Mitt Romney said as governor he built a Massachusetts rainy day fund

Mitt Romney usually stresses his business background rather than his time as Massachusetts governor. But with President Barack Obama still reeling from the Standard & Poor’s credit downgrade, Romney has lately reminded voters of his bipartisan budget-cutting with the legislature when he was governor.

Here’s what Romney said about his work with the Democratic legislature in a speech to a Manchester Rotary club on Aug. 8, 2011.

"We worked together to find a way not to just reduce the rate of growth in spending but to actually cut back on spending in the state budget. And so I was able to do that, and then we worked together in ensuing years to hold down our spending level relative to our revenue level. And that was why at the end of my four-year term, the rainy day fund was established at more than $2 billion."

We wanted to explore whether Romney is right that his bipartisan efforts were so successful.

To back up the claim, the Romney campaign pointed us a to series of state financial statements.

They show that shortly after he took office in 2003, Romney and the legislature did cut spending for the 2004 budget year by slightly more than 1 percent. However, spending increased in subsequent years. And they also show that when Romney left office in 2007, Massachusetts’ Rainy Day Fund did indeed hold more than $2 billion.

Massachusetts budget watchers we spoke with don’t quarrel with those particulars. They also say it's true that Romney didn’t act alone.

"Obviously he did that with the Democratic legislature." said Geoff Beckwith, director of the Massachusetts Municipal Association, a group that represents local governments in the state.

Michael Widmer of the Massachusetts Taxpayers Foundation, a non-partisan fiscal policy group, presented a less-rosy picture of bipartisan cooperation but acknowledged the results. "Romney presented budgets and the legislature rewrote his budgets, and then he’d veto a few things, and then they’d override his vetoes."

The analysts agree that Romney’s account of his fiscal record is largely accurate but doesn’t tell the whole story.

Widmer notes that aside from 2003, when Romney and lawmakers took emergency action to cut state aid to cities and towns, spending under Romney rose every year, often far faster than the rate of inflation. The state also received more revenue after the legislature and Romney made adjustments to state fees and taxes. Romney’s campaign has characterized them as "closing loopholes" or  increases for a specific purpose, such as transportation. Others, however, describe them as tax hikes.

"There were no broad-based tax increases," said Widmer, "but part of the revenue growth was corporate tax increases and fee increases."

The growth of the nation's economy also played a significant role. Romney came into office during a downturn, but for much of his term his term, the stock market boomed. Collections from Massachusetts’ capital gains tax on Romney’s watch outstripped estimates by $1.3 billion.

"That’s where most of the growth in the rainy day fund came from. It wasn’t part of some sort of concerted effort to hold down spending beyond what the estimates were," said Beckwith.

Added Widmer, "All of these numbers are in the context of national forces that he as governor had very little to do with or any other governor."

Our Ruling:

Mitt Romney said he worked with Democrats to leave behind a rainy day fund that topped $2 billion. The state's financial records back that up.

But it's important to note that the spending reductions he touts occurred in just one year, 2003. Other years, thanks to economic growth, Romney and the legislature were able to increase spending. And besides the spending reductions in that one year, Massachusetts also earned a revenue windfall from a surge in capital gains receipts.

We rate his claim Mostly True.

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