Huckabee: Truth Squad: Response to Misleading Club For Growth Attack Ad

Governor Huckabee's record on taxes as a steward of the public’s money has been CLEAR and consistent as a conservative with strong pro-growth.policies. The Club for Growth misrepresents this record.

Governor Huckabee is a fiscal conservative who cut taxes almost 100 times in the state of Arkansas. He doubled the standard deduction and the child care credit, eliminated the marriage penalty, repealed capital gains taxes for home sales, lowered the capital gains rate, expanded the homestead exemption and set up tax-free savings accounts for medical care and college tuition.

The fact is that when Governor Huckabee began in office, the tax rate was 1% for the poorest taxpayers and 7 percent for the richest – the tax rates remained exactly the same when he left the governor’s office 11 years later. The sales tax only went up 1 penny in 10 ½ years and the gas tax 3 cents per gallon.

The Governor believes differently than the Club for Growth – there are many in that group who believe that believe public FUNDING should never be considered to pay for such things as highways, prisons, schools and Medicare.

About the Video Clip
In 2003 the state's chief financial officer projected a $62.3 million revenue shortfall that would result in cuts in state services, possible layoffs, tax increases or the possible repeal of late 1990s tax cuts.

Governor Huckabee told the Legislature that he would accept any recommendation they could agree on in order to meet the law's requirement to balance the budget. The Legislature was presented a series of options and chose to increase the tax on tobacco.

About the Club for Growth's Attack Ad
The attack ad was financed by Steve Stephens, the chairman of ClubforGrowth.net and a wealthy political rival from Little Rock.

Because Governor Huckabee supports earmark reform, Stephens stands to lose millions of dollars in pork for his businesses when the Governor is elected President.

(“Earmarks” is the term used to refer to a provision in legislation that directs funds to be spent on specific projects. Typically, legislators use earmarks to direct money to a particular organization or project in his/her home state or district. These mandates circumvent the merit-based or competitive allocation process.)

Even the liberal New York Times said that the Club for Growth was distorting Governor Huckabee's record. Last week they wrote an article explaining how the tax increases were used to improve education and infrastructure in Arkansas. [Note: The full text of the article is at the end of this briefing sheet.]

The link to the NYT article: http://www.nytimes.com/2007/12/02/us/politics/02huckabee.html

Why the Governor Raised Taxes
The Arkansas constitution, in a measure that should be lauded by all fiscal conservatives, requires that the state budget be balanced.

More than 90% of the state's budget is spent on education, Medicare, prisons, and human services.

Naturally, cutting spending is always the first response of conservatives, as it was for Governor Huckabee. But that solution is inadequate when there is very little discretionary spending available in the budget.

Unable to resort to deficit spending (as other candidates are able to do) the Arkansas Legislature was forced to raise taxes to pay for infrastructure repair, conservation efforts, court-mandated education expenditures, and unfunded federal mandates.

Governor Huckabee returned almost $400 million to Arkansas taxpayers. He believes it is immoral to take more money from taxpayers than is needed to run the government, and if a surplus occurs because of growth in the economy and good fiscal policy, it should be returned to the people.

He was the first Governor of Arkansas to pass a broad-based tax cut in the history of the state.
He also doubled the standard deduction to $2,000 for individuals and to $4,000 for married couples, as well as the childcare tax credit and eliminated the marriage penalty.

He eliminated the capital gains tax on the sale of a home. He eliminated the state income tax for families below the poverty line.

He reduced the capital gains tax for businesses and individuals.

He indexed the income tax to protect people from paying higher taxes because of "bracket creep."

Governor Huckabee left the state with almost a $1 billion surplus- a state record, setting the stage for further tax reductions. The “Huckabee Surplus” enabled his successor to follow Huckabee’s lead to begin the elimination of the state sales tax on food.

He urged that the surplus should go back to the taxpayers in the form of a rebate or tax cut.
He cut welfare rolls by almost 50 percent.

With respect to the tax and spending that he had under his control, spending rose about six-tenths of one percent a year during his ten-and-a-half year tenure.

Specific Taxes Mentioned in the Attack Ad
Sales Tax Hike (1996): Voters approved 1/8 cent sales tax increase to fund conservation and park services to preserve Arkansas natural and cultural heritage.

