CLT UPDATE
Friday, July 6, 2007
Public employees exposed --
taxpayers ignored
Public sentiment still runs strongly against going
anywhere near the "Taxachusetts" that voters hoped was left behind.
Budget cuts might be deep, but budget skepticism among those who pay the
bills runs even deeper....
According to figures published by the state Department of
Revenue, 39 overrides have been approved this year in Massachusetts; 83 have
been rejected. Whether it is in a lump sum or a line item, the life expectancy
of an override proposal isn't good....
Barbara Anderson, author of Proposition 2½ and still head of Citizens
for Limited Taxation and Government, isn't quite so happy. The notion that
"Proposition 2½ works" is "true in the sense that voters getting to vote is
better than having government force us to pay those taxes without our having to
say anything about it."
"But they're not as happy when (an override) fails. Then they don't start
talking about democracy in action," she said.
Asked whether a Proposition 2½ override (as opposed to a temporary debt
exclusion for a specific project) is always unjustified, she paused, then said,
"Well, no."
"When we first drafted this, remember how angry everybody was. We knew we had to
put in some kind of safety net, some kind of emergency if something
unanticipated happened, a court judgment or an accident or a crisis. Then voters
can choose to raise property taxes to address it.
"It never occurred to us during that time that some day they would be voting to
raise taxes for operating expenses or for pay raises and benefits, or even
fireworks," she said.
"I see them laying off teachers but I don't see them cutting teachers' pay or
cutting back on benefits. ... Only the pressure of a 'no' vote is going to force
reform in pensions and health insurance," she added....
Newspapers and lawmakers, she said, "are beginning to understand that the
problem is the so-called fixed costs, the pay and benefits for employees
accumulating."
"In the private sector they have to correct for that," she said, and now the
time has come to do the same in the public sector. Pensions, her group has long
complained, must be reined in, along with sharing more of the burden for health
insurance.
The New Bedford Standard-Times
Thursday, July 5, 2007
Track record for overrides bumpy at best
Yes, we have all memorized the mantra. We can recite the holy
trinity of "uncontrollable" costs along with our elected officials -- energy,
health care and inflation. We private-sector types have to cope with those
things, too.
What we don't understand is the mentality that we should have to pay not only
for our own household increases in energy and health care, but then pay extra
taxes so public employees don't have to pay for them.
When health-care costs go up, private sector employers require workers to pay a
bigger percentage of the premium. Copays go up. Deductibles go up. Why should
public employees be immune from that?
When energy costs go up, private-sector workers can't demand pay and benefit
increases to wipe that out. They drive a bit less. Or they keep the house cooler
in the winter and warmer in the summer. Or, they forgo purchases they want. In
short, they curb their lifestyle.
And that doesn't even address the elephant in the room -- union contracts.
Personnel costs are about 85 percent of school budgets. School committees across
the state approve contracts they know are unaffordable, and then throw up their
hands when the bill comes due, call them "fixed costs" and demand an override.
The Eagle-Tribune
Sunday, July 1, 2007
Lack of fiscal prudence kills overrides
By Taylor Armerding
The legislation to allow municipalities to join the state's
health insurance system also has strong support from chief executives, who said
it would relieve their soaring health costs.
However, Lynn's Mayor Clancy opposes the bill as proposed, because it would
require approval by local unions for a community to join the system.
[Thomas G. Ambrosino] said the legislation "was a compromise hashed out over
many months of negotiation between municipal managers, legislators, and labor."
Without the provision, Revere's mayor said, he does not believe that the bill
could have won passage.
The Boston Globe - North edition
Thursday, July 5, 2007
Cities' leaders back Patrick's local aid plan
Deval Patrick was elected governor on a promise of doing
something about property taxes, and he couldn't be getting better news on the
revenue front. While the final numbers won't be released for a week, several
Patrick officials told me the state will report about $19.7 billion in tax
revenue for the year -- $1.2 billion, or 7 percent, more than a year ago. Looked
at another way, that is $425 million to $450 million above the $19.3 billion the
state projected in January.
You would think with a new governor dedicated to property tax relief and state
revenue surging, now would be the moment to give the struggling homeowner some
help. You would be wrong.
That $425 million-plus windfall, the Patrick administration says, is already
mostly spent. About $100 million is scheduled for the rainy day fund. Another
$80 million will pay to restore the cuts Mitt Romney made as he left office.
Much of the rest will go to the state's supplemental budget. Says Barbara
Anderson, leader of the fraud, waste, and abuse watchdogs: "If you have a
surplus and spend it, it is no longer a surplus."
