Chip Ford's CLT Commentary
The imperial governorship of the Bay State Sun King
continues to astound and astonish on a daily basis as Deval Patrick
seizes as many trappings of power and prestige as he can accumulate.
In just yesterday's CLT Update Commentary ("The
astonishing arrogance of our imperious governor") I listed the many
amazing first steps of this alleged man of the people, and thought that
would be it for a while. Surely the governor's advisors if not
Deval Patrick himself couldn't be so tone deaf that they wouldn't
recognize he'd overstepped his position, was devastating his projected
image. I couldn't have been more wrong, and we citizens and
taxpayers had better get used to it.
No apologies from the Royal Governor, his handlers or
his minions -- only obdurate, snappish insistence that whatever the
Royal Governor wants he is thus entitled to and shall have.
Today we learned this included a $42,000 luxury
Cadillac DTS sedan, the lease for which costs us taxpayers
$1,166-a-month. No standard issue Ford Crown Victoria for the Bay
State Sun King, nothing but the top-of-the-line best is due his "His
Excellency."
Then later we discovered that his wife, Diane, has
been provided, at state taxpayer expense, a $72,000-a-year "chief of
staff" to schedule her occasional functions as the state's "first lady."
Mrs. Patrick, a practicing attorney for a prestigious law firm,
apparently can't do her own occasional scheduling thus needs a fulltime
state employee (with the usual benefits along with salary) at her beck
and call.
On March 8, 2006, the
Boston Globe reported
("Patrick's mortgages amount to $5.9m," the full report also
appears below):
Patrick has heavily mortgaged his family's real
estate. He and his wife are now carrying mortgages worth a total of
$5.9 million on their Milton home and a Berkshires vacation home.
Based on the interest rates of the loans, which the Globe reviewed,
the Patricks' mortgage payments are roughly $27,000 per month.
Don't be surprised if the Bay State Sun King
decrees the royal family's "24-room, 10,000-square foot mansion on 77 acres in
Richmond" in the Berkshires "The New Versailles" and burdens
taxpayers with its whopping mortgage.
While the Bay State Sun King basks in aristocratic
splendor, his proposals are apparently not going far in the Legislature.
Yesterday "His Excellency" unveiled his "Municipal Partnership
Act," which included his provision to permit local governments to adopt
their own meals tax in addition to the state's. This, according to
a Patrick aide, "fulfills his promise to reduce property taxes by giving
communities other ways of raising revenues."
That's not even close to what Candidate Patrick
promised -- in lieu of rolling back the state income tax -- while
campaigning for governor: He promised property tax relief, not new taxes. Nice try "Your Excellency," but not even the
Democrat-controlled Legislature is buying that deception.
House Speaker Salvatore F. DiMasi quickly "rejected
the Patrick administration's argument that giving communities the right
to impose local meals and lodging taxes did not constitute a tax hike."
Even Michael Widmer, president of the so-called
Massachusetts Taxpayers Foundation,
had to admit, "this is hardly a panacea to providing much property tax
relief in the short-term."
Widmer must have had a very bad day yesterday.
Obviously the Bay State Sun King sniffed then rejected Widmer's
self-important sage counsel: His butt-kissing didn't work even
when it came to tax increases on his Fat Cat Big Business MTF
membership. To Widmer's chagrin, His Highness the Royal Governor
also proposed "a wide range of corporate tax changes."
In his panicked response, Widmer blubbered:
"Many of these changes are changes of tax policy under the guise of
loophole changes. These are purely revenue changes to make up for the
budget shortfall..... This sends a very bad signal to the business
community."
Widmer's been doing it to us regular taxpayers for
years. Now Mike knows how it feels to be stabbed in the back.
 |
|
Chip Ford |
The Boston Herald
Friday, February 16, 2007
Cadillac Deval:
When not heli-commuting gov rides in style
By Casey Ross and Dave Wedge
Already facing heat for flying to events in a state police helicopter,
Gov. Deval Patrick is now cruising in a pricey, tricked-out Cadillac
DeVille at taxpayer expense.
