Huckabee's Fiscal Record

Summary

Republican presidential candidate Mike Huckabee has been hit with criticism over his record on taxes as governor of Arkansas. The faultfinders have been members of his own party, who take issue with tax increases he enacted. In recent interviews on Fox News, Huckabee responded to some of these questions, but we found him to be misleading and incorrect on several points:

Huckabee claimed that a speech in which he implored the state Legislature to raise taxes was in response to a state Supreme Court order to increase education funding. But he specifically said in that speech that he would address the education matter at a later date.
He said a tax on beds filled in nursing homes was a “fee” not a tax, despite the fact that he himself has called it the “bed tax.”
Huckabee claimed a gasoline tax was only passed after 80 percent of voters approved it. Not true. The tax was enacted before a referendum vote on highway repairs.
He frequently says he cut taxes “almost 94 times” but leaves out the 21 taxes raised during his tenure. In the end, he presided over a net tax increase.

Also, we find that former Tennessee Sen. Fred Thompson stretched the truth in claiming that Arkansas’ spending had doubled under Huckabee. It didn’t increase that much, and Huckabee left a sizable surplus.

Analysis

Former Arkansas Gov. Mike Huckabee has drawn fire from fiscal conservatives who accuse him of pushing for tax increases. It’s an issue that has garnered plenty of back and forth in the blogosphere – and, as Huckabee’s campaign has gained ground in Iowa, from the Republican presidential candidates themselves. A CBS News/New York Times poll shows him winning approval from 21 percent of Republican likely caucus-goers in Iowa to front-runner Mitt Romney’s 27 percent – with a margin of error of plus or minus 5 percent.

In recent interviews on Fox News, Huckabee responded to some of the sniping with inaccurate and misleading descriptions of his actions as governor. The campaign of one of his rivals, Fred Thompson, sent out an e-mail this week disputing some of Huckabee’s recent remarks. We also find the Thompson camp to be wrong on one of its criticisms.

Bluffing on Tax Increases

A recent YouTube video, first posted by a conservative Arkansas blogger, shows about one minute of a May 2003 speech in which Huckabee encourages the Arkansas Legislature to pass tax increases. In a Fox News interview, Huckabee said that portion of the speech was taken out of context:

Huckabee (Fox News, Nov. 14): That was in the context of a [Arkansas] Supreme Court order that we had to fund education at a higher level. The legislators had come down to the special session and there was all kinds of talk about, well, this tax increase or that revenue possibility is out of the question, dead on arrival. … Now we were at the point, with a court order over our heads – we were going to have to improve our schools.

Huckabee also invites listeners to “look at the whole speech, if you can stand it,” claiming that it shows a very different message from the one that clip implies. We have pretty strong stomachs here at FactCheck.org, so we called Huckabee’s bluff. (The entire speech is available in two parts.) We found that the full speech does indeed show a different message. But it’s Huckabee who’s out of step with the facts.

It is true that in November 2002 the Arkansas Supreme Court ruled that the state’s funding of its public schools violated the equal protection clause in the Arkansas Constitution. Public schools in poorer parts of the state were being underfunded. The court gave the state until Jan. 1, 2004, to correct the problem. So Huckabee is correct in claiming that he was under a court order to increase public school funding.

But that is not why Huckabee was in front of the Arkansas Legislature in May 2003. Even without the court order to increase public school funding, Arkansas was facing a budget shortfall. For the fiscal year that ended June 2002, that shortfall was $209 million, according to the state Department of Finance and Administration. The fiscal year 2003 gap was $66.7 million. Huckabee’s plea for a tax increase was aimed at covering these revenue shortfalls. But don’t take our word for it. Here’s Huckabee earlier in that same speech:

Huckabee (state Legislature, May 2003): But the issue that brings us back to this Capitol on this day cannot wait any longer. The urgency of passing budgets for various state agencies is critical, but just as critical is passing a revenue stream that will fund these budgets and provide an adequate level of service, particularly in the areas of Medicaid [sic], as well as the Department of Corrections.

The line that really got our attention, though:

Huckabee: The business of education, we’ve decided to let that wait until the fall.

We take no position on Huckabee’s call for tax increases. But we do suggest that bluffing on a busted hand is a bad move in the YouTube age.