She has a point. If Patrick and the Legislature were serious about doing
something about property taxes, rather than leaving cities and towns between a
rock and a hard place, they could....
Massachusetts has many needs, and slowing the growth in property taxes is high
among them. In a few short months, Patrick has rolled out a lot of
billion-dollar plans, and it is only July. There's one to improve education and
make community colleges free. There's one for commuter rail service to
Southeastern Massachusetts. There's another for the biotech industry.
When do we get at least a down payment on his signature campaign promise --
doing something about property taxes?
The Boston Globe
Friday, July 6, 2007
If not now, then when?
By Steve Bailey
[State Senator Richard T. Moore ] and some advocates
complained at the time the bar had been set too low. They cited studies by
insurers and legislators that showed Massachusetts companies that provide
employee health insurance contribute about 75 percent of premium costs. If
companies could avoid the $295 surcharge with a contribution of only 33 percent,
critics of the regulation said, they would tend to pay less toward their
employees' insurance....
Blue Cross spokesman Chris Murphy said the company changed the minimum employer
contribution to premiums [to one-third] in response to inquiries from small
companies. The insurer said its new lower contribution standard only applies to
companies with 50 or fewer employees. Large firms still have to pay at least 50
percent of premiums, Blue Cross said.
"We actually have a lot of small businesses contacting us, trying to provide
insurance for their employees, but they can't meet the 50 percent contribution
requirement," said Murphy. "Now more employers will get to offer health
insurance to employees and be more competitive in the market, and the employee
gets coverage that's less expensive than if they were buying insurance
individually."
The Boston Globe
Friday, July 6, 2007
Some say Blue Cross plans to hurt health revamp
The House and Senate passed a $26.8 billion budget yesterday,
restricting spending growth to just 4.2 percent over last year and embracing, at
least in part, many of Governor Deval Patrick's budget priorities for education,
public safety, and public health.
Patrick has up to 10 days to review the spending plan and decide which parts, if
any, to veto or return with amendments. His initial reaction, however, signaled
that he was largely satisfied with the Legislature's work....
The two chambers eventually worked out an unusual compromise: The budget
dedicates up to $100 million of the fiscal 2007 surplus to a new Bay State
Competitiveness Investment Fund, but it does not spell out how the money would
be used. A House legislative aide said the leaders agreed that the House and
Senate would each use half of the money for its own priorities....
The budget depends on about $611 million in reserves and one-time revenue
sources, more than double the amount the governor's budget used and nearly $140
million more than the Senate's did.
In doing so, the Legislature is betting that revenues will come in higher than
the conservative estimate of 3 percent over last year.
Michael Widmer, president of the Massachusetts Taxpayers Foundation, said the
legislative leaders would probably win the bet, as they have in the previous two
fiscal years, and not have to draw too heavily on reserves.
The Boston Globe
Tuesday, July 3, 2007
House and Senate OK $26.8b budget,
a 4.2 percent rise
It’s been an amusing parlor game at the State House,
trying to divine exactly which sections of the state budget will fall to
the veto pen of the first Democratic governor in 16 years.
Yes, there’s plenty for Gov. Deval Patrick to like in the $26.8 billion
spending plan approved by the Democratic House and Senate yesterday. He
issued glowing praise for the legislative effort, and promised to do his
“homework” in the coming days.
Still that red pen is going to get some action. And we’re happy to offer
a suggestion -- Governor, start with Senate President Therese Murray’s
cockamamie plan that ties up most of any future surplus in the state
budget for spending on life sciences -- instead of using it for taxpayer
relief....
But the plan to divert a portion of any potential surplus
above $50 million for private biotech investment eliminates any illusion
taxpayers might have had that lawmakers might soon honor their demand to lower
the income tax rate -- and it deserves a bright red line drawn through it.
A Boston Herald editorial
Tuesday, July 3, 2007
Make liberal use of the veto pen
Chip Ford's CLT Commentary
The FY2008 state budget has passed through the bowels
of the Legislature and now awaits the governor's sign-off.
Everyone's still trying to figure out whether there was in fact a
deficit -- as so loudly proclaimed for months now -- or actually a
surplus, as it now appears since the spending has been done. Or an
even bigger surplus ahead that already is planned to be spent as fast as
it arrives. In the $26.8 billion document -- a 4.2 percent
increase over last year -- there is no tax relief to be found, anywhere
-- for anything -- and none in sight.
Meanwhile, the voters' 2000 tax rollback mandate
continues to go ignored, property taxes continue to increase, and
Proposition 2½ overrides are popping up like dandelions on the lawn.
