CLT UPDATE
Thursday, March 27, 2008
Pols get fatter on borrowed taxpayer
money
as next "fiscal crisis" looms
A small army of state workers assigned to public
relations is costing taxpayers in cash-strapped Massachusetts at least
$3 million as officials struggle with ways to cut costs, a Herald review
of the latest state payroll has found....
The swelling state salaries, which mean higher pensions, have some
taxpayer advocates worried that a fiscal crisis is on the horizon unless
public pay is reined in.
“How long do they think we can continue this way?” asked Barbara
Anderson, executive director of Citizens for Limited Taxation.
The Boston Herald
Wednesday, March 26, 2008
These state salaries a $3M PR nightmare
While the city struggles to pay off a massive pension debt
and control property taxes, retirement costs are skyrocketing as dozens of
former municipal workers rake in near-six-figure annual payouts, a Herald review
has found....
“Personnel spending has become a much more expensive item for cities and towns,”
[Boston Municipal Research Bureau director Sam] Tyler said. “We’ll soon be at a
point where we’re really going to have to reevaluate the benefit package for
public employees.”
The Boston Herald
Tuesday, March 25, 2008
Huge pensions pinch budget
It’s not just the high cost of pensions that’s killing the
taxpayers, it’s the even higher cost of double-dipping.
Check out the new listing of City of Boston pensions now posted at
bostonherald.com. It’s a stroll down memory lane with the forgotten-but-not-gone
brigade. And the funny thing is, some of the coatholders with the top pensions
are still chowing down at the public trough, on top of collecting their monthly
kiss in the mail.
The Boston Herald
Wednesday, March 26, 2008
Taxpayers chip in to pay these double dippers
By Howie Carr
An unprecedented cash crunch will force the state to borrow
up to $400 million on an emergency basis next month to pay bills and make
promised aid payments to cities and towns, Treasurer Tim Cahill said yesterday.
“It’s certainly a troubling situation,” said Cahill. “We’ve already had to
borrow more than we ever have in the past and I’m not optimistic that revenues
are going to meet expectations going forward.”
The Boston Herald
Wednesday, March 26, 2008
State to borrow $400M
against anticipated revenue to pay bills, aid
State Treasurer Timothy P. Cahill said yesterday that, yet
again, he must borrow hundreds of millions in short-term notes to pay the
state's bills - like a consumer using a credit card to make a mortgage payment.
All of this is set against the fact that the state already has the highest per
capita government debt in the country - and now will be forced to borrow even
more to keep a deteriorating transit system and its aging college campuses from
completely crumbling....
Cahill said he will be forced to borrow $400 million by Monday to fulfill the
state's obligations, including local aid and pension payments. The state has
occasionally had to borrow before to meet short-term cash shortages - including
$600 million in 2006 and $1 billion in 2007 - but never this late in a fiscal
year.
"This to me is a wake-up call," Cahill said. "I'm hopeful that it's going to be
a message to everyone in the [State House] that we've got to get spending under
control. It's not just enough to look for new revenue sources."
The state will be able to repay the loan by the end of April - once income tax
receipts start to come in - but the shortfall will cost about $3 million in
interest payments, Cahill said. That is the equivalent to the full annual tax
bill of about 2,200 taxpayers....
"It's more than tight," said Senator Steven C. Panagiotakos, chairman of the
Ways and Means Committee. "The bottom line is spending is going far ahead of
revenue growth. Every area is an area to cut." ...
Massachusetts carries the highest per capita public debt burden in the country,
which places limitations on its ability to borrow more money. To free up more
borrowing power, the state has started using longer-term bonds, which allows
more money to be borrowed at one time. The Patrick administration also is
borrowing more per year for capital expenditures - increasing a self-imposed
limit from $1.25 billion last year to $2 billion annually by 2012.
The Boston Globe
Wednesday, March 26, 2008
State's fiscal picture dims
Cuts, tax hikes may be on table
And don’t forget that other budget buster, the state’s
universal health plan, whose costs are soaring by the day. With no easy way to
cut health care costs, especially in the short term, the state hasn’t even begun
to tackle that one.
This is going to be a very bumpy ride and it’s unclear that state leaders have
the wisdom or the fortitude to plan for the hard times ahead. The tradition,
unfortunately, has been to wait for calamity to strike and then look for ways to
cut. With the casino fight over, spring brings budget season and a last chance
for legislators to hold the line on spending before the revenue picture gets
even worse than it is now....
The state must prepare now for declining jobs and revenue, yet the only top
elected official sounding an alarm is Treasurer Tim Cahill. Last week Cahill
warned the state not only must cut spending but also cannot continue on a
borrowing binge. That’s a direct challenge to some of Patrick’s major
initiatives, which would add billions to the state’s debt....
The budget proposals now under consideration use wildly optimistic theories
typical on Beacon Hill. Savings are based on closing loopholes, creating
efficiencies, squeezing smokers for another $1 a pack and snatching hundreds of
millions from rainy day funds. It won’t work. Not with capital gains revenues
sure to fall and fewer people working and paying taxes. And taking any money
from a rainy day fund [$427 million] now when a monsoon is predicted is just
plain reckless.
