CLT UPDATE
Thursday, November 15, 2007
A clash is coming
Municipal officials on Tuesday again danced around
the topic of broad-based tax increases, telling Gov. Deval Patrick that
structural deficits are embedded in local budgets even as local
residents continue to get socked with property tax increases.
Separately, Patrick’s top budget aide said the state is staring down its
own $1.3 billion structural budget gap next fiscal year....
In a briefing with reporters after she chaired a corporate tax code
commission meeting Tuesday, [Administration and Finance Secretary Leslie
Kirwan] said the state suffers from “a spending problem.”
“The experience of the last few years has been that we didn’t have to
dip into the stabilization fund,” Kirwan said. “I’m not sure that we’re
going to have that luxury this time. From what I’m looking at it would
take such a large amount of revenue in over the benchmark, that I’m
feeling it’s quite likely that we will in fact be using some of the
stabilization fund to support a standard operating budget in a year with
revenue growth. So, you know, I think that’s an alarming condition.” The
state has more than $2 billion in its stabilization fund....
During a Local Government Advisory Council meeting, local mayors and
selectmen, in a light Q&A session led by Patrick, also indicated few
cities and towns believe they can avail themselves of major savings by
enlisting their workers in the state’s health insurance system or
investing pension assets in the state-run pension fund....
In September, Newton Mayor David Cohen, at a similar council meeting,
told Lt. Gov. Tim Murray that municipal officials were ready to back the
administration if it launched an effort to discuss broad-based tax
increases. Murray indicated that discussion was premature. On Tuesday,
local officials again broached the same topic, noting Patrick’s local
option tax proposals as well as his casino plan, seemed to be wilting
while the need for more revenue remains....
But several local officials followed up on Cohen’s call last September
to begin discussing broad-based tax increases, mentioning the sales, gas
and income taxes as examples....
During the meeting, Chesterfield Selectman David Kielson, president of
the Massachusetts Municipal Association, told Patrick tax increases are
sometimes “less painful” than the alternatives, noted that he was
surprised at the local level of receptivity to a sales tax increase, and
said he believed tax hikes were being discussed in the Legislature....
Jerry Wasserman, a Needham selectman and president of the Massachusetts
Selectmen’s Association, told Patrick that more towns are seeking more
expensive Proposition 2˝ overrides and passage rates are declining.
Saying cities and towns can’t deliver expected services, Wasserman told
Patrick local officials want a “different plan.” ...
“Somehow the state has to expand revenue,” said Wasserman, mentioning
the roughly 40 tax cuts that were approved when Republican governors and
House Speaker Thomas Finneran governed on Beacon Hill....
Revenue collections for the first quarter of this fiscal year have come
in $144 million above benchmarks. Last month, state officials said they
expect to collect $400 million more in tax receipts than initially
projected this year.
“In the short run, we have a spending problem, and that’s caused the
state to rely on, to me, a level of one-timers that is approaching a
dangerous level,” she said.
State House News Service
Tuesday, November 13, 2007
Revenue talks simmer as talk of crunch intensifies
Gov. Deval Patrick’s top budget aide yesterday said the state
is facing at least a $1.3 billion budget deficit next fiscal year and will have
to implement sharp spending cuts unless new job-growth revenues or new taxes are
factored in.
“That’s a starting point,” budget chief Leslie Kirwan said of the $1.3 billion
deficit. “There’s always inflation from one year to the next” due to growth in
health-care expenses, contractual salary increases and other costs.
The potential size of the fiscal 2009 deficit means Patrick and lawmakers will
have little room for new programs and will likely have to cut services
significantly to balance the budget. It also means cities and towns could face
no growth -- or even sharp cuts -- in state assistance needed to pay for local
services....
Kirwan said Patrick hopes to close next year’s deficit with economic growth
instead of broad-based tax increases, but she left the door open to business-tax
increases.
The Boston Herald
Wednesday, November 14, 2007
Budget chief says state could face $1.3B deficit
A reform offering cities and towns the chance to buy health
insurance under the state’s program, touted by Gov. Deval Patrick and
legislative leaders as a major accomplishment and big-time cost saver, has gone
largely ignored in cities and towns, where municipal officials say the reforms
may actually lead to higher costs.