Though for the most part, overrides are being mowed down by voters more
often than not: statewide, 83 to 39 by the count of Steve Urbon of
the Standard-Times.
It appears more taxpayers are finally recognizing the
cause of their continually escalating tax burden: public employee
unions and the "fixed costs" imposed by them. Like the "For The
Children" mantra, no longer is "Fixed Costs" sliding by without public
skepticism. Citizens at large eventually learned the first meant
"for the teachers unions," and now are learning the latter code
translates into "public employee union benefits."
The dichotomy between public and private sector
benefits was defined well in the report on the new mandatory health
insurance law, in the lobbying by private sector employers:
whether they must pay 50 percent or 33 percent of the policy cost to
avoid a state penalty. Can you imagine telling a public employee
union that only 50 percent of their health insurance will be paid by
taxpayers? Most go ballistic if it's suggested that they pay
merely 15 percent of the cost!
But Gov. Patrick's "municipal relief" plan will leave
it up to the unions to decide whether to join or reject a more
cost-effective state-run health insurance plan. And he expects
them, given a choice, to respond -- how?
 |
|
Chip Ford |
The New Bedford Standard-Times
Thursday, July 5, 2007
Track record for overrides bumpy at best
By Steve Urbon
All things considered, Dartmouth has a better-than-average likelihood of
passing a dreaded Proposition 2½ override later this month.
That is because it has a solid middle-class population. A good number of
professionals live there. The main issue is schools and the future of
education for the children of all those middle-class families.
Those are all factors that state officials have identified as
predisposing voters to grant relief from the restrictions placed on
property taxes by Proposition 2½.
Then again, all things considered, the Proposition 2½ override is likely
to lose.
Public sentiment still runs strongly against going anywhere near the "Taxachusetts"
that voters hoped was left behind. Budget cuts might be deep, but budget
skepticism among those who pay the bills runs even deeper.
Dartmouth isn't the only community to hit a fiscal wall this year, going
hat-in-hand to the taxpayers for a permanent increase in taxes, this
time $8.5 million. And if recent history is any guide, it won't be the
only one heading into fall trying to regroup after a rejection, making
draconian spending cuts and wondering about the future.
According to figures published by the state Department of Revenue, 39
overrides have been approved this year in Massachusetts; 83 have been
rejected. Whether it is in a lump sum or a line item, the life
expectancy of an override proposal isn't good.
"For taxpayers, the story of municipal government over the past decade
is universal: higher property taxes and increased fees combined with
diminished public services and deferred investments in infrastructure.
Faced with this zero-sum game, the politics of local government has
turned increasingly sour." So wrote John P. Hamill and Thomas G.
Ambrosino in a recent op-ed commentary in The Boston Globe.
Mr. Ambrosino, mayor of Revere, told The Standard-Times that "as the
mayor of an urban city we never could conceivably pass a Proposition 2½
override."
He knows that from direct experience and from serving on the Municipal
Finance Task Force of the Metro Mayors Coalition in 2005.
That group, chaired by Mr. Hamill, who is chairman of Sovereign Bank,
studied the history and trajectory of municipal finances in Greater
Boston and sounded a dire note, which they repeated this year: "The
basic business model of local government is beginning to fail."
Others, however, point out that where Proposition 2½ overrides have
passed — in Maynard and Kingston, for example — it demonstrates that
Proposition 2½ works, making it difficult but not impossible for voters
to be persuaded to increase their taxes.
Proposition 2½ was a 1980 referendum — some say revolution — that capped
local property taxes at 2.5 percent of assessed value, with yearly
increases limited to 2.5 percent, adjusted for growth.)
Barbara Anderson, author of Proposition 2½ and still head of
Citizens for Limited Taxation and Government, isn't quite so happy.
The notion that "Proposition 2½ works" is "true in the sense that voters
getting to vote is better than having government force us to pay those
taxes without our having to say anything about it."
"But they're not as happy when (an override) fails. Then they don't
start talking about democracy in action," she said.
Asked whether a Proposition 2½ override (as opposed to a temporary debt
exclusion for a specific project) is always unjustified, she paused,
then said, "Well, no."
"When we first drafted this, remember how angry everybody was. We knew
we had to put in some kind of safety net, some kind of emergency if
something unanticipated happened, a court judgment or an accident or a
crisis. Then voters can choose to raise property taxes to address it.
"It never occurred to us during that time that some day they would be
voting to raise taxes for operating expenses or for pay raises and
benefits, or even fireworks," she said.
