CLT UPDATE
Monday, December 10, 2007

"Municipal Meltdown" getting closer


The so-called "municipal meltdown," a moniker coined by the Boston public policy think tank MassInc., is a real threat to cities and towns hoping to avoid drastic reductions in services in years to come, according to experts....

"We have to figure out who the real villains are, and it's not us," said Sen. Steven Tolman, D-Brighton, referring to the state Legislature, municipal leaders and unions. "We have to work together."

[Sen. Steven Tolman] participated in a forum sponsored by MassInc. in Boston yesterday to discuss issues facing cities and towns raised by the cover story in the fall issue of Commonwealth Magazine, published by MassInc.

Geoff Beckwith, executive director of the Massachusetts Municipal Association, Barbara Anderson, head of Citizens for Limited Taxation, Amesbury Mayor Thatcher Kezer, and Massachusetts Teachers Association President Paul Toner also took part in the discussion.

Anderson, a fierce critic of wasteful government spending, said Bay State residents no longer trust local government officials when they say their towns are in dire fiscal straits.

That lack of trust has built up over the years, said Anderson, pointing to the Legislature's refusal to reduce the state income tax to 5 percent, despite voters approving the reduction on a ballot question.

She also didn't hesitate in blaming unions for soaking cities and towns, arguing that the state could send a strong message with a symbolic move to curtail police details on road projects that would also save cities and towns money.

"Until we take on the unions, we aren't going to be able to save ourselves from this fiscal meltdown," Anderson said.

The Lowell Sun
Friday, December 7, 2007
Forum: State's cities and towns face fiscal crisis


Most people, when they retire, get a small severance and a hearty thank-you. But if you've spent your career in the public sector, you're likely eligible for tens of thousands of dollars worth of "unused" sick and vacation time on top of a generous pension.

Most people, if they steal from their employer or stand accused of some other kind of egregious conduct, are promptly fired. But if you work in the public sector, you're likely to be placed on "administrative leave," meaning you continue to collect your full pay until the matter is resolved, whether the process takes weeks, months or even years.

Such policies have helped create the huge credibility problem with which Massachusetts cities and towns are wrestling these days. And it's one that must be addressed before taxpayers are asked to pony up any more money for their operation....

This "municipal meltdown" is the subject of an extensive article in the latest issue of CommonWealth magazine whose cover depicts a generic town hall on the verge of collapse. "The view is nearly unanimous," the headline declares, "cities and towns are in big trouble." ...

Which left Barbara Anderson of Citizens for Limited Taxation (and a regular columnist for this newspaper) to state the obvious: "Until we take on the unions ... we aren't going to be able to save ourselves from the fiscal meltdown." ...

It's incumbent on legislators to change that system before local government implodes under the twin weights of rapidly rising personnel expenses and continued taxpayer intransigence.

The Eagle-Tribune
Sunday, December 9, 2007
An Eagle-Tribune editorial
Municipal 'meltdown'
gets cold shoulder from taxpayers


Letís get this out of the way first: the answer is not higher property taxes. The answer is also not higher state taxes; our per capita tax burden is still far above the national average.

A too-common response to suggestions for innovative change or even commonsense reforms reflecting whatís done elsewhere is that we canít do them here. Letís instead insist that "together we can."

CommonWealth Magazine
Volume 12 | Number 4 | Fall 2007
Municipal Meltdown:
The Fiscal Crisis Facing Massachusetts Cities & Towns

By Barbara Anderson


What about cutting costs? Here are a few savings ideas that would improve the Commonwealth's fiscal condition.

Get public employee benefits under control. State pension laws allow public employees to begin collecting at a younger age than private employees. Last year, the Commonwealth paid out more than $500 million in pension benefits to retirees and their survivors under the age of 60.

State employees currently pay 15 percent of their health insurance premiums. Tens of millions of dollars could be saved by bringing the Commonwealth more into line with the private sector by boosting the employee share to 25 percent.

For years, the argument for generous public sector benefit packages was that government employees earned less. But according to the federal Bureau of Labor Statistics, public employees in Eastern Massachusetts now earn an average of 15 percent more than their private sector counterparts who perform similar work.

The Boston Globe
Saturday, November 24, 2007
Paying the bills
By Lovett C. Peters


Chip Ford's CLT Commentary

It was only eight years ago that municipalities were declared to have an "embarrassment of riches," when cities and towns had revenue pouring in hand over fist.  "Towns rolling in cash," the Eagle Tribune headlined in its Feb. 16, 1999 article.  In his story, John Macone reported:

Across the Merrimack Valley, and statewide, cities and towns are sitting atop stashes of surplus taxes. It is a remarkable turnaround from the dark days of the early 1990s, when the economy was sour and many towns were millions of dollars in debt.

