The Salem News
Friday, December 06, 2002
Excerpt from Nelson Benton's weekly column
Citizens for Limited Taxation has a couple of bills before
the Legislature next year. One would reduce the income tax rate to 5 percent, the other would amend the state Constitution
to remove the provision, approved by voters in 1998, granting legislators automatic pay
raises tied to the increase in household income.
CLT, echoing Finneran's view on the Clean Elections law
passed that same year, says voters may have been misled by the wording of the pay raise question.
Indeed the latter initiative (Question 1 on the 1998 ballot)
starts off by saying it would "prohibit the state Legislature from changing the base compensation received by members ..."
and only later notes that such compensation "would be increased or decreased at the same
rate as increases of decreases in the median household income."
Since the median household income rarely goes down, it
amounted to an automatic pay raise for legislators who previously were in the embarrassing position of having to vote
one for themselves. CLT would also spare lawmakers that embarrassment by requiring any future
raises be placed on the ballot.
Regarding the tax cut proposal, CLT says, "Yes, we hear
there is a fiscal crisis. Our response would fit on a bumper sticker: 'The state's problem is not our fault.'"
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The Boston Herald
Monday, December 9, 2002
A Boston Herald editorial
Managing it ...
It's going to be so great to have a governor who can do math
and read a balance sheet.
Gov.-elect Mitt Romney demonstrated both skills during a
speech last week in which he made clear that a tax hike wasn't merely politically unpalatable, it was economically pointless.
Increasing the state income tax from its current 5.3 percent
to 5.6 percent - the rate it was when citizens went to the polls and voted to lower the rate to 5 percent two years ago -
would bring in a mere $240 million extra a year, Romney told the Massachusetts Newspaper
Publishers Association. That would hardly make a dent in the anticipated $2 billion-plus
shortfall.
Of course, he noted, to really close the gap with tax
increases would take a hike to 7 percent or even 8 percent, but that would put the state in what he called a "doom loop" that
would turn the state into an economic "basket case."
Then businesses would have every reason to close up shop and
head to a friendlier clime.
Romney may be new to Beacon Hill, but he's no novice to
facing down deficits nor is his chief number cruncher, Administration and Finance Secretary-designate Eric
Kriss, a veteran of the Weld administration.
Romney explained that during his tenure as head of the Salt
Lake City Olympics and at Bain Capital, the key to trimming expenditures and paring down deficits has always been to
separate "core" from "non-core" functions. Among the latter would surely be the 60 press
secretaries scattered among state agencies, along with "hundreds of lawyers" and "thousands"
of information technology types, who, Romney said, ought to have their jobs consolidated in
some comprehensive department.
In the case of Massachusetts government, the "core"
functions he defined are fairly obvious - public safety, education and caring for "those people who cannot care for
themselves," including, he noted, the homeless.
Getting a handle on health care costs in a number of
different ways - Medicaid, state employee health insurance, medical expenses in the state prison system - will be critical
to making ends meet in the long and the short term, Romney indicated.
But look for fresh solutions to what most people who have
spent far too much time on Beacon Hill have always assumed were intractable problems.
And those who have trouble understanding the message (see
the editorial that follows) can either get with the program or spend their time bemoaning the fact that no one seems to be
listening to them any more.
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The Boston Herald
Monday, December 9, 2002
A Boston Herald editorial
... or trying to ignore it
And where would we be without the utterly clueless - those
so blinded by their particular cause, their issue, that they are blinded to the fiscal realities.
So what, that the state faces a $2 billion deficit! Increase
taxes, they say. Or cut someone else's budget. It's the fiscal equivalent of NIMBY (Not in My Backyard).
Last week the charter members of the Clueless Club included
the Massachusetts Campaign for Single Payer Health Care and their chief legislative enabler, Rep. Frank Hynes
(D-Marshfield). The group represents some 80 labor and advocacy groups and others
without a firm grip on reality.
The proposal to set up a government health-care trust fund
with a committee to manage it, a system that attempts to duplicate the dysfunctional Canadian system, is co-sponsored by
50 members of the Legislature - which only goes to prove how intellectually bankrupt that
branch of government has become.
And while advocates for those on Medicaid (under the
MassHealth program) have a better case in their attempts to restore some benefits, they fail to acknowledge that this has
been among the nation's most gold-plated health-care programs for the poor. Are most citizens
going to cry salty tears because Medicaid recipients are losing the right to
chiropractor visits? Somehow we don't think so.
Then there are the perennially clueless, however well-intentioned, anti-smoking zealots. Yes,
smoking is a bad thing for anyone's health and it's a dumb thing, but the bottom
line is that anti-smoking ads are not by any definition a core function of government as defined above by
the governor-elect.
The state is already taxing the daylights out of cigarettes.
If that doesn't convince more folks to stop (or kids not to start), then all the TV time in creation won't matter.
