CLT UPDATE
Monday, December 10, 2007
"Municipal Meltdown"
getting closer
The so-called "municipal meltdown," a moniker coined
by the Boston public policy think tank MassInc., is a real threat to
cities and towns hoping to avoid drastic reductions in services in years
to come, according to experts....
"We have to figure out who the real villains are, and it's not us," said
Sen. Steven Tolman, D-Brighton, referring to the state Legislature,
municipal leaders and unions. "We
have to work together."
[Sen. Steven Tolman] participated in a forum sponsored by MassInc. in
Boston yesterday to discuss issues facing cities and towns raised by the
cover story in the fall issue of Commonwealth Magazine, published by
MassInc.
Geoff Beckwith, executive director of the Massachusetts Municipal
Association, Barbara Anderson, head of Citizens for Limited
Taxation, Amesbury Mayor Thatcher Kezer, and Massachusetts Teachers
Association President Paul Toner also took part in the discussion.
Anderson, a fierce critic of wasteful government spending, said Bay
State residents no longer trust local government officials when they say
their towns are in dire fiscal straits.
That lack of trust has built up over the years, said Anderson, pointing
to the Legislature's refusal to reduce the state income tax to 5
percent, despite voters approving the reduction on a ballot question.
She also didn't hesitate in blaming unions for soaking cities and towns,
arguing that the state could send a strong message with a symbolic move
to curtail police details on road projects that would also save cities
and towns money.
"Until we take on the unions, we aren't going to be able to save
ourselves from this fiscal meltdown," Anderson said.
The Lowell Sun
Friday, December 7, 2007
Forum: State's cities and towns face fiscal crisis
Most people, when they retire, get a small severance and a
hearty thank-you. But if you've spent your career in the public sector, you're
likely eligible for tens of thousands of dollars worth of "unused" sick and
vacation time on top of a generous pension.
Most people, if they steal from their employer or stand accused of some other
kind of egregious conduct, are promptly fired. But if you work in the public
sector, you're likely to be placed on "administrative leave," meaning you
continue to collect your full pay until the matter is resolved, whether the
process takes weeks, months or even years.
Such policies have helped create the huge credibility problem with which
Massachusetts cities and towns are wrestling these days. And it's one that must
be addressed before taxpayers are asked to pony up any more money for their
operation....
This "municipal meltdown" is the subject of an extensive article in the latest
issue of CommonWealth magazine whose cover depicts a generic town hall on the
verge of collapse. "The view is nearly unanimous," the headline declares,
"cities and towns are in big trouble." ...
Which left Barbara Anderson of Citizens for Limited Taxation (and
a regular columnist for this newspaper) to state the obvious: "Until we take on
the unions ... we aren't going to be able to save ourselves from the fiscal
meltdown." ...
It's incumbent on legislators to change that system before local government
implodes under the twin weights of rapidly rising personnel expenses and
continued taxpayer intransigence.
The Eagle-Tribune
Sunday, December 9, 2007
An Eagle-Tribune editorial
Municipal 'meltdown'
gets cold shoulder from taxpayers
Let’s get this out of the way first: the answer is not higher
property taxes. The answer is also not higher state taxes; our per capita tax
burden is still far above the national average.
A too-common response to suggestions for innovative change or even commonsense
reforms reflecting what’s done elsewhere is that we can’t do them here. Let’s
instead insist that "together we can."
CommonWealth Magazine
Volume 12 | Number 4 | Fall 2007
Municipal Meltdown:
The Fiscal Crisis Facing Massachusetts Cities & Towns
By Barbara Anderson
What about cutting costs? Here are a few savings
ideas that would improve the Commonwealth's fiscal condition.
Get public employee benefits under control. State pension laws allow
public employees to begin collecting at a younger age than private
employees. Last year, the Commonwealth paid out more than $500 million
in pension benefits to retirees and their survivors under the age of 60.