Of 351 municipalities in the Commonwealth, only six have bought into the state
health insurance program, despite frequent claims by Patrick and House Speaker
Salvatore DiMasi that the new policy is a major cost-saving tool Beacon Hill has
offered to local governments. An outside report suggests municipalities could
have saved up to $102 million next fiscal year by buying into the Group
Insurance Commission....
Nearly four months after Patrick signed the GIC bill, the low early signup rate
is fueling talk on the Hill that the Legislature may act on a pledge by some
legislative leaders to remove the requirement that local unions who represent
municipal workers must agree to the switch before municipal employees can be
enrolled in the state plan. Such a switch would likely touch off a big political
battle.
State House News Service
Wednesday, November 14, 2007
Municipalities not biting on state's
health insurance savings offer
Chip Ford's CLT Commentary
Here we go again, so typical -- and yet more
threatening. Municipal officials can't get taxpaying voters to
pass overrides in their communities -- so now they're attempting to get
state legislators and the governor to raise taxes on the state level, to
give to them of course. This is so sickening.
Contrast and compare the following statements.
"[H]e was surprised at the local level of receptivity
to a sales tax increase . . ."
"[M]ore expensive Proposition 2˝ overrides and
passage rates are declining . . ."
What's wrong with that picture?
"[T]he state is staring down its own $1.3 billion
structural budget gap next fiscal year . . ."
"Revenue collections for the first quarter of this
fiscal year have come in $144 million above benchmarks. Last month,
state officials said they expect to collect $400 million more in tax
receipts than initially projected this year."
What's wrong with that picture?
What's wrong with this picture?
"Aides to Governor-elect Deval Patrick said yesterday
that the state is facing a deficit that could reach $1 billion next
year, a looming budget gap that observers say could force Patrick to
scale back his ambitious agenda, slash spending, or raise taxes....
"A $1 billion gap, in a $26 billion budget, could force Patrick to make
unpleasant choices, to cut spending, dip into the state's $2.1 billion
"rainy day" fund, or raise taxes, which Patrick has repeatedly vowed not
to do...."
The Boston Globe
Dec. 30, 2006
State could face $1b
deficit in '07
Or this one?
And at the end of the day, the state budget that
Patrick signed tallies a few hundred million dollars more than what he
originally proposed. Taxpayers probably ought to get used to it....
Sure, it could have been worse. But it appears that going along to get
along is simpler than taking on the true powers that be.
A Boston Herald editorial
Jul. 13, 2007
Gov’s
discovering who is in charge
Naturally the local officials, town fathers and
mothers, don't want to rock their boats calling for higher taxes, so
they'd rather pass tax increases off to a "broad-based state tax"
that'll pour into their municipal coffers again. Then they can
keep on keeping on spending without aggravating anyone. That's
politics, here and everywhere else. Never mind that their local
voters don't want higher taxes -- make someone else raise them when they
can't.
Look out -- a clash is coming: between local
politicians, state politicians, and the taxpaying public. None
agree.
 |
|
Chip Ford |
State House News Service
Tuesday, November 13, 2007
Revenue talks simmer as talk of crunch intensifies
By Michael P. Norton and Jim O’Sullivan
Municipal officials on Tuesday again danced around the topic of
broad-based tax increases, telling Gov. Deval Patrick that structural
deficits are embedded in local budgets even as local residents continue
to get socked with property tax increases. Separately, Patrick’s top
budget aide said the state is staring down its own $1.3 billion
structural budget gap next fiscal year.
The governor – whose proposals to sanction casinos, allow more local
option taxes, and raise corporate taxes – have failed to win support in
the Legislature, didn't directly comment on broad-based taxes but said
he would lead the conversation on Beacon Hill regarding municipal
issues, including budget problems. The developments came as legislative
leaders and Patrick aides predicted another tough state budget season
ahead, with Administration and Finance Secretary Leslie Kirwan
projecting a $1.3 billion fiscal 2009 budget gap and saying the state
will likely have to dip further into reserves just to balance this
year’s budget.
In a briefing with reporters after she chaired a corporate tax code
commission meeting Tuesday, Kirwan said the state suffers from “a
spending problem.”