The Boston Herald
Wednesday, March 26, 2008
Gov better have something up his sleeve
By JoAnn Fitzpatrick
When Massachusetts launched its landmark universal health
insurance initiative nearly two years ago, the state put off addressing rising
costs so it could expand coverage immediately. Now those costs are dominating
the discussion as the state faces a recession and pivotal funding decisions that
could make or break health reform....
"If we don't grapple seriously with the cost of healthcare, the support for
reform will erode and the perception will become broader that it is
unaffordable," said Jon Kingsdale, executive director of the Commonwealth Health
Insurance Connector, which oversees much of the reform effort....
"We have done a remarkable job signing up people for insurance," said Senate
President Therese Murray, a Plymouth Democrat. "I don't think anyone wants to go
backward on that." ...
Yet the financial pressures provide new ammunition for those who have opposed
the initiative from the start....
[Secretary of Administration & Finance Leslie Kirwan] said the state expects to
spend substantially more for insurance subsidies than the $869 million Governor
Deval Patrick proposed in his 2009 budget just two months ago, because of
increasing enrollment and higher payments to insurers. In private briefings, she
has told coalition members that the cost could be $100 million more, according
to several who were present.
The Boston Globe
Wednesday, March 26, 2008
Healthcare cost increases dominate
Mass. budget debate
We all know it’s a terrible idea to charge groceries to your
high-interest credit card. Same logic applies when you take out a $400 million
loan to pay for the day-to-day expenses of state government....
But it will cost taxpayers $3 million in borrowing costs - just like paying fat
interest fees for your frozen peas - and will bring the total amount borrowed to
cover expenses this year to $1.8 billion.
A Boston Herald editorial
Thursday, March 27, 2008
Fiscal forecast mostly cloudy
Massachusetts’ housing market is in a downward price spiral
not seen since the devastating recession of the early 1990s.
The Boston Herald
Wednesday, March 26, 2008
Home prices plunge in Feb.
Worst Mass. drop in 18 years
The last major downturn in Boston-area housing prices
stretched 43 months from July 1988 to February 1992, according to the Case-Shiller
index. Another five years passed before prices reached and then surpassed the
high-water mark of July 1988.
In other words, a person who bought a home for $200,000 in the summer of 1988
would have had to wait nine years before being able to sell it for $200,000
again.
From peak to bottom, prices fell almost 17 percent.
The Boston Globe
Wednesday, March 26, 2008
Boston-area housing slump hits 28 months
Chip Ford's CLT Commentary
"I'm hopeful that it's going to be a message to
everyone in the [State House] that we've got to get spending under
control. It's not just enough to look for new revenue sources."
So stated state Treasurer Tim Cahill, perhaps the
only public official in the Commonwealth of Massachusetts to recognize
and admit the obvious. As we've been saying for decades, it's not
a revenue problem, it's the spending stupid!
Beacon Hill has done it to us taxpayers all over
again. When the good times rolled on for years they spent every
cent, and when that wasn't enough they borrowed even more. Just as
they did before the last recession. Then as the economic cycle
turns and the economy slows, as it always does, omigosh! -- they don't
have enough revenue to pay the bills they've run up on our credit card.
Governor Patrick still even wants to borrow and spend
billions more on his hair-brained new programs like a billion of our
bucks on biotech industry incentives. Primary purposes of
government like basic maintenance were simply ignored, put aside for
times like this to use as the next "critical need." Long
deteriorating roads and bridges are now reportedly crumbling -- but that
didn't begin happening just recently. They were allowed to erode
over decades, instead of being maintained. Maintaining the
infrastructure would have cost money -- which instead was better spent
fattening up "public servants" both active and retired. The primary
purpose of government in Massachusetts is maintaining and enriching
government and its legions, at any cost.
One way Beacon Hill proposes to climb out of the hole
it dug is with another hike in the cigarette tax, making Taxachusetts
the second-highest taxed state. This latest increase is supposed
to raise an additional $152 million -- though it's allegedly intended to
discourage smokers, go figure. Even U.S. Senator John McCain -- an
enemy of "Big Tobacco" -- gets it, according to a report in yesterday's
Boston Globe ("McCain's
stand on tobacco is put to test"):
"When asked during a policy forum in October why
he opposed the tobacco tax for the children's health program, McCain
seemed to reject the logic that taxing tobacco would reduce its use,
and instead suggested the government would be profiting from a
dangerous practice.
"'Now help me out here: We are trying to get people not to
smoke, and yet we are depending on tobacco to fund a program that's
designed for children's health?' McCain said. 'I can't buy
that.'"
If hiking the tax on cigarettes again, by $1 a pack
this time, will raise an additional $152 million in state revenue
annually, then
why not raise it by $10 a pack? By Beacon Hill's logic, that would
rake in $1.52 billion in one fell swoop, "fiscal crisis" solved!
More likely the pols would squander that $1.52 billion to double every
"public servant's" salary, pension, and benefits -- hire another legion
of second-tier hack friends and relatives -- but maybe there'd still be
enough left over to finally roll back the "temporary" income tax
increase.
Which reminds me. It was nineteen years ago
(1989) that the state imposed the first "temporary" income tax increase
followed by a second the next year, when that recession snuck up on
them. In 2002, during the last economic slowdown six years ago,
they "temporarily" "froze" the voters' tax rollback at 5.3 percent.
In 1989 the state budget was about $13 billion. Since then it has
grown to almost $30 billion. But that's still not enough.