State employees currently pay 15 percent of their health insurance
premiums. Tens of millions of dollars could be saved by bringing the
Commonwealth more into line with the private sector by boosting the
employee share to 25 percent.
For years, the argument for generous public sector benefit packages was
that government employees earned less. But according to the federal
Bureau of Labor Statistics, public employees in Eastern Massachusetts
now earn an average of 15 percent more than their private sector
counterparts who perform similar work.
The Boston Globe
Saturday, November 24, 2007
Paying the bills
By Lovett C. Peters
Chip Ford's CLT Commentary
It was only eight years ago that municipalities were
declared to have an "embarrassment of riches," when cities and towns had
revenue pouring in hand over fist. "Towns
rolling in cash," the Eagle Tribune headlined in its Feb. 16, 1999
article. In his story, John Macone reported:
Across the Merrimack Valley, and statewide,
cities and towns are sitting atop stashes of surplus taxes. It is a
remarkable turnaround from the dark days of the early 1990s, when
the economy was sour and many towns were millions of dollars in
debt.
These days, the state is pouring money into local coffers at
unprecedented rates, while local business growth and housing
construction -- not to mention tax increases approved by voters --
pump in even more.
But it has raised a conundrum for some town officials: What do you
do with an embarrassment of riches? . . .
In his 26 years in city government, Haverhill
City Councilor George Dekeon cannot remember a time when the city
was in the black -- until now. It has just over a $1 million
surplus, compared to a deficit of $3.3 million in 1993. . . .
"You just have to be cognizant that things can change," said Mr.
Dekeon. "There's always a cycle of ups and downs. I just hope it
stays like this for a while."
In less than eight years municipalities across the
state have plunged from an "embarrassment of riches" to what's now being
labeled a "municipal meltdown." Some may wonder "How can this be
possible?" They either aren't aware of or haven't heeded our warnings
of the "Ticking
Time Bomb." We began those warnings back in 2000 and
have been relentless since, predicting this inevitable result of
profligate spending, especially on public employee benefits.
That's where the bulk of "fixed costs" which are bankrupting cities and
towns are found. Municipal so-called leaders have nobody but
themselves and their predecessors to blame for this once-avoidable
crisis.
As City Councilor George Dekeon recognized back in
1999, when the city of Haverhill wiped out its $3.3 million debt and had
an historic $1 million surplus: "You just have to be cognizant
that things can change. There's always a cycle of ups and downs."
But during the MassInc. forum last week, Geoff Beckwith,
executive director of the Massachusetts Municipal Association, which
represents municipal governments statewide, bemoaned that "Local aid,
when adjusted for inflation, has been reduced $621 million since 2002,
while new revenue has also been slow to grow."
1999: An "embarrassment of riches, towns rolling
in cash," slogged on until at least 2002.
2002: The voters' income tax rollback was frozen
at 5.3 percent. The state's wheelbarrows of free cash to cities
and towns diminished some.
2007: A "Municipal Meltdown" is recognized.
So what is Beckwith's and his ilk's solution?
As if I need to tell you -- it's for more and higher taxes, of course.
Quoting a State House News Service
report, in the CLT Update of Nov. 15, 2007 ("A
clash is coming") we highlighted the statewide mayors' and
selectmen's recommendation:
But several local officials followed up on
[Newton Mayor David] Cohen’s call last September to begin discussing
broad-based tax increases, mentioning the sales, gas and income
taxes as examples....
Try this on for size as a simple analogy.
Imagine that you've managed to get by on $500 a week after-tax income.
Then the state, rolling in excess revenue, decides to send you a check
every week for, say an additional $200. This public treasury largesse
goes on for a number of years, adjusted for inflation and more.
Eventually the state decides that it's time to wean you off what you've
come to feel is an "entitlement" -- you're used to spending more
than you earn, have amassed a considerable outstanding balance on your
charge card, expected that you can depend on your free-cash state check
in the mail to keep up with at least the minimum-due monthly payments.
All those things you otherwise couldn't have afforded
but bought depending on your weekly state "crazy check" are suddenly
unaffordable and were all along -- but they're still on your credit card statement! Oh oh.
