The Boston Herald
Tuesday, November 19, 2002
Hub's DNC costs to soar
by Ellen J. Silberman
The $49.5 million budget for bringing the Democratic
National Convention to Boston is all but guaranteed to skyrocket because it doesn't include insurance costs,
transportation estimates or potential police overtime, officials and experts acknowledged yesterday.
"The unknowns are very difficult to budget for," said David
A. Passafaro, president of Boston 2004, the host committee charged with bankrolling the four-day event.
Insurance costs alone, said LeConte Moore, managing director
of the entertainment practice at insurance brokerage Marsh Inc., could run as high as $4 million, depending on what
agreements Boston 2004 has with the Democratic National Committee and how much
insurance the city decides to purchase.
In Los Angeles and Philadelphia - which hosted the year 2000
national party conventions - when prices soared, taxpayers ended up footing the bill. And city officials aren't offering
any guarantees that the same thing won't happen here.
Mayor Thomas M. Menino has been vague about the city's role
in financing the convention, dodging the question by saying the expected tourism revenue - and hours of free publicity -
will be worth the cost to taxpayers.
And state officials, deep in a fiscal crisis, have balked at
reaching into Massachusetts' treasury to pay for a political convention.
In addition to big-ticket items, a host of smaller costs
have yet to be budgeted. Boston 2004 and the FleetCenter, which Democrats will transform into a political arena, are in
negotiations on rental payments.
And Boston's $49.5 million convention budget also does not
include the cost of running the Boston 2004 host committee, which will soon rent office space and hire a small staff to
coordinate with the Democratic National Committee.
Passafaro said Boston 2004 wouldn't begin shopping for
insurance until three or four months before the convention begins on July 26, 2004. By then, the chances of a catastrophe
striking during the convention should be clear - to insurance companies at least.
"The world of insurance has been tipped upside down (since
Sept. 11)," he said, describing the convention's insurance cost as "an unknowable number."
Special events such as political conventions typically
purchase a fistful of insurance, including three big-ticket items: liability insurance, in case people slip and fall during
the event; cancellation insurance, in the case the event doesn't come off, and umbrella insurance against
a catastrophe such as a roof collapse, said Moore.
Since Sept. 11 all those types of insurances can come with
the costly option of insuring against terrorism and the prices - with or without a terrorism rider - have gone through the
roof.
"The premiums could be double, triple or more" than they
were for the 2000 conventions, Moore said.
Convention organizers have said the event will cost $49.5
million and bring in $150 million in tourism dollars when 35,000 delegates, reporters and assorted spectators descend on
the city. Boston 2004 already has commitments for $20 million in private cash donations.
They're looking for another $12 million in in-kind contributions. The city and state are
expected to provide $17.5 million in services, such as security and transportation.
Neither the city nor Boston 2004 has released a detailed
convention budget. The preliminary figures were removed from the winning convention bid released to the press.
The working budget, included in the contract the city
negotiated with the Democratic National Convention, won't be released at least until DNC Chairman Terry McAuliffe signs
the document next month - and perhaps not then, said Menino's spokeswoman Carole
Brennan.
The public figures don't include the cost of the Massachusetts Bay Transportation Authority
providing 125 buses, said T spokesman Joe Pesaturo.
"You won't find dollar figures attached to the T information
(in the contract)," he said, explaining that the T would swallow the cost of providing the buses in its fiscal 2005
budget, but couldn't put a dollar figure on the service until the Carmen's Union, which represents bus
drivers, negotiates a new contract.
The old contract expired in June. Pescaturo would only say
that talks are "progressing." The police overtime figure is also likely low.
In Philadelphia, which hosted the 2000 Republican National
Convention, city officials budgeted up to $7 million in services, including police. Ultimately, the city contributed
$14.9 million in "in-kind" services, including nearly $10 million for police alone, according to
Philadelphia newspapers.
In Los Angeles, the site of the 2000 Democratic National
Convention, city leaders told the public the event would only drain $8.3 million from city coffers.
As in Boston that figure covered security, transportation
and other city services. When the books were closed, the city's price tag topped $35 million, including nearly $22 million in
police overtime and other security costs, according to published reports.
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The Boston Herald
Tuesday, November 19, 2002
A Boston Herald editorial
No blank check for the convention
With state finances looking bleak, House Speaker Thomas
Finneran was wise to warn colleagues there'll be no blank check for the Democratic National Convention.
As the July 2004 event nears, arguments for public subsidies
will become increasingly forceful, even desperate, as organizers try to make good on the $17.5 million pledge
delivered by Mayor Thomas M. Menino and Sen. Edward Kennedy.
Proponents will say the Legislature should cough up the
money because a convention will bring exposure that will in turn generate tourism. But unlike some other recent host
cities, Boston doesn't need a lot of help in this regard. And how much of the city will a dwindling
national television audience watching hagiographic documentaries about candidates
see?
Menino has suggested the convention deserves a state subsidy
because the state tax code unfairly funnels meal and hotel taxes to Beacon Hill rather than City Hall. Even if that claim
had merit - and it doesn't - now is not the time to press it.