Yet another "fiscal crisis" looms while new "unmet needs like universal
health insurance continue to arise and pile up, while those same roads and
bridges are still crumbling and need repair, two decades later.
I'd suggest it's time to consider bailing out of this
state, as thousands have done over the past few years, before Massachusetts
demonstrates to the federal government how to build a border fence
quickly. But you'd have a hard time selling your home these days
without giving it away then running off with what you can carry on your
back.
As the Boston Globe noted: ". . . a
person who bought a home for $200,000 in the summer of 1988 would have
had to wait nine years before being able to sell it for $200,000 again."
The Massachusetts border fence will surround us by then; there will be
no escape from the tax gulag.
 |
|
Chip Ford |
The Boston Herald
Wednesday, March 26, 2008
These state salaries a $3M PR nightmare
By Joe Dwinell
A small army of state workers assigned to public relations is costing
taxpayers in cash-strapped Massachusetts at least $3 million as
officials struggle with ways to cut costs, a Herald review of the latest
state payroll has found.
“It’s a pretty complex position,” said Patricia McCafferty, the
$133,200-a-year chief public affairs officer at the University of
Massachusetts at Lowell, one of the top-paid in her field in the state.
McCafferty defended her post yesterday, saying she juggles Web sites,
publications, staff, marketing, media and government relations - as well
as planning former U.S. Rep. Martin T. Meehan’s April 4 inauguration as
chancellor.
She is a longtime aide and political supporter of Meehan. The former
congressman is slated to earn $280,000 this year at the helm of UMass-Lowell.
Although the bulk of the state’s $100,000-plus salaries go to state
police and professors and administrators in the UMass system,
spokespeople - sometimes more than one per agency - also make big bucks.
The swelling state salaries, which mean higher pensions, have some
taxpayer advocates worried that a fiscal crisis is on the horizon unless
public pay is reined in.
“How long do they think we can continue this way?” asked Barbara
Anderson, executive director of Citizens for Limited Taxation.
“I don’t think the governor needs extra people to tell us he’s going to
raise taxes,” said Barney Keller, spokesman for the state Republican
Party.
The state payroll - now posted online in its entirety at
bostonherald.com - shows that:
The highest paid public affairs director in the State House is Joseph
Landolfi, who makes $119,000 as Gov. Deval Patrick’s chief
communications strategist. Patrick’s spokesman Kyle Sullivan pulls in
$95,000.
Trial Court spokeswoman Coria Holland makes $102,000 a year. State
Health and Human Services spokesman Juan Martinez makes $91,000. Joan
Kenney, the top spokeswoman for the Supreme Judicial Court, makes
$109,000 a year.
In the state Legislature, top earners include David Guarino, who makes
$90,000 as House Speaker Sal DiMasi’s spokesman, and David Falcone, paid
$83,500 as state Senate President Therese Murray’s spokesman.
In the state Treasury, spokeswoman Alison Mitchell earns $90,000, while
over at the Lottery, Daniel Rosenfeld earns $77,000.
Some of the public relations staffers on the state payroll are former
reporters and editors at the Herald. Former Globe reporters head the PR
staffs at the Massachusetts Port Authority and Turnpike Authority.
Patrick spokeswoman Cyndi Roy said the administration has 28 designated
spokespeople - about four more than under Gov. Mitt Romney’s tenure -
and they play a crucial role.
“Reporters and others depend on the knowledge these spokespeople have of
the work being done in individual agencies and secretariats,” she said.
“Allowing those spokespeople the ability to communicate directly with
the media and the public ensures that those seeking information get it
in the most accurate and timely manner possible.”
Romney made a point of cutting and consolidating PR jobs at state
agencies, but the then-$150,000 pay of his top communications guy, Eric
Fehrnstrom, was the target of the former governor’s State House critics.
Jessica Fargen contributed to this report.
The Boston Herald
Tuesday, March 25, 2008
Huge pensions pinch budget
Hub’s retirement costs ballooning
By Dave Wedge
While the city struggles to pay off a massive pension debt and control
property taxes, retirement costs are skyrocketing as dozens of former
municipal workers rake in near-six-figure annual payouts, a Herald
review has found.
Of the top 50 city pensions, 20 are paid to firefighters, 17 to police
officers and nine to school officials. In all, 75 former city workers
take home $80,000 or more, having retired under the rules of the city
pension system.
Topping the list with a $99,856-a-year pension is fire Capt. William G.
Suprey, who retired in 1998. The top police officer is retired Deputy
Superintendent Rachel L. Hutchinson, who retired in 2004 and takes home
$99,585. The top school official is former Charlestown High School
principal Michael Fung, who receives $99,368.
The city’s annual retirement costs have ballooned 38 percent since 2005
to a staggering $202.9 million this year as officials seek to pay down
$2.1 billion in pension debt. The 2008 cost marks the first time the
city’s pension costs have eclipsed the $200 million mark. In 2006, the
cost was $186 million, while last year retirement pay cost the city $192
million, according to the Boston Municipal Research Bureau.
Among the notable ex-pols are former Suffolk Sheriff Richard J. Rouse,
who receives an $81,180-a-year pension. Rouse stepped down as an inmate
abuse scandal unfolded at the Suffolk jail.
Meanwhile, thousands of ex-city workers take home more than the city’s
two living former mayors, Raymond Flynn and Kevin White. Flynn, who
retired in 1998, receives just $47,152, while White, who left office in
1984, gets $25,123, records show.