Of course you are in trouble.
To add another analogy; this is exactly what the
Legislature did to taxpayers, only in reverse, in 2002 when it froze the
voters' income tax rollback. Taxpayers had a very reasonable
expectation, a legitimate belief that their state income tax burden would be
lowered to its traditional 5 percent in 2003, per the voters' mandate:
they planned their finances accordingly. Did that matter to state
government? Of course it didn't, the vote and the voters be
damned.
Even more unconscionable was the Legislature's treatment of
Capital Gains taxpayers, out of the blue making it retroactive.
CLT fought that battle against demonstrable unfairness and eventually
won. (See: CLT Alert! - Dec. 1, 2005 ("Retro
Tax scrapped today!")
So c'mon MMA (aka, "More Money Always"), take your
whining and shedding of tears somewhere else. Deal with your
municipal "fixed costs" that you're membership has negotiated and for
which taxpayers must shoulder: balance your municipal budgets and
stop the outrageous give-aways to our alleged "public servants."
Naturally this will be difficult or it would have
happened long ago as it should have -- such as being the last state to
finally rid itself of police details will be. As Bob McCarthy,
president of the Professional Fire Fighters of Massachusetts -- its
union boss -- brashly proclaimed in
his
CommonWealth magazine contribution to the debate:
The above proposals are ludicrous and another
attack by the right-wing to decimate labor and government. Let me
state clearly: Labor will fight the above draconian proposals with
every resource available and with every fiber in our bodies.
Expending energy on defeating the anti-union, anti-taxes, and
anti-government entities could be better served working together
collectively to propose innovative solutions in a cooperative and
collaborative climate. If we must fight, we will fight.
But as Barbara asserted at the forum, "Until we take
on the unions, we aren't going to be able to save ourselves from this
fiscal meltdown."
At this point in history -- after so many years,
decades of profligacy and catering to every state and local public
employee union's whim and desire at taxpayers' expense -- it is the
ONLY solution, because it's primarily what is driving up public
spending in state and local government. It's past time our elected
officials get started on reducing those "fixed costs."
"Together we can!"
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Chip Ford |
The Lowell Sun
Friday, December 7, 2007
Forum:
State's cities and towns face fiscal crisis
By Matt Murphy
BOSTON -- It's becoming a story all too familiar for Massachusetts
cities and towns.
Rising health-care and special-education costs, a need to invest in
public infrastructure and slow new growth have left communities strapped
for cash and turning to its residents for help.
Billerica, for the first time in more than a decade this year, imposed
athletic fees for students to bridge the budget gap created in large
part by special-education costs.
Westford asked for, and voters approved, a debt-exclusion override to
finance the expansion of the Cameron Senior Center.
The so-called "municipal meltdown," a moniker coined by the Boston
public policy think tank MassInc., is a real threat to cities and towns
hoping to avoid drastic reductions in services in years to come,
according to experts.
But the solution is anything but clear.
"We have to figure out who the real villains are, and it's not us," said
Sen. Steven Tolman, D-Brighton, referring to the state Legislature,
municipal leaders and unions. "We have to work together."
Tolman participated in a forum sponsored by MassInc. in Boston yesterday
to discuss issues facing cities and towns raised by the cover story in
the fall issue of Commonwealth Magazine, published by MassInc.
Geoff Beckwith, executive director of the Massachusetts Municipal
Association, Barbara Anderson, head of Citizens for Limited
Taxation, Amesbury Mayor Thatcher Kezer, and Massachusetts Teachers
Association President Paul Toner also took part in the discussion.
Anderson, a fierce critic of wasteful government spending, said Bay
State residents no longer trust local government officials when they say
their towns are in dire fiscal straits.
That lack of trust has built up over the years, said Anderson, pointing
to the Legislature's refusal to reduce the state income tax to 5
percent, despite voters approving the reduction on a ballot question.