"I see them laying off teachers but I don't see them cutting teachers'
pay or cutting back on benefits. ... Only the pressure of a 'no' vote is
going to force reform in pensions and health insurance," she added.
Many, if not most, local officials might disagree that frivolous
spending is to blame for the crunch, not after 25 years of Proposition
2½. Officials across the state point to double-digit health insurance
increases in recent years as the main driving force behind spiraling
budgets. Most towns have experienced six-year increases of more than 50
percent; some have approached 100 percent in that time.
"I've been dealing with it daily for three years," Dartmouth Select
Board Chairwoman Kathleen Horan McLean said.
"We need an override. If not, then this will be a different town, and
that may be where the majority of people are going," she said.
This turmoil has not gone unnoticed. Gov. Deval Patrick has had a warm
reception for his Municipal Partnership proposal, which among other
things would allow communities to levy taxes on restaurant meals and
hotel rooms. That would ease the strain on property taxes.
The state's local aid formula also has been tweaked to rebalance
property taxes and income taxes, to redirect some money back into the
suburbs, which feel cheated.
"Growth communities are being penalized," Ms. McLean said. While
Revere's mayor cannot appeal to low-income residents for more taxes,
"Cities like New Bedford get much greater state aid because ... one of
the factors is income and the value of the home. Our aid is reducing and
New Bedford's is increasing."
But, she added, "I think people are becoming educated and I think they
are beginning to understand that these problems are real."
Ms. Anderson agrees, but in a different sense. Newspapers and lawmakers,
she said, "are beginning to understand that the problem is the so-called
fixed costs, the pay and benefits for employees accumulating."
"In the private sector they have to correct for that," she said, and now
the time has come to do the same in the public sector. Pensions, her
group has long complained, must be reined in, along with sharing more of
the burden for health insurance.
State officials recently pitched a merger of state and local pension
systems on the basis that the state's investment performance is better.
And the state also is moving quickly to let communities participate in
the state's health insurance system. Some towns say that will save
millions, especially in places such as Nantucket where health care costs
$22,000 per employee; Ms. McLean said that in Dartmouth a change could
be a toss-up.
Much like the override vote itself.
The Eagle-Tribune
Sunday, July 1, 2007
Lack of fiscal prudence kills overrides
By Taylor Armerding
People don't mind their taxes going up, as long as they know years in
advance that they are going up.
That, at least, is the theory under which the Newburyport School
Committee plans to sweat its way through July and August -- developing
budget forecasts as much as 10 years out. Their rationale is that the
recent defeat of a Proposition 2½ override was not because residents
believe they are taxed (and charged fees) more than enough, but because
the School Department has not provided a long-term "vision" for
educating Newburyport students.
Maybe that was a small factor in why the override failed. I like a
long-term vision as much as anybody else. But don't you think public
education has been in business long enough to have developed a long-term
vision decades ago?
Besides, a vision doesn't necessarily get anything done. I've seen other
long-term visions, known as master plans, get developed with much toil
and discussion, and then end up sitting on a shelf somewhere in a
municipal building.
I'm also suspicious of "vision" these days, because it sounds very much
like a word from the amorphous, gauzy lexicon of our new governor, Deval
Patrick. The governor has visions of police officers swarming every
corner of every community, of health care that is the best in the world
and the cheapest in the world, of lowering property taxes by (shhh!)
raising other taxes, of spending $1 billion of your tax money to make
Massachusetts the center of the biotech world, of keeping Massachusetts
safe from horrible things like a democratic vote on a divisive issue.
I could do all that stuff too -- so could you -- with unlimited access
to everybody else's wallets. There is no end to all the good I can do
with your money.
So, I'm willing to bet that the reason most overrides are rejected is
not because school officials (and municipal leaders as well) haven't
done long-range projections, but because they fail to show why taxes
have to rise so much more than inflation. And that is something they
don't want to show.
Yes, we have all memorized the mantra. We can recite the holy trinity of
"uncontrollable" costs along with our elected officials -- energy,
health care and inflation. We private-sector types have to cope with
those things, too.
What we don't understand is the mentality that we should have to pay not
only for our own household increases in energy and health care, but then
pay extra taxes so public employees don't have to pay for them.
When health-care costs go up, private sector employers require workers
to pay a bigger percentage of the premium. Copays go up. Deductibles go
up. Why should public employees be immune from that?
When energy costs go up, private-sector workers can't demand pay and
benefit increases to wipe that out. They drive a bit less. Or they keep
the house cooler in the winter and warmer in the summer. Or, they forgo
purchases they want. In short, they curb their lifestyle.