The best claim for a contribution from the taxpayers is that
since convention-goers will spend an estimated $150 million, putting up millions in public dollars to support the event is
really just an investment.
Perhaps, but such decisions require careful consideration on
sunny economic days. They demand all the more scrutiny in troubling times such as these. And no one knows just how
bad state finances will look next year.
But with all indicators pointing to trouble for at least the
next few budget years - "we're broke," Finneran told the Herald's Elisabeth Beardsley - caution should dominate any
consideration of convention spending. Finneran and Gov.-elect Mitt Romney have been right
to insist on this, even amid the euphoria of landing the big show.
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The Boston Globe
Tuesday, November 19, 2002
Fiscal '04 forecast: trouble for city
State budget woes may affect local aid
By Scott S. Greenberger
Globe Staff
With Boston anticipating a budget crisis more severe than
last year's roughly $50 million gap, Mayor Thomas M. Menino is suddenly facing a chillier Beacon Hill climate for the city
than at any time in his nine-year tenure.
Mitt Romney was elected governor largely by suburban voters
- and despite active campaigning by Menino for Democrat Shannon O'Brien. Romney, who has pledged strict
fiscal discipline, last week decried "political welfare" in cautioning that the state
won't necessarily pick up a large piece of Boston's tab for the Democratic convention - even
though that event will fill the state's coffers as surely as the city's. And a ballot measure
that would have scrapped the state's income tax did better than expected, likely dampening the
prospects of a tax increase.
Last year, Menino closed the budget hole with the help of a
friendly, albeit Republican, governor and a Legislature that swooped in to restore cuts in local aid with a $1.1 billion tax
increase.
Menino said yesterday that Boston almost certainly will feel
the state's budget woes more acutely in fiscal 2004 than it did in 2003.
The mayor said he hopes Romney, whom he described as "a
pretty fair guy," remembers how important the capital is to the state's economic health.
"We're the center of education, we're the center of health
care, the center of financial services," Menino said. "The thing is, we generate a lot of revenue for the state. I would
hope we'd get our fair share."
Romney spokesman Eric Fehrnstrom said it's too early to
comment on specific parts of the new governor's first budget, but that the state's fiscal crisis will force "major changes in
the way it does business."
Romney and the Legislature will have a huge impact on
Boston's finances. State money constitutes nearly a third of the city's roughly $1.8 billion annual budget. And legislators
have to sign off on city revenue-raisers such as increases in towing fees or the meals tax - both of
which were rejected last session.
Acting Governor Jane Swift largely protected K-12 education
funding to cities and towns in fiscal 2003, and the Legislature's tax increase cleared the way for the restoration
of other cuts in local aid.
But as the state looks to close a budget gap that could
reach $2 billion, it is unlikely that Boston and other cities will escape again.
"It seems to be an environment of serious financial problems
for the state, and an environment where there's less willingness to increase taxes," said Samuel Tyler of the
Boston Municipal Research Bureau, a business-funded watchdog group.
"I think the city is going to be facing larger local aid
cuts than we saw this year."
Former city councilor Michael McCormack noted that local aid
historically has been "a sacred cow."
But he said Romney and legislators surely heard the message
delivered by the strong showing by the income tax ballot measure.
"They take it as a real message that taxes are the last
resort," McCormack said. "They're going to look at where they can find places to cut before they even think about raising
taxes - and there aren't many left."
Furthermore, Romney and other budget hawks may be skeptical
of Boston's poverty pleas. Before the Legislature's last-minute tax increase, Menino was able to submit a budget based
on the worst-case scenario - a 10 percent reduction in local aid - that preserved essential
services without significant layoffs or program cuts.
Meanwhile, a report by the Municipal Research Bureau accused
Boston of spending too much during the 1990s, describing Menino's tight 2003 plan as "a budget correction."
Expensive contracts that Menino signed with the city's
firefighters and teachers also might reduce Beacon Hill's sympathy for Boston's budget plight. The contracts include an
average raise of 15 percent over three years for teachers, and an average salary increase of 22
percent over four years for the firefighters, once other seniority bonuses are factored in.
Political fallout from the governor's race also may factor
into the city's success or failure on Beacon Hill.
Unlike in 1998, when Menino offered only lukewarm support to
Democrat Scott Harshbarger in his losing bid to unseat Paul Cellucci, the mayor unleashed the full might of his
get-out-the-vote machine in support of O'Brien.
But Fehrnstrom said Menino's support for O'Brien will have
no bearing on how Boston is treated during the budget debate. He pointed to Romney's transition team, which includes
O'Brien supporters, as evidence.
"Who Tom Menino or any other mayor supported in the recent
election is irrelevant," Fehrnstrom said.
"Mitt Romney demonstrated through the formation of his
transition steering committee that political affiliation is less important than the contributions an individual can make."
City Councilor Michael Ross of the Back Bay, who chairs the
Ways and Means Committee, said he hopes that's the case.
"I can't imagine that the new governor would hold a grudge,"
Ross said.
"I can't imagine turning your back on a whole city or town
just because you didn't pull a high enough vote from them."
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