Boston Municipal Research Bureau director Sam Tyler said pension costs
continue to be a heavy strain on the city, especially as Boston
struggles to comply with a state order to pay off all past pension debt
by 2023. The city had $6.2 billion in unfunded pension liability but has
slowly chipped away at it since the order went into effect in 1988. As
of Jan. 1, 2007, the city has paid off $4.1 billion, Tyler said.
The city has also managed to maintain minimum investment performance
standards, thus avoiding being forced to merge with the state system, as
has been the case in other Bay State cities and towns.
But Tyler said health care and pension costs, coupled with the rising
salaries of government workers, are pressing Boston to the limit and
will eventually require sytematic changes.
“Personnel spending has become a much more expensive item for cities and
towns,” Tyler said. “We’ll soon be at a point where we’re really going
to have to reevaluate the benefit package for public employees.”
As part of an ongoing effort to improve access to public information,
the Herald has posted the entire list of pensions paid to more than
11,000 former city workers in a searchable database at
www.bostonherald.com.
The Boston Herald
Wednesday, March 26, 2008
Taxpayers chip in to pay these double dippers
By Howie Carr
It’s not just the high cost of pensions that’s killing the taxpayers,
it’s the even higher cost of double-dipping.
Check out the new listing of City of Boston pensions now posted at
bostonherald.com. It’s a stroll down memory lane with the
forgotten-but-not-gone brigade. And the funny thing is, some of the
coatholders with the top pensions are still chowing down at the public
trough, on top of collecting their monthly kiss in the mail.
Come on down former Boston cop Bob Hayden. Retired from the Boston PD in
2000, had a cup of coffee in Lawrence and is now collecting a pension of
$63,592.92 a year. Hayden’s now got himself a job at the MBTA. He’s the
assistant general manager for safety, for a cool $110,000 a year.
Then there’s former Boston Fire Commissioner Martin E. Pierce Jr. Cashed
out four weeks after Bob Hayden in 2000, and now has a city pension of
$72,039.96 a year. Would you care to guess where the Comish now works?
If you said MBTA, you win! Pierce is now a “fire safety consultant” for
the T, getting paid at the rate of $55 an hour. According to the MBTA,
in 2007 Pierce was paid $75,185.
Next we come to the former police commissioner, Francis M. “Mickey”
Roache. Mickey stepped down in 1993, after his Southie pal Ray Flynn
gave up the mayor’s job to become an ambassador. Mickey then got himself
elected to the City Council, but has now really died and gone to heaven.
He is the elected register of deeds in Suffolk County - a job that pays
$97,270.50 a year. In addition to that, his pension, which he began
collecting in 1993, is $43,904.64 a year.
Alas for Mickey, his salary at the courthouse is now less than that of
the other local registers, who just got a raise. The problem is, the
Suffolk register’s salary is set as a percentage of the judges’ pay.
What a terrible injustice for Southie’s favorite double-dipper. For
God’s sake, someone pass a home-rule petition and get Register Roache
the raise he so richly deserves. This pay freeze will not stand!
Next comes Paul McCann, veteran Boston Redevelopment Authority (BRA)
coatholder. His pension is $96,651.84 a year. But how can everyone at
the BRA miss McCann when he won’t go away. He’s still there, for 20
hours a week at $127.50 an hour. That works out to $2,550 a week - a
four-day week, by the way. He doesn’t come in Mondays.
A BRA spokesman said yesterday of his deal: “No sick pay, no vacation
pay, no benefit pay.”
The thing about the City Hall pensions is that they’re inflated by the
fact that the hacks down there make so much more than their
counterparts, and not just in the Dreaded Private Sector (which is of
course expected). They also get more money than comparable state hacks,
or even those at the authorities. No wonder the tax rate in the city is
so out of sight - it takes big money to keep the Friends of Mumbles
happy.
The great thing about pensions is, no one asks you if you were competent
at your job. Look at Richie Rouse, an ex-state rep and the one-time High
Sheriff of Suffolk County. Worthless as mammaries on a bull. Run out of
office on a rail, and now he’s grabbing $81,180 a year. For life. Which,
considering that Richie Rouse is still only 53 years old, could run into
very serious money over the decades.
Talk about forgotten but not gone. How about another ex-fire
commissioner, George Paul. He checked out with Mayor Kevin White in
January 1984. I still remember one City Council budget hearing where he
appeared with a female City Hall lawyer. Councilor Dapper O’Neil worked
Paul over for a while, then told him to screw. As Paul and the lawyer
stood up to leave, the Dap looks at the woman and says:
“We won’t be needing your services for the next witness, my dear. The
next witness plans on telling the truth.”
I thought Paul was going to jump over the desk at Dapper he was so
angry. Dapper’s gone now but not Paul. He’s in his 24th year of
collecting. His pension: $49,772.04.
Most of the old city councilors are gone now, but some of their children
live on. Kitty Craven once threw a shoe at Bill Foley. One son became a
judge - that would be ‘Doughnuts‘ Craven. Another son is Brendan, who
became a BPD detective. His pension is $56,536.92.
But the king of the kiss in the mail is still Whitey Bulger’s little
brother Billy. He wanted to be mayor - the Corrupt Midget could taste it
he wanted it so bad. But it was not to be. He figured he could succeed
Kevin White, but in the end he didn’t even run. Ray Flynn won going
away.
