In 2002, Massachusetts' economy was rapidly deteriorating.  It was ranked 50th, the second worst in the nation in its increase in unemployment. ^[1] Job losses were so great that although a dozen states were more populous, and California had over 5 times as many people ^[2], Massachusetts lost more jobs than anywhere else in the country:

“Massachusetts is number one in the nation in job losses, shedding 4.7 percent of all jobs over the last two years. The state has lost 71,000 manufacturing jobs, or 17 percent; 69,000, or nearly 14 percent, of all jobs in the professional and business services sector; and nearly 18 percent of all jobs in the information industry.”

Debt was mounting in the state government as jobs were leaving the state at such an alarming rate.

“Antitax activist Barbara Anderson recalls leaving the following message on Romney's answering machine: ''I know you're really busy now with the Olympics, but when you're finished, please come back and save Massachusetts.''

“The state party's new chairwoman, Kerry Healey, discreetly flew to Salt Lake City to gauge his intentions. He was noncommittal.”

“A "Draft Mitt" campaign sprouted up in the state... Ann Romney had grown to love living in Utah. (Among other reasons, she'd been found to have multiple sclerosis a few years earlier, and horseback riding in the Utah mountains was therapeutic.) And they still bore the scars of the 1994 campaign. But the forces beckoning Romney to run were too strong to resist. Nearly everyone, it seemed, wanted him.”

The economic situation was so grave, that after Romney decided to run, Tim Russert (from NBC) said:

“Let's go to a very, very important issue confronting this state. It's fiscal health. This is what someone on Beacon Hill said just the other day:

''A lot of people think this has been bad. This was the warm-up! This was just spring training. There's no glimmer of economic optimism or life or confidence out there. The next governor, whoever it is, is going to have to address this aggressively.''

“ — Speaker Thomas Finnernan...

“There's a $300 million shortfall. There is a $2 billion structural deficit confronting Massachusetts. The budget is $23 billion, 40% of which is off the table because of court mandates and laws that you must provide that kind of funding. With the remaining $12 billion, you have to find $2 billion...”

That was in October, but by December the Boston Globe reported it got even worse:

“ "It's the worst I've seen it. Going back to the post-war era, I've never seen such an acute and focused fiscal crisis and particularly for the state government," said Richard P. Nathan, director of the Nelson Rockefeller Institute of Government at the State University of New York-Albany...

“The estimated budget gap of $547 million in Massachusetts is among the largest in total dollars, according to the report by the National Conference of State Legislatures... Massachusetts officials have predicted that in the next fiscal year the shortfall will far exceed an earlier projection of $2 billion.”

It continued to worsen. By the time Mitt Romney took office as governor of Massachusetts, the upcoming state budget for that year would have a structural deficit of nearly $3 billion if the budget was not cut. ^[3] Furthermore, the existing budget passed the previous year, that would be in effect for several more months, had a projected total deficit of approximately $1.2 billion ^[4]. He inherited about a $650 million deficit in that budget by the time he took office. ^[5]

Governor Romney convinced the legislature to allow him to immediately make changes to the existing budget. He immediately slashed spending and balanced that budget. ^[6] He then balanced each of the four annual budgets he created. He was dealing with a veto-proof legislature that was 85% democrat, but he was able to 'hold the line on all the spending that the democrats up there wanted to do.' ^[7] The budgets he submitted, fought for and succeeded in obtaining not only were balanced each year, but provided a surplus of $700 million in 2004, ^[8] nearly $1 billion in 2005 ^{[9a],[9b],[9c]} and a surplus of $700 million in 2006. He balanced the budget every year without raising taxes. ^[10] By the end of his term, he had taken "Massachusetts from billions in deficit to billions in surplus". ^[11] He turned in a $2 billion rainy day fund at the end of his term in office. ^[12]

The unemployment rate in Massachusetts had doubled from January 2001 to January 2003, the year Romney took office, and was continuing to increase at a fast rate. He implemented pro-growth policies and programs. By summer the increase in unemployment had stopped and by fall unemployment was dropping. ^[13] While Massachusetts was 50th, or nearly the worst in the nation in the increase in unemployment rates the year that just ended when he took office, he got it down to 38th place by the end of his first year in office. ^[14] The unemployment rate continued to rapidly drop for nearly two years, hit a plateau for about a year and a half, then started dropping again at the end of his term of office (see chart below). The year he left office (2007), the trend in Massachusetts' unemployment rate was 12th in the nation ^[15], a big improvement from the 50th place it was in the year he won office.

U.S. Bureau of Labor Statistics - Massachusetts
                    (retrieved November 2008)

While jobs were shrinking by the thousands each month in Massachusetts when he took office ^[16], by the time he left office, "the state had attracted hundreds of new companies and added [a net total of] 60,000 new jobs." ^[17] It takes time for pro-growth policies to effect the economy, but before the end of his first year in office the job losses had stopped, and in his remaining time in office 81,000 new jobs were created. ^[18] The people in the state benefited not only by increased employment and not having their taxes raised, but they also saw attempted and successful tax cuts by the governor.

He sought to lower the state income tax from 5.3% to 5.0% but was unable to get the legislature to agree. ^[19]

But he did succeed in lowering the total taxes paid to Massachusetts from an average of 7.33% of residents' income in 2003 when he entered office to 6.99% in 2007 when he left office and the year of his final budget. During that period, taxes paid to other states increased from an average of 2.6% of residents' income in 2003 to 2.9% in 2007, resulting in the total state and local tax burden on Massachusetts residents being 9.9% in 2007, the same rate as it was in 2003. During that same period, from 2003-2007, the average state and local tax burden in the U.S. increased from 9.6% of income to 9.8%. Governor Romney bucked the trend resulting in Massachusetts dropping from the 13th highest taxed state in the nation, to the 17th. ^[20][21]

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