And that doesn't even address the elephant in the room -- union
contracts. Personnel costs are about 85 percent of school budgets.
School committees across the state approve contracts they know are
unaffordable, and then throw up their hands when the bill comes due,
call them "fixed costs" and demand an override.
If they are serious about getting the support of taxpayers, they can
start with transparency before getting into the vision thing. That means
posting union contracts for teachers and all other employees on the
school's Web site. That means including the entire salary schedule, so
that taxpayers can see why a 2 percent pay increase adds so much more
than 2 percent to the budget -- because just about everybody gets a
"step" increase or a "further education" increase as well. That means
posting every salary, so people can see exactly where the money is
going.
Unions hate the idea of their contracts being made public, of course.
Why do you suppose that is?
Don't buy the usual complaints that they deserve some privacy, just like
anybody else. They don't. If they want privacy, there is a simple way to
get it: Go to work in the private sector.
School officials are probably right about one thing. If local residents
believe their money is being spent wisely and fairly, and is not a gravy
train for public employees at their expense, they will have much more
open minds about tax overrides.
But if that is truly the case, few overrides will be necessary.
Taylor Armerding is associate editorial page editor of The
Eagle-Tribune.
The Boston Globe - North edition
Thursday, July 5, 2007
Cities' leaders back Patrick's local aid plan
By John Laidler
While some key provisions of the Municipal Partnership Act are moving
forward and others remain stalled on Beacon Hill, the entire package of
local taxes and savings proposed by Governor Deval Patrick has received
strong support from the chief executives of local cities, according to
an informal Globe survey.
"People are beginning to understand that we are in a municipal crisis in
most cities and towns in Massachusetts, in terms of underfunding, and
that real-estate taxpayers, especially residential real-estate
taxpayers, are overtaxed," said Mayor John Bell of Gloucester. He said
the Municipal Partnership Act offers relief in the form of potential new
cost savings and revenues.
In Haverhill, Mayor James J. Fiorentini said his city's employee health
insurance costs are to increase 9 percent next year, while tax revenues
are expected to rise 3 to 4 percent.
"Something has to give," Fiorentini said. "There has to be some relief
for cities." The governor's plan, he said, "gives us some extra tools in
our toolbox."
In interviews, 12 chief executives of area cities said they supported
the Municipal Partnership Act in its entirety, though they cautioned
that not all provisions would apply to their communities.
In addition to Bell and Fiorentini, endorsing the full relief package
were Mayors Thatcher W. Kezer III of Amesbury, William F. Scanlon Jr. of
Beverly, John Hanlon of Everett, Richard C. Howard of Malden, Robert J.
Dolan of Melrose, John Moak of Newburyport, Michael J. Bonfanti of
Peabody, Thomas G. Ambrosino of Revere, and Kimberley L. Driscoll of
Salem, and City Manager Jay Ash of Chelsea.
In Lynn, Mayor Edward J. Clancy Jr. said he had no overall position on
the act, but expressed support for several provisions and concern over
one.
The House on June 21 and the Senate on June 26 adopted one Municipal
Partnership Act provision, a measure that allows cities and towns to
reduce health insurance costs by joining the state's system. On June 27,
the House approved a second key provision, one requiring underperforming
local and county retirement funds to be placed in the state's pension
fund.
But other parts of the governor's package have yet to gain traction.
Included are measures to end a property tax exemption for
telecommunications companies, to allow cities and towns to adopt a meals
tax of up to 2 percent, and to increase the maximum hotel-motel tax from
4 to 5 percent.
"It's my sense that some of these features we may see this year and
others are going to take another year, but I think the ball is starting
to roll," Beverly's Mayor Scanlon said, adding that local officials need
to do "a better job explaining our problem" to lawmakers.
Kyle Sullivan, a spokesman for Patrick, said: "The governor is grateful
to legislators and their leadership for the action that has already
taken place to move this agenda forward. We look forward to working with
our partners in the Legislature to ensure communities have the tools
necessary to ease the property-tax burden on homeowners and the
financial pressure on cities and towns."
David Guarino, spokesman for House Speaker Salvatore F. DiMasi, said
that DiMasi has been "focused on finding ways to help cities and towns
save money before we go to the taxpayers and ask for more." He said that
municipalities would annually save an estimated $120 million to $180
million under the health insurance measure and about $100 million from
the pension bill, and that they have also benefited from added local
aid.
Guarino said DiMasi has expressed concern about the impact of the meals
and hotel taxes on businesses and taxpayers, adding that not every
community would benefit equally. He said DiMasi also is concerned that
the telecommunications measure would hurt ratepayers.