The governor’s new luxury Cadillac DTS sedan is a lease that puts a
$1,166-a-month strain on the state budget and replaces the much more
modest Crown Victoria that former Gov. Mitt Romney was driven around in.
“Maybe it would be cheaper if he kept using the helicopter,” state
Republican Party chairman Peter Torkildsen said last night of Patrick.
Patrick came under fire this week after the Herald reported that he has
already taken two taxpayer-funded chopper rides to public events and
plans to continue to use the helicopter as he sees fit. Republicans have
said he is getting a pass on his helicopter use while former Acting Gov.
Jane Swift was lambasted for her infamous 2000 chopper commute.
Patrick’s new car is one of Cadillac’s finest vehicles with a price tag
that starts at $42,000. By comparison, Crown Victorias, which are the
vehicle of choice for police and government agencies, start at $26,000.
The DTS is the 2007 version of the DeVille and is the largest luxury
sedan made by Cadillac.
Sources said the governor’s coach was outfitted with tinted windows,
blue lights, sirens and other security features by a Marlboro company
that specializes in supplying public agencies.
A Patrick aide said the car was selected from a short list of vehicles
that meet state police security specifications. The aide said the
governor had sought to obtain the same kind of car used by Romney but
claimed that vehicle was no longer in production.
A Patrick spokesman declined comment last night.
Torkildsen disputed any assertion that the car was necessary.
“The Crown Vic is the standard police car issue. Certainly any security
features you can put on a Cadillac you can put on a Crown Vic,”
Torkildsen said.
State Sen. Richard Tisei, the top Republican in the senate, said the
cost of the Cadillac is exorbitant, especially when the governor is
proposing new taxes to help pay for local services.
“With all this talk about raising taxes, you would think the governor
would want to set an example with belt tightening in his office,” Tisei
said.“The governor has to realize that there is a lot of symbolism to
what he does and he has to set an example for state government.”
“He’s putting together a budget that is cutting a lot of state programs
across the board,” Tisei added. “The example of being frugal really
needs to start with him.”
State Sen. Bruce Tarr (R-Gloucester) said the governor should come clean
about the vehicle, including what special features he had installed on
the sleek new ride.
“One of the questions I have is, Are there not vehicles we already own
in the state fleet?” Tarr said. “I would hope the governor would follow
through on his commitments about transparency and indicate what (the
vehicle’s) options were. Without that information to put it into
context, people can only relate this to the vehicle they drive, which
probably doesn’t cost that much money.”
The Lowell Sun
Friday, February 15, 2007
Chief of staff hired for governor's wife
First there was the million-dollar gala.
Then there were the helicopter rides.
Now Gov. Deval Patrick is spending taxpayer dollars on staff for his
wife.
The state has hired a $72,000-a-year chief of staff whose sole job will
be to schedule Diane Patrick's public appearances and media
availabilities, The Sun has learned.
Diane Patrick's aide also gets a slice of office space in the governor's
third-floor suite.
The last governor's wife to have a full-time secretary was Kitty
Dukakis, whose husband left office in 1990. Since 1990, the governor's
staff has scheduled the first lady's appearances.
Patrick is simply being more efficient by using one person, said his
spokesman, Kyle Sullivan.
"Mrs. Patrick has a full-time job as a practicing attorney so staff
assistance relative to her official duties as first lady is necessary,"
Sullivan wrote in a statement e-mailed to The Sun.
Barbara Anderson, executive director of Citizens for Limited Taxation,
was already concerned about putting a tax-and-spend Democrat back in the
corner office.
This hire puts the governor's spending on even shakier ground,
especially as Gov. Patrick asks cities and towns to brace for a $1
billion shortfall.
Patrick also has asked state departments to cut budgets by 5 to 10
percent.
"This could be just the beginning. There was the big gala, the
helicopter, and now the wife with paid staff," Anderson said. "He's
creating an image of royal governorship that we're not accustomed to at
all."
For more on this, read tomorrow's Sun
The Boston Globe
Friday, February 16, 2007
Patrick eyes corporate tax changes
Would follow Romney's path for revenues
By Steve Bailey
Governor Deval L. Patrick, facing a daunting challenge as he tries to
balance his first state budget, is looking hard at the same solution
that his predecessor, Mitt Romney, employed in the early difficult
fiscal days of his administration: declaring war on corporate ‘‘tax
loopholes.’’