These days, the state is pouring money into local coffers at unprecedented rates, while local business growth and housing construction -- not to mention tax increases approved by voters -- pump in even more.

But it has raised a conundrum for some town officials: What do you do with an embarrassment of riches? . . .

In his 26 years in city government, Haverhill City Councilor George Dekeon cannot remember a time when the city was in the black -- until now. It has just over a $1 million surplus, compared to a deficit of $3.3 million in 1993. . . .

"You just have to be cognizant that things can change," said Mr. Dekeon. "There's always a cycle of ups and downs. I just hope it stays like this for a while."

In less than eight years municipalities across the state have plunged from an "embarrassment of riches" to what's now being labeled a "municipal meltdown."  Some may wonder "How can this be possible?"  They either aren't aware of or haven't heeded our warnings of the "Ticking Time Bomb."  We began those warnings back in 2000 and have been relentless since, predicting this inevitable result of profligate spending, especially on public employee benefits.  That's where the bulk of "fixed costs" which are bankrupting cities and towns are found.  Municipal so-called leaders have nobody but themselves and their predecessors to blame for this once-avoidable crisis.

As City Councilor George Dekeon recognized back in 1999, when the city of Haverhill wiped out its $3.3 million debt and had an historic $1 million surplus:  "You just have to be cognizant that things can change.  There's always a cycle of ups and downs."

But during the MassInc. forum last week, Geoff Beckwith, executive director of the Massachusetts Municipal Association, which represents municipal governments statewide, bemoaned that "Local aid, when adjusted for inflation, has been reduced $621 million since 2002, while new revenue has also been slow to grow."

1999:  An "embarrassment of riches, towns rolling in cash," slogged on until at least 2002.

2002:  The voters' income tax rollback was frozen at 5.3 percent.  The state's wheelbarrows of free cash to cities and towns diminished some.

2007:  A "Municipal Meltdown" is recognized.

So what is Beckwith's and his ilk's solution?  As if I need to tell you -- it's for more and higher taxes, of course.

Quoting a State House News Service report, in the CLT Update of Nov. 15, 2007 ("A clash is coming") we highlighted the statewide mayors' and selectmen's recommendation:

But several local officials followed up on [Newton Mayor David] Cohenís call last September to begin discussing broad-based tax increases, mentioning the sales, gas and income taxes as examples....

Try this on for size as a simple analogy.  Imagine that you've managed to get by on $500 a week after-tax income.  Then the state, rolling in excess revenue, decides to send you a check every week for, say an additional $200.  This public treasury largesse goes on for a number of years, adjusted for inflation and more.  Eventually the state decides that it's time to wean you off what you've come to feel is an "entitlement" -- you're used to spending more than you earn, have amassed a considerable outstanding balance on your charge card, expected that you can depend on your free-cash state check in the mail to keep up with at least the minimum-due monthly payments.

All those things you otherwise couldn't have afforded but bought depending on your weekly state "crazy check" are suddenly unaffordable and were all along -- but they're still on your credit card statement!  Oh oh.  Of course you are in trouble.

To add another analogy; this is exactly what the Legislature did to taxpayers, only in reverse, in 2002 when it froze the voters' income tax rollback.  Taxpayers had a very reasonable expectation, a legitimate belief that their state income tax burden would be lowered to its traditional 5 percent in 2003, per the voters' mandate:  they planned their finances accordingly.  Did that matter to state government?  Of course it didn't, the vote and the voters be damned.

Even more unconscionable was the Legislature's treatment of Capital Gains taxpayers, out of the blue making it retroactive.  CLT fought that battle against demonstrable unfairness and eventually won.  (See:  CLT Alert! - Dec. 1, 2005 ("Retro Tax scrapped today!")

So c'mon MMA (aka, "More Money Always"), take your whining and shedding of tears somewhere else.  Deal with your municipal "fixed costs" that you're membership has negotiated and for which taxpayers must shoulder:  balance your municipal budgets and stop the outrageous give-aways to our alleged "public servants."

Naturally this will be difficult or it would have happened long ago as it should have -- such as being the last state to finally rid itself of police details will be.  As Bob McCarthy, president of the Professional Fire Fighters of Massachusetts -- its union boss -- brashly proclaimed in his CommonWealth magazine contribution to the debate:

The above proposals are ludicrous and another attack by the right-wing to decimate labor and government. Let me state clearly: Labor will fight the above draconian proposals with every resource available and with every fiber in our bodies. Expending energy on defeating the anti-union, anti-taxes, and anti-government entities could be better served working together collectively to propose innovative solutions in a cooperative and collaborative climate. If we must fight, we will fight.

