CITIZENS   FOR  LIMITED  TAXATION
and the
Citizens Economic Research Foundation

 

CLT UPDATE
Friday, January 30, 2004

Gov. Romney's FY'05 budget greeted by usual reaction


Gov. Mitt Romney rolled out a $22.9 billion fiscal 2005 budget yesterday that hikes spending by more than $1 billion - with moderate increases for education and local aid - but depends upon reforms and revenue projections Democratic lawmakers view skeptically.

Romney is calling for reforms in the state pension and public construction systems - while dumping the Inspector General's office - and the merger of the Turnpike Authority with the state Highway Department as a means to balance his budget without tax hikes.

"We still face hard choices, but if we stay on the road of reform, placing the interests of people first, we can do some good things this year," Romney said.

But House and Senate budget leaders questioned the reforms and suggested Romney's plan is $400 million to $500 million out of balance.

The Boston Herald
Thursday, January 29, 2004
Budget overhaul: Dems call gov's plan unbalanced


While most of the ideas would generate "miniscule" savings, Romney acknowledged, he said they are nonetheless crucial to boosting the public's faith in the system.

While most of the ideas would generate "miniscule" savings, Romney acknowledged, he said they are nonetheless crucial to boosting the public's faith in the system....

"I think it's a thoughtful package," said Michael Widmer, president of the Massachusetts Taxpayers Foundation. "Even if it's not a lot of money, creating equity and fairness is a very important thing."

"It's nothing you can argue with," said Barbara Anderson, executive director of Citizens for Limited Taxation. "Common sense and clear examples of abuse, that combination should get the public's support."

The Boston Globe
Thursday, January 29, 2004
Governor says change needed to restore public confidence


Governor Mitt Romney yesterday unveiled a $22.98 billion budget blueprint for the coming year, arguing that rising tax revenues and savings from government changes he proposes will enable the Commonwealth to boost spending on education, housing, and some social services, though it will have to squeeze money from a variety of health programs.

Romney's plan would increase K-12 school spending by $116 million and boost higher education spending by $36 million. Most of the education spending is included in a 1.7 percent increase in state aid to cities and towns, to about $4.2 billion, after deep cuts last year.

The governor also wants to make changes in welfare to bring Massachusetts into line with new federal requirements, under which recipients must work at least 24 hours per week....

Overall, Romney would increase state spending by 4 percent for the fiscal year that begins July 1.

The Boston Globe
Thursday, January 29, 2004
Romney sets a $22.98b blueprint
Education aid rises; health services are hit


Gov. Mitt Romney's $23 billion spending plan threatens to shatter the state's fragile health care system, activists said yesterday.

Although spending on Health and Human Services would increase by 5 percent, payments to doctors and hospitals would drop and some of the state's poorest residents would lose services.

Under the spending plan, those now receiving Medicaid benefits will remain eligible.

"Nobody will lose his or her Medicaid benefits," Romney said introducing his budget....

"We really feel this is an incredibly short-sighted approach by the governor," said Ali Noorani, executive director of the Massachusetts Immigrant and Refugee Advocacy Coalition.

The Boston Herald
Thursday, January 29, 2004
Activists say gov's plan hits health


Local officials criticized Governor Mitt Romney's proposed fiscal 2005 budget yesterday, saying the slight increase he proposed in local aid would result in layoffs, crowded classrooms, and rising property taxes....

Boston Mayor Thomas M. Menino said he would ask legislators to defy Romney and bolster state aid. Romney's budget gives Boston, the state's top local aid recipient, $200.5 million in Chapter 70 funds, $164 million in additional assistance, and $54 million in lottery revenue. Boston lost $30 million in local aid last year, and has cut 1,500 jobs since 2001.... [Total state taxpayers' contribution to Boston: $418.5 million]

In Brockton, which lost $14 million in state aid last year, salary increases for school employees will cost an extra $3.5 million in fiscal 2005....

The Boston Globe
Thursday, January 29, 2004
Some see increase leading to more cuts


Governing is about making choices, and Gov. Mitt Romney has given the Legislature a doozy: Reform or else....