“The experience of the last few years has been that we didn’t have to
dip into the stabilization fund,” Kirwan said. “I’m not sure that we’re
going to have that luxury this time. From what I’m looking at it would
take such a large amount of revenue in over the benchmark, that I’m
feeling it’s quite likely that we will in fact be using some of the
stabilization fund to support a standard operating budget in a year with
revenue growth. So, you know, I think that’s an alarming condition.” The
state has more than $2 billion in its stabilization fund.
Kirwan said it was “too early to comment” on whether the administration
would include casino revenues in its spending plan. Patrick’s bid to
introduce casinos in the Bay State has butted up against resistance in
the House.
During a Local Government Advisory Council meeting, local mayors and
selectmen, in a light Q&A session led by Patrick, also indicated few
cities and towns believe they can avail themselves of major savings by
enlisting their workers in the state’s health insurance system or
investing pension assets in the state-run pension fund.
Local officials also pressed Patrick to address in his next state budget
proposal a funding formula that they say harms traditional public
schools while benefiting charter public schools. Patrick said he would
make sure his Readiness Project, the governor’s effort to develop
education improvement strategies, addresses the funding issues.
In September, Newton Mayor David Cohen, at a similar council meeting,
told Lt. Gov. Tim Murray that municipal officials were ready to back the
administration if it launched an effort to discuss broad-based tax
increases. Murray indicated that discussion was premature. On Tuesday,
local officials again broached the same topic, noting Patrick’s local
option tax proposals as well as his casino plan, seemed to be wilting
while the need for more revenue remains.
“The numbers look really, really bad and I know we’re not alone,“ said
Northampton Mayor Mary Clare Higgins. “Where’s the partnership here?”
Patrick, asking for a show of hands, found very few local officials have
adopted highly promoted health insurance and pension-related cost saving
reforms approved by the Legislature this year. About a dozen of the
three-dozen local officials present indicated support for Patrick’s plan
to eliminate a loophole that allows telecommunications companies to
avoid property taxes. But several local officials followed up on Cohen’s
call last September to begin discussing broad-based tax increases,
mentioning the sales, gas and income taxes as examples.
Natick Board of Selectmen member Josh Ostroff said some state residents
are ready to discuss higher taxes.
“I think people are. I think municipal officials are,” Ostroff said
after today’s meeting. “I’m not sure the legislative leadership and the
governor are ready to address this.” Ostroff added: “There’s no joy in
talking about raising taxes.”
During the meeting, Chesterfield Selectman David Kielson, president of
the Massachusetts Municipal Association, told Patrick tax increases are
sometimes “less painful” than the alternatives, noted that he was
surprised at the local level of receptivity to a sales tax increase, and
said he believed tax hikes were being discussed in the Legislature.
Patrick didn’t address the references to broad-based tax hikes and
invited Higgins to talk privately in his office after the meeting.
Patrick told local officials he was “not ready” to say whether he was
for or against a reform sought by municipal leaders that would ramp up
local aid until it accounted for 40 percent of annual tax revenues. A
Patrick aide estimated local aid currently accounts for between 30 and
35 percent of tax revenues.
Patrick told local officials he understands the connection between local
budgets and quality-of-life issues and economic development in cities
and towns, but added: “I don’t have the up or down, yes or no answers
you hoped I would have today . . . As it sit here, I don’t get to answer
those questions all by myself anyway.”
Jerry Wasserman, a Needham selectman and president of the Massachusetts
Selectmen’s Association, told Patrick that more towns are seeking more
expensive Proposition 2˝ overrides and passage rates are declining.
Saying cities and towns can’t deliver expected services, Wasserman told
Patrick local officials want a “different plan.”
Asked by Patrick to offer areas where the state should cut spending,
local officials declined to specify line items.
“I would cut the opposition to raising more revenue,” added Colleen
Corona, a selectwoman from Easton.
“Somehow the state has to expand revenue,” said Wasserman, mentioning
the roughly 40 tax cuts that were approved when Republican governors and
House Speaker Thomas Finneran governed on Beacon Hill.