A Tax By Any Other Name …

On Fox News Sunday, host Chris Wallace asked Huckabee about several taxes for which the conservative organization Club for Growth has lambasted the governor, including one on nursing home patients. Huckabee played with semantics in his response :

Huckabee (Fox News Sunday, Nov. 18): Well, we didn’t raise them on nursing home patients. That was a quality assurance fee that was supported by the industry.

Huckabee backed and signed into law a 2001 bill requiring a “quality assurance fee,” which was a $5.25 fee per bed, per day for nursing homes designed to increase funding for the state Medicaid program. Arkansas media outlets and state legislators dubbed it the “bed tax,” and in fact, Huckabee himself has called it that on at least one occasion. In discussing a controversy over the subsequent hikes in prices charged to private-insurance patients (those who personally pay their bills), he said:

Huckabee (quoted in Arkansas Democrat-Gazette, July 19) : Many of them told their patients that it was directly resulted from the bed tax. What we have shown you is that is not true; some of these increases are not the result of the bed tax.

Whether the governor calls it a tax or a fee, the money charged was to be adjusted annually so that nursing homes would pay an annual fee “equal to six percent (6%) of the aggregate annual gross receipts,” according to Act 635 of 2001. The legislation also stipulated that nursing homes could not list the fee as a separate charge on billing statements to patients.

It is true, as Huckabee said, that the industry strongly supported the measure. The president of the Arkansas Health Care Association said the group was “ecstatic” that the governor signed the bill into law, according to the Democrat-Gazette. Huckabee had vetoed a bill that would have raised the funds through a tax on tobacco products.

Huckabee also told Fox News that the bed tax “increased the quality of care by increasing the staffing requirements.” The tax may have led some homes to hire more employees, but a separate piece of legislation specifically increased the staffing requirements. Despite that law, a 2003 congressional report by the Committee on Oversight and Government Reform found that many of Arkansas’ nursing homes didn’t meet federal staffing recommendations.

Increases with Voter Approval?

Huckabee has similarly been playing loose with the facts about gas tax increases. In 1999, the Arkansas Legislature approved – with Huckabee’s support – a 3 cent per gallon increase in gasoline taxes and a 4 cent per gallon increase in diesel fuel taxes. Huckabee has claimed in campaign appearances and on Fox News that these increases were part of a statewide referendum that passed with 80 percent voter approval. Here is an exchange with Fox News’ Sean Hannity:

Hannity (Nov. 16): You talked about cutting taxes and balancing budgets. You know, what was the net result? You did support some tax increases, but some tax cuts. Can you explain that?

Huckabee: Yes, I did. Certainly, there was an issue that involved road building and infrastructure on roads and bridges, and I did support that. We added $1 billion to our economy, 40,000 jobs, went from having the worst to the best roads. When we put that out there for the people to decide whether they wanted to affirm it, they did by an 80 percent vote, I would call that leadership.

We would call that not true. Huckabee is right that about 80 percent of Arkansas voters approved a referendum to increase funding for highway repair. But the referendum happened after the gas tax hike had already become law.

Huckabee seems to be describing the plan he wanted rather than the plan he actually supported. In Huckabee’s initial proposal, a tax increase on diesel fuel would be used to finance bonds that would, in turn, be used to repair major highways. The higher diesel fuel tax would have taken effect only if the bond initiative passed, according to the Associated Press. Huckabee’s plan, however, met resistance from Democratic lawmakers, many of whom were from rural districts that did not have major highways but that did have roads badly in need of repair. Their proposed alternative was to add a gasoline tax hike to the bond referendum.

But Huckabee actually campaigned against sending the gas tax proposal to the voters. Eventually he supported a plan under which the gas and diesel tax increases would take effect regardless of whether the bond passed.

Championing His Tax Cuts

The former Arkansas governor is fond of saying – in debates, on his Web site and in that Nov. 18 Fox News interview – that he cut taxes “almost 94 times in my state.” (On his site, he rounds up to “nearly 100 times,” adding that he saved “the people of Arkansas almost $380 million.”)

