and the
Citizens Economic Research Foundation


Wednesday, October 22, 2003

CLT awards "Tell the truth and shame the devil" award
to Eric Kriss, Secretary of Administration & Finance

("Tell the truth and shame the devil" will be an ongoing service to the media to give balance to stories in which Romney administration membersí statements are disavowed by the governor when they are attacked by his usual opponents.)

A pat on the back to Secretary of Administration & Finance Kriss, who warned the Boston Chamber of Commerce that the ratio between taxpayers and tax-users (which he called net givers and takers) will soon be unsustainable.

We read his speech, and then read the indignant response of state Sen. Richard Moore, who misquoted the speech on his way to missing its point.

Eric Kriss: "For example, the state provides free health care to a million residents."

Sen. Moore: "Secretary Kriss stated that the ratio of Ďgiversí to Ďtakersí is 3-1, and nearing 2-1, explaining that more than a million residents receive free health care covered by the taxpayers... Since the actual number of residents enrolled in Mass Health (Medicaid) is 913,000 (down from 995,000 in August of 2002), it appears the Governor's budget chief could be as much as 10% off the mark"

Note that Kriss rounded off 913,000 to "a million" for a casual, not official-numbers, statement in his speech. To make his point, Moore had to change Krissís statement to say "more than a million."

The Kriss speech went on from Medicaid to talk about the inefficient use of state buildings and other items. But no one can refute his general point, that as more net tax recipients get services from fewer net tax payers, the state will have a real fiscal crisis.

His was not an original observation. Alexander Fraser Tytler, economist and professor at Edinburgh University, wrote at the time of the American Revolution: "A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising them the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy..."

Despite the support of the so-called Massachusetts Taxpayers Foundation for new taxes expressed in this morningís Boston Globe, we obviously canít keep raising taxes until one tax payer is supporting one tax recipient.

Perhaps we can take comfort in the possibility that if Krissís warning is ignored and the Massachusetts economy collapses, Tytlerís warning will be taken more seriously by the federal government before itís too late.

- 30 -

Remarks of Eric Kriss to Government Affairs Breakfast, Boston Chamber of Commerce

Eric Kriss Secretary, Administration & Finance
October 16, 2003

After 49 weeks at the State House (which includes a frantic transition prior to taking office in January 2003), I would like to share some thoughts about the core problem facing government today, namely: How to implement reforms fast enough in order to provide sustainable government services in an era of deeply constrained resources.

Some will argue that any talk about constrained resources is a favorite fiction of Republican administrations; taxes can and should be raised whenever the tank runs empty. After 49 weeks, I've learned that one cannot win such debates in the 20 minutes or so I have with you today. So, with apologies to those among us who want a feisty discussion on taxes, I will just state my strong hypothesis that America generally, and Massachusetts specifically, is beyond a kind of inflection point - new taxes cannot cure the problem, and may only make it worse. California is my Exhibit A.

By "sustainable government services", I mean an ecosystem-like balance between those who contribute through taxes and those who receive government benefits. Of course, all of us receive some benefits -- like the roads and rails that brought us all here this morning. But we all know that some -- most in this room probably -- are net contributors, while others are net beneficiaries. The ratio between givers and takers turns out to be a critical variable of government.

What ratio is sustainable? Lyndon Johnson's Great Society figured it to be around 9-to-1 -- that is, 90% should help the bottom 10% rise up. (By the way, Johnson's initial 1964 speech about the Great Society was given before an audience at the University of Michigan with Governor George Romney at the dais.)

In 1964, a major thrust of the Great Society's Medicare program was to remove health care as the wedge driving the elderly below the poverty line. It worked especially well for the 3% of the population who were old and poor. Another focus was the 4% of Americans who lacked a grammar school education. And urban renewal sought to aid the 3% who were at the bottom of city life.

Forty years later, our ratio at the state level is more like 3-to-1 -- 75% net contributors and 25% net recipients -- and edging towards 2-to-1. For example, the state provides free health care to a million residents, or about 16% of our total population. Over a third of our municipalities cannot support their public schools on the local real estate tax base. The health and welfare portion of our operating budget is about half of all spending. And the trends are unsettling.

But I'm not here this morning to depress you with bad news ... especially in light of the Sox victory last night. Instead, I have good news. We can fix all the problems we have, and then some. We just need reform ... immediate reform.

Actually, "reform" is not strong enough a word; we need a completely new way of seeing government, both in cultural and pragmatic terms. I'd like to take the balance of my time to describe an example in some detail.