Kirwan said the $1.3 billion structural deficit she sees is “just a
starting point.” This year’s spending plan leans on $569 million in
onetime revenues, state agencies are facing roughly $400 million in
projected deficiencies, and Lottery revenue shortfalls will likely click
past $200 million, Kirwan said. Revenue collections for the first
quarter of this fiscal year have come in $144 million above benchmarks.
Last month, state officials said they expect to collect $400 million
more in tax receipts than initially projected this year.
“In the short run, we have a spending problem, and that’s caused the
state to rely on, to me, a level of one-timers that is approaching a
dangerous level,” she said.
Between now and January 23, when Patrick’s budget filing is due, Kirwan
said her office would be vetting requests from agencies “in a very
thorough way,” with a balance-sheet briefing due to her this week.
Kirwan said she would be operating under “a really detailed schedule …
of what happens every single day.”
“We have not acknowledged every dollar of potential exposure that
agencies have told us about,” Kirwan said, adding that the
administration was encouraging agencies to plan within existing budgets.
Asked how she expected to deal with the revenue pressures without
relying on new streams, Kirwan replied, “A and F’s a lonely position.”
The Boston Herald
Wednesday, November 14, 2007
Budget chief says state could face $1.3B deficit
By Casey Ross
Gov. Deval Patrick’s top budget aide yesterday said the state is facing
at least a $1.3 billion budget deficit next fiscal year and will have to
implement sharp spending cuts unless new job-growth revenues or new
taxes are factored in.
“That’s a starting point,” budget chief Leslie Kirwan said of the $1.3
billion deficit. “There’s always inflation from one year to the next”
due to growth in health-care expenses, contractual salary increases and
other costs.
The potential size of the fiscal 2009 deficit means Patrick and
lawmakers will have little room for new programs and will likely have to
cut services significantly to balance the budget. It also means cities
and towns could face no growth -- or even sharp cuts -- in state
assistance needed to pay for local services.
Kirwan said the financial crunch is largely due to the use of “one-time”
revenue sources to patch the state’s budget problems. In the current
fiscal year, the state is relying on $569 million in reserves and other
funds to keep the budget in balance, a move that essentially pushes the
problem into fiscal 2009.
When added to a $243 million shortfall in state lottery funds and other
deficits, that $569 million quickly snowballs into a much larger number,
especially given projections for modest revenue growth next year.
Kirwan cautioned that the state is early in its budget process -- she
will not file a spending proposal until Jan. 23 -- but she made clear
yesterday that the projected $1.3 billion deficit is a minimum number
that could grow significantly in the months ahead.
“In the short run, we have a spending problem,” she said, referring to
growth in health-care costs and other preprogrammed expenses that are
expanding faster than state tax revenues.
Kirwan said Patrick hopes to close next year’s deficit with economic
growth instead of broad-based tax increases, but she left the door open
to business-tax increases. The governor’s proposal to raise an
additional $600 million from businesses by closing “corporate tax
loopholes” is still being studied by a state commission.
“Clearly, a number of the things the governor is working on, including
life sciences (tax credits) and casinos, are designed to help grow the
economy so in the midterm the revenue pie is a lot bigger,” she said.
Asked whether casino revenues will be included in the governor’s budget
plan, Kirwan said it would be premature to answer definitively, but she
did not rule it out.
State House News Service
Wednesday, November 14, 2007
Municipalities not biting on state's
health insurance savings offer
By Michael Norton and Jim O’Sullivan
A reform offering cities and towns the chance to buy health insurance
under the state’s program, touted by Gov. Deval Patrick and legislative
leaders as a major accomplishment and big-time cost saver, has gone
largely ignored in cities and towns, where municipal officials say the
reforms may actually lead to higher costs.
Of 351 municipalities in the Commonwealth, only six have bought into the
state health insurance program, despite frequent claims by Patrick and
House Speaker Salvatore DiMasi that the new policy is a major
cost-saving tool Beacon Hill has offered to local governments. An
outside report suggests municipalities could have saved up to $102
million next fiscal year by buying into the Group Insurance Commission.
The lack of interest among municipalities in enrolling employees in the
state’s health insurance program or investing local pension fund assets
in the state pension fund was evident Tuesday, when less than a handful
of roughly three dozen local officials raised their hands after Patrick
asked how many were interested.