Two senior Patrick officials said that the administration is looking
seriously at a wide range of corporate tax changes to help close what is
now projected to be a $1.3 billion budget gap for the coming fiscal
year, which begins July 1. One of the officials said that the tax
changes could raise between $350 million and $400 million annually.
The Patrick officials, who spoke on condition they not be identified
because the proposals aren’t public yet, said no final decisions have
been made on which of the changes to incorporate into Patrick’s upcoming
budget. The budget is due to the Legislature by the end of the month,
and all the changes would require its approval.
If Patrick decides to make the tax changes a centerpiece of his new
budget, it is likely to create an uproar in the state’s business
community, which will consider them to be tax increases. The definition
of tax loopholes is in the eye of the beholder: People trying to close
them say they are addressing unx fairness, while those hurt by any
changes say they are simply higher taxes.
Four years ago, with Massachusetts facing a $3 billion deficit and
struggling economy, Romney avoided raising income or other broad-based
taxes by aggressively going after what he described as tax loopholes and
by raising fees. In all, three rounds of corporate tax changes produced
about $400 million in new revenue annually, according to state
officials. Eventually, Romney pulled back on some $85 million of
corporate tax changes when the business community objected loudly and
the economy began improving.
Now Patrick finds himself in a similar, if somewhat less severe,
situation. And rather than raise broad-based taxes he has asked his
revenue department to identify potential corporate tax changes. Revenue
Commissioner Alan LeBovidge, the man behind Romney’s campaign to close
tax loopholes, has targeted 10 possible tax changes for Patrick’s
consideration. Several of them are the changes that Romney first
proposed, and then rejected, two years ago.
During the campaign Patrick talked about the need to close ‘‘tax
loopholes,’’ including three of the changes that Romney initially
proposed but then rejected. Patrick, on his campaign website, estimated
that those changes could raise about $85 million in new revenue. But
now, with the budget outlook tighter than expected, Patrick is looking
for bigger opportunities.
The tax-law changes under consideration are complicated. The Patrick
officials said two changes would produce most of the new revenue:
Combined reporting. Advocates of combined reporting see it as a
comprehensive approach to closing corporate tax loopholes by making it
more difficult for corporations to shift profits to low-tax states like
Delaware. Currently, companies with multi-state operations in
Massachusetts pay taxes based on a calculation of the property, payroll,
and the sales they have here. Combined reporting would require
corporations, when filing their tax returns, to list all of their
profits, including any subsidiaries, and apportion the tax to more
accurately reflect the size of their business in Massachusetts.
Seventeen states, including California and Illinois, currently use
combined reporting. New York’s new governor, Eliot Spitzer, has also
proposed it in his new budget. Expected new revenue: $200 million a
year.
‘‘Check the box.’’ Romney at first proposed, and then rejected, this tax
change. Massachusetts is one of the few states that allow companies to
claim different corporate structures when filing federal and state tax
returns. For instance, a company can file as a corporation when filing
its federal tax returns and as a partnership for its Massachusetts
returns, sometimes lowering its state tax. The revenue department wants
to force companies to make a consistent choice. Expected revenue: $100
million to $150 million a year.
Other tax changes under consideration would raise less money. One
proposal would tax the non-insurance business of insurance companies at
the same rates that other businesses are taxed, eliminating the special
treatment insurers are now allowed. Another proposal would prevent
sellers of real estate from avoiding the deeds excise tax by placing the
property in a partnership and then selling an interest in that entity.
Another proposal would extend the state’s sales tax to digital music,
photographs, and printed materials in the same way the state did on
software three years ago.
Patrick spokesman Kyle Sullivan would only say, ‘‘It is the governor’s
intention to take on the modernizing of the tax code during his
administration.’’ But the governor’s plans drew immediate praise and
criticism.