Therese Murray, the Senate's president, stated in a news release that
the pension bill would be taken up this week and that the hotel-motel,
meals, and telecommunications tax measures would get a full debate in
the Senate.
Local chief executives say they understand lawmakers' concerns about
raising taxes, but stress that it would be up to cities and towns
whether to adopt the hotel-motel tax and meals tax provisions.
"We are not asking the Legislature to pass a tax," said Howard, Malden's
mayor. "We are just asking them to give individual communities the
chance to analyze for themselves whether or not it is needed."
In the view of the local officials interviewed, the tax exemption for
telecommunications companies is ripe for elimination. It was put in
place a century ago "when there was a statewide rollout of telephone
service," Howard said, adding that it has "definitely served its
purpose."
The legislation to allow municipalities to join the state's health
insurance system also has strong support from chief executives, who said
it would relieve their soaring health costs.
However, Lynn's Mayor Clancy opposes the bill as proposed, because it
would require approval by local unions for a community to join the
system.
Ambrosino said the legislation "was a compromise hashed out over many
months of negotiation between municipal managers, legislators, and
labor." Without the provision, Revere's mayor said, he does not believe
that the bill could have won passage.
While few of their communities would be affected by it, area chief
executives see the pension measure as another positive step in easing
the strain on local budgets.
Joining the state's pension fund was "the best thing Chelsea ever did,"
Ash said. "We doubled our return the year after we got into it."
In Newburyport, Moak said he is pleased that Patrick "has realized there
is a need for partnership" between the state and municipalities "to
close the cost and revenue gap we have."
A fairer way to address the local funding squeeze, Peabody's Bonfanti
said, is to raise the state income tax to 5.9 percent and allocate a
portion of resulting new revenue to cities and towns. But with that idea
not on the table, he is embracing the governor's plan.
"What it comes down to is cities and towns need some . . . new tools so
we can survive."
The Boston Globe
Friday, July 6, 2007
If not now, then when?
By Steve Bailey
If you really want to get discouraged about the prospects for property
tax relief, consider the numbers as the state closes the books on what
is turning out to be a banner year for taxes, if not taxpayers.
Deval Patrick was elected governor on a promise of doing something about
property taxes, and he couldn't be getting better news on the revenue
front. While the final numbers won't be released for a week, several
Patrick officials told me the state will report about $19.7 billion in
tax revenue for the year -- $1.2 billion, or 7 percent, more than a year
ago. Looked at another way, that is $425 million to $450 million above
the $19.3 billion the state projected in January.
You would think with a new governor dedicated to property tax relief and
state revenue surging, now would be the moment to give the struggling
homeowner some help. You would be wrong.
That $425 million-plus windfall, the Patrick administration says, is
already mostly spent. About $100 million is scheduled for the rainy day
fund. Another $80 million will pay to restore the cuts Mitt Romney made
as he left office. Much of the rest will go to the state's supplemental
budget. Says Barbara Anderson, leader of the fraud, waste, and
abuse watchdogs: "If you have a surplus and spend it, it is no longer a
surplus."
She has a point. If Patrick and the Legislature were serious about doing
something about property taxes, rather than leaving cities and towns
between a rock and a hard place, they could.
Here is one way to think about the state's $425 million good-news
surprise. There are 1.9 million Massachusetts homeowners. If the state
simply sent them a check, that would amount to more than $200 for every
homeowner, equivalent to a 5.5 percent cut in the average property tax
bill of $3,600 for a single-family home. Nothing says relief quite like
a check.
The big bulge in state taxes says less about the strength of the economy
-- which is doing OK but not great -- and more about the strong stock
market. The tax spike is coming mainly from capital gains and bonuses,
and also from some big tax cases settled recently by the state's
Department of Revenue. In short, the $425 million windfall needs to be
looked at as a one-time gain, not the kind of revenue to be counted on
going forward. The state is playing a dangerous game using that money to
fund operating budgets.
This governor's proposal to allow more communities to join the state
health insurance system is unlikely to curb municipal healthcare costs
much because it gives the unions too much power to block the changes.
His proposal to force underperforming local pension systems into the
state pension fund will help, but doesn't go far enough. Patrick's
reasonable attempt to allow cities and towns to impose a modest meals
tax and close a loophole that benefits telecommunications companies is
being blocked by House Speaker Sal DiMasi.
"One of our top priorities is sustainable, long-term property tax
relief," says Leslie Kirwan, Patrick's secretary of administration and
finance. Michael Widmer, president of the Massachusetts Taxpayers
Foundation, is less optimistic: "Nothing that he has proposed will
address the increase in property taxes in any meaningful way."