Gas and Diesel Fuel Tax Hike (1999): Arkansans supported a 3 cent per gallon fuel tax increase that allowed Arkansas to completely rehabilitate the interstate highway system, changing the interstate system from one of the worst in the country to the best according to Truckers Magazine.

Cigarette Tax Hike (2001): The cigarette tax increase of 25 cents per pack was used to fund state healthcare obligations. Arkansas tobacco taxes are still low, 33rd in the U. S.

Nursing Home Bed Tax (2001): The bed-tax on private nursing home patients was instituted to generate revenue for a nearly 3-to-1 match in federal Medicaid funds. Without this revenue low-income patients would not be able to find beds in nursing homes.

Grocery Tax: Huckabee opposed repeal (2002): This was actually a soft drink tax that Governor Huckabee opposed abolishing because it would drain $168 million from the state's Medicaid budget.

Income Surcharge Tax (2003) – In 2003 there was a temporary increase in the income tax to offset the economic recession our country was facing in the aftermath of the terrorist attacks of September 11, 2001. They were needed for one year, and unlike most “temporary taxes,” Governor Huckabee made sure that the legislature kept its promise to the people that it was eliminated after two years.

Tobacco Tax Hike (2003) – This is the tax from the video clip that the Club for Growth uses in their attack ad. In 2003 the state's chief financial officer projected a $62.3 million revenue shortfall that would result in cuts in state services, possible layoffs, tax increases or the possible repeal of late 1990s tax cuts. The Legislature was presented a series of options and chose to increase the tax on tobacco.

Taxes on Internet Access – Governor Huckabee has always been staunchly opposed to any tax on Internet access.

Beer Tax: Huckabee opposed letting the tax expire (2006) – The tax was used to fund programs for abused and neglected children. Without the tax there would be no funds for those programs.

Full Text of New York Time Article

"Huckabee’s Stature Rises, Mobilizing Tax Critics" by Leslie Wayne (12/2/07)

As Mike Huckabee rises in the Republican presidential polls, fiscal conservatives have been raising alarms about a series of tax increases he oversaw while governor of Arkansas — new taxes on gasoline, nursing home beds and even pet groomers.

The Club for Growth, a politically influential antitax group, has dubbed Mr. Huckabee Tax Hike Mike and poured money into anti-Huckabee advertisements that were broadcast in early nominating states, with more on the way. Mr. Huckabee “spends money like a drunken sailor,” according to the group’s news releases, and it has sprinkled YouTube and the airways with videos that mock him and his policies.

But the record offers a more complex and nuanced picture. While taxes did rise in the 10 years that Mr. Huckabee was governor, the portrayal of him as a wild-eyed spendthrift is hardly apt. For the most part, Mr. Huckabee’s tax initiatives had wide bipartisan support, with the small number of Republicans in the overwhelmingly Democratic state legislature voting for the tax increases and many maintaining that the state was better for them.

In addition, when Mr. Huckabee left office last January, he had turned a $200 million budget shortfall into an $844 million surplus. Still, as the attacks on his fiscal policies have stepped up, the Huckabee campaign has also cited examples of some 90 taxes that went down under his tenure.

But over all, on balance, tax increases outweighed the tax cuts by some $500 million, and many of the cuts that Mr. Huckabee heralds owe little to his efforts.

“He got bipartisan support on all the tax increases,” said State Senator Kim Hendren, a veteran Republican and member of the legislative budget committee. “Huckabee didn’t say ‘I just want to raise taxes to start programs.’ He has a liberal heart for young people, for the disabled and for improving Arkansas’ lot in education, and he is pretty good at working across party lines.”

Mr. Huckabee’s record on the tax front is emerging as a pivotal issue as he seeks to win the Jan. 3 Iowa caucuses and other early nominating states. In Iowa, he has built his following around Christian conservatives, but the tax issue could resonate in states like New Hampshire, which holds its primary five days later and where Mr. Huckabee has been devoting more time.
The attacks on him over taxes come as he faces criticism on other aspects of his record as governor, including fighting for tuition breaks for the children of illegal immigrants.