That was the bad news. The good news is, Billy ran his state pension up
to about $200,000 a year, while between them, the pensions of the two
mayors, White and Flynn, total $72,000 and change. There must be a
lesson here somewhere, but I don’t even want to think about what it
might be.
The Boston Herald
Wednesday, March 26, 2008
State to borrow $400M
against anticipated revenue to pay bills, aid
By Casey Ross
An unprecedented cash crunch will force the state to borrow up to $400
million on an emergency basis next month to pay bills and make promised
aid payments to cities and towns, Treasurer Tim Cahill said yesterday.
“It’s certainly a troubling situation,” said Cahill. “We’ve already had
to borrow more than we ever have in the past and I’m not optimistic that
revenues are going to meet expectations going forward.”
Cahill said the short-term cash crunch could have broader implications
for the fiscal 2009 budget if economic conditions continue to
deteriorate. The budget year starting in July is facing a $1.3 billion
shortfall, and state officials are already planning tax hikes and
spending cuts to close the gap.
The state has never been forced to borrow so much money this late in the
fiscal year. Cahill said the treasury already has exceeded its $1
billion limit for short-term borrowing, and it will have to lend the
$400 million against anticipated revenues.
It is not unusual for the state to have to borrow money on a short-term
basis to meet its obligations, but Cahill said the large amount this
year is brought on by overspending that must be curtailed during the
next several months.
“Obviously, the inflation that’s affecting household budgets right now
is starting to affect us,” Cahill said, citing rising costs for fuel,
health care and other necessities.
Gov. Deval Patrick’s top budget official said she agrees with Cahill’s
cautious approach, but said she does not see the need for drastic budget
cuts immediately.
“It’s right for the treasurer to be particularly alert as we hear more
about the (economic) downturn,” said Leslie Kirwan, Administration and
Finance secretary. “Right now, our revenues are on or above benchmark.
We are watching it closely, and we do need to react if they begin to
fall short.”
Kirwan said it’s too early to tell whether the shaky economy is going to
cause a nosedive in revenue projections for fiscal 2009, but she said
the state must address a $1 billion-plus structural deficit that is
creating a perpetual crisis.
State Rep. Robert DeLeo, chairman of the House Ways and Means Committee,
said the news from Cahill is “very disconcerting.” He expects the House
will debate its version of the fiscal 2009 budget in late April.
The Boston Globe
Wednesday, March 26, 2008
State's fiscal picture dims
Cuts, tax hikes may be on table
By Matt Viser
As the sputtering economy sends shocks from Wall Street to Main Street,
the reverberations are being felt on Beacon Hill, where key officials
acknowledged yesterday that the signs are bad and the future may be even
worse.
Income tax revenues are expected to shrink as the recession takes hold,
worsening an anticipated $1.3 billion budget deficit. Municipal
officials, heavily dependent on state aid, say their budget problems
have already risen to crisis proportions.
State Treasurer Timothy P. Cahill said yesterday that, yet again, he
must borrow hundreds of millions in short-term notes to pay the state's
bills - like a consumer using a credit card to make a mortgage payment.
All of this is set against the fact that the state already has the
highest per capita government debt in the country - and now will be
forced to borrow even more to keep a deteriorating transit system and
its aging college campuses from completely crumbling.
"Every taxpayer and tollpayer in Massachusetts is overburdened at the
same time as our infrastructure is about to implode," said Senator Mark
C. Montigny, Senate chairman of the Joint Committee on Bonding, Capital
Expenditures and State Assets and a New Bedford Democrat. "We are headed
for a much more dangerous time than people realize. We've got all these
nasty variables converging at the same time."
Governor Deval Patrick is readying a major economic speech in which he
will discuss the effect on the budget, although it has not yet been
scheduled, his aides said. House budget writers are beginning to craft a
detailed budget for fiscal year 2009, and they will have to choose
between raising taxes and fees and cutting programs.
"This has been the most difficult budget I've had to deal with," said
Representative Robert A. DeLeo, a Winthrop Democrat who is in his fourth
year as chairman of the House Committee on Ways and Means. "It's been
further exacerbated by looking into the future."
Patrick submitted a $28.2 billion budget proposal in January that
avoided large-scale cuts and included several spending initiatives and
money-generating proposals - including $124 million from his ill-fated
proposal to license three casinos, a plan that the House killed last
week.
Moving forward, while few are talking about serious program cuts, a big
increase in the cigarette tax, tightening corporate tax loopholes, and
digging into the state's rainy day fund are apparently the most viable
means of balancing the next budget.
Officials also are looking at gas tax increases, higher and more
widespread highway tolls, and the less tangible possibility that an
array of economic stimulus plans, including the promise of a $1 billion
shot in the arm for the state's biotech industry, will pay off with new
jobs and investment.
As House and Senate leaders start focusing on the details, they are
working under an even bleaker scenario than when Patrick drew up his
plan. Following a stream of negative news caused by the nation's crisis
in debt markets, a report last week released by MassINC said the state
is at a financial "point of reckoning."
"We're just teetering on the precipice," said Michael Widmer, president
of the Massachusetts Taxpayers Foundation, a nonprofit budget study
group that is funded by businesses. "I haven't heard any real ideas."