She also didn't hesitate in blaming unions for soaking cities and towns,
arguing that the state could send a strong message with a symbolic move
to curtail police details on road projects that would also save cities
and towns money.
"Until we take on the unions, we aren't going to be able to save
ourselves from this fiscal meltdown," Anderson said.
Beckwith and Thatcher downplayed Anderson's spirited argument about
wasteful spending, calling for a more generous pact between state and
municipal government on local aid and a focus on new sources of revenue.
Local aid, when adjusted for inflation, has been reduced $621 million
since 2002, according to Beckwith, while new revenue has also been slow
to grow.
Beckwith said cities and towns must be given more authority from the
state to control their own finances, and called Gov. Deval Patrick's
expansion of the Group Insurance Commission one step in the right
direction.
Fewer than 10 communities have signed up to be a part of the state's
Group Insurance Commission, a signature part of Patrick's Municipal
Partnership Act that would allow municipalities to join the larger state
pool to negotiate for lower rates.
The small number of new participants has a lot to do with a limited
amount of time communities had in this first year to make the decision
to join, Toner said.
He said the program won't save every community money, but should be
given more time to have a broader impact.
Patrick has also proposed measures like optional meals and hotel taxes
for cities and towns in his Municipal Partnership Act, which has stalled
in the Legislature.
"We need to empower communities to do this," Beckwith said of digging
themselves out from under heavy financial pressures.
The Eagle-Tribune
Sunday, December 9, 2007
An Eagle-Tribune editorial
Municipal 'meltdown'
gets cold shoulder from taxpayers
Most people, when they retire, get a small severance and a hearty
thank-you. But if you've spent your career in the public sector, you're
likely eligible for tens of thousands of dollars worth of "unused" sick
and vacation time on top of a generous pension.
Most people, if they steal from their employer or stand accused of some
other kind of egregious conduct, are promptly fired. But if you work in
the public sector, you're likely to be placed on "administrative leave,"
meaning you continue to collect your full pay until the matter is
resolved, whether the process takes weeks, months or even years.
Such policies have helped create the huge credibility problem with which
Massachusetts cities and towns are wrestling these days. And it's one
that must be addressed before taxpayers are asked to pony up any more
money for their operation.
Mayors and selectmen throughout the North of Boston region are
struggling to make ends meet. They say they need more money; but
legislators, comfortable in their incumbency, know that if there's
anything that might prompt a voter revolt, it's the prospect of higher
taxes.
On the other hand, lawmakers are unwilling to take on the unions or do
anything to disrupt the comfortable prospects of those they've helped
secure a place on the public payroll. So they're telling municipal
officials to live with what they have, at least until the state can
raise more money the easy way -- by getting people to buy more scratch
tickets or play the slots when Gov. Deval Patrick realizes his dream of
building three resort casinos in the Bay State.
There's a reason taxes are off the table. Simply put, Bay Staters
believe that any additional revenue won't go to improve services, but to
increase the gap between the pay and benefits they receive and those
provided people in the employ of state or local government. And until
elected officials are willing to address that fact, cities and towns
must accept living within the limits of Proposition 2½ and going hat in
hand to the Legislature for whatever morsels it sees fit to provide.
This "municipal meltdown" is the subject of an extensive article in the
latest issue of CommonWealth magazine whose cover depicts a generic town
hall on the verge of collapse. "The view is nearly unanimous," the
headline declares, "cities and towns are in big trouble."
At a follow-up forum sponsored by MassINC this past Thursday morning at
the Parker House in Boston, Geoff Beckwith of the Massachusetts
Municipal Association and Paul Toner of the Massachusetts Teachers
Association said the problem is too little money; while Sen. Steven
Tolman, D-Watertown, urged those in attendance not to blame the
Legislature or the unions for costly benefits and personnel practices.
Which left Barbara Anderson of Citizens for Limited Taxation
(and a regular columnist for this newspaper) to state the obvious:
"Until we take on the unions ... we aren't going to be able to save
ourselves from the fiscal meltdown."
