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A Project of The Annenberg Public Policy Center

Stretching on Romney’s Fees

An ad from the Obama campaign exaggerates the truth about fees and tax hikes imposed by Mitt Romney when he was governor of Massachusetts.

It lists numerous fees hiked by Romney, but we found that a number of them are misleading — seeming to be more far-reaching and broad than they really are.

The ad also repeats a misleading claim about Romney cutting taxes “on millionaires like himself,” and botches the figure for the revenue gained by Romney imposing higher fees and closing corporate tax loopholes.

The ad is part of a one-two ad punch from the Obama campaign, attacking Romney’s record as governor of Massachusetts. Called “Mosaic,” it is the latest ad using the theme: “Romney Economics: Didn’t Work Then. Won’t Work Now.”

The ad begins with a quote from Romney when he was running to be Massachusetts governor in 2002: “I’m going to reduce taxes.”

The narrator then says that, “As governor, Mitt Romney did cut taxes on millionaires like himself, but he raised taxes and fees on everyone else — $1.5 billion. Over a thousand fee hikes. On health care. On school bus rides. On milk. On driver’s licenses. On nursing homes. On lead poisoning prevention. On meat and poultry inspection. On fishermen and gun owners. On nurses. On electricians. On hospitals. On funeral homes. On mental health services. On hospice care. On elevator repair.”

The narrator’s voice trails off, implying that he could go on and on.

We’ll deal with all three claims in order.

Tax Cuts for Millionaires?

The first claim is that “as governor, Mitt Romney did cut taxes — on millionaires like himself.” We looked at this same claim when it was made in a previous Obama campaign ad, and we found it wasn’t as clear-cut as the ad would have viewers believe. More accurately, Romney opposed a plan to impose a capital gains tax retroactively.

The tax has a bit of a tortured history. In 2002, before Romney became governor, the Massachusetts Legislature enacted a package of tax increases to deal with a deficit crisis. The package included a capital gains tax that was slated to go into effect in May 2002. But that tax was challenged in court, and the state’s Supreme Judicial Court ultimately struck down the tax, ruling that it was unconstitutional for the tax to go into effect halfway through the year. That left the state Legislature with two possible remedies: have the tax kick in on Jan. 1, 2003 — and refund eight months’ worth of capital gains tax revenue — or make it retroactive to Jan. 1., 2002, adding another four months’ worth of tax revenue. The Democratic Legislature decided to make it retroactive to the start of 2002.

Romney argued it was unfair for people who made decisions, like selling their home, based on the tax law in place at the time to be forced to pay retroactively. He proposed that anyone who paid the tax in 2002 get a rebate.

The Boston Globe’s editorial page, the nonpartisan Massachusetts Taxpayers Foundation and — ultimately — the Democratic leaders of the state Legislature, agreed. Although wealthy people are disproportionately affected by capital gains taxes, what Romney did was much different than a straight tax cut for millionaires, as the ad suggests.

$1.5 billion in Taxes and Fees?

As regular readers of FactCheck.org know by now, although Romney opposed across-the-board tax increases, he did balance the state budget by raising a number of fees and closing some corporate tax loopholes. The question is whether it added up to $1.5 billion, as the ad claims.

As we have reported in the past, there is some disagreement over the amount of the annual revenues raised by those fees and the closing of corporate tax loopholes. The Massachusetts Department of Administration and Finance put the fee total at $260 million a year and the corporate tax change at $174 million a year, and the independent Massachusetts Taxpayers Foundation said both fees and taxes totaled $740 million to $750 million a year (split about evenly between fees and corporate taxes).

So how does the ad get to $1.5 billion?

The Obama campaign says that it’s a four-year figure — something not obvious to those watching the ad. And in its backup material, the campaign cites media estimates of the four-year total for only corporate tax loophole closures (excluding fees — which is the focus of the ad).

Michael Widmer of the Massachusetts Taxpayers Foundation said its policy is always to cite the annual impact of taxes and fees. You could look at the 10-year, 20-year or even the 50-year  impact, he said, if you really wanted to make the figure look huge. But where do you stop?