Cahill said he will be forced to borrow $400 million by Monday to
fulfill the state's obligations, including local aid and pension
payments. The state has occasionally had to borrow before to meet
short-term cash shortages - including $600 million in 2006 and $1
billion in 2007 - but never this late in a fiscal year.
"This to me is a wake-up call," Cahill said. "I'm hopeful that it's
going to be a message to everyone in the [State House] that we've got to
get spending under control. It's not just enough to look for new revenue
sources."
The state will be able to repay the loan by the end of April - once
income tax receipts start to come in - but the shortfall will cost about
$3 million in interest payments, Cahill said. That is the equivalent to
the full annual tax bill of about 2,200 taxpayers.
Leslie Kirwan, secretary of administration and finance, did not offer a
complete explanation of why the state is coming up short of cash. "I
would be very cautious about saying it's a spending problem. We do not
believe there is a significant issue on overspending," she said.
Budget cuts are definitely on the table in the Senate and the House.
"It's more than tight," said Senator Steven C. Panagiotakos, chairman of
the Ways and Means Committee. "The bottom line is spending is going far
ahead of revenue growth. Every area is an area to cut."
House Speaker Salvatore F. DiMasi six weeks ago sketched out a set of
budget priorities, ignoring the governor's use of projected casino
revenues. Instead, he is proposing raising $152 million by increasing
the state's cigarette tax by $1 a pack, which would give Massachusetts
the second highest cigarette tax in the country, behind New Jersey.
DiMasi also plans to use $427 million from the rainy day fund and,
without indicating which areas he would target, wants to cut state
spending by $100 million.
Massachusetts carries the highest per capita public debt burden in the
country, which places limitations on its ability to borrow more money.
To free up more borrowing power, the state has started using longer-term
bonds, which allows more money to be borrowed at one time. The Patrick
administration also is borrowing more per year for capital expenditures
- increasing a self-imposed limit from $1.25 billion last year to $2
billion annually by 2012.
Fiscal watchdogs say those policies will work only if the state economy
grows.
Patrick and DiMasi have both backed a plan to tighten the corporate tax
codes, but they have significant differences over how deep corresponding
reductions in corporate tax rates should be, so the savings remain in
doubt.
At the local level, 50 communities so far are considering property tax
or debt exclusion overrides - in addition to 109 communities that sought
them last year. Communities have also increasingly relied on raising
fees and fines to fill their coffers.
"It's a tough year," said Geoffrey Beckwith, executive director of the
Massachusetts Municipal Association. "There aren't a lot of revenues.
The overall economic downturn certainly could not come at a worse time."
The Boston Herald
Wednesday, March 26, 2008
Gov better have something up his sleeve
By JoAnn Fitzpatrick
Deciding not to tie the state’s financial future to casino gambling was
the easy decision for the Massachusetts House. Now comes the hard part:
Figuring out how to maintain essential services and invest in priority
infrastructure improvements and education while the nation sinks into a
recession that could dwarf the last one in magnitude.
And don’t forget that other budget buster, the state’s universal health
plan, whose costs are soaring by the day. With no easy way to cut health
care costs, especially in the short term, the state hasn’t even begun to
tackle that one.
This is going to be a very bumpy ride and it’s unclear that state
leaders have the wisdom or the fortitude to plan for the hard times
ahead. The tradition, unfortunately, has been to wait for calamity to
strike and then look for ways to cut. With the casino fight over, spring
brings budget season and a last chance for legislators to hold the line
on spending before the revenue picture gets even worse than it is now.
Gov. Deval Patrick can take the lead in educating the public about how
disastrous the next year could be. The governor lost political capital
on the failed casino measure but he’s also lost a ton of support among
voters who expected him to bring reform to the State House. The debate
over gambling was good theater, but the fact is whether bettors have to
drive a couple hours out of state to satisfy their craving is not
something most hard-pressed families are concerned about. Prices are
rising; financial markets are in turmoil and a five-year-old war feeds
the federal budget crunch.
The state must prepare now for declining jobs and revenue, yet the only
top elected official sounding an alarm is Treasurer Tim Cahill. Last
week Cahill warned the state not only must cut spending but also cannot
continue on a borrowing binge. That’s a direct challenge to some of
Patrick’s major initiatives, which would add billions to the state’s
debt.
Cahill rightly points out that circumstances have changed dramatically
since the governor’s budget was presented in January. Indeed, would
anyone have forecast two months ago that one of the country’s major
investment banks would collapse?
Strong, sage leaders - like great generals - earn their stars by
adapting to situation changes. Patrick may have lost a major legislative
battle to House Speaker Sal DiMasi. But instead of continuing to argue
over who trumped whom, he should try to rally DiMasi and Senate
President Therese Murray as allies in a joint venture to keep the state
budget in check. The budget proposals now under consideration use wildly
optimistic theories typical on Beacon Hill. Savings are based on closing
loopholes, creating efficiencies, squeezing smokers for another $1 a
pack and snatching hundreds of millions from rainy day funds. It won’t
work. Not with capital gains revenues sure to fall and fewer people
working and paying taxes. And taking any money from a rainy day fund now
when a monsoon is predicted is just plain reckless.
The game is over. No more talk of cards and dice and creating jobs based
on chance. It will take all the courage and brain power elected
officials can muster to keep Massachusetts from falling off a financial
cliff this year.