Michael Widmer, president of the Massachusetts Taxpayers Foundation, a
business-funded fiscal watchdog, acknowledged ‘‘the budget situation is
very challenging,’’ but said it ‘‘is not in the state’s interest to
close a short-term budget gap at the expense of long-term economic
growth.’’ Added Widmer: ‘‘Many of these changes are changes of tax
policy under the guise of loophole changes. These are purely revenue
changes to make up for the budget shortfall, which is exactly what they
were under Romney..... This sends a very bad signal to the business
community.’’
Noah Berger, executive director of the liberal Massachusetts Budget and
Policy Center, disagreed. ‘‘It is hard to think of a less efficient use
of economic development resources than keeping open costly loopholes,
which allow companies that adopt aggressive tax avoidance strategies to
avoid paying taxes that others have to pay,’’ he said. ‘‘Does anyone
really believe that keeping open tax loopholes is a better long-term
investment in our economy than providing workforce training and
education so that Massachusetts will have the skilled and educated
people that employers want to hire?’’
The Patrick official warned that the $350 million to $400 million
estimate is an annualized number, and not all of that would be available
for the coming fiscal year even if all the changes make it through the
Legislature. Much of the budget gap will have to be dealt with through
cuts, he said, to make up for portions of the budget such as healthcare
that continue to grow at three times the rate of inflation.
The Boston Globe
Friday, February 16, 2007
Patrick aid plan gets cool reception
DiMasi questions local tax options
By Lisa Wangsness and Matt Viser
Governor Deval Patrick's plan to help cities and towns ran into
immediate resistance in the Legislature yesterday, with the House
speaker characterizing portions of it as "absolutely" tantamount to
raising taxes and cautioning that it would not benefit all communities
equally.
Speaker Salvatore F. DiMasi said that Patrick's proposed pension and
health insurance changes are "good, creative ways for cities and towns
to save money." But he rejected the Patrick administration's argument
that giving communities the right to impose local meals and lodging
taxes did not constitute a tax hike.
"Whether they raise it or we raise it, it's allowing them to raise it,"
the Boston Democrat said in a phone interview yesterday. While the new
taxing power deserves careful consideration, he said, "I don't think all
communities are going to benefit across the board."
DiMasi's reaction to Patrick's first major legislative proposal hints at
the challenge the freshman governor may face in pursuing this key agenda
item in the Legislature, which has historically been loath to share its
taxing authority. Patrick's municipal relief package, which he announced
yesterday at a press conference in Watertown, will be one of the first
tests of his ability to deliver on a central campaign promise: to help
communities gain a firmer financial footing and to reduce their reliance
on the property tax.
"Local option taxes have historically been a tough sell in
Massachusetts, and it's been that way for literally generations, so it's
a tough hill to climb; there's no question," said Senator Stanley C.
Rosenberg, a strong supporter of local taxes who helped craft a
municipal relief package several years ago.
The governor's bill would also end longstanding exemptions that let
telecommunications companies avoid paying certain property taxes,
something Patrick said could bring in about $140 million to local
coffers across the state. DiMasi and others raised concerns that this
could discourage economic development in the state when Patrick and the
Legislature have made it a priority. But Patrick said that eliminating
the exemptions would only ask the companies to pay their fair share of
the property tax, and that he did not think the exemptions were a
determining factor in whether the telecom companies would add
infrastructure in less developed areas.
Local leaders who had eagerly awaited Patrick's announcement gave it
mixed reviews yesterday. In Boston, where a new 2 percent meals tax
could bring in another $40 million, leaders were gleeful. Mayor Thomas
M. Menino said a provision that would allow communities to impose new
taxes on telecommunications equipment would save Boston homeowners an
average of $200.
"I'm grateful to the governor for coming out with this," Menino said. "A
lot of people said he wouldn't, but he's come through with a real strong
program to help the taxpayers and homeowners in our state."
But the plan encountered a lukewarm reception from many communities
without a strong tourism base.
"There's a lot more they have to do, a lot more," said Mayor John
Barrett III of North Adams, who said the package would put a small dent
in his nearly $40 million budget. "But it's a start."
As a candidate, Patrick made an early pitch for support from local
leaders, tapping into their frustration about stagnant state aid, which
had forced many communities to raise property taxes and cut services to
cover skyrocketing healthcare costs and other local needs.