But as Barbara asserted at the forum, "Until we take on the unions, we aren't going to be able to save ourselves from this fiscal meltdown."

At this point in history -- after so many years, decades of profligacy and catering to every state and local public employee union's whim and desire at taxpayers' expense -- it is the ONLY solution, because it's primarily what is driving up public spending in state and local government.  It's past time our elected officials get started on reducing those "fixed costs."

"Together we can!"

Chip Ford

 


The Lowell Sun
Friday, December 7, 2007

Forum:
State's cities and towns face fiscal crisis
By Matt Murphy


BOSTON -- It's becoming a story all too familiar for Massachusetts cities and towns.

Rising health-care and special-education costs, a need to invest in public infrastructure and slow new growth have left communities strapped for cash and turning to its residents for help.

Billerica, for the first time in more than a decade this year, imposed athletic fees for students to bridge the budget gap created in large part by special-education costs.

Westford asked for, and voters approved, a debt-exclusion override to finance the expansion of the Cameron Senior Center.

The so-called "municipal meltdown," a moniker coined by the Boston public policy think tank MassInc., is a real threat to cities and towns hoping to avoid drastic reductions in services in years to come, according to experts.

But the solution is anything but clear.

"We have to figure out who the real villains are, and it's not us," said Sen. Steven Tolman, D-Brighton, referring to the state Legislature, municipal leaders and unions. "We have to work together."

Tolman participated in a forum sponsored by MassInc. in Boston yesterday to discuss issues facing cities and towns raised by the cover story in the fall issue of Commonwealth Magazine, published by MassInc.

Geoff Beckwith, executive director of the Massachusetts Municipal Association, Barbara Anderson, head of Citizens for Limited Taxation, Amesbury Mayor Thatcher Kezer, and Massachusetts Teachers Association President Paul Toner also took part in the discussion.

Anderson, a fierce critic of wasteful government spending, said Bay State residents no longer trust local government officials when they say their towns are in dire fiscal straits.

That lack of trust has built up over the years, said Anderson, pointing to the Legislature's refusal to reduce the state income tax to 5 percent, despite voters approving the reduction on a ballot question.

She also didn't hesitate in blaming unions for soaking cities and towns, arguing that the state could send a strong message with a symbolic move to curtail police details on road projects that would also save cities and towns money.

"Until we take on the unions, we aren't going to be able to save ourselves from this fiscal meltdown," Anderson said.

Beckwith and Thatcher downplayed Anderson's spirited argument about wasteful spending, calling for a more generous pact between state and municipal government on local aid and a focus on new sources of revenue.

Local aid, when adjusted for inflation, has been reduced $621 million since 2002, according to Beckwith, while new revenue has also been slow to grow.

Beckwith said cities and towns must be given more authority from the state to control their own finances, and called Gov. Deval Patrick's expansion of the Group Insurance Commission one step in the right direction.

Fewer than 10 communities have signed up to be a part of the state's Group Insurance Commission, a signature part of Patrick's Municipal Partnership Act that would allow municipalities to join the larger state pool to negotiate for lower rates.

The small number of new participants has a lot to do with a limited amount of time communities had in this first year to make the decision to join, Toner said.

He said the program won't save every community money, but should be given more time to have a broader impact.

Patrick has also proposed measures like optional meals and hotel taxes for cities and towns in his Municipal Partnership Act, which has stalled in the Legislature.

"We need to empower communities to do this," Beckwith said of digging themselves out from under heavy financial pressures.


The Eagle-Tribune
Sunday, December 9, 2007

An Eagle-Tribune editorial
Municipal 'meltdown'
gets cold shoulder from taxpayers


Most people, when they retire, get a small severance and a hearty thank-you. But if you've spent your career in the public sector, you're likely eligible for tens of thousands of dollars worth of "unused" sick and vacation time on top of a generous pension.

Most people, if they steal from their employer or stand accused of some other kind of egregious conduct, are promptly fired. But if you work in the public sector, you're likely to be placed on "administrative leave," meaning you continue to collect your full pay until the matter is resolved, whether the process takes weeks, months or even years.

Such policies have helped create the huge credibility problem with which Massachusetts cities and towns are wrestling these days. And it's one that must be addressed before taxpayers are asked to pony up any more money for their operation.

Mayors and selectmen throughout the North of Boston region are struggling to make ends meet. They say they need more money; but legislators, comfortable in their incumbency, know that if there's anything that might prompt a voter revolt, it's the prospect of higher taxes.