The Boston Globe
Wednesday, March 26, 2008
Healthcare cost increases dominate Mass. budget debate
Controlling them said key to keeping universal coverage
By Alice Dembner
When Massachusetts launched its landmark universal health insurance
initiative nearly two years ago, the state put off addressing rising
costs so it could expand coverage immediately. Now those costs are
dominating the discussion as the state faces a recession and pivotal
funding decisions that could make or break health reform.
A short-term funding problem - closing a budget gap of about $100
million by July 1 - may be solved quickly if the state approves an
increase in the cigarette tax and devotes the money to healthcare
reform, as is widely expected.
A larger issue will also come to a head by July 1: the need to secure a
new three-year commitment from the federal government to pay for half
the soaring cost of insurance subsidies. Massachusetts is seeking up to
$1.5 billion, but the Bush administration has been cutting back federal
payments to the states.
Even if the state garners enough money from those two sources, the
plan's future rests on slowing the growth of healthcare costs in
general, a task many analysts say is far more challenging than shaping
the complex health reform law in the first place.
"If we don't grapple seriously with the cost of healthcare, the support
for reform will erode and the perception will become broader that it is
unaffordable," said Jon Kingsdale, executive director of the
Commonwealth Health Insurance Connector, which oversees much of the
reform effort.
The state's political leadership and the broad coalition of insurers,
hospitals, businesses, and consumer advocates that worked to pass the
first-in-the-nation initiative remains committed to ensuring its
success.
So far, more than 342,000 people are newly covered since the initiative
began, probably about half of the state's uninsured, although the exact
number is unknown. Of the total, 176,000 are getting
government-subsidized insurance - far more than expected by the second
year, which is driving up the cost. Another 55,000 are newly enrolled in
Medicaid.
"We have done a remarkable job signing up people for insurance," said
Senate President Therese Murray, a Plymouth Democrat. "I don't think
anyone wants to go backward on that."
"Everyone understands that the eyes of the nation remain on us," added
Andrew Dreyfus, executive vice president at Blue Cross and Blue Shield
of Massachusetts.
Yet the financial pressures provide new ammunition for those who have
opposed the initiative from the start.
"We've said from the beginning that the basic problem with the reform is
that if you don't restructure the system, it becomes rapidly
unaffordable and the commitment to cover people begins to fade," said
Dr. David Himmelstein, an associate professor at Harvard Medical School
and a founder of Physicians for a National Health Program, which
advocates for a government-run health system like Canada's. "We're
seeing that begin to happen."
Among those who have supported the law, there is as yet no move to
change the fundamental provisions of the plan: requiring nearly everyone
to obtain insurance, providing free or subsidized coverage for those
with low and moderate incomes, and changing the insurance market to make
private coverage more affordable.
But the state's top budget official, Leslie Kirwan, last week suggested
that the financial pinch might require increases in the contributions
from coalition partners as well as "revisiting some of the original
assumptions of healthcare reform." Through a spokesman this week, she
declined to elaborate, saying only that "the administration remains
fully committed to healthcare reform."
Murray also suggested the state should review the health law's
provisions as part of a "look at everything." But House Speaker
Salvatore F. DiMasi said he believed it was too soon to significantly
modify the blueprint.
The Patrick administration has asked coalition members for suggestions
on how to raise money and cut costs, and dozens of proposals have been
submitted.
Advocates are pressing the administration to expand the number of
companies subject to a penalty for not insuring their workers, a step
the administration could take without legislative approval but which
would probably draw strong opposition from businesses. The penalty
raised only about $6 million this year, far less than originally
expected. DiMasi said he thinks the administration should consider this
option.
DiMasi has also proposed another alternative - a $1-per-pack increase in
the cigarette tax earmarked for healthcare reform - that could raise
$152 million a year. Murray supports the increase.
Kirwan said the state expects to spend substantially more for insurance
subsidies than the $869 million Governor Deval Patrick proposed in his
2009 budget just two months ago, because of increasing enrollment and
higher payments to insurers. In private briefings, she has told
coalition members that the cost could be $100 million more, according to
several who were present. The administration declined to confirm that
number.
The gap is part of an estimated $1.3 billion shortfall in the $28
billion state budget. A recession could also bring layoffs at private
companies that increase the ranks of the uninsured.
The subsidized program, called Commonwealth Care, accounts this year for
about one-third of the $1.9 billion price tag for healthcare reform.
About half of that total is picked up by the federal government.
Over the next three years, the Patrick administration has projected,
Commonwealth Care will double in size and cost. Some analysts suggest
that the cost projections, produced last fall, may have been inflated in
an attempt to get more funding.
Spending on other components of healthcare reform are expected to
decline over the next few years, but probably not enough to pay all the
bills.
Meanwhile, healthcare costs statewide are rising by about 10 percent a
year. A council established by the health reform law has developed some
proposals to reduce cost growth, and several bills are pending in the
Legislature. But the task is daunting.
"Expanding coverage is easy compared to controlling healthcare costs,"
said Nancy Turnbull, a Commonwealth Health Insurance Connector board
member and associate dean at the Harvard School of Public Health.
"Nobody has to give much up to expand coverage, but in controlling cost
there will always be losers."
The Boston Herald
Thursday, March 27, 2008
A Boston Herald editorial
Fiscal forecast mostly cloudy
We all know it’s a terrible idea to charge groceries to your
high-interest credit card. Same logic applies when you take out a $400
million loan to pay for the day-to-day expenses of state government.