Massachusetts has many needs, and slowing the growth in property taxes
is high among them. In a few short months, Patrick has rolled out a lot
of billion-dollar plans, and it is only July. There's one to improve
education and make community colleges free. There's one for commuter
rail service to Southeastern Massachusetts. There's another for the
biotech industry.
When do we get at least a down payment on his signature campaign promise
-- doing something about property taxes?
The Boston Globe
Friday, July 6, 2007
Some say Blue Cross plans to hurt health revamp
Lower contributions by firms
could leave more without policies
By Jeffrey Krasner
Small employers that are only willing to pay one-third of their workers'
healthcare insurance premiums can now offer policies through Blue Cross
and Blue Shield of Massachusetts. Previously, the state's largest health
insurer only offered coverage to companies that contributed at least
one-half of premium costs.
The change, which went into effect July 1, has reignited debate over how
much employers should contribute to healthcare premiums. Healthcare
activists and state legislators who helped craft Massachusetts'
healthcare reform law are worried the move by Blue Cross, which has
about 3 million members, could lead to fewer workers with healthcare
coverage.
"This has the potential to unravel some of the progress we've been
making in reducing the number of uninsured," said state Senator Richard
T. Moore , Democrat of Uxbridge, who played a key role in forging the
healthcare reform law, which is intended to extend coverage to all state
residents
Moore said that as employers shift more of the cost of healthcare
insurance to workers, fewer will be able to afford coverage.
Employer contributions to employee health plans became a major issue
last summer when the Romney administration was drafting final rules for
the implementation of the reform law. Last summer, the Division of
Health Care Finance and Policy decided companies would have to
contribute a minimum of 33 percent of the cost of individual coverage to
avoid a $295 per employee annual surcharge.
Moore and some advocates complained at the time the bar had been set too
low. They cited studies by insurers and legislators that showed
Massachusetts companies that provide employee health insurance
contribute about 75 percent of premium costs. If companies could avoid
the $295 surcharge with a contribution of only 33 percent, critics of
the regulation said, they would tend to pay less toward their employees'
insurance.
Yesterday, Moore wrote to Sarah Iselin , commissioner of the healthcare
finance division, asking her to issue emergency regulations that would
increase the minimum contribution to employee premiums to 50 percent. He
called the 33 percent threshold a "glaring loophole" that had been
"inherited" from the Romney administration.
In a statement, Iselin said the state is "carefully monitoring" the
implementation of the healthcare reform law. "Over time, we will make
adjustments where they are needed," she added.
Blue Cross spokesman Chris Murphy said the company changed the minimum
employer contribution to premiums in response to inquiries from small
companies. The insurer said its new lower contribution standard only
applies to companies with 50 or fewer employees. Large firms still have
to pay at least 50 percent of premiums, Blue Cross said.
"We actually have a lot of small businesses contacting us, trying to
provide insurance for their employees, but they can't meet the 50
percent contribution requirement," said Murphy. "Now more employers will
get to offer health insurance to employees and be more competitive in
the market, and the employee gets coverage that's less expensive than if
they were buying insurance individually."
But John E. McDonough, the executive director of Health Care for All, an
advocacy group, said the change sets a "bad precedent."
"We hope Blue Cross officials will reconsider their action," he said.
McDonough said it will now be easier for companies to provide "degraded"
healthcare coverage. He is also concerned other insurers will copy Blue
Cross's new policy.
Sharon Torgerson , a spokeswoman for Harvard Pilgrim Health Care, said
the state's second largest insurer still requires a 50 percent minimum
employer contribution. But "Blue Cross's decision has forced us to
reconsider our existing policy," she said.
Tufts Health Plan, the third-largest insurer, also requires a 50 percent
minimum employer contribution. "Our minimum contribution standards are
designed to keep premium costs as low as possible while maintaining
access to healthcare," said Patti Embry-Tautenhan , a Tufts spokeswoman.
The Boston Globe
Tuesday, July 3, 2007
House and Senate OK $26.8b budget,
a 4.2 percent rise
Governor gets number of wins
By Lisa Wangsness
The House and Senate passed a $26.8 billion budget yesterday,
restricting spending growth to just 4.2 percent over last year and
embracing, at least in part, many of Governor Deval Patrick's budget
priorities for education, public safety, and public health.
Patrick has up to 10 days to review the spending plan and decide which
parts, if any, to veto or return with amendments. His initial reaction,
however, signaled that he was largely satisfied with the Legislature's
work.
