along with cutting spending, as a way to rein in the federal budget.

: We talk about all the waste in government, and the inefficiency. And having spent 25 years in business, I know something about taking waste out of enterprises. I'd love to do that to the federal government.

ARNOLD: As governor, Romney and his first budget claimed to have found $2 billion of loopholes, waste and inefficiencies. But Mike Widmer says the rhetoric here - at the state or the national level - often overreaches. He says a small fraction of that $2 billion was actually waste and inefficiency. He says the rest was plain old spending cuts, and tax or revenue increases. At least at the state level, he's says that those are the cornerstones of balancing a budget.

Chris Arnold, NPR News, Boston. Transcript provided by NPR, Copyright NPR.