There's hardly a line item in the state budget - which has
tens of thousands of them - that doesn't have an advocacy group supporting its growth. Each is prepared to argue that
civilization as we know it will end should that item not be funded. It's that mindset that the
new governor will be up against. Most taxpayers will be right behind him.
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The MetroWest Daily News
Monday, December 9, 2002
Editorial
A year for 'agonizing reappraisals'
After a career spent turning around troubled enterprises
from consulting companies to the Winter Olympics, Gov.-elect Mitt Romney has learned that the first step must be an honest
financial audit.
That is a process, he told newspaper publishers last week,
of "rude awakening followed by agonizing reappraisal."
As it audits the state's finances, Team Romney has faced
another rude awakening. The state's budget gap, estimated at an intimidating $1 billion as Romney campaigned last
summer, now may easily top $2 billion. Eric Kriss, who will serve as Romney's secretary of
administration and finance, calls the fiscal crisis ahead the worst state government has faced
since the 1930s.
The brutal math involved in closing that gap will become
familiar in the months to come. Romney still refuses to consider tax increases, but even if he did, the most ambitious
tax hikes would cover less than half the deficit. He still thinks he can save $1 billion in wasted
spending -- a figure more objective observers consider unrealistic -- but that would
still leave the state more than $1 billion in the hole.
Romney promises to launch a hard-nosed re-evaluation of
everything state government does. On one list will be the core functions that cannot be dropped, on another the worthy
endeavors that are by some definition optional. It won't be that simple, as Romney surely
knows. Education, public safety, and providing a safety net for the poor are all core functions
of government, but some programs under those broad categories will have to go to make the
numbers work.
Romney didn't say it, but an honest appraisal of the numbers
leads to the conclusion that much of the pain will be shared with cities and towns. The next budget can't be balanced
without hitting the billions now sent out in local and education aid. Since municipal expenses
almost always grow faster than property tax revenues, cuts in state aid will make
the hole local officials face that much deeper. In some cases, tax revaluations will make it deeper still.
Because the value of commercial properties dropped while residential values rose,
the average Framingham homeowner may be looking at a tax hike of $700 or more.
Local officials can't wait for the Legislature to adopt a
budget before beginning their own "agonizing reappraisal." In town halls as well as on Beacon Hill, officials and voters must
begin rooting out waste, studying fundamental reforms and sorting core functions from
programs that are desirable but not essential.
This process won't be fun. But it will be less destructive
to the extent leaders are honest about the numbers, candid about the choices we face and open to the involvement of as
many citizens as can be crowded into the room.
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The Boston Globe
Monday, December 9, 2002
Deep in the heart of taxes
By Adrian Walker
Globe Columnist
Mayor Thomas M. Menino may as well have unveiled a new
slogan last week: He will leave no stone untaxed.
The mayor has proposed a whopping package of taxes to deal
with anticipated cuts in state funding.
If Menino gets his way, having a car towed, seeing a movie,
going out for a meal, or catching a ballgame all will cost more, with the additional proceeds going to City Hall.
Fortunately, these tax increases are subject to approval by
the Legislature, which most of them are not likely to get. Menino has been quoted saying that he hopes to get one or two
passed in the next legislative session, with more to come. Even before the legislation gets to
Beacon Hill, it will have to be passed by the City Council - a body that has recently taken to
occasional shows of backbone.
It's important to understand that the city is not, at
present, in a fiscal crisis. This is not New York City, circa 1977. Years of prosperity have swelled the cash reserves to
well over $100 million. Besides, no one knows how much the city will be affected by the state's budget
woes.
Local aid is sure to fall, and $50 million - 10 percent of
the $500 million allocated in 2002 - is a fair guess of how much. But it's only a guess.
There is a larger issue here, though. Menino was elected in
1993, in a time of prosperity. Times have only gotten better for the city since then. As mayor, he has never had to deal
with an economic downturn. Frankly, it's been a terrific time to be mayor.
Now, relatively hard times are going to require fresh
thought and more creativity - and we now know what the Menino administration considers a fresh idea. It's finding more ways
to pass along the pain, while explaining, as one mayoral aide did last week, that going to a
movie isn't a necessity. Glad to have the reminder.
To be fair, the mayor's heart is mostly in the right place.
Cuts to education and social services are going to be painful. Like most budget cuts, they will disproportionately come down
on the heads of the needy.
Menino's idea of raising $35 million for the homeless is
laudable, even if it's not likely to happen any time soon.
It's worth remembering that these cries of poverty follow
years of explosive new spending. Since 1995, the city budget is up 42 percent, most of it for salaries and benefits. Observers
agree that spending has to be reined in before Menino can credibly sell new taxes. An early
retirement program earlier this fall was projected to save $1.9 million. It's too soon to
say whether it will - more employees than expected took it, but the savings also depend on how
many of the positions go unfilled.
"I think before the mayor can talk credibly about more
taxes, the mayor has to talk about what is being done to control spending," said Samuel R. Tyler, executive director of
the Boston Municipal Research Bureau. "That has to carry equal weight."