Today we are renovating the John Adams courthouse in downtown Boston. And yet we plan to operate this courthouse as if frozen in the horse-and-buggy era.

What I mean is this. We have 112 court buildings scattered among our 351 cities and towns, with the average resident about a 45-minute horseback ride away, assuming the weather was passable. This made sense for our pastoral society of the last century, when we were clustered in villages and isolated from one another. In the automotive era, we've cut that courthouse travel time down to around 6 minutes. If we returned to a 45-minute car ride, we would need just a handful of courts. Instead of relying on a model from the last century, isn't it time we start thinking about the 21st century and how we can more efficiently use our resources to serve the public?

We recently completed a new capital plan, with detailed spending allocations for fiscal year 2004. We will limit spending to $1.278 billion in capital projects this year. Among the many requests we cannot fund in 2004 are three new courthouses -- in Worcester, Plymouth, and Taunton -- which will need about a quarter billion dollars for completion. We have only about $3 million to press forward on these courthouses this fiscal year.

The prior 1990s planning process was thoughtful, but incomplete. The objective was only to address capacity shortages -- a worthy goal. But each project floated like an island, disconnected from its operating costs and all other capital projects at the same time.

Take the Worcester courthouse. A handsome 360,000 square foot structure would greatly ease a space crunch and help revitalize downtown at the same time. A fine idea.

But the old Worcester courthouse would stay open -- not a single operating dollar saved -- to handle probate and family cases, which will cost an extra $1 million annually. Next door, the Worcester War Memorial building must be renovated for a new juvenile court instead of consolidated into the new court building. This suboptimal choice costs another $1 million annually.

And five nearby district courts -- in Clinton, Uxbridge, Westborough, Dudley, and Milford -- remain untouched. No plan for sharing services or re-purposing old buildings. Perhaps this is a missed opportunity. 

A typical outlying district court requires about 1.5 courtrooms ... Worcester already has plans for 19. Consolidating Clinton and Uxbridge into Worcester, for example, would take 3 additional courtrooms. Worcester also includes a 12,000sf law library. Three additional courtrooms can easily fit into 12,000 square foot. Why can't we consolidate small, underutilized courthouses? We can save millions. Why do courthouses have large law libraries anyway?

Meanwhile, considerable funds have already been spent on the Worcester project, even before its place in the capital budget is determined. Build-now, figure-out-how-to-pay-for-it-later no longer works. We must follow prudent, time-honored policies and return to basics. A new era of fiscal discipline must begin now.

The building is fully designed, but did not use cost-effective, design-build methods. Still, we have time to engage a construction manager who can help reprogram the building to incorporate additional efficiencies. The payback for such pre-planning is probably twenty to one. While Worcester places the construction manager at risk (a good policy), the job still uses filed sub-bids (a bad policy that is legislatively mandated). We should eliminate filed sub-bids on all public construction immediately and use design-build whenever possible.

Here is quick comparison. The Brooke Courthouse in Boston used a traditional design-bid-build process with filed sub-bids that cost taxpayers about $267sf in current dollars. A trial court in Brockton, by contrast, used design-build without filed sub-bids and cost 25% less per square foot! Perhaps not exactly apples-to-apples, but the savings are real. Unless we change business as usual, Worcester will cost even more than Boston's Brooke Courthouse.

Caseload flow can also be modified. Our courts, more or less, are undifferentiated. Traffic tickets are handled next to serious felonies. Why can't traffic tickets be processed in convenient places, like in shopping malls or police stations?

But we still need a courthouse in Worcester, so we will move forward. Some of our $3 million in FY04 funds will demolish an old building on the site by the end of this fiscal year, as well as engage a construction manager. However, moving forward does not mean we will stop asking questions that have not been asked before. We look forward to working with the legislative delegation from Worcester and with legislators throughout Massachusetts to answer some of these questions.

So what does "reform" mean? To me, it's a new way of thinking, of solving problems out of the usual political confinements. Living within our constrained resources becomes the imperative. Doing the right thing becomes the process.

Politics often gets in the way. But we must push forward. Relentlessly.
Thank you.

Response by Sen. Moore to Eric Kriss's statement regarding government givers and takers

True Reform Means Building A Caring Commonwealth
Senator Richard T. Moore, Senate Chair, Committee on Health Care
October 20, 2003

As we begin this legislative hearing on proposals to improve our health care system, I want to respond to comments made last week to the Greater Boston Chamber of Commerce by a senior official of the Romney Administration.

