Analyst puts increase in fees, taxes at $700m

Fees and taxes have increased more than $700 million a year under Governor Mitt Romney and Lieutenant Governor Kerry Healey, a leading budget specialist said yesterday.

Michael J. Widmer -- president of the Massachusetts Taxpayers Foundation, which closely tracks state finances -- said the state has raised roughly $740 million to $750 million per year by increasing fees and corporate taxes gained from what the Romney administration describes as ``closing loopholes."

Widmer's figure is about $500 million more than what Romney asserted yesterday when he sharply disputed charges by Democratic gubernatorial nominee Deval L . Patrick that the GOP administration had raised millions in taxes. But it is also tens of millions less than the $985 million that Patrick cited.

Taxes have become a central issue in the gubernatorial campaign. Healey has focused on Patrick's opposition to an immediate rollback of the income tax rate. Patrick attempted this week to redefine the battle on taxes by focusing on the fees raised in the Romney-Healey administration.

In a debate Monday, Patrick said that Romney and Healey proposed $985 million in tax increases. Backup information from his campaign said the actual increases that were approved by the Democratic Legislature add up to $800 million per year.

``Our list is slightly smaller," Widmer said in an interview.

In a press conference yesterday, Romney contended that Patrick was exaggerating the figure, which the governor pegged at $260 million in fees raised at the height of the state's fiscal crisis in 2003. Part of the reason for the discrepancy is a dispute over the characterization of the corporate tax increases.

``What planet does that come from?" Romney said when asked by reporters about Patrick's contention.

Patrick's list includes scores of fee increases, including tuition and fees at state and community colleges and some $309 million in new corporate revenues that he labels tax increases. Most of the increases were enacted in fiscal 2003 to stop the state's financial freefall from a recession-caused 15-percent drop in state revenues the prior year.

Eric Fehrnstrom, Romney's communications director, said: ``Deval Patrick is right. There was a fiscal crisis four years ago, and it was solved by Mitt Romney and Kerry Healey. They solved it by cutting spending. They did not raise taxes, and the fee increases accounted for a small amount of the solution."

Healey campaign manager Tim O'Brien yesterday welcomed the focus on taxes ``because there's only one candidate who's said he'd be open to raising taxes and that's Deval Patrick, and only one candidate who signed the no-new-taxes pledge, Kerry Healey." He called Patrick's making fees an issue ``a pretty lame smokescreen."

In interviews with the Globe, Widmer and E. Cameron Huff, the foundation's research director, said the only significant discrepancy they found in Patrick's list was his figure of $230 million in increased costs of legal filings in connection with real estate transactions. When he proposed the fee increases, Romney used the higher amount, but actual collections have fallen $50 million to $60 million below that estimate, Huff said.

After he took office in January 2003, Romney instructed his revenue chief, Alan Lebovidge, to examine the tax code to find tax loopholes and other provisions that could be tweaked to bring in more money, according to a 2005 Globe article. Over the objections of businesses, Romney and the state Legislature raised roughly $210 million by closing loopholes and increasing enforcement, according to the Globe. He proposed to raise another $170 million in 2005, but later watered down the proposal after an outcry from business groups.

Yesterday, Widmer disputed the contention that the state merely stepped up its tax enforcement. ``Many of the proposals were a direct reversal of state tax policies . . . and were legitimately called tax increases," Widmer said. ``A minority are fairly argued as closing loopholes."

Retorted Fehrnstrom: ``When we see loopholes we close them. [Widmer] disagrees because some of the businesses he represents were taking advantage of the loopholes."

Yesterday Romney also disputed arguments by Patrick and others that the Romney-Healey administration's deep cuts in local aid forced cities and towns to raise local property taxes. ``Do you know how big a ball of baloney that is?" Romney told reporters. He then displayed some colored graphs to show that the rate of growth in local property taxes has been fairly steady for the past two decades.

But Geoffrey Beckwith, executive director of the Massachusetts Municipal Association, said huge cuts in local aid in 2003-04 to cope with the fiscal crisis continue to strain local budgets and tax bases.

``The cuts were so deep in 2003 and 2004 that there are still 113 cities and towns [out of 351] today that still receive less local aid than they did in fiscal year 2002, and that's without adjusting for inflation," said Beckwith, whose association represents the interests of local governments on Beacon Hill.

Fehrnstrom said the financial distress at the local level is overstated. ``It ain't as bad as Deval Patrick and the cities and towns make it out to be," he said.