Treasurer Tim Cahill is sounding alarm bells about this kind of
short-term paper patch, announcing this week that he has been forced to
borrow $400 million to meet immediate local aid and debt service
payments - a practice not unheard of, but which Cahill says is rare so
late in the fiscal year (ending June 30).
And still, those who most closely control the commonwealth’s purse
strings are operating without an urgent plan to shore up state finances
- a plan, that is, beyond pie-in-the-sky “stimulus” packages and
shopworn solutions like a hike in the cigarette tax.
Yes, revenues for the moment are coming in as projected and the
commonwealth will likely be able to pay off this debt by then.
But it will cost taxpayers $3 million in borrowing costs - just like
paying fat interest fees for your frozen peas - and will bring the total
amount borrowed to cover expenses this year to $1.8 billion.
As a $1.3 billion deficit for next year looms, Cahill has called for a
reexamination of all state spending, which will generate howls of
protest from the usual suspects.
But last time we checked, nothing in the state Constitution grants
immunity to government agencies from the same belt-tightening exercise
we’re all going through.
Yes, some have struggled to recover from the last crisis. But to suggest
that there is no flab left in state government is to insult every
taxpayer of this commonwealth.
If they can quit sniping at each other long enough, Gov. Deval Patrick
and House Speaker Sal DiMasi (and Senate President Therese Murray) must
join forces and come up with a plan for next year - beyond dipping into
the state’s rainy-day fund and closing the occasional corporate tax
“loophole.”
The Boston Herald
Wednesday, March 26, 2008
Home prices plunge in Feb.
Worst Mass. drop in 18 years
By Jay Fitzgerald and Jerry Kronenberg
Massachusetts’ housing market is in a downward price spiral not seen
since the devastating recession of the early 1990s.
Bay State single-family home prices last month plummeted by nearly 9
percent - the worst year-over-year fall in 18 years, market tracker the
Warren Group reported yesterday in its Banker & Tradesman newspaper.
Median house prices fell 8.8 percent to $301,000, down from $330,000 in
February 2007.
The volume of homes changing hands also fell to 2,123, a sharp 19
percent drop from February 2007’s 2,628 transactions.
The news wasn’t much better for the Massachusetts condo market.
Warren said median condo prices tumbled 6.6 percent to $256,500, while
the overall number of condo sales fell by 25 percent to 1,231.
The Massachusetts Association of Realtors is expected to release similar
gloomy numbers today.
MAR calculates house sales slightly differently than the Warren Group.
Doug Azarian, the group’s immediate past president, said MAR’s figures
show February house sales fell 23 percent from a year earlier, while
prices dropped 4.6 percent.
Azarian said condo sales likewise plummeted a whopping 34.6 percent,
while median condo prices fell 6.7 percent.
If there was any good news for the market yesterday, it came from the
National Association of Realtors.
The national group reported that total U.S. existing-home sales rose 2.9
percent in February, although median prices fell by 8.2 percent.
Azarian said the national numbers could represent an early sign that the
housing crunch is coming to an end.
“I think we’re almost to the bottom of this cycle,” he said.
The Boston Globe
Wednesday, March 26, 2008
Boston-area housing slump hits 28 months
Prices are down 11% from September '05
through last January
By Binyamin Appelbaum
The most widely respected index of home prices reported yesterday that
Boston's real estate downturn reached 28 months in January, as prices
dropped about 3.5 percent compared to the same month last year.
Prices now have fallen 11 percent from the peak of the local market in
September 2005, according to the S&P/Case-Shiller housing price index.
Other home sales data for February, released this week suggest the
market may have improved slightly since January, but it will be another
month before the more reliable Case-Shiller numbers are available.
The multitude of different reports on real estate prices can be
overwhelming, but boiling down the latest round suggests three things:
The Boston market is bad. Local problems are still growing, but the pace
has stopped accelerating. Many other markets are much worse.
As for the future, history may provide some indication.
"We have to look back to 1990 and 1991 to see sales trends that resemble
what is happening now," Timothy Warren, chief executive of Warren Group,
a real estate data publisher, said in a statement yesterday.
The last major downturn in Boston-area housing prices stretched 43
months from July 1988 to February 1992, according to the Case-Shiller
index. Another five years passed before prices reached and then
surpassed the high-water mark of July 1988.
In other words, a person who bought a home for $200,000 in the summer of
1988 would have had to wait nine years before being able to sell it for
$200,000 again.
From peak to bottom, prices fell almost 17 percent.
Part of the problem is the growing supply of foreclosed homes being
resold at discounts.
About 6 percent of the homes for sale in Massachusetts at the end of
February were either foreclosures or short sales - attempts to sell the
property without actually foreclosing on it - according to Movoto, a
California analytics firm.
The weak economy also remains an issue.
Warren Group released detailed data yesterday showing prices and sales
volumes continue to fall most sharply in urban areas and peripheral
suburbs, but the market is weakening even at higher price points in more
established suburbs.
The price of single-family homes continues to rise in a belt stretched
tight against the city from Milton through Dedham and Needham to Newton
and around Belmont and Arlington out to Winchester.
But in the next belt of communities, sales volume and often prices are
falling, from Canton and Westwood through Medfield and Wellesley, on
into Waltham, Lexington, Woburn, and Reading.
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