Romney deserves a boatload of credit for sticking with his "no new taxes" promise, too. Taking taxes off the table, in itself, imposes as much fiscal discipline as spending restraint and in government, one is rarely possible without the other. Romney has also minimized reliance on fee increases and gimmicks.

Targeted increases to education and human services will only be possible if the Legislature follows Romney's lead and holds the line on spending while adopting reforms such as uniformly increasing state employees' share of health insurance costs. Or lawmakers could propose their own reforms. Or raise taxes. The choices are crystal clear.

A Boston Herald editorial
Thursday, January 29, 2004
Choices are clear ...


In the public's mind, state employee pensions remain the pot of gold at the end of the political rainbow. And Gov. Mitt Romney yesterday announced a slew of reforms as part of his fiscal 2005 budget aimed at curbing the worst abuses.

The governor noted that high-profile abuses not only burden the state's taxpayers but also erode public confidence, making state workers just another special interest.

A Boston Herald editorial
Thursday, January 29, 2004
... Pension reform a must


Romney is proud that his budget contains no tax increases and few additional fee hikes, which amounted to selective tax increases in last year's budget....

Romney said yesterday that a tax increase is out of the question because it would provoke public outrage. During the 1990s, the public, through its representatives, endorsed plans to drastically expand Medicaid, bring the benefits of a good education to every community in the state, and maintain a high level of local aid. Yet the income tax rate, at 5.3 percent, is at its lowest point since the 1980s....

A Boston Globe editorial
Thursday, January 29, 2004
Romney's wish list


Chip Ford's CLT Commentary

Governor Romney released his budget for Fiscal Year 2005 on Wednesday. Even though it proposes to spend an additional billion dollars over this year's budget, on cue the More Is Never Enough (MINE) crowd was spring-loaded and ready to howl -- another billion is, well, just not enough.

And, of course, legislative leaders responded on cue as well. They shrugged off the governor's proposed reforms, doubted adopting them will balance his budget -- so why bother reforming anything.

*                    *                    *

One good example of such legislative inertia was reported by the State House News Service on Wednesday ("At first blush, Romney '05 budget attracts more critics than admirers," by Michael Norton, Michael Levenson and Amy Lambiaso):

[Senate Ways and Means Chairwoman Therese Murray] praised Romney's reforms in the School Building Assistance program, but said she was concerned that the plan spreads the debt out over a 40-year period. "We're significantly passing off our debt to our children and our grandchildren," she said.

We've heard this concern for future generations in regard to the looming Social Security and Medicare crises and both federal and state deficits. It applies to the massive state pension system debt too, but it's never stopped spending, never balanced a budget ... it's never made any difference, though it certainly should.

But in this one particular situation, concern is for "our children and our grandchildren" to whom we will be "significantly passing off our debt" -- "our children and our grandchildren" who for once are the direct beneficiaries of that spending. We taxpayers, with high school long ago behind us, certainly aren't going to benefit from a multitude of new Taj Mahal school buildings, though we'll be paying the property tax increase share to leverage state assistance funds for building them until long after the kids have graduated.

Let's hope Sen. Murray and her colleagues in the Legislature are equally as concerned about passing our debt off to future generations when they consider the governor's pension fund reforms, and that they remember that Massachusetts has the 7th highest pension debt in the nation. Even if all of his reforms are adopted, generations to come will be paying off that corrupt insiders' system.

*                    *                    *

Last night Barbara was a guest on New England Cable News' "NewsNight" with Jim Braude and Chet Curtis, where she discussed Romney's budget and defended his proposed reforms.

*                    *                    *

Yesterday's Boston Globe editorial, in stealthily-crafted words banging its old tax-hike drum, opined, "Yet the income tax rate, at 5.3 percent, is at its lowest point since the 1980s...."

Almost 15 years ago, on July 27, 1989, the Boston Herald's Jonathan Wells reported:

In the privacy of his State House office, Gov. Michael Dukakis last night signed into law a temporary 15 percent hike in the state income tax designed to sop up the red ink in last year’s budget. Dukakis put his signature on the controversial 18-month tax hike, vetoed $53.6 million from a final spending bill for the prior fiscal year and quickly departed, offering no public comment on his actions.