Secretary of Administration and Finance Eric Kriss told the gathered business leaders that the solution to creating a system of "sustainable government services," will require a "completely new way" of seeing government, and that a better balance was needed between the "givers and takers." Secretary Kriss was quoted as defining "givers" as those paying into the system more than they receive and the "takers" as those who receive what he seems to think are a disproportionate share of benefits.

To explain his point, press reports noted that Secretary Kriss stated that the ratio of "givers" to "takers" is 3 to 1, and nearing 2 to 1, explaining that more than a million residents receive free health care covered by the taxpayers. Since the actual number of residents enrolled in Mass Health (Medicaid) is 913,000 (down from 995,000 in August of 2002), it appears the Governor's budget chief could be as much as 10% off the mark. This, in itself, raises concern with the accuracy of state revenue and expenditure projections.

Nevertheless, it appears that in using this divisive rhetoric about Medicaid recipients, Mr. Kriss was not simply expressing his own opinion, but the philosophy of the Governor as well. I arrive at this conclusion because during Governor Romney's "State of the State Address," the Governor stated, and I quote, "In Massachusetts, for every three taxpayers, there is one person receiving free healthcare. Simply put, if you're a taxpayer, you're not just paying for yourself, you're paying one third of the cost of another person's healthcare bills as well. And in Massachusetts today, this other person doesn't pay even one dollar for their healthcare."

Both Secretary Kriss and Governor Romney, in my humble opinion, are not being honest with the people of Massachusetts when they describe the Medicaid, or Mass Health, program! "Blaming the victim" comments such as these are disingenuous and divisive and do nothing to build needed consensus for improving health care or the state's economy.

Let me explain why I believe this to be the case. When I first heard the Governor's comments during his State of the State address, I contacted the Governor's office to learn how this three to one ratio was determined. Presumably, this is also the same three to one ratio that Secretary Kriss described.

The Governor's office informed me, at the time, that they got that figure by dividing the number of Mass Health recipients into the number of tax returns, defining them as individual taxpayers even though joint filers should have counted as two in most cases. First, of all, it's a rather questionable statistic by not counting joint filers as two taxpayers, thus increasing the base, and by not counting the individuals receiving publicly assisted health care as taxpayers. Most, if not all, of the 913,000 recipients pay the sales tax, may pay property taxes directly or through rent, perhaps pay excise taxes or pay the gas tax or a bus fee, pay co-pays and out of pocket expenses. They are taxpayers and they pay some portion of their health costs. 

In reality, there aren't many people who don't -- as Governor Romney stated in his address, "even pay one dollar for their health care" except, perhaps infants and small children or the profoundly retarded who are unlikely to be able to work. Does Governor Romney or Secretary Kriss believe that young children, who get their health care through Mass Health or the Children's Medical Security Plan, should be put to work as society once did during Charles Dickens' 19th century England? Does the Governor or Secretary Kriss really believe that people in the Alzheimer's Units of nursing homes or, for that matter, all elderly nursing home residents, are freeloaders? The elderly and disabled on Medicaid who reside in nursing homes or receive home care worked hard all their lives and played by the rules - and they paid taxes for years. Does the Governor or Secretary Kriss really believe that low birth-weight babies struggling for their lives at Children's Hospital are slackers, carelessly living off those who work hard every day? 

Let's look at who really comprises the approximately 913,000 Mass Health enrollees. In round figures, assuming my figures are reasonably correct, about 404,000 of these enrollees are children under age 19. Nearly 200,000 are disabled adults, many of whom still work and nearly all of whom worked prior to their disability. The disabled population includes people who are mentally retarded, have a serious mental illness, those who've had a major disability since birth or childhood.

There are another 13,000 low-wage workers gaining Mass Health services through the Insurance Partnership. Another 115,000 are senior citizens - for a combined total of 732,000 of the 913,000. The balance of enrollees are the parents of children who qualify for Mass Health. If the Governor or Secretary Kriss did not really intend to label the children, the disabled, the working poor, or senior citizens receiving Mass Health as being "health care freeloaders," who did they mean when they said that for every three taxpayers, another person is receiving the full cost of their health care? Even President Bush would have to admit that that was "fuzzy math."

When I hear the rhetoric being used by the Governor and Secretary Kriss, I can't help being reminded of the scene in Charles Dickens's A Christmas Carol where those engaged in caring for the unwanted in Ebenezer Scrooge's London are rebuffed by the miserable tightwad: "Let those poor go to the prisons and the Union workhouses," is Scrooge's reply to the plea for Christmas charity. "And if they would rather die, they had better do it, and decrease the surplus population." Is this the "completely new way of seeing government," about which Secretary Kriss spoke last week?