About 53 percent of municipal revenues statewide come from property
taxes, the highest level in 25 years, said Geoffrey Beckwith, executive
director of the Massachusetts Municipal Association.
"The reason for that is that communities have no real options other than
the hotel/motel and the property tax," Beckwith said. "Right now the two
choices that are in front of communities are not good choices:
increasing the property tax or decreasing services."
Yesterday, Patrick hailed the relief package as the beginning of a new
relationship between state and local government and said it would help
lower property taxes.
"The idea is to develop both revenue sources and cost-containment
mechanisms to get the pressure off property taxes that local governments
are facing," he told reporters at Watertown Town Hall, where he met with
local leaders from across the state.
Responding to DiMasi's contention that the local option tax is the
equivalent of raising taxes, Patrick spokesman Kyle Sullivan said
yesterday, "The governor is looking to give local communities the
authority to make a judgment that's in their best interest."
Patrick's package would allow cities and towns to adopt a local meal tax
of up to 2 percent. It would also raise the 4 percent limit on the local
hotel tax to 5 percent. (Some communities already have a hotel tax.)
Twenty-five percent of the new revenue would go to a state reserve fund
that would reimburse cities and towns for property tax abatements for
low-income seniors and for other tax abatements that Patrick plans to
propose in his budget at the end of February. Communities that already
have a hotel tax would have to send only 25 percent of the new revenue
they earn to the fund.
On the cost-savings side, Patrick's plan would allow communities to buy
health insurance though the state's Group Insurance Commission, whose
large size has helped the state control the growth in its employees'
healthcare costs.
Michael Widmer, president of the Massachusetts Taxpayers Foundation,
said the package would help many cities and towns by holding down their
healthcare costs, finding pension savings, and bringing in new tax
revenues.
But "this is hardly a panacea to providing much property tax relief in
the short-term," he said.
For some local leaders, however, every bit helps.
The Boston Herald
Friday, February 16, 2007
DiMasi skewers meals tax
By Casey Ross
House Speaker Sal DiMasi yesterday smacked down a proposal by Gov. Deval
Patrick to institute local taxes on hotels and meals, delivering a
significant setback to the prized initiative just hours after the
governor announced it.
“These are broad-based taxes and the Senate president and I don’t think
we should be doing those things,” DiMasi told the Herald. “There’s a
($1.3 billion) shortfall this year, and if we have to deal with it by
making cuts, then that’s the way we should deal with it.”
DiMasi spoke after Patrick filed a bill to let communities impose a 2
percent tax on meals and a 5 percent levy on hotels. The proposal was
part of a broader “municipal relief” package that includes initiatives
to lower local health care costs, reform pension management and let
communities tax telecommunications companies.
“Today we take one major step toward rebuilding the relationship (with
cities and towns),” Patrick said. The measure would give communities
blanket authority to impose the meals and hotel taxes, which now require
a lengthy case-by-case legislative approval process. It also would
direct, 25 percent of the revenue into a state fund for elderly property
tax relief.
But DiMasi said the taxes offer questionable benefits for smaller
communities and relieve the state of its responsibility to cut spending
when times are tough.
“It’s not easy creating a tax and none of us (in the Legislature) have
any appetite for that,” DiMasi said.
DiMasi’s opposition creates a major roadblock for the tax provisions,
which have been resoundingly rejected in previous years.
A Patrick spokesman said the local taxes on meals and hotels give
communities a choice - not a mandate - to look to taxpayers for
additional resources. “The governor is looking to give local communities
the authority to make a judgment that’s in their best interests and
gives them flexibility,” spokesman Kyle Sullivan said.
Patrick’s aides have said the bill also fulfills his promise to reduce
property taxes by giving communities other ways of raising revenues.
Republican lawmakers questioned the plan’s logic, saying Patrick is
essentially saying he wants to relieve the tax burden by creating new
taxes.
“Gov. Patrick was elected in large measure because he promised to reduce
local taxes, yet in his bill he does the opposite,” said state Sen.
Richard Tisei (R-Wakefield). “Those who had hoped for some tax relief
will obviously be disappointed.”