That turns out to be far from the whole story. The Arkansas Department of Finance and Administration found that 90 tax cuts were enacted in legislative sessions from 1997 through 2005, while Huckabee was governor, and those cuts reduced tax revenues by $378 million. But Huckabee fails to mention the 21 tax increases that occurred under his watch and that raised revenues by substantially more. The total net tax increase under Huckabee’s tenure was an estimated $505.1 million, says the Department of Finance and Administration’s Whitney McLaughlin, adding that the figure has been adjusted for inflation.The Arkansas Democrat-Gazette combed through a list of those 90 tax cuts, finding that a number of them pertained to very specific taxes and relatively small amounts. (We asked the Huckabee campaign for its tax tally, but we didn’t get a response.) The newspaper does give Huckabee credit for spearheading “one of the largest tax cuts in Arkansas history,” an income-tax cut that amounted to $90.6 million in one year alone.

He Obeys the Law, Too

In that Fox News Sunday interview, Huckabee said that he balanced the state budget “every single year of my 10.5 years as governor,” a boast that he has repeated on the campaign trail. What Huckabee forgot to mention is that the Arkansas Constitution has a balanced budget requirement. The state can run a deficit only if a majority of voters approve such a move in a statewide election. To his credit, Huckabee does sometimes acknowledge the balanced budget requirement. But to our ears, trying to claim credit for obeying your state’s constitution is a bit like bragging that you obey the law of gravity.

Hey Big Spender

Huckabee’s critics, however, have done some exaggerating of their own. That press release from former Tennessee Sen. Thompson accuses Huckabee of more than doubling state spending, from $6.6 billion to $16.1 billion at the end of 2006. But those numbers aren’t correct. When we talked to Mike Stormes, the administrator of the Office of Budget for the state of Arkansas, we discovered a different story. In fact, after adjusting for inflation, we found that spending in fiscal year 1998 (the first budget for which Huckabee was responsible) was actually $10.4 billion, while spending at the end of 2006 was $15.6 billion. That’s a big increase, but it’s a far cry from doubling state spending.

It’s worth noting, too, that Huckabee, despite facing a $200 million shortfall in 2002, ended his term with a surplus of $844.5 million. A billion dollar turnaround is, we think, a noteworthy accomplishment.

– by Joe Miller and Lori Robertson

Sources

“Act 1028: Arkansas Distillate Special Fuel Excise Tax Act of 1999 and Motor Fuel Excise Tax Act of 1999.” 24 March 1999. Arkansas State Legislature. 19 November 2007.

“Arkansas Highway Financing Act of 1999.” 03 March 1999. Arkansas Legislature. 19 November 2007.

Jefferson, James. “Huckabee road plan hinges on GOP votes for tax hike.” Associated Press. 1 March 1999.

Lieb, David A. “Dozen Republicans split from Huckabee, propose alternative highway plan.” Associated Press. 26 Feb. 1999.

Osher, Chris. “Huckabee signs bed-tax bill for nursing homes.” Arkansas Democrat-Gazette. 10 Mar. 2001.

“The latest Crisis, This time it’s the nursing homes.” Arkansas Democrat-Gazette, editorial. 2 Mar. 2001.

Jefferson, James. “Legislators still want answers on nursing home rates.” Associated Press. 20 July 2001.

Rowett, Michael. “4 ideas come of rest-home study, Huckabee vows to ask to change Medicaid policy.” Arkansas Democrat-Gazette. 19 July 2001.

“Act 635: An Act to Levy a Quality Assurance Fee Upon Nursing Facilities.” 2001. Arkansas State Legislature. 19 November 2007.

“Act 1397: An Act to Amend Minimum Staffing Requirements and Procedures in Arkansas Nursing Homes and Nursing Facilities.” 2001. Arkansas State Legislature. 19 November 2007.

U.S. Congress, Committee on Oversight and Government Reform. “Nursing Home Conditions in Arkansas.” 6 Nov. 2003.

Nasaw, Daniel. “10-year record on taxes studied.” Arkansas Democrat-Gazette. 9 Oct. 2007.

“Amendment 20: State Bonds.” Constitution Of The State Of Arkansas Of 1874. 20 November 2007.

Bureau of Labor Statistics. Consumer Price Index – All Urban Consumers. 20 November 2007. 20 November 2007.

“Huckabee Fact Check.” 18 November 2007. Fred ’08. 20 November 2007.

Wickline, Michael R. “February state revenue up 2.4% Monthly figures on track for $844 million surplus by July.” Arkansas Democrat-Gazette. 3 March 2007.

DeMillo, Andrew. “Ark. House passes school-funding measures.” Associated Press. 27 Feb. 2007.