Secretary Kriss, in his remarks last week, seemed to suggest that Massachusetts needs to reduce the number and cost of Mass Health enrollees is we are to have "sustainable government services." Reducing the number of these enrollees, unless the economy were to become more robust, can of course be achieved as the Administration has proposed by capping enrollments, limiting benefits, or dropping people from the rolls. However, this only results in cost shifting to hospitals and other health providers and places further stress on our health care system and reduces the quality of health care for every Massachusetts resident who uses the health system, not just the Mass Health enrollees.

It should be noted that the Medicaid program is actually an economic engine in the Commonwealth's economy. Fifty percent of the money -- about $3.5 billion -- comes into the state from the federal government -- money that would not be available without state matching funds. A report by Families USA, released in January 2003 noted that for every $10 million spent in Medicaid, $21.9 million in business activity and 191 jobs are created. Most of this business activity and jobs provide tax revenues for the state. Health care is one of the state's leading industries, and the Medicaid program is a part of this economic force. Medicaid may cost taxpayers, but like other public spending, it contributes to the asset side of the economy as well.

Based on 2001 Medicaid spending, the Department of Commerce econometric input-output model was used to determine Massachusetts specific economic impact of Medicaid spending in this state. In 2001, every dollar in Medicaid spending in Massachusetts produced $2.21 in increased business activity. Our total state Medicaid appropriation of $3.43 billion resulted in $7.6 billion in goods and services added to the Massachusetts economy. Medicaid spending was responsible for over 70,000 new private sector jobs that paid an aggregate of $2,713,000 in wages to Massachusetts residents.

Of course, Massachusetts should work to make Medicaid more efficient. Democrats as well as Republicans support that sort of reform. However, we should save money by techniques such as chronic care management, electronic prescribing of drugs, and other measures rather than by capping enrollments or dropping people from the Mass Health rolls.

Our first Governor of the province of Massachusetts Bay, in a sermon aboard the Arbella nearly 375 years ago, set forth a moral vision for society in Massachusetts in a sermon entitled, "A Model of Christian Charity." While it was based on Christian philosophy, as with it's cite from Galatians 6.2, "Bear ye another's burdens and so fulfill the law of Christ," the concept of loving one's neighbors can be found in the writings and values of the Talmud, the Koran, and among the works of all the world's great religions, including the Book of Mormon. Our current Governor and his advisors ought to read this sermon as well as the Wall Street Journal. 

We should also remember that in the letters that spell "Commonwealth of Massachusetts," can be found the words, "we" and "us." There is no "I" or "me." The people of Massachusetts have a proud tradition of helping our neighbors. After all, a "commonwealth," as defined in Webster's Encyclopedic Dictionary of the English Language is "a government for the common good." 

When I was growing up in the Blackstone Valley, I was taught to believe that a true commonwealth cares for "those who are at the dawn of life, the children; those who are in the twilight of life, the elderly; and those who are in the shadows of life, the sick, the needy, and the handicapped."

If the Romney Administration's vision of a "completely new way of seeing government," means that the only way to balance the state budget and sustain state services within the limits of current revenues is to discard the values of caring that define a Commonwealth, I do not accept that vision, and I do not agree with that premise. I believe that there is a better way to reform our health system and promote access to affordable, safe, high quality health care, and I have presented that vision through my proposed state health policy that can be found on the web at 

The kind of divisive rhetoric that was used in the State of the State Address earlier in the year, and in Secretary Kriss' remarks to the Greater Boston Chamber of Commerce last week, needs to be tempered if the Governor truly supports health care reform that places the patient at the center of health care. I would strongly encourage the Governor, Secretary Kriss and others in the Romney Administration to join with this Health Care Committee and other concerned legislators and health care advocates for health care reform to help us find ways provide programs in prevention, to expand access to care that is needed, and to ensure that this care is safe.

Unless we are guided by a caring, common sense health policy as we consider budget allocations and government reform, efforts at cost containment will become no more than health care containment. We will be unable to cover the uninsured and those we cover will remain at risk from a system that fails to adequately address prevention and safety. If we are unable to focus on prevention to limit more serious health conditions from developing, if we are unable to provide access to health care for our citizens, and if we are unable to ensure that this health care is safe, the Massachusetts health care system will be neither healthy, caring, nor a system. 

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