The Boston Globe
Friday, February 16, 2007
A Boston Globe editorial
Patrick's municipal bargain
Municipal relief bills proposed by former governors in recent years
offered little actual solace to cities and towns. Governor Deval Patrick
took a bolder approach yesterday with a plan to help communities lessen
their dependence on residential property taxes.
The strongest section of Patrick's Municipal Partnership Act would
eliminate unfair tax exemptions for telecommunications companies.
Telephone poles, switches, fiber-optic lines, and other equipment are
often out of the reach of city tax collectors, unlike in most states.
The decades-old loopholes cost cities and towns about $140 million
annually, according to the nonprofit Massachusetts Municipal
Association. Patrick's proposal would finally put some power back in the
hands of local officials.
Patrick blinked, however, when it came to giving cities and towns the
clout they need to control double-digit annual increases in healthcare
costs for municipal workers. His bill would give communities the option
of folding town workers into the state's tightly managed Group Insurance
Commission, but only by agreement between the municipality and a public
employee committee. Municipal unions are almost sure to dismiss the
proposal. Cities and towns need the same power the state now wields to
design coverages, such as increasing co-pays for state employees. The
governor doesn't have to go with his hat in hand to achieve health care
efficiencies. And neither should mayors and selectmen.
In other areas, Patrick showed more backbone. His bill would allow
communities to impose a local option tax of up to 2 percent on
restaurant meals. That could raise as much as $240 million for
communities that now don't share in the 5 percent state meals tax.
Cleverly, Patrick would set aside a quarter of the new revenues to
provide property tax abatements for cash-strapped elderly residents.
The tax option stays true to Patrick's oft-repeated campaign promise to
help communities diversify their revenues for the purpose of providing
real property tax relief.
Local pension boards may rise up against Patrick's proposal to force the
transfer of underperforming local retirement systems into the successful
state pension fund. But it is only reasonable for the governor to demand
that local communities clean up their own backyards now that he has
pledged publicly not to cut state aid to cities and towns.
Municipal relief packages often amount to little more than lame early
retirement packages served up by detached governors. Patrick puts
authentic proposals on the table. And he is backing a commission to
grant increased local authority in areas, like speed limits, that now
require legislative approval.
A governor is finally treating local officials like adults.
The Boston Herald
Friday, February 16, 2007
A Boston Herald editorial
Local tax relief still a long way off
It’s difficult to grasp how new local taxes could possibly translate
into local tax relief. The most we can say about Gov. Deval
Patrick’s package of municipal reforms released yesterday is that we
won’t be shocked when property taxes don’t exactly plummet next year.
The proposal does contain a number of sensible ideas. But they’re almost
entirely overshadowed by the tax increases and the strings attached and
it’s tough to imagine any of it leading to meaningful relief in our
lifetimes.
First, Patrick wants to allow cities and towns, which have seen the cost
of health care for their workers skyrocket, to participate in the state
Group Insurance Commission. GIC costs are growing, but far more slowly.
It’s a solid idea, well worth legislative approval. But because it isn’t
mandatory, even if a community opts in it has to get every last
bargaining unit in town to go along. So don’t expect a municipal
stampede, or the town budget to reflect savings anytime soon.
Patrick’s plan also contains the dreaded “cheeseburger tax,” which gives
communities the option of slapping diners with a 2 percent local
meals tax on top of the 5 percent state meals tax. A quarter of
the revenue would go into a state fund and be used to pay back cities
and towns that give property tax abatements to senior citizens, while
the rest would be for general use.
Good for seniors. Not so good for the guy who buys a sub for lunch a few
times a week, or for the town with one lonely coffee shop.
The administration also wants to hike property taxes for
telecommunications companies, a tax that will surely be passed right on
to cable and phone customers. So much for relief there.
It’s now up to lawmakers to separate the wheat from the chaff. The GIC
reforms deserve to go forward, as does Patrick’s plan to require
underperforming municipal and county pension funds to be taken over by
the state retirement board.
But no one should get his hopes up. That promised property tax relief is
still a pipe dream.