The Obama campaign could truthfully have said the total for both fees and loophole closings was “as high as $3 billion over four years.” But for some reason, it picked a figure that included only loophole closures — and failed to make clear this wasn’t an annual figure.

The Fees

The ad also claims Romney hiked over 1,000 fees. It then begins to list a number of them. But when we checked the backup material provided by the Obama campaign, some of the fees weren’t as far-reaching as the ad might lead a viewer to believe.

For example, the ad says Romney hiked fees:

On driver’s licenses. The backup material cites increased fees for a Class A driver’s license, from $52.50 to $60; Class B, from $40 to $50; and Class C and Class M, from $33.75 to $40. But according to the Massachusetts Department of Transportation website, those are licenses for large commercial vehicles — tractor trailers, buses and the like — as well as motorcycles. The fee hikes were not for driver’s licenses to operate a car.

On fishermen. The ad mentions fishermen in the same breath as gun owners. And while it’s true that the fee increases directly apply to any recreational hunter or gun owner, the same cannot be said for the fees that apply to fishermen. The fees applying to fishermen include those for a “Master Digger” shellfish license (for residents as well as non-residents), and a $6 charge for each half-bushel of shellfish depuration (toxin-removal). These are fees that wouldn’t apply to the average recreational fisherman in Massachusetts.

On school bus rides. This one is a real stretch. The state doesn’t impose fees for school bus service. Bus service is provided by the school districts. Rather, Romney created new powers for municipal school committees to assess students a transportation fee to cover the cost incurred by the district. Michael Gilbert, with the Massachusetts Association of School Committees, argues that Romney indirectly hiked these fees because he slashed state transportation reimbursements to local and regional districts. Local districts weren’t required to enact bus fees, but many of them had to in order to balance their constrained budgets, he said.

On milk. Although the ad pictures a girl drinking a glass of milk, Romney didn’t place a fee on the purchase of a gallon of milk from your local grocery store. Rather, as the backup material notes, Romney increased the fee for a milk dealer license from $5 to $10; increased the permit fee for a pasteurization plant from $50 to $100; and increased the fee to operate a device for the determination of butterfat content of milk from $10 to $20. Perhaps those costs are passed on to the consumer, but the effect on any single purchase would be infinitesimal.

On mental health services. The fees actually only applied to mental health counselor applications, registrations and renewals. Increases ranging from $32 to $45 in the cost of maintaining a license would be almost impossible to spot in the price of mental health services for patients, whom the ad suggests would be affected.

More broadly, the ad is simply incorrect when it says that Romney raised taxes and fees on “everyone else.”

In a debate during his first run for president in 2008, Romney defended the fees, saying they were necessary to help close a $3 billion budget shortfall, and because “we found that some fees hadn’t been raised in as many as 20 years.”

Specifically, Romney said, “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 to raise money for our state in a way that was consistent with the what the market had done over the ensuing years.”

Michael Widmer of the Massachusetts Taxpayers Foundation told us some of the fees were more broad-based than Romney let on — such as a fee on deeds for real estate transactions (the largest revenue producer). That fee hike hit anyone buying or selling real estate in a  given year, but it didn’t hit “everyone.”

As for the fees being outdated, that may have been the case for some fees, Widmer said, but there was never any analysis presented to justify the fee increases. Rather, he said, it was clear the overriding purpose was to raise revenue to help close the budget gap.

One last note on the ad’s contention that Romney raised taxes and fees on “everyone else” but millionaires. In 2004, 2005 and 2006, Romney proposed cutting the state’s income tax rate from 5.3 percent to 5 percent — which would have provided a bit of tax relief to everyone, including the middle class. In every case, his efforts were rebuffed by the Democratic Legislature.

Widmer notes that although Romney supported those tax cuts — which would have slashed state revenues by about $750 million — he never described a plan to reduce spending in a way that would make the cuts possible.

“From a fiscal viewpoint, it was not a fully developed proposal,” Widmer said.

— Robert Farley and Nathan Emmons