“For many of us, if we’re going to do that, it’s a long drawn-out
affair,” Northampton Mayor Mary Clare Higgins told Patrick. To enlist
city employees in the state Group Insurance Commission program, Higgins
noted, she first needs to negotiate with 16 separate employee units.
The policy, signed into law in late July with much fanfare, requires
collective bargaining sign-off that DiMasi has vowed to revisit if
participation proves low after one year.
Many locally run health insurance programs perform “much better than the
state,” said Geoffrey Beckwith, president of the Massachusetts Municipal
Association and a former state representative.
Beckwith said some municipal leaders are wary of joining the state plans
because their employees are currently enrolled in managed care plans and
local leaders fear higher costs associated with the potential that
employees could enroll in indemnity plans.
“It’s very complicated,” said Beckwith. “It’s not going to translate for
a large number of communities.”
Rep. Rachel Kaprielian (D-Watertown), who helped shepherd the bill
through the House, said she wasn’t surprised by the level of municipal
enthusiasm, this year, and said most of the communities that signed in
had ready-made internal champions that pushed for the move.
“I think we will see a lot more interest and participation once this is
vetted from place to place,” Kaprielian said Wednesday. She added,
“There’s a ton of communities that love it, but the unions are,
understandably, skeptical, given that that’s the way the process goes.”
Because the bill didn’t pass until late July, most communities didn’t
begin local negotiations until early September, said Joel Barrera, a
project director at the Metropolitan Area Planning Council, which worked
in favor of the bill.
“This is a radical restructuring of the way health insurance is done,
and changes the collective bargaining laws,” Barrera said, adding that
he knew of “two-dozen to three-dozen communities that are going to make
a serious attempt at going in for next year.”
The pension and health insurance reforms represent major portions of
Patrick’s Municipal Partnership Act that the Legislature opted to
advance. The chance to invest local pension funds with the $50 billion
Pension Reserves Investment Trust, hailed as a simple economy-of-scale
upgrade, contains requirements that would force in the local programs if
they do not meet certain performance thresholds.
Other key portions of Patrick’s plan, such as allowing local option
taxes and lifting a property tax exemption enjoyed by telecommunications
companies, have languished in the Legislature. At the meeting Tuesday,
more local officials expressed interest in the telecommunications tax
than in the pension and health insurance reforms.
According to the Metropolitan Area Planning Council, five municipalities
– Saugus, Millis, Winthrop, Groveland and Holbrook – had signed into the
Group Insurance Commission program by October 29. Fiscally troubled
Springfield was already in the GIC. The deadline for signing up was
originally October 1 but was pushed back to give communities more time
to show interest.
Three regional school districts – Gill-Montague, Hawlemont and Mohawk
Trail – signed up, as well as the Old Colony Planning Council and the
Southeaster Regional Planning and Economic Development District, and the
Lawrence Community Charter School.
Nearly four months after Patrick signed the GIC bill, the low early
signup rate is fueling talk on the Hill that the Legislature may act on
a pledge by some legislative leaders to remove the requirement that
local unions who represent municipal workers must agree to the switch
before municipal employees can be enrolled in the state plan. Such a
switch would likely touch off a big political battle.
Among the groups that have signed up, the two planning agencies and the
charter school are non-unionized entities.
A report issued in August by the business-backed Mass. Taxpayers
Foundation and Boston Municipal Research Bureau pegged savings between
$61 million and $102 million for next fiscal year if all municipalities
bought into the GIC, with potentially $2.5 billion by fiscal 2018.
Proponents pointed to group-rate opportunities offered by GIC,
particularly in a health care cost environment that has seen
exponentially increasing burdens on local budgets.
Figures distributed earlier this year by the state Department of
Revenue, for instance, showed the town of Amesbury slapped by a 215
percent expenditure increase in 2004, while the state saw a 6 percent
hike. In 2005, Lunenburg had to deal with a 152 percent health insurance
cost increase; the Commonwealth’s climbed 6 percent. The DOR developed a
thick batch of municipal cost comparison data that was distributed
during debate on the bill.
Officials said 12 municipalities have been taken into the state Pension
Reserves Investment Trust, with at least three others volunteering to
join, with two others likely to do so within months.
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