Mass. Market: Romney’s claims of success here come with caveats
In case you haven’t noticed, our former venture-capitalist-turned-governor has been busy barnstorming in Florida during the past week in his quest for the White House.
The Sunshine State is crucial for the Romney campaign, with its early primary set for Tuesday. So Mitt Romney has focused his stump speeches in the swing state on what is arguably the most important domestic policy issue right now: the economy.
He is boasting of how he added thousands of jobs here in Massachusetts when he was governor, and how he balanced the state budget without tax increases.
It’s exactly the type of message you would expect to hear from a business-savvy Republican who was a co-founder of Bain Capital, one of Boston’s leading private equity firms.
However, many of our state’s business leaders remember Romney’s mixed track record on economic issues during his four-year tenure as governor from 2003 through the end of 2006.
To be sure, the Romney administration helped land some key corporate players, such as the construction of a new Bristol-Myers Squibb drug plant and the relocation of 3Com’s headquarters from California. He also worked with the state’s Democrats in Congress to protect Hanscom Air Force Base and the Army’s Soldier Systems Center in Natick - two unsung heroes of the state’s economy that were threatened during the last wave of military base closures.
But Romney’s claim that he balanced the state budget ‘‘without raising taxes’’ needs plenty of caveats. Romney and his revenue chief, Alan LeBovidge, presided over a steady series of what they referred to as measures to close ‘‘tax loopholes’’ for companies. To many of the companies that had to pay more taxes, those loophole closings sure felt like tax increases.
The Democrats who run the state Legislature went along with the first two rounds. But they started to balk when Round 3 arrived in 2005 amid protests from some of the state’s leading business groups, forcing the Romney administration to cut the proposed tax changes in half that year.
Still, those changes have provided an important revenue stream: The tax changes, enacted over three years, provided a total of $377 million in extra revenue annually to help balance the state’s budget, according to the state Department of Revenue. Of that figure, corporate taxes rose by some $228 million a year, and many of the other tax changes - such as a sales tax on downloaded software - affect businesses as well.
‘‘Clearly, they were not economic incentives,’’ says Michael Widmer, president of the business-backed Massachusetts Taxpayers Foundation. ‘‘They were economic deterrents. ... They were trying to get a short-term gain, but there’s a long-term cost. The long-term cost is the creation of jobs.’’
Romney likes to tout the thousands of jobs created under his watch in Massachusetts. To some extent, that is true, based on state data adjusted for seasonal hiring patterns. The state added nearly 80,000 jobs from December 2003 when the labor market bottomed out to December 2006, Romney’s last month in office.
But that number doesn’t come close to the roughly 200,000 jobs that the state lost in the last downturn. The meager job growth, in a work force that employs some 3.2 million people, fell far short of the nation’s economic pace at the time.
Romney’s performance is more disappointing if you measure the number of jobs that were added from when he first took office. By the end of 2006, there were roughly 32,000 more jobs than in January 2003, according to seasonally adjusted figures from the state.
Much of what happens in the economy is beyond what a governor can control. But Romney is the one who rode into office here with the promise of using his business ties and acumen to lure hordes of new corporate employers. And he’s the one who now points to his track record in Massachusetts as a reason to be elected president.
To be fair, we have a very different governor in charge now, but the corporate taxation and job-growth issues haven’t really changed all that much. The state added only about 24,000 jobs in the past year under Gov. Deval Patrick.
And Romney’s Democratic successor has returned another corporate taxation plan to the Legislature. This time, he’s pushing to end accounting methods that allow companies to shift income to be taxed in other states and report with different taxation structures on their federal and state returns. All told, the changes could reap nearly $300 million in the next fiscal year - even though they would only take effect halfway through the fiscal year.
At least Patrick recognizes that he’s got to give something back in return: He wants to reduce the corporate excise tax from 9.5 percent to 8.3 percent by 2012.
Navjeet Bal, the senior deputy commissioner in Patrick’s Department of Revenue who will soon run the agency as its commissioner, says the changes are not really corporate tax hikes. Instead, she says, they are aimed at getting rid of accounting gimmicks used by some multistate companies and making this state’s rules more like other states’ tax codes.
But business groups such as the Associated Industries of Massachusetts lament that they need to continue their lobbying efforts on Beacon Hill after several rounds of tax changes under Romney.
‘‘The continuing jiggering with tax rates and tax administration policies is very unsettling for employers here,’’ says Brian Gilmore, an executive vice president at AIM.
Some reporters covering the campaign have greeted Romney’s economic boasts with skepticism. One Reuters story, for example, questions Romney’s job-creation credentials, and a USA Today story couches its description of Romney’s accomplishments by explaining that he didn’t oversee any ‘‘broad-based’’ tax increases.
Romney’s simple sound bites may still resonate with voters in Florida on Tuesday when they head to the polls looking for someone who has a track record of economic development. But they will ring hollow among many of the business leaders in Massachusetts when they vote a week later in this state’s primary.
Jon Chesto is the business editor of The Patriot Ledger. He may be reached at firstname.lastname@example.org.