The biggest increase under Mr. Huckabee was mandated by the Arkansas Supreme Court, which in 2002 ruled that the state’s school financing procedure was unconstitutional and ordered a more equitable plan — which led to $400 million in new taxes.

Some other taxes came about directly because of Mr. Huckabee’s efforts. After becoming governor in 1996, he traveled the length of the Arkansas River within the state to win support for an additional one-eighth-cent sales tax to improve the state parks system.

Early in his tenure, he pushed through a three-cent-a-gallon gasoline tax increase and a four-cent increase on diesel fuel, along with a bond issue, to improve a road system that was considered one of the worst in the country.

And when the state lacked enough of the necessary matching money for federal Medicaid payments to its nursing homes, Mr. Huckabee and the legislature enacted a $5.25-a-day “bed tax” on nursing homes, which won the grudging approval of the state’s nursing home industry.
All of this has become fodder for the Club for Growth and other antitax groups. At the Republican YouTube debate on Wednesday, an advertisement shown by a rival candidate, Fred D. Thompson, directly attacked Mr. Huckabee’s tax policies.

“We’ve been making noise about Huckabee since Day 1 of his candidacy,” said Nachama Soloveichik, a spokeswoman for the Club for Growth, which analyzes the tax policies of Republican candidates. “There is a groundswell among conservatives that this cannot be our guy.”

Both Democratic and Republican politicians and political observers say the legislature had little choice but to raise taxes from 2002 to 2004 given the fiscal challenges facing Arkansas.

The biggest tax increases came in 2003 and 2004. A sagging economy had cut into revenues and the state faced a 2002 court order to equalize financing among school districts.

“We had our backs against the wall; we had no choice,” said State Senator Bobby Glover, a Democrat who has been in the legislature off and on since 1973. “Our only other choice was to take more from prisons and heath care and other agencies.”

In the end, the $400 million tax increase package was passed by an overwhelming majority, with Republican legislators taking the lead in pushing for it along with Democrats. The items included a sales tax increase of seven-eighths of a cent, the imposition of sales tax levies on several previously exempt services and some lesser taxes.

“Republicans were fighting for the tax increase,” said State Senator Denny Altes, the Republican minority leader of the State Senate who did not support the package. “There were few votes against it. Some of the most conservative people, both Democrats and Republicans, supported it. It passed by 90 percent.”

In general, Mr. Huckabee supported tax increases when he had a defined goal in mind, whether it was schools, roads or parks.

“He tended to raise taxes for specific government programs,” said Jay Barth, an associate political science professor at Hendrix College in Conway, Ark. “He does believe in a robust government as an active force in the lives of its citizens, especially in helping the little guy.”
The Club for Growth is circulating a video of Mr. Huckabee speaking to the legislature and going through a litany of all the taxes he could support, leaving the impression that there is no tax he would not embrace.

But the purpose of Mr. Huckabee’s address was specific: Arkansas was facing a multimillion-dollar budget shortfall and Mr. Huckabee was pleading for a tax increase to cover it — any tax, and listing all the possibilities.

The other big tax increase, which also received bipartisan support, was the one on gasoline to pay for road improvements.

“Our roads were in terrible condition,” said Dennis Milligan, chairman of the Arkansas Republican Party. “We knew that in order to attract jobs and companies we needed better roads. Huckabee made a wise choice and now we have companies locating here and wonderful roads. He did a lot to improve roads, and you can’t do it for free.”

In the face of criticism from fiscally conservative Republicans, Mr. Huckabee has been spending more time talking about the taxes he cut than the ones he raised. For instance, at the Republican debate last week, he said that he had cut 90 taxes and that the sales tax was only a penny higher under his stewardship.

Of the 90 tax cuts cited by Mr. Huckabee, one was large: an increase in the standard deduction for income taxes. But most were very small, with some reducing state tax revenues by as little as $15,000 to $20,000, according to an Arkansas Department of Finance and Administration study that was reported in The Arkansas Democrat-Gazette.

Still, the Huckabee campaign has set up a “Truth Squad” specifically intended to rebut the Club for Growth.

“Antitax radicals will never be convinced that tax monies can be legitimately spent on highways, bridges, schools and Medicare,” the campaign said in a response to the Club for Growth.