"I think we have a working budget based on shared values, and built on
collaboration, and I'm very pleased with what I know about it," he said
in an interview yesterday.
The vote came two days after the start of the 2008 fiscal year, but the
Legislature passed an interim budget last month to keep state agencies
running two weeks.
The governor's warm reception of the budget reflects a budget season
that, after a rocky start, became more harmonious as legislative leaders
gradually resolved their differences with the new governor.
Earlier this spring, the initial House budget rejected many of the new
governor's priorities in education, public safety, and health,
frustrating Patrick's team.
But the Senate was more hospitable to Patrick's initiatives, and the
compromise adopted yesterday meets the governor at least halfway on many
of his proposals, with the noticeable exception of his effort to raise
up to $500 million a year through closing so-called corporate tax
loopholes.
In the end, it was a disagreement between House Speaker Salvatore F.
DiMasi and Senate President Therese Murray that kept the budget from
being delivered on time.
Murray wanted to dedicate portions of any year-end budget surplus to
life science research, housing, and new technology projects, in hope of
stimulating job creation in Massachusetts. DiMasi, sources said, felt
that other priorities were equally important.
The two chambers eventually worked out an unusual compromise: The budget
dedicates up to $100 million of the fiscal 2007 surplus to a new Bay
State Competitiveness Investment Fund, but it does not spell out how the
money would be used. A House legislative aide said the leaders agreed
that the House and Senate would each use half of the money for its own
priorities.
The budget depends on about $611 million in reserves and one-time
revenue sources, more than double the amount the governor's budget used
and nearly $140 million more than the Senate's did.
In doing so, the Legislature is betting that revenues will come in
higher than the conservative estimate of 3 percent over last year.
Michael Widmer, president of the Massachusetts Taxpayers Foundation,
said the legislative leaders would probably win the bet, as they have in
the previous two fiscal years, and not have to draw too heavily on
reserves.
Patrick, who earlier this year sharply criticized the House budget for
its liberal use of reserves and one-time revenue, seemed unworried.
"I'm very positive about the outcome, because so many of our initiatives
turn out to be shared initiatives with the Legislature, and I appreciate
that," he said, adding that he would examine the reserves issue more
closely in the coming days.
In his budget plan, Patrick was able to reduce his reliance on reserves
and one-time revenue by closing the so-called loopholes in the corporate
tax code.
The Legislature set aside that proposal after DiMasi sharply criticized
it as destructive to the economy.
A tax commission is currently studying Patrick's proposals.
The Boston Herald
Tuesday, July 3, 2007
A Boston Herald editorial
Make liberal use of the veto pen
It’s been an amusing parlor game at the State House, trying to divine
exactly which sections of the state budget will fall to the veto pen of
the first Democratic governor in 16 years.
Yes, there’s plenty for Gov. Deval Patrick to like in the $26.8 billion
spending plan approved by the Democratic House and Senate yesterday. He
issued glowing praise for the legislative effort, and promised to do his
“homework” in the coming days.
Still that red pen is going to get some action. And we’re happy to offer
a suggestion -- Governor, start with Senate President Therese Murray’s
cockamamie plan that ties up most of any future surplus in the state
budget for spending on life sciences -- instead of using it for taxpayer
relief.
We’re not holding out a whole lot of hope. After all, this is the same
governor who just proposed spending a half-million dollars to bulk up
the governor’s office staff . . . in Washington, D.C. (Former Gov. Mitt
Romney had a term for that kind of proposal -- not a “need-to-have,” but
a “nice-to-have” . . . and even that’s debatable here).
But the plan to divert a portion of any potential surplus above $50
million for private biotech investment eliminates any illusion taxpayers
might have had that lawmakers might soon honor their demand to lower the
income tax rate -- and it deserves a bright red line drawn through it.
The budget as a whole is about what you’d expect in a year when revenues
are tight -- small increases in state aid to cities and towns,
maintenance funding for most accounts.
There are bright spots. Lawmakers rejected Patrick’s proposal to balance
the budget on the backs of the very businesses they’re encouraging to
add new jobs. The budget does, though, draw on $240 million from the
rainy-day account.
Lawmakers also found a few bucks to double the investment in grants to
help school districts finance longer school days and school years, from
$6.5 million last year to $13 million. And with a nod to Virginia Tech,
they set aside funding for a new emergency text-message notification
system on public college and university campuses.
This budget also has 90 outside sections that need combing through
(exactly how many new assistant court clerk positions have been created
here?).
But the ball’s in Patrick’s court. Go ahead, Gov -- surprise us.
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