Romney often casts himself as budget hero
But speeches omit some important detail
By Scott S. Greenberger, Globe Staff | October 24, 2005
It is the first line on Governor Mitt Romney's resume as a potential presidential candidate.
He closed Massachusetts' $3 billion budget gap by cutting government waste instead of by raising taxes, he tells Republican audiences from New Hampshire to California. He says he saved money by shrinking the public workforce and eliminating superfluous agencies. And, Romney boasts, he protected education from the budget ax.
Romney's message is resonating with some GOP activists, who view the governor as a miracle-worker who imposed fiscal discipline on the bluest of blue states. In some respects, the reputation rests on solid ground: Romney didn't raise income taxes or sales taxes or borrow his way out of his budget woes, as many other governors have done. He and the Legislature also made substantial spending cuts, slashing $1.6 billion from the state's 2004 budget.
But his pitch includes some assertions and omissions that leave his audiences with an incomplete and, in some ways, inaccurate picture of what really happened here.
For example, the $3 billion budget gap Romney cites never materialized. It was a prediction the administration and lawmakers made shortly after Romney took office in January 2003. Even before Romney unveiled his budget proposal at the end of February 2003, the state Department of Revenue and outside analysts said the $3 billion figure was rooted in revenue projections that were much too low. They were right: Before the year was up, a windfall in capital gains taxes helped cut the $3 billion shortfall by about $1.3 billion.
The state got another half-billion dollars by raising fees and closing what Romney called loopholes in the corporate tax code. Many business leaders and antitax groups view the loophole closures as tax increases.
Romney also asserts that Massachusetts cut more state and local government jobs than any other state. That is true, but he had relatively little to do with the reductions, at least at the state level. Only 3,800 of the 11,200 state government jobs cut between January 2001 and January 2005 were eliminated during Romney's tenure, according to the US Department of Labor's Bureau of Labor Statistics.
In his out-of-state speeches, Romney suggests that the consolidation of state agencies was a major factor in closing the budget gap. But those changes saved relatively little money: Folding 16 human-services agencies into four, a change Romney often cites outside the state, saved about $7 million, according to the administration. Eliminating the Metropolitan District Commission saved about $3.5 million, according to the Massachusetts Taxpayers Foundation, a business-funded nonprofit group that monitors state spending.
''No reform has saved any meaningful money. It's all on the margins," said Michael J. Widmer of the Massachusetts Taxpayers Foundation. ''They have no connection to the closing of the gap, even if they are good things, as some of them are."
Romney's proposed budget for fiscal 2004 included a slight increase in K-12 school spending -- $25.4 million, or less than 1 percent. But the actual budget approved by the Legislature and signed by Romney cut K-12 school spending by $181.6 million, or 4 percent. The story is simpler for higher education: Romney proposed a cut of $100 million, or about 10 percent, and the final budget reduced it $112 million, or 11 percent.
Nonetheless, in North Carolina earlier this month, Romney said, ''we didn't cut education, despite this huge budget deficit. We said education is going to get protected."
In an interview with the Globe, Romney said he portrays his fiscal record accurately, and that it is impossible to cover every budget detail in his stump speech, which typically touches on gay marriage, China's growing economic power, and his role as a Republican governor in a Democratic state. He said in the interview that his administration cut small amounts of money from hundreds of areas, seeking ''every single avenue of reform and change to try and generate savings."
''It's not a dissertation or a thesis. This is a speech, where you're describing the highlights and the hardest things to do. It's not complete with caveats and footnotes," the governor said.
Romney and his aides, well aware of the political risk of a negative story about his fiscal stewardship, were eager to dispel the notion that he was shading the truth in his speeches. On Friday, wearing his rarely seen reading glasses and drawing bar graphs on a piece of paper, Romney defended his assertion that he closed a $3 billion gap.
In state government, he said, a ''gap" is defined as the difference between projected revenues and ''as is" spending, or what it would cost to maintain programs and services at current levels. The prediction of a $3 billion gap didn't come true, Romney said, but he argued that both his budget plan and the one finally approved by the Legislature included cuts and new revenue totaling that amount. Widmer and legislative Democrats questioned whether Romney's plan would have achieved that goal.
Romney insists that ''the full story is a lot better than the partial story I tell in the speech." But there are some details he omits that might not appeal to a GOP audience.
For example, in his first year in office, the state increased hundreds of fees, making it more expensive to get a driver's license, marry, or buy a house. Those changes, which he defends as limited in scope and long overdue, brought in an additional $260 million.
The new governor also collected an additional $255 million from businesses by closing what he called tax loopholes.
''A loophole is where someone uses a provision of the tax code in a way it was not intended to be used," Romney said. ''There's a constant effort to plug the loopholes that our most aggressive tax acountants find, to ensure that people are abiding by the law as intended."
Noah Berger of the Massachusetts Budget and Policy Center, a frequent critic of the administration, defended the governor's position.
''Closing tax loopholes is different from raising taxes," Berger said. ''If some companies are finding ways to avoid paying taxes, then closing loopholes to level the playing field is simply making our tax system more effective and more of a fair system."
But Joseph R. Crosby of the Washington-based Council on State Taxation, which monitors tax policy for 575 corporations, said it's hard to discern the difference between Romney's changes and tax increases. Crosby said Romney went further than any other governor in trying to wring more money out of corporations.
''The fact remains that businesses are paying more out of their pockets than they were. It's not simply loophole-closing," Crosby said.
Nevertheless, in a speech to the Michigan Senate dinner in Livonia, Mich., last March, he said: ''I said no to a tax hike; raising taxes hurts working people and scares away jobs. I also said no to more borrowing; borrowing just shifts our problems to the backs of our kids . . . Instead, I went after waste, inefficiency, duplication, and patronage."
Though Romney has taken some shots from Washington-based tax watchdogs, Republican activists who have heard him speak tend to point to his fiscal record as a strength. At a time when many conservatives are concerned about the fast-growing federal deficit, the perception that the former corporate executive is a financial wizard might play well in GOP presidential primaries.
''We've investigated the various states out there that are doing some good work as far as efficiency and cost containment," said Robert Pittenger, a Republican state senator from North Carolina who invited Romney to speak in his state earlier this month. Romney's record is ''pretty remarkable when you look at the rest of the states. It really is a remarkable story," he said.
After hearing Romney speak, Pittenger said the governor solved the Bay State's budget problems largely by trimming its bureaucracy. Pittenger said he knew that Massachusetts raised some fees, but in his view the increases didn't detract from Romney's accomplishment.
In the interview with the Globe, Romney said his attack on waste and inefficiency went far beyond consolidating agencies. Of the $1.6 billion in spending that was cut that first year, he said, ''much of it was wasteful, much of it was inefficient, and much of it was nice to have but not essential."
''We didn't cut [spending on] homelessness, we didn't cut education, we didn't cut a series of programs that were absolutely vital to people most in need," Romney said. ''We did cut things that were nice to have but not essential."
Scott Greenberger can be reached at greenberger@globe.com. |