Perhaps the Globe's words are technically true if one parses them assiduously, but the editorial's contorted effort to rewrite history, at a bare minimum misrepresent it,  glossed over the fact that from 1980 through all but the last five months of that decade -- when the "18-month temporary tax" hike was imposed -- the income tax rate was 5 percent: in fact, the rate was 5 percent for all but five of that decade's 120 months.

It would have been far more accurate to say, "Yet the income tax rate, at 5.3 percent, is at its lowest point since ... the end of 1989, when it leaped to 5.75 percent allegedly for 18 months, before climbing to 6.25 percent the following year."

*                    *                    *

"In fiscal 2003, property taxes grew by 6 percent statewide, compared with a 4.5 percent average from 1993 to 2001," the Boston Globe reported yesterday, then explained why:  "In the past two years, 95 cities and towns asked voters to override the state property tax limit."

In that same report, Globe correspondent Benjamin Gedan also provided a classic example of why, in many if not most of those communities, overrides were necessary: "In Brockton, which lost $14 million in state aid last year, salary increases for school employees will cost an extra $3.5 million in fiscal 2005."

Brockton received less state aid -- so it's leaders agreed to spend more? Mayor John T. Yunits Jr. warned that Romney's budget means a three-year hiring freeze would stay in place. But that's apparently okay, as those still on the City of Brockton payroll will be making more money: bad  habits are so hard to break.

Chip Ford


The Boston Herald
Thursday, January 29, 2004

Budget overhaul: Dems call gov's plan unbalanced
By Steve Marantz


Gov. Mitt Romney rolled out a $22.9 billion fiscal 2005 budget yesterday that hikes spending by more than $1 billion - with moderate increases for education and local aid - but depends upon reforms and revenue projections Democratic lawmakers view skeptically.

Romney is calling for reforms in the state pension and public construction systems - while dumping the Inspector General's office - and the merger of the Turnpike Authority with the state Highway Department as a means to balance his budget without tax hikes.

"We still face hard choices, but if we stay on the road of reform, placing the interests of people first, we can do some good things this year," Romney said.

But House and Senate budget leaders questioned the reforms and suggested Romney's plan is $400 million to $500 million out of balance.

"You have to say it's not balanced," said Sen. Therese Murray (D-Plymouth). "It's got a $470 million structural deficit covered by one-time revenues that wouldn't be carried over into next year."

Rep. John H. Rogers (D-Norwood) cited legislative mandates for hospital "free care" and for special education that are underfunded by the plan.

"The insurance industry and all the hospitals will be quite upset at the lack of much-needed reform," Rogers said.

Romney suggested legislative resistance - which sidetracked several of his proposed reforms last year - could give way in the face of public opinion.

On the other hand, Romney said, lawmakers "could say we're not going to make those investments - they could say we're going to cut local aid."

Romney acknowledged that the $500 million increase in Health and Human Services spending would be viewed as inadequate but said it reflected "necessary reforms" that are slowing growth in the largest chunk of the budget.

In renewing his call to merge the Turnpike with the highway department - a non-starter last year - Romney said recent Turnpike actions "have placed the entire statewide transportation plan in jeopardy."

The merger would yield $190 million in Turnpike cash reserves and another $20 million in operational savings, Romney said.

Proposed pension reforms would curb excessive pensions and require municipalities to fund new liabilities - such as early retirement incentives - within three years.

Romney called for the elimination of restrictions on procurement and delivery methods in government construction, as well as filed subcontractor bidding.

The Office of the Inspector General, which monitors public construction, also is pegged for elimination under Romney's plan.

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The Boston Globe
Thursday, January 29, 2004

Governor says change needed to restore public confidence
By Raphael Lewis, Globe Staff


Governor Mitt Romney proposed a series of changes to the state's pension laws yesterday, hoping to capitalize on public outrage over a recent spate of controversial Beacon Hill retirements, most notably that of former University of Massachusetts president William M. Bulger.

While most of the ideas would generate "miniscule" savings, Romney acknowledged, he said they are nonetheless crucial to boosting the public's faith in the system.