On the other hand, lawmakers are unwilling to take on the unions or do anything to disrupt the comfortable prospects of those they've helped secure a place on the public payroll. So they're telling municipal officials to live with what they have, at least until the state can raise more money the easy way -- by getting people to buy more scratch tickets or play the slots when Gov. Deval Patrick realizes his dream of building three resort casinos in the Bay State.

There's a reason taxes are off the table. Simply put, Bay Staters believe that any additional revenue won't go to improve services, but to increase the gap between the pay and benefits they receive and those provided people in the employ of state or local government. And until elected officials are willing to address that fact, cities and towns must accept living within the limits of Proposition 2Ĺ and going hat in hand to the Legislature for whatever morsels it sees fit to provide.

This "municipal meltdown" is the subject of an extensive article in the latest issue of CommonWealth magazine whose cover depicts a generic town hall on the verge of collapse. "The view is nearly unanimous," the headline declares, "cities and towns are in big trouble."

At a follow-up forum sponsored by MassINC this past Thursday morning at the Parker House in Boston, Geoff Beckwith of the Massachusetts Municipal Association and Paul Toner of the Massachusetts Teachers Association said the problem is too little money; while Sen. Steven Tolman, D-Watertown, urged those in attendance not to blame the Legislature or the unions for costly benefits and personnel practices.

Which left Barbara Anderson of Citizens for Limited Taxation (and a regular columnist for this newspaper) to state the obvious: "Until we take on the unions ... we aren't going to be able to save ourselves from the fiscal meltdown."

She cited the ubiquitous police details as a prime reason taxpayers are unhappy. Massachusetts is the only state in the country that requires them. They inflate the cost of every public construction project in the commonwealth. And when a motorist drives by one of these sites and sees a cop (or cops) reading the paper or talking on the cell phone, rather than doing anything useful, and at a hefty overtime rate, it's enough to make the blood boil.

Or take the effort to allow cities and towns to move their employees to the state Group Insurance Commission and take advantage of its more reasonable health insurance rates. Legislators inserted what some have called "a poison pill," allowing the unions and retirees to veto any such change.

As a result, according to Michael Widmer of the Massachusetts Taxpayers Foundation, only five of the state's 351 cities and towns have availed themselves of this opportunity to save money. The legislation, as modified at the unions' insistence, was akin to "dousing a raging inferno with a pail of water," Widmer wrote in MassINC's online forum.

Though he sought to take a middle-of-road approach at Thursday's forum, Amesbury Mayor Thatcher Kezer observed that "we're dealing with a structural system that's not in management's favor." And that makes it exceedingly difficult for cities and towns to reduce labor costs, even if there's a willingness to do so.

It's incumbent on legislators to change that system before local government implodes under the twin weights of rapidly rising personnel expenses and continued taxpayer intransigence.


CommonWealth Magazine
Volume 12 | Number 4 | Fall 2007

Municipal Meltdown:
The Fiscal Crisis Facing Massachusetts Cities & Towns

By Barbara Anderson

Letís get this out of the way first: the answer is not higher property taxes. The answer is also not higher state taxes; our per capita tax burden is still far above the national average.

A too-common response to suggestions for innovative change or even commonsense reforms reflecting whatís done elsewhere is that we canít do them here. Letís instead insist that "together we can."

Home rule is a nice tradition but it needs 21st-century adjustment to allow more regionalization. Collective bargaining is a 19th-century anachronism and should be abolished; at the very least, unions shouldnít be dictating management decisions about adjusting unusually generous employee benefits. In Swampscott, unions refused to allow savings from moving to the state health system unless they were given a percentage of the savings!

Citizens for Limited Taxationís ongoing proposal is to eventually get most education costs off the property tax rolls; to this end weíve supported increased state aid for schools. Unfortunately, the local aid increases of the '90s were used to increase payroll and benefits to a level thatís no longer sustainable.

In the Netherlands, all schools, public and private, are funded by vouchers, producing cost-saving competition through parental choice. Our goal should be funding competitive education with existing broad-based state taxes and better management of existing state resources. Using the public records law, CLT has received the recommendations for savings given to the Patrick Administration by department heads last winter; some of the $750 million in suggestions could be used for new local aid. Certainly, special education should be a human services expenditure, not a property tax issue. Maintenance should be encouraged and new buildings should forego architects, instead using basic blueprints labeled "school."

Communities with financial difficulties should seek ideas that are presently working for others. A taxpayer in Provincetown is asking for an independent audit before voting for any override; just as new companies were formed to quickly do revaluations after Proposition 2Ĺ passed, independent auditors could compete to take an objective look at community finances.

