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Fact-checking Romney: Correct on some claims, inaccurate on others

While Mitt Romney attacked President Obama on the economy and taxes, he touted his own record as governor of Massachusetts on fiscal issues and education. But an examination of his record reveals some of his claims are either inaccurate or, especially on the state’s finances, although linguistically correct, conceal subtle manipulations.

First Read examined five claims Romney made during his speech in the New Hampshire seacoast town of Stratham:

1. Did President Obama raise taxes on corporations?
2. Did Romney really not raise taxes?
3. Did Romney balance the budget every time?
4. Did he cut taxes 19 times?
5. Did Romney keep Massachusetts schools first among all 50 states? 

1. Did President Obama raise taxes on corporations?

Romney said Thursday of President Obama, "Instead of encouraging entrepreneurs and employers, he raise[d] their taxes."

In fact, President Obama has not raised taxes on corporations during his three years in office.

"This seems like it is grasping at straws," Bill Smith, managing director of CBIZ's National Tax Office said.

Smith, who has 30-plus years of tax experience, noted that Obama has not increased the tax rate on corporations. He pointed out, in fact, that it was well covered back in December when Obama helped temporarily extend the Bush tax cuts. Smith highlighted a few provisions in the Tax Relief Act that Romney might have been talking about when he said Obama raised taxes on entrepreneurs.

The act did reinstate the estate tax, which had been repealed completely by the Bush tax cuts in 2001. This has an impact on some entrepreneurs and small business owners whose estates are worth more than $5 million, Smith said.

The other item Smith pointed to is part of President Obama's economic stimulus, a tax provision known as "net operating loss carryback." Carryback is exactly what it sounds like. It allows businesses in the red to "carryback" their losses and ask the IRS to refund them for any taxes they paid over the last five years. When the extension of the Bush tax cuts passed, carryback was tightened so only small businesses could ask for tax refunds for the last two years.

2. Did Romney really not raise taxes?
While Romney was technically correct when he said he did not raise taxes, he is responsible for the largest hike in fees in the state's history.

"There is a difference between fees and taxes," contended Noah Berger, president of the non-partisan Massachusetts Budget and Policy Center. "But Romney was responsible for the largest raise of fees in our state's history."

The head of the center since 2003, Berger said the difference between fees and taxes is that fees are usually charged for a specific service. Taxes, on the other hand, go into general cost. 

Budget documents show Romney raised more than $501 million from fee hikes and closing a business tax loophole in 2004 alone. Romney claimed on the campaign trail in 2008 the fee hikes netted around $260 million over his four years as governor. But the center’s analyses of the state’s 2004 budget show Massachusetts collected $331 million in fees alone after increasing those paid by people like gun owners, used-car buyers, the blind, and small business owners.

By the same logic Romney used in claiming President Obama raised taxes, Berger says it's possible to consider the $181 million in "loophole" closings Romney authorized in 2004 and 2005 as tax increases on businesses. 

3. Did Romney balance the budget every time?
As governor, Romney did balance every budget, but only by dipping into the state’s rainy-day fund early and often. He also fell far short of restoring “a $2 billion rainy day fund," as he claimed.

While state-finance law allows the use of rainy-day money to balance the budget, and Berger admits it’s not unusual for governors to do so during recessions, the same budget analyses by budget and policy center show Romney dipped into rainy-day funds routinely. He also co-opted money from funding pools set aside for Medicare assistance, infrastructure projects, and tobacco settlements. 

In 2007 alone, Romney's budget relied on $600 million from the stabilization fund. The center’s documents also show during his four-year governorship, Romney diverted more than $1.5 billion in revenue from other sources to help balance the budget despite record growth in tax revenues. 

According to the Massachusetts state comptroller's office, Romney left office with a $594.4 million surplus, well short of the $2 billion rainy-day fund figure he claimed.

4. Did he cut taxes 19 times?
According a spokesperson for the Massachusetts Department of Revenue, Romney did, in fact, cut taxes 19 times. (But see above about fees.)   

5. Did Romney keep Massachusetts schools first among all 50 states?
Romney was correct, when he said Massachusetts schools were "first among all 50 states" during his tenure. But, as a statistician at the National Center for Education Statistics told First Read, the statistical difference between Massachusetts test scores and those of its closest competitors falls within the margin of error.

"Although Massachusetts was numerically first in all those years, these rankings do not reflect statistically significant differences,” said Arnold Goldstein, the NECS statistician.

Massachusetts finished first in NCES's educational rankings in both 2005 and 2007, statistically tying six other states. Under Romney's watch, Massachusetts students’ test scores improved, especially in fourth-grade math -- where they jumped from sixth to first in the nation.

Educational success in Massachusetts isn't new. According to Goldstein, Massachusetts has been at or near the top of the NCES school rankings since Democrat Michael Dukakis occupied the statehouse. Still, Romney’s claim in that case was correct.