The Boston Globe
March 8, 2006
Patrick's mortgages amount to $5.9m
Candidate says he has what it takes to run
By Frank Phillips
With the Democratic primary heating up, Deval Patrick has stressed that
he will have the funds to wage a credible campaign in what is expected
to be the state's most expensive gubernatorial election ever.
Patrick is assuring supporters he has the personal assets to compete, as
he takes on an incumbent attorney general with a bulging campaign
account, and possibly a deep-pocketed venture capitalist.
Indeed, after a lengthy career at private law firms, the US Justice
Department, and as counsel to major corporations, Patrick has
considerable resources.
But he also has accumulated significant debt.
Patrick has heavily mortgaged his family's real estate. He and his wife
are now carrying mortgages worth a total of $5.9 million on their Milton
home and a Berkshires vacation home. Based on the interest rates of the
loans, which the Globe reviewed, the Patricks' mortgage payments are
roughly $27,000 per month.
Patrick declined to discuss his finances, and, like several other
gubernatorial candidates this year, has said he will not make his income
tax returns public. His only required financial disclosure, a limited
report to be filed with the state, is not due until May.
''There has to be a line drawn between public affairs and private ones,
and I am drawing it here," Patrick said, explaining why he will not
release his tax returns.
But a Globe examination of public records -- including real estate
holdings, mortgages, personal loans, and federal financial reports --
reveals this picture: Patrick, a Harvard-educated lawyer who grew up
poor on Chicago's South Side, has seen his income soar over the last 20
years. But during that same period, he has also embraced financial risk,
taking on significant debt.
There are no allegations that Patrick did anything improper. In fact, in
a rising housing market, borrowing heavily to buy real estate with the
expectation of appreciation can be a successful financial strategy.
Since 1989, when Patrick and his wife, Diane, first purchased their
Milton house for $560,000, they have taken out 10 mortgages on the
property, sometimes carrying three at the same time. They are currently
carrying two mortgages worth $1.65 million on the house. The town
recently assessed it at $1.8 million.
The mortgages include a $1.28 million mortgage from the SunTrust Bank, a
bank that has close ties to the Coca-Cola Co., where Patrick was a vice
president and general counsel for four years. That loan is second in
line to a first mortgage of $350,000 the Patricks received in 2000 from
Fleet Bank.
On a 77-acre tract of land in the Berkshires, where they are building a
10,000-square-foot house, the Patricks have a $4 million mortgage that
they took out in January from Berkshire Bank in Pittsfield. They also
have a $620,000 mortgage that they took out last year to buy a 14-acre
adjacent lot, which an aide to Patrick said the couple intends to sell.
The current assessed value for the two Berkshire lots is $1.1 million.
The building permit for the house, filed with the Richmond town hall,
estimates it will cost $2.5 million to build. Richmond Tax Assessor
Craig Swinson said that property assessments lag market value in the
town.
''It might be assessed for $2.5 million but could sell for $4 million,"
Swinson said after reviewing the plans for the house, which will also
include a $90,000 swimming pool, a squash court, and a 1,000-foot
driveway. Swinson stressed that he has not visited the property.
Patrick and his wife were also heavily mortgaged on a condominium they
purchased in Atlanta in 2001, when he was working at Coca-Cola corporate
headquarters there. They bought the condo for $755,000, and received a
mortgage from Sun Trust Bank for $735,000, or 97 percent of the purchase
price. The condo is now under agreement to be sold, said Kahlil Byrd, an
aide to Deval Patrick.
The Patricks have always met their obligations, public records show,
with the exception of a period in 1996, when Patrick was assistant US
attorney general in charge of the Civil Rights Division in Washington.
That year, a tax lien was placed on the Patricks' Milton home after they
failed to make payments on $8,778 in back taxes they owed to the IRS.
Patrick, in a statement to the Globe, stressed that he and his wife have
''never failed to repay any loan we have ever had, or to meet our
financial responsibilities." He declined to be interviewed about his
finances.
While the 19 mortgages and personal loans the Patricks have taken out
since 1989 are recorded publicly, the couple's income and assets are
more difficult to determine.