"The state's pension system has loopholes that allow certain insiders to take advantage of the system, gain unreasonable and unfair benefits, and erode public confidence," Romney said in his budget note to the Legislature, which will now consider the plan. His budget, he said, "ensures greater fairness and calculation transparency."

Lawmakers have touted pension reform for years, but the issue came to a head in 2003, when Bulger attempted to apply $50,000 in perks and allowances to his salary for pension purposes in order to boost his retirement to $230,000 from $200,000. The state Pension Board denied that request, but Romney yesterday said his plan would permanently block public employees from trying to do the same.

Romney also proposed capping pensions of public employees who take high-paying jobs in their last few years of service, exploiting a system that calculates benefits based on an employee's three highest salary years and not the average over a career.

Bulger never made more than $81,000 a year in 35 years in the State Legislature, but because he reaped a $309,000 annual salary as UMass president for his last seven years as a public employee, his annual retirement payout skyrocketed to about $200,000 a year. Under Romney's proposal, retirement earnings would be based on entire career earnings if there were a dramatic difference between the last three years of an employee's pay and the rest of an employee's career salary.

To highlight the potential savings involved, Romney said a 65-year-old town selectman who for 27 years earned $5,000 a year but in his last three years of service earned $60,000 a year would be entitled to a pension of roughly $50,000 a year under the current system, but only $10,000 a year under his plan.

Romney also proposed eliminating the so-called "Jan. 1 loophole" that allows lawmakers to receive a full year of pension credit if they delay their retirement until after the first of the year. Last November, Senator Cheryl A. Jacques, a Needham Democrat, announced she was vacating her seat for a job at a private, not-for-profit in Washington, but officially resigned Jan. 1, entitling her to another year's worth of salary credit toward her pension.

In addition, Romney would disburse retirement benefits based on the time an employee serves in each pension category, so employees cannot increase benefits by switching to a more lucrative plan in the final days of service. Former Correction Department chief Michael T. Maloney, when asked to resign last year, tried to double his retirement from $41,000 a year to $82,000 by moving from a white-collar pension category to one reserved for public employees in more risky professions, such as correction officers. The request was denied.

Also, Romney moved to end "termination" retirements now available to public employees who have put in 20 years of service and suddenly lose their jobs due to downsizing or reorganization efforts. On occasion, some "terminations" raise questions about insider deals for workers who, as Romney said yesterday, "magically" lose their jobs one day into their 20th year of public service.

Last year, the state Retirement Board awarded a termination pension to Peter Forman, former chief of staff to acting governor Jane Swift. In 2002 Forman left the governor's office to help the campaign of Republican lieutenant governor candidate Patrick C. Guerriero, Swift's friend and political ally. Forman insisted he was terminated, but critics had accused Swift of political patronage.

Budget watchdogs yesterday largely praised Romney for his plan.

"I think it's a thoughtful package," said Michael Widmer, president of the Massachusetts Taxpayers Foundation. "Even if it's not a lot of money, creating equity and fairness is a very important thing."

"It's nothing you can argue with," said Barbara Anderson, executive director of Citizens for Limited Taxation. "Common sense and clear examples of abuse, that combination should get the public's support."

Still, some criticized Romney's plan because it exempts the State Police from the pension cap. The State Police union was the only statewide union to endorse Romney in his 2002 campaign.

"There is no rational basis for exempting one force," Rich Marlin, legislative director for AFL-CIO of Massachusetts, said.

"There is no legitimate reason why he would make a difference between the State Police and regular police, other than the fact that the State Police supported him," said Kenneth Donnelly, one of seven commissioners on the Public Employee Retirement Administration Commission, which oversees the state pension system.

Romney spokeswoman Shawn Feddeman defended the exemption, saying that the exam-based system by which troopers advance in the ranks "does not lend itself to gaming the system."

"We're not averse to it," Feddeman said. "It's just not necessary because the abuses don't occur."

Democrats in the Legislature, too, said Romney's pension ideas were more symbol than substance, and touted their own plan, rolled out in November.