In some communities, both employees and citizen activists with good ideas are scorned; in others, they are appointed to committees to help institute change. Finance committees helped make Prop 2Ĺ work in the early '80s. Recently, in my town, the one finance committee member with new ideas was dismissed by the selectmen for not being a team player. In some communities, taxpayer activists are running for office; this should be encouraged by voters.

Most important: both local and state governments should respect taxpayers and not insult their intelligence with "temporary" taxes, scare tactics during override elections (often "finding" the needed money when the overrides fail), and symbols of taxpayer abuse like the police details that exist in no other states.

Finally, local citizens should avoid feeling entitled to non-essential programs at their neighborsí expense. First secure public safety, address existing liabilities, and maintain infrastructure; then see what else a community can afford with many taxpayers facing fiscal realities of their own.

Barbara Anderson is executive director of Citizens for Limited Taxation. http://www.cltg.org


The Boston Globe
Saturday, November 24, 2007

Paying the bills
By Lovett C. Peters


Leslie Kirwan, secretary for administration and finance, says the Commonwealth faces a budget deficit of at least $1.3 billion next year. That doesn't include a down payment on a number of new programs Governor Deval Patrick has proposed that have one thing in common: They would cost a lot of money.

Patrick wants to spend $2 billion to repair crumbling state colleges and $1 billion to boost the commonwealth's biotech industry. Building a commuter rail line to New Bedford and Fall River would cost another $1.4 billion and add about $21 million to the MBTA's annual operating deficit.

Universal early childhood education, a longer school day, and free community colleges would cost yet-uncalculated billions. A dramatic increase in capital spending will add to interest costs that are already the fourth-largest line item in the state budget at nearly $1.8 billion.

The governor proposes to use proceeds from his casino gambling proposal to provide property tax relief and invest in our deteriorating transportation infrastructure, but the new revenue wouldn't be enough to solve these existing problems, never mind close the budget gap or fund any new spending.

In a September speech before a business group, House Speaker Salvatore DiMasi took a different approach. "When people . . . say 'new revenue,' " he declared, "I like to say, 'What about efficiencies and cutting costs?' "

What about cutting costs? Here are a few savings ideas that would improve the Commonwealth's fiscal condition.

Get public employee benefits under control. State pension laws allow public employees to begin collecting at a younger age than private employees. Last year, the Commonwealth paid out more than $500 million in pension benefits to retirees and their survivors under the age of 60.

State employees currently pay 15 percent of their health insurance premiums. Tens of millions of dollars could be saved by bringing the Commonwealth more into line with the private sector by boosting the employee share to 25 percent.

For years, the argument for generous public sector benefit packages was that government employees earned less. But according to the federal Bureau of Labor Statistics, public employees in Eastern Massachusetts now earn an average of 15 percent more than their private sector counterparts who perform similar work.

Common-sense construction. Project labor agreements require that owners use exclusively union workers on a construction project. Since only about 20 percent of Massachusetts construction workers choose to join a union, the agreements increase costs by limiting competition. The premium is at least 12 percent, according to a 2003 Beacon Hill Institute study of Massachusetts school construction.

Twelve percent can add up quickly when you're talking about almost $1 billion. This year alone, the Massachusetts School Building Authority will provide about $500 million in aid to municipal school projects and the Department of Capital Asset Management will get another $300 million in capital funds for state building projects.

Massachusetts also requires that police patrol roadway construction projects. One recent analysis found that the Commonwealth could save $44 million this year by joining the 49 other states that allow civilians to perform the work.

There is little appetite for new broad-based taxes, and they might slow a state economy that already shows signs of sputtering. Other ideas could raise additional revenue. One is to grant a long-term lease to operate the Massachusetts Turnpike (and collect the toll revenue) in return for a large upfront payment that could be dedicated to maintaining transportation infrastructure. In the last couple of years, Chicago netted $1.8 billion for its toll highway and Indiana's toll road attracted a $3.85 billion payment.

A similar deal to operate the state lottery and collect the proceeds could produce enough money to guarantee that state aid to cities and towns would be at least held harmless for years to come. These ideas should be explored, but care must be taken to ensure that any deals protect the public interest.

Any prudent approach to addressing our strained state finances must begin with capturing savings. Only when we know how to pay the bills can we intelligently decide whether the governor's proposals represent the best path for Massachusetts.

Lovett C. Peters is founding chairman of Pioneer Institute, a Massachusetts public policy think tank.


NOTE: In accordance with Title 17 U.S.C. section 107, this material is distributed without profit or payment to those who have expressed a prior interest in receiving this information for non-profit research and educational purposes only. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml


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