She cited the ubiquitous police details as a prime reason taxpayers are
unhappy. Massachusetts is the only state in the country that requires
them. They inflate the cost of every public construction project in the
commonwealth. And when a motorist drives by one of these sites and sees
a cop (or cops) reading the paper or talking on the cell phone, rather
than doing anything useful, and at a hefty overtime rate, it's enough to
make the blood boil.
Or take the effort to allow cities and towns to move their employees to
the state Group Insurance Commission and take advantage of its more
reasonable health insurance rates. Legislators inserted what some have
called "a poison pill," allowing the unions and retirees to veto any
such change.
As a result, according to Michael Widmer of the Massachusetts Taxpayers
Foundation, only five of the state's 351 cities and towns have availed
themselves of this opportunity to save money. The legislation, as
modified at the unions' insistence, was akin to "dousing a raging
inferno with a pail of water," Widmer wrote in MassINC's online forum.
Though he sought to take a middle-of-road approach at Thursday's forum,
Amesbury Mayor Thatcher Kezer observed that "we're dealing with a
structural system that's not in management's favor." And that makes it
exceedingly difficult for cities and towns to reduce labor costs, even
if there's a willingness to do so.
It's incumbent on legislators to change that system before local
government implodes under the twin weights of rapidly rising personnel
expenses and continued taxpayer intransigence.
CommonWealth Magazine
Volume 12 | Number 4 | Fall 2007
Municipal Meltdown:
The Fiscal Crisis Facing Massachusetts Cities & Towns
By
Barbara Anderson
Let’s get this out of the way first: the answer is not higher property
taxes. The answer is also not higher state taxes; our per capita tax
burden is still far above the national average.
A too-common response to suggestions for innovative change or even
commonsense reforms reflecting what’s done elsewhere is that we can’t do
them here. Let’s instead insist that "together we can."
Home rule is a nice tradition but it needs 21st-century adjustment to
allow more regionalization. Collective bargaining is a 19th-century
anachronism and should be abolished; at the very least, unions shouldn’t
be dictating management decisions about adjusting unusually generous
employee benefits. In Swampscott, unions refused to allow savings from
moving to the state health system unless they were given a percentage of
the savings!
Citizens for Limited Taxation’s ongoing proposal is to eventually get
most education costs off the property tax rolls; to this end we’ve
supported increased state aid for schools. Unfortunately, the local aid
increases of the '90s were used to increase payroll and benefits to a
level that’s no longer sustainable.
In the Netherlands, all schools, public and private, are funded by
vouchers, producing cost-saving competition through parental choice. Our
goal should be funding competitive education with existing broad-based
state taxes and better management of existing state resources. Using the
public records law, CLT has received the recommendations for savings
given to the Patrick Administration by department heads last winter;
some of the $750 million in suggestions could be used for new local aid.
Certainly, special education should be a human services expenditure, not
a property tax issue. Maintenance should be encouraged and new buildings
should forego architects, instead using basic blueprints labeled
"school."
Communities with financial difficulties should seek ideas that are
presently working for others. A taxpayer in Provincetown is asking for
an independent audit before voting for any override; just as new
companies were formed to quickly do revaluations after Proposition 2½
passed, independent auditors could compete to take an objective look at
community finances.
In some communities, both employees and citizen activists with good
ideas are scorned; in others, they are appointed to committees to help
institute change. Finance committees helped make Prop 2½ work in the
early '80s. Recently, in my town, the one finance committee member with
new ideas was dismissed by the selectmen for not being a team player. In
some communities, taxpayer activists are running for office; this should
be encouraged by voters.
Most important: both local and state governments should respect
taxpayers and not insult their intelligence with "temporary" taxes,
scare tactics during override elections (often "finding" the needed
money when the overrides fail), and symbols of taxpayer abuse like the
police details that exist in no other states.
Finally, local citizens should avoid feeling entitled to non-essential
programs at their neighbors’ expense. First secure public safety,
address existing liabilities, and maintain infrastructure; then see what
else a community can afford with many taxpayers facing fiscal realities
of their own.