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The Boston Globe
Thursday, January 29, 2004

Romney sets a $22.98b blueprint
Education aid rises; health services are hit
By Scott S. Greenberger, Globe Staff

Governor Mitt Romney yesterday unveiled a $22.98 billion budget blueprint for the coming year, arguing that rising tax revenues and savings from government changes he proposes will enable the Commonwealth to boost spending on education, housing, and some social services, though it will have to squeeze money from a variety of health programs.

Romney's plan would increase K-12 school spending by $116 million and boost higher education spending by $36 million. Most of the education spending is included in a 1.7 percent increase in state aid to cities and towns, to about $4.2 billion, after deep cuts last year.

The governor also wants to make changes in welfare to bring Massachusetts into line with new federal requirements, under which recipients must work at least 24 hours per week.

Romney would eliminate state funding for school nurses, sharply cut housing and food aid to the elderly and disabled, and trim Medicaid payments to hospitals and nursing homes, as part of about $200 million in cuts and savings in health and human services spending.

Senator Therese Murray, chairwoman of the Senate Ways and Means Committee, said the administration "seemed to be taking the heart out of the health care system."

The proposed cutbacks, buried in the state budget released yesterday, run contrary to the optimistic tone struck by the governor and his aides as they leaked new initiatives in the budget over the last several weeks. Still, the governor's plan for fiscal 2005 is a far cry from the roughly $3 billion in cuts over the past three years.

"I am pleased that we have a budget that provides for fiscal responsibility," said the governor, whose plan kicks off a budget debate with the Legislature that typically extends into the summer. "It's not filled with gimmicks. It's not filled with tax increases and fee hikes."

Overall, Romney would increase state spending by 4 percent for the fiscal year that begins July 1. The Legislature will begin hearings today on the proposal, and lawmakers will produce their own version. Negotiations between the Republican governor and the Democrat-controlled Legislature will produce a final version.

Yesterday, flanked by the heads of the major state agencies at a State House news conference, the second-year governor boasted that his plan closes what he estimates as a $1 billion revenue shortfall for fiscal 2005 without a broad increase in taxes or fees.

His plan relies on at least $500 million in one-time revenue, however, including $190 million from his proposed merger of the Turnpike Authority and the Highway Department; $150 million from refinancing school construction assistance; and $140 million in federal Medicaid money.

Despite the governor's pledge of no new taxes, his proposal does increase some taxes and fees: The administration says it can collect an additional $70 million by "closing loopholes" in corporate and sales tax rules, and it hopes to bring in an extra $16.5 million by raising assorted fees, including a doubling of the mortgage broker license fee to $1,000, and an increase in the civil service exam fee to $75. In addition, the proposal would trim the growth of the Medicaid program by about $150 million, largely by reducing payments to healthcare providers.

Chastened by the legislative defeats of his first year in office, Romney is pursuing a new political strategy as he pushes his reform ideas. Last year, he promoted the changes as an attack on the patronage and entrenched power of Beacon Hill's past, though lawmakers disputed just how much money his proposals would save. Now, he is linking his plans for change directly to new money for public priorities such as education and housing.

The governor suggested that his proposals that died last year, including the Turnpike Authority-Highway Department merger and consolidation of some courthouses, will fare better this year because "we've been able to link in people's minds that reform allows us to invest" in education and other programs and "will pay permanent dividends for our kids and our citizens."

Independent budget analysts and advocates, who were still reviewing Romney's plan late yesterday, noted that the overall growth of the state's budget is largely the result of federally mandated increases in Medicaid spending, which would rise by $496 million, or 8 percent, and masks significant cuts to the Department of Public Health (9 percent), the Office of Child Care Services (6 percent), and other agencies, especially in social services. "Where there's growth, it's limited to just a handful of areas and it's nominal," said Michael J. Widmer, who heads the Massachusetts Taxpayers Foundation, a business-funded nonprofit group that studies taxes and government spending. "It doesn't begin to restore the cuts that have taken place over the past three years."

Widmer said health and human service agencies have been hit hard during the fiscal crisis of the past three years: Excluding Medicaid, the agencies have lost $326 million, a 14 percent decrease, since fiscal 2001. Other broad areas, such as higher education and local aid, have been cut by larger percentages. But the Department of Public Health has been cut by 27 percent, more than any other state agency, and it is a prime target again in Romney's 2005 proposal.