Of course, Menino has only begun to ask for more of your
money. That is almost a certainty, thanks to the successful bid to woo the 2004 Democratic Convention. In the tradition of the
Big Dig, the price of the convention is likely to escalate, with the city struggling to pay its
share of the freight.
There's no question that the next year promises to be grim
for both city and state government. But a knee-jerk roster of tax hikes isn't the solution, or even a good start.
Actually, when you couple the tax proposal with the mayor's
dead-on-arrival rent stabilization scheme, you start to wonder if the mayor is now floating trial balloons for lack of
anything better to do. It's the illusion of action, as opposed to action itself.
Pity our poor mayor. For nine years his timing has been
perfect. Now come hard times and tough decisions. To judge from his recent behavior, the mayor wants no part of it.
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The Boston Herald
Monday, December 9, 2002
Business Section
Budgeting lessons lie northwest
Capital Focus/by Ted Bunker
Eric Kriss ought to watch Olympia, Wash., a week from
tomorrow. That's when Gov. Gary Locke is expected to unveil a radical way to close a $2 billion budget gap in that state.
As Mitt Romney's budget point man, Kriss made clear last
week why Locke's approach may be needed on Beacon Hill.
"We face the most difficult year in state fiscal history
since the 1930s," Kriss said about fiscal 2004 in a widely reported speech.
Real cuts - reductions in actual spending compared with the
previous year - are in store, Kriss warned. A retooling of the spending plan won't be enough.
"Government costs are not fixed on a must-follow track,"
Kriss said. "Clearly, any budget without fundamental reform runs the commonwealth right off its fiscal track."
Romney's aides muster the bleakest tones they can find to
paint the budget crisis in terms stark enough to justify a ground-up reshaping of state government.
Many a hack may be hunkered down by now, taking solace in
the thought that such a Herculean task can't be done. Not so - just ask the folks in Olympia.
But Romney and Kriss don't have to reach that far for
answers. Right up the road in Essex sits David Osborne, one of the thinkers behind Locke's plan. But the managing partner of
the Public Strategies Group Inc. says he's yet to hear from Romney or
Kriss.
Readers may remember Osborne as the co-author of a seminal
1990s book, "Reinventing Government," which then-Vice President Al Gore must have kept under his pillow. For
Gore, it provided the stuff that presidential dreams were made of, even if they
never came true.
Maybe Gore didn't go far enough. Compared with what fellow
Democrat Locke came up with in Olympia, it sure looks that way.
Perhaps with Osborne's "The Reinventors Fieldbook" under his
pillow, Locke started out remaking Washington's government by deciding on a set of 10 objectives. He went from
there to design a spending plan that would accomplish those goals.
Organizing around 10 "most critical outcomes," Locke set up
teams of policy-makers, agency chiefs, labor and industry leaders to first map out priorities, then come up with ways
to achieve them.
"The value of what they did is that it drove everybody to
re-examine what state government was doing and the way to get the best results," Osborne said on Friday.
After getting the list of priorities from each of the 10
groups, Locke allocated a certain amount of revenue to each, Osborne said. Each group figured out what critical activities
had to be funded to achieve must-have results, then sorted out what they wanted if they had the
money, what they would like to have but couldn't afford and what they didn't really need.
But before they finalized spending proposals, each group
bargained with the others, Osborne said. In effect, they created a marketplace for public funds and traded resources.
For instance, initially, the group that focused on improving
the safety of people and property was going to propose releasing 6,000 prison inmates back into society. That was
going to save some millions of dollars.
But the groups tasked with improving primary education and
the security of the state's vulnerable populations determined that would hurt their efforts. So those two groups shifted
funds allocated to their tasks to public safety, to keep 4,000 inmates in jail who would have
been released.
Locke must still get his plan past a Republican-dominated
state legislature - not a given, by any means. But Washington, like Massachusetts, is caught in the teeth of a budget crunch
that shows no signs of letting go.
"What he's got is 10 strategic programs for state government, and it gives him the moral high
ground," Osborne said. Locke can appeal to the public to pressure lawmakers to
accept his plan. He's already won support from influential newspapers.
Here in Boston, the budget crisis gives Romney a chance to
take the same radical route, Osborne said. "It's the best opportunity he'll ever get."
But Osborne isn't convinced Romney sees that yet.
"He's been talking a lot about consolidation," Osborne said.
"If consolidation were the answer, Aeroflot would have been the greatest airline on earth."
Consolidation, he observed, tends to build bigger, more
centralized and inefficient bureaucracies.
"What the governor can do is consolidate the funding streams
and force the bureaucracy to compete," he said. "My advice to him would be to look for all kinds of ways to increase
competition."
One of Romney's first steps should be to seek repeal of the
Pacheco law that bans most state service privatization. Osborne said that alone could produce substantial savings.
In the meantime, if Romney or any of his aides need
Osborne's number, we've got it here. Just give a call, we'll be happy to share.
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