In 1994, when Patrick was nominated to be an assistant attorney general
in the Clinton administration, he filed a federal financial disclosure
report, listing the couple's net worth at $201,000, with assets worth
$1,034,000, including their Milton house, which they valued at $750,000.
In the report, Patrick said he had earned a base salary the previous
year as partner at the now defunct Boston law firm Hill & Barlow, where
he was a partner, of $136,000. His wife was then human resource director
at Harvard University. No salary is listed for her position.
After leaving the Justice Department in 1997, Patrick went to work at
the Boston firm of Day Berry & Howard for two years and then to Texaco,
where he was a vice president and general counsel. Little is available
in public records about his income during that period.
According to filings with the Securities and Exchange Commission,
Patrick appears to have had high earnings during the years he served as
general counsel at Coke. His salary at Coca-Cola began at $1.5 million
in 2001 and increased to $2 million in his final year, 2004. He also
received a $2.1 million in severance pay in 2005 shortly after he left
Coca-Cola.
The SEC documents from that four-year period also reveal that Patrick
accumulated about $2 million in stock from Coca-Cola and by sitting on
the boards of directors at Reebok International Ltd. and United Airlines
Corporation. Stories in trade journals, including the Atlanta Business
Chronicle and Legal Times, reported that when he left Coca-Cola, in
addition to the $2.1 million in severance pay, he had between $10
million and $20 million in Coca-Cola stock options.
But Patrick has denied receiving anything near that, and Bruce Brumberg,
editor in chief of myStockOptions.com, who examined Patrick's Coke
holdings at the request of the Globe, said those reports in the trade
journals were greatly exaggerated.
''It's nowhere near the $10 million-to-$20 million that has been
reported," Brumberg said. ''By the time he left the company, most of the
stock options were under water or barely profitable," he said. Brumberg
emphasized that it is difficult to determine how much Patrick still owns
of the roughly $2 million in Coca-Cola stock he was granted, since it is
no longer required that his holdings be publicly reported.
Patrick has resigned from the Reebok and United Airlines boards, but he
remains on the board of the holding company that operates the nation's
largest mortgage company, Ameriquest Mortgage.
The privately held lending firm earlier this year entered into a $325
million settlement with 49 states to settle allegations of predatory
lending practices. Patrick, who has been on the board since 2004,
declined to detail what compensation he has received from Ameriquest,
saying only that it is more than $100,000 a year.
Patrick's wife, Diane, is a partner at the major Boston law firm of
Ropes & Gray, where she specializes in labor and employment law.
Patrick's campaign declined to reveal her salary.
Patrick says that he and his wife can meet their loan obligations if he
is elected governor, a post that pays $135,000 a year.
"We looked hard at the financial implications of dedicating ourselves
full time to public service and planned accordingly," Patrick said in a
statement. ''Through hard work, great opportunities, and continued
blessings, we are in a wonderful financial position today to make this
leap."
Still, the debt the couple is carrying raises a political question: If
Patrick needs to draw on his own funds for his campaign, how much wealth
does he have available to tap?
His rivals have large fortunes to draw on. Venture capitalist Chris
Gabrieli, who put $5 million into his race for lieutenant governor in
2002, is considering jumping into the Democratic primary. Lieutenant
Governor Kerry Healey, a Republican who draws wealth from her husband's
investment firm, and convenience store magnate Christy Mihos, an
independent, are also running.
Patrick's fund-raising pace has picked up in recent months. Still he
lags behind Attorney General Thomas Reilly, who has approximately $4
million in his campaign warchest, to Patrick's $850,000.
Personal debt has been an issue in state campaigns before. Governor Paul
Cellucci was saddled with over $700,000 in personal debt, most of it
from credit cards. Cellucci said the debt piled up after he gave up his
law practice when he became lieutenant governor, and faced education
expenses for his kids and other expenses.
Cellucci never defaulted on his obligations, but faced questions about
how he accumulated the debt, and how he was paying it off. A Hudson bank
that had close ties to him and his family had extended him critical
financial help.
But Cellucci, like other recent governors, with the exception of Mitt
Romney, released his income tax returns. Patrick has declined to do so.
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