In health spending, the governor's proposal would eliminate funding for prostate cancer education ($1 million), suicide prevention ($125,000), and a treatment program for compulsive gamblers ($655,000). Advocates said yesterday that funding for community health centers had been eliminated, but the administration insisted the money simply had been moved to another account.

Geoff Wilkinson, executive director of the Massachusetts Public Health Association, said Romney had proposed "an amazingly shortsighted budget" that continues an "assault on the very infrastructure of public health."

"The administration does not seem to understand the cost value of public health prevention," Wilkinson said. "This is an administration that is freaking out about the skyrocketing cost of Medicaid, and meanwhile they're cutting back services that prevent costly and unnecessary medical expenses."

Roseanne Pawelec, a spokeswoman for the Department of Public Health, said the cuts over the past several years should be viewed in the context of huge funding increases the agency experienced during the economic boom of the late 1990s.

The Romney administration also would cut funding for the state's trial courts by 5 percent. His proposal would force trial judges to nearly double the amount of money they generate from probation and court fees. In addition, it would overhaul the way the state pays lawyers for the poor, increasing their rates and paying them on retainer, rather than at the end of the fiscal year.

"We need to do everything in our power to encourage prompt, affordable justice equally available for all citizens of Massachusetts at the best possible cost," said Daniel B. Winslow, the governor's chief legal counsel.

Court officials, however, called it unrealistic to expect the courts to raise $65 million in fees in the next fiscal year and said trial courts will suffer dramatically if their operating budget is cut another 5 percent. The system has lost 1,200 jobs since July 2001.

House and Senate Democrats said they will need a few days to fully examine Romney's blueprint. But Representative John H. Rogers, the Norwood Democrat who chairs the House Ways and Means Committee, said yesterday the governor's proposal might produce a deficit of between $400 million and $500 million.

"Even if we were to rubber-stamp the governor's budget, our concern at this point in time is that we would be seriously out of balance," Rogers said.

Globe correspondent Matthew Rodriguez and Thanassis Cambanis and Alice Dembner of the Globe staff contributed to this report.

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The Boston Herald
Thursday, January 29, 2004

Activists say gov's plan hits health
By Jennifer Heldt Powell


Gov. Mitt Romney's $23 billion spending plan threatens to shatter the state's fragile health care system, activists said yesterday.

Although spending on Health and Human Services would increase by 5 percent, payments to doctors and hospitals would drop and some of the state's poorest residents would lose services.

Under the spending plan, those now receiving Medicaid benefits will remain eligible.

"Nobody will lose his or her Medicaid benefits," Romney said introducing his budget.

But with growing demands from those in the program, other services would be cut, under Romney's plan. In total, the budget proposal cuts $150 million from the state's Medicaid program.

It reduces state funding for health care programs serving women and children, cuts nearly $7 million from neighborhood health centers, and shifts much of the cost of the childhood immunization program to private health plans, activists said yesterday.

"The administration's proposal signifies a backward slide when the Commonwealth desperately needs to move forward to ensure that families have access to affordable health care," said John McDonough, Health Care for All executive director.

Cuts to the neighorhood health centers include a managed care plan that serves 4,000 people and funding for public health programs such as outreach workers.

"We need to stabilize the system financially and we can't take any more cuts," said James W. Hunt Jr., Massachusetts League of Community Health Centers president.

The governor also proposed changing the rules for the state's Emergency Aid to the Elderly, Disabled and Children program, bringing it in line with federal rules.

The change would cut thousands of elderly and severely disabled legal immigrants from state aid, and force them into homeless shelters, advocates said.

"We really feel this is an incredibly short-sighted approach by the governor," said Ali Noorani, executive director of the Massachusetts Immigrant and Refugee Advocacy Coalition.

The budget preserves Prescription Advantage, a state-run prescription drug program for the elderly, but only until a federal Medicare drug benefit kicks in.

"Our members are glad that we will be fighting for an open enrollment period rather than the life of this program, but the long range planning is atrocious," said John Boesen, Massachusetts Senior Action Coalition executive director.

