Anti-tax advocates are scrutinizing Mitt Romney’s (R) record as governor of Massachusetts and focusing on the fact that he increased fees in the state by $500 million and proposed nearly $400 million in business tax increases.
This could erode whatever advantage on tax policy he hopes to have over 2008 presidential rivals such as Sen. John McCain (R-Ariz.) and former New York City mayor Rudy Giuliani (R).
The Cato Institute, a libertarian think tank, published a fiscal-policy report card for 2006 that gave Romney a C grade, ranking him behind 11 other governors, including Democratic White House hopeful Bill Richardson, governor of New Mexico.
Cato found that Romney increased annual state fees by $500 million as governor and proposed two corporate tax increases totaling close to $400 million a year.
When he took office, Romney faced a budget deficit of $3.2 billion, which he eliminated. He did not hike personal income or sales taxes. He is now highlighting his efforts to cut Massachusetts’s income tax rate from 5.3 percent to 5 percent and his successful shepherding of a $250 million capital gains tax refund through the Democrat-dominated state legislature.
But he increased fees for getting married, buying a house, bringing a case to court, and using a public golf course, to name a few reported examples. However, in a move that could prove controversial with social conservatives, Romney decided not to raise fees for convicted sex offenders. He vetoed a $75 fee for offenders required by law to register with the state.
“Romney’s people are trying to spin this by saying he kept his ‘No new taxes’ pledge,” said Stephen Slivinski, director of budget studies at Cato. “I guess if you consider only personal income taxes and sales taxes, he’s within bounds. If you take a broader view, he is not.
“The spirit of [anti-tax pledges] is to force governors to find more innovative ways of funding government,” he added. “If the spirit is to save money before you increase revenues, I don’t think Romney has held to the spirit of the no-new-tax pledge.”
Slivinski said he based his report on publications by Tax Analysts, a non-partisan group that tracks state and federal tax activity, and by the National Conference of State Legislatures.
Romney’s decision to raise many fees, but not the fee for sexual offenders’ registration, remains a sensitive political topic. Then Massachusetts Lt. Gov. Kerry Healey (R) said last fall that she disagreed both with this veto and another that sought to block a bill to spend $750,000 reducing a backlog of unregistered sex offenders. Massachusetts’s Democratic legislature overrode both vetoes.
Kevin Madden, Romney’s spokesman, said his boss raised fees by only $260 million and noted that the $75 fee increase for sex offenders was a disincentive for offenders to register, making it harder to track them. Another Romney aide said the $500 million figure used an inflated Democratic estimate from 2003.
The aide said fees actually increased only $260 million between 2003 and 2004 but that data for later fiscal years were not available.
Debbie Savoia, co-founder of Community VOICES, a group that supports stricter laws for sex offenders, defended Romney, saying that although she opposed the veto, the governor eliminated the backlog of unprocessed offenders.
Romney also championed a tougher policy requiring the most dangerous sexual predators to post their whereabouts on the Internet.
Michael Widmer, president of the Massachusetts Taxpayers Foundation, disputed Romney’s figure of $260 million and agreed with Cato. Widmer recently served on Democratic Gov. Deval Patrick’s transition team, but he has also advised Republican governors.
He said business groups objected so strongly to a proposed $170 million tax increase that Romney snuffed the idea and proposed $85 million instead. Romney proposed the tax increases as eliminations of what he called various business tax “loopholes,” Widmer added.
John Berthoud, president of the National Taxpayers Union, retorted, “Closing tax loopholes and not cutting rates concurrently — that’s a tax increase. The loopholes business is sometimes patina to make it seem like it’s not really an increase.
Berthoud also said, however, that the fees Romney increased could be tax cuts in disguise.
“It is legitimate for government to charge a fee for services,” he said, but went on, “Once the dollar amount of the fee exceeds cost of service, we categorize it as a tax hike. When you look at those aggregate numbers it’s hard to imagine the dollars being raised for folks didn’t exceed the cost of service.”
Widmer and Barbara Anderson, of the Massachusetts-based Citizens for Limited Taxation, said the Romney fee increases went mostly to the general treasury, not into separate accounts funding the services on which they were raised.
When Romney ran for governor in 2002, he disparaged President Bush’s 2001 tax cuts, Berthoud said. “I think one of the bigger concerns were his comments where a few years ago he did not say the greatest things about the Bush tax cuts,” said Berthoud. “Right now Romney is saying all the right things on the Bush tax cut.”
A major fiscal test will come for Romney when the Club for Growth, a conservative group that advocates smaller government, publishes a white paper on his record. The Club recently made headlines when it blasted McCain for opposing Bush’s tax cut packages in 2001 and 2003.
“When the most important pro-growth tax cuts in a generation were proposed by President Bush in 2001 and 2003, Sen. McCain vigorously opposed them,” Club for Growth wrote in its analysis. The group, however, also praised McCain for voting in 2006 to extend Bush’s tax cuts and consistently opposing federal spending bills.
“Over his twenty years in the Senate, he has been at the forefront of the battle to eliminate wasteful projects and inject greater discipline and transparency into the appropriations process,” the Club concluded.
A spokeswoman for the organization said it was conducting an analysis of Romney and would comment on his record when it is complete.
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