Barbara Anderson is executive director of Citizens for Limited
Taxation. http://www.cltg.org
The Boston Globe
Saturday, November 24, 2007
Paying the bills
By Lovett C. Peters
Leslie Kirwan, secretary for administration and finance, says the
Commonwealth faces a budget deficit of at least $1.3 billion next year.
That doesn't include a down payment on a number of new programs Governor
Deval Patrick has proposed that have one thing in common: They would
cost a lot of money.
Patrick wants to spend $2 billion to repair crumbling state colleges and
$1 billion to boost the commonwealth's biotech industry. Building a
commuter rail line to New Bedford and Fall River would cost another $1.4
billion and add about $21 million to the MBTA's annual operating
deficit.
Universal early childhood education, a longer school day, and free
community colleges would cost yet-uncalculated billions. A dramatic
increase in capital spending will add to interest costs that are already
the fourth-largest line item in the state budget at nearly $1.8 billion.
The governor proposes to use proceeds from his casino gambling proposal
to provide property tax relief and invest in our deteriorating
transportation infrastructure, but the new revenue wouldn't be enough to
solve these existing problems, never mind close the budget gap or fund
any new spending.
In a September speech before a business group, House Speaker Salvatore
DiMasi took a different approach. "When people . . . say 'new revenue,'
" he declared, "I like to say, 'What about efficiencies and cutting
costs?' "
What about cutting costs? Here are a few savings ideas that would
improve the Commonwealth's fiscal condition.
Get public employee benefits under control. State pension laws allow
public employees to begin collecting at a younger age than private
employees. Last year, the Commonwealth paid out more than $500 million
in pension benefits to retirees and their survivors under the age of 60.
State employees currently pay 15 percent of their health insurance
premiums. Tens of millions of dollars could be saved by bringing the
Commonwealth more into line with the private sector by boosting the
employee share to 25 percent.
For years, the argument for generous public sector benefit packages was
that government employees earned less. But according to the federal
Bureau of Labor Statistics, public employees in Eastern Massachusetts
now earn an average of 15 percent more than their private sector
counterparts who perform similar work.
Common-sense construction. Project labor agreements require that owners
use exclusively union workers on a construction project. Since only
about 20 percent of Massachusetts construction workers choose to join a
union, the agreements increase costs by limiting competition. The
premium is at least 12 percent, according to a 2003 Beacon Hill
Institute study of Massachusetts school construction.
Twelve percent can add up quickly when you're talking about almost $1
billion. This year alone, the Massachusetts School Building Authority
will provide about $500 million in aid to municipal school projects and
the Department of Capital Asset Management will get another $300 million
in capital funds for state building projects.
Massachusetts also requires that police patrol roadway construction
projects. One recent analysis found that the Commonwealth could save $44
million this year by joining the 49 other states that allow civilians to
perform the work.
There is little appetite for new broad-based taxes, and they might slow
a state economy that already shows signs of sputtering. Other ideas
could raise additional revenue. One is to grant a long-term lease to
operate the Massachusetts Turnpike (and collect the toll revenue) in
return for a large upfront payment that could be dedicated to
maintaining transportation infrastructure. In the last couple of years,
Chicago netted $1.8 billion for its toll highway and Indiana's toll road
attracted a $3.85 billion payment.
A similar deal to operate the state lottery and collect the proceeds
could produce enough money to guarantee that state aid to cities and
towns would be at least held harmless for years to come. These ideas
should be explored, but care must be taken to ensure that any deals
protect the public interest.
Any prudent approach to addressing our strained state finances must
begin with capturing savings. Only when we know how to pay the bills can
we intelligently decide whether the governor's proposals represent the
best path for Massachusetts.
Lovett C. Peters is founding chairman of Pioneer Institute, a
Massachusetts public policy think tank.
NOTE: In accordance with Title 17 U.S.C. section 107, this
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