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The Boston Globe
Thursday, January 29, 2004

Some see increase leading to more cuts
By Benjamin Gedan, Globe Correspondent


Local officials criticized Governor Mitt Romney's proposed fiscal 2005 budget yesterday, saying the slight increase he proposed in local aid would result in layoffs, crowded classrooms, and rising property taxes.

Romney's proposed budget would expand Chapter 70 education aid by 2.3 percent, but it would not increase lottery funds and additional assistance -- the two other major forms of state aid to cities and towns.

In addition to funding schools, the state money is used to fund public safety, build roads, and provide critical services for the Commonwealth's 351 cities and towns. All three categories were deeply cut last year.

Boston Mayor Thomas M. Menino said he would ask legislators to defy Romney and bolster state aid. Romney's budget gives Boston, the state's top local aid recipient, $200.5 million in Chapter 70 funds, $164 million in additional assistance, and $54 million in lottery revenue. Boston lost $30 million in local aid last year, and has cut 1,500 jobs since 2001.

"Level funding means a 2 to 3 percent cut," said Menino, on the effect that enrollment growth and inflation has on the city's spending needs. "It looks good on paper, but you're taking a cut."

"We've cut public works and parks pretty definitively over the last several years," he said. "Further cuts will mean a reduction in services."

Somerville Mayor Joseph A. Curtatone added: "It hurts greatly. This is not good news."

Local aid, reduced by $12 million in the past two years, makes up 40 percent of Somerville's budget. The $16.2 million it would receive next year, Curtatone said, would not cover $4 million in increased pension and health care costs.

In Brockton, which lost $14 million in state aid last year, salary increases for school employees will cost an extra $3.5 million in fiscal 2005. And the cost of supplies, such as books and fuel, will be up $1 million. The governor's budget, said Mayor John T. Yunits Jr., means a three-year hiring freeze would stay in place.

The city also plans to eliminate 100 jobs in its school district, which would increase class sizes that average as high as 36 students in the junior high school. The news did not surprise many yesterday. Romney announced his plan at his State of the State address Jan. 15 and repeated it at the annual meeting of the Massachusetts Municipal Association.

The proposed budget is regarded as an improvement over last year's, which cut Chapter 70 aid and additional assistance by 20 percent, and reduced lottery aid by 15 percent. "We're not going to have to go to cities and towns and ask that they share in the sacrifices," Romney said yesterday at a State House news conference.

The recent cuts, about $550 million in two years, have drained local reserves, said Geoffrey Beckwith, executive director of the Massachusetts Municipal Association. "This is not pain free," he said. "There are fixed costs that are increasing. They'll still have to find ways to cut."

In last two years, he said, at least 5,000 teachers, police, firefighters, and other public employees have lost their jobs statewide.

Romney praised his budget, saying it avoided income tax hikes and higher fees. The balanced budget proposal does not include possible revenue from casino gambling.

If the Legislature accepts Romney's proposal, residents could see their property taxes skyrocket to cover deficits. In fiscal 2003, property taxes grew by 6 percent statewide, compared with a 4.5 percent average from 1993 to 2001. In the past two years, 95 cities and towns asked voters to override the state property tax limit.

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The Boston Herald
Thursday, January 29, 2004

A Boston Herald editorial
Choices are clear ...


Governing is about making choices, and Gov. Mitt Romney has given the Legislature a doozy: Reform or else.

"The moderate recovery, reform and restrained spending allows us to balance the budget without raising taxes or imposing broad fee increases, while making important new investments," Romney said, illustrating this simple summation on a chart as an algebraic equation.

Simple or not, Romney's math works. And it works because the governor has assiduously held the line on spending.

The $22.9 billion bottom line for fiscal 2005 represents a modest 3.75 percent increase over projected spending in fiscal 2004, not including the cost of bringing Turnpike revenues and spending under the purview of the administration.

Restraining Medicaid to 8 percent growth, for example, will get the governor nothing but a boatload of grief from advocates. "There are people who will want to see 12 percent or 15 percent growth, but if we do that, the state will be bankrupt," budget chief Eric Kriss said.

Romney deserves a boatload of credit for sticking with his "no new taxes" promise, too. Taking taxes off the table, in itself, imposes as much fiscal discipline as spending restraint and in government, one is rarely possible without the other. Romney has also minimized reliance on fee increases and gimmicks.

Targeted increases to education and human services will only be possible if the Legislature follows Romney's lead and holds the line on spending while adopting reforms such as uniformly increasing state employees' share of health insurance costs. Or lawmakers could propose their own reforms. Or raise taxes. The choices are crystal clear.

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The Boston Herald
Thursday, January 29, 2004

A Boston Herald editorial
... Pension reform a must

In the public's mind, state employee pensions remain the pot of gold at the end of the political rainbow. And Gov. Mitt Romney yesterday announced a slew of reforms as part of his fiscal 2005 budget aimed at curbing the worst abuses.

The governor noted that high-profile abuses not only burden the state's taxpayers but also erode public confidence, making state workers just another special interest.

And as state Treasurer Tim Cahill pointed out in a meeting this week with Herald editors and reporters, state workers collect on average annual pensions of about $18,000 and teachers in the system get an average pension of $25,000 a year.

It's the Bill Bulger-sized pensions Romney wants to go after with a cap and a new formula no longer based on the last three years of state service - a system which has allowed those with powerful political friends to boost their pensions into the stratosphere. The governor is also proposing to close what should henceforth be called the Cheryl Jacques loophole, which allowed the ex-state senator to add an entire year to her "state service" by showing up for one day in 2004.

His proposal would also clarify that such perks as cars and housing allowances can't be used to boost pension benefits either, again a la Bulger's attempted raid on the pension fund. And it would eliminate the so-called "termination benefit" for those under 55 with 20 years of service who get "fired." (We'll call that the Peter Forman amendment.)

It would also force the state to actually calculate the pension liability of changes in the program - like that last early retirement package which will cost the state about $2 billion - and to pay for those changes within three years.

These aren't big-ticket budget items this year. They are just simple reforms that need to be made - and the public should demand it.

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The Boston Globe
Thursday, January 29, 2004

A Boston Globe editorial
Romney's wish list


Governor Mitt Romney stressed his commitment to three societal needs when he unveiled his fiscal 2005 budget yesterday. He has his priorities right, but health care for the poor, public education, and local aid are expensive, and his no-new-taxes pledge leaves too little revenue to pay for them.

Romney's $22.9 billion budget proposal would increase state spending by 5 percent, an improvement from last year, when the flat state economy mandated level funding across accounts. Medicaid costs are increasing by 8 percent, and there is little money left for the major initiatives needed to provide adequate reimbursement to medical providers, fill the budget gaps of the cities and towns, and fulfill the ambitious objectives of the Education Reform Law passed a decade ago.

Instead, the governor proposes to level-fund local aid and modestly increase assistance to school districts with low MCAS passing rates. He said that, unlike last year, nobody would be forced off of Medicaid, but hospitals are complaining that their Medicaid rates would be cut.

Romney's two principal reform initiatives, on state pensions and construction contracts, have much to recommend them. The Legislature should examine them without regard to the special interests they might hurt, including the legislators themselves, some of whom have gained pension windfalls upon leaving office. Neither reform would have much impact on next year's budget.

Romney's plan to merge the Turnpike Authority with the Highway Department would yield $190 million in one-time savings, but legislators rejected an identical proposal last year. It might make sense to fold the authority into the state transportation infrastructure eventually, but many questions remain unanswered. The Legislature needs to make sure that nothing disrupts Central Artery construction, now under control of the authority.

Romney is proud that his budget contains no tax increases and few additional fee hikes, which amounted to selective tax increases in last year's budget. But health plans complain that this year Romney would assess them for an immunization program that the state has historically subsidized, and both the plans and hospitals are unhappy about a $15 million increase in payments to the free care pool, which defrays the hospital costs of people without health insurance.

Romney said yesterday that a tax increase is out of the question because it would provoke public outrage. During the 1990s, the public, through its representatives, endorsed plans to drastically expand Medicaid, bring the benefits of a good education to every community in the state, and maintain a high level of local aid. Yet the income tax rate, at 5.3 percent, is at its lowest point since the 1980s. Romney's refusal to fully fund his three great policy objectives is the essential contradiction of state government.

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