www.boston.com/bostonglobe/regional_editions/overridecentral/2008/06/
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"Moms for more taxes: Women lobby for overrides as Mass. towns struggle"
By Erica Noonan, Boston Globe Staff, March 2, 2008
NATICK - You could call them the Override Moms - politically powerful suburban women who lobby for property tax increases to pay for teachers, new schools, and better classroom gear for their school-aged children. Think soccer moms, with an activist bent.
In one community after another, these mothers have banded together in common cause. They are nimble and they are quick, often performing with the agility and strategy of an expert strike force.
With at least 40 Eastern Massachusetts cities and towns planning to ask voters for more than $50 million over the next few months, this is the make-or-break season for thousands of these young mothers dedicated to persuading neighbors to vote themselves a tax hike.
Within 48 hours after Natick selectmen voted last month to seek a $3.9 million override, the town's first such attempt in six years, the group Vote Yes! for Natick had a position statement e-mail waiting in thousands of inboxes around town.
"This matters so much to the community," said campaign cochairwoman Mari Barrera, while standing out in the freezing rain Tuesday evening with a Vote Yes! placard. She cited threatened teacher cuts, library hour reductions, and cutbacks in the Police Department, Department of Public Works, and the town-run organic farm, if the vote does not pass.
"Those are the things that get me out here," said Barrera, whose two elementary-school aged children dropped by for a quick hug on their way home for dinner and homework. "Who will plow the streets so my elderly neighbors can walk downtown?"
In Randolph, Kathy Haire is leading the town's fourth campaign for an override in as many years. Ballot questions in 2003, 2006, and 2007 all failed. The schools experienced $12 million in budget cuts, and are threatened with state receivership.
Haire hopes this year's question - a $5.5 million override - will be different. Her committee, Support a Future for Randolph, is coordinating informational mailings, meetings, and any other outreach she can think of to sway public opinion before the April 1 vote.
"Our kids deserve the best education we can give them," said Haire, the mother of a senior at Randolph High School. "I look around my neighborhood and see the smaller kids and say, 'If I'm able to do something to help, how can I turn my back?' "
The luxury of simply being a soccer mom went out with the flush 1990s.
In today's stalled-out economy - with municipal budget cuts and shrinking state aid - these mothers are leveraging their social connections, technical savvy, and professional skills to help bail out town budgets. They have protest placards mingling with sports gear in the back of their station wagons. Many work full-time jobs, then rush home to e-mail, organize, and raise money - sometimes hundreds of thousands of dollars - in an effort to keep local schools ranked high on the MCAS.
Although anti-override activism has been around almost since the controversial 26-year-old Proposition 2 1/2 state law took effect in 1981, the override mom has now become a fixture in such communities as Wellesley, Newton, Lexington, Concord, and Scituate, which have passed repeated tax overrides.
Override advocates certainly include men as well as women without school-age children, but the fervor among 30- and 40-something mothers has grown noticeably over the years, along with cuts in local school systems.
Yet they have their detractors, none more notable than Barbara Anderson, executive director of Marblehead-based Citizens for Limited Taxation, which created Proposition 2 1/2, ½the state statute that prohibits towns from raising property taxes more than 2.5 percent per year without voter approval. Critics say it is starving municipalities of needed revenue.
"These are people who have the spare time to do this," said Anderson. "They are obsessed with what they want for their kids, which is a private school experience that they don't have to pay for themselves."
Anderson said override moms don't have enough empathy for "old people, sick people, and people who can't afford an override."
But the mothers insist they want all residents to benefit. "We're not 'Save Our Schools,' " said Lisa Valone, who cofounded the Proposition 2 1/2 advocacy in Wayland.
"We are 'Save Our Services,' and our mission is about preserving service for everyone in town and advocating for fiscal responsibility in the long term. We value our community on many levels, not just the schools."
Valone's largely women-led group mounted successful override campaigns in 2005 and 2006, votes that approved tax hikes totaling $4.4 million. They are girding for an April 8 ballot battle for another $1.9 million in proposed tax hikes, mostly to fund town operations.
Before their children reached school age, when they spent their time chasing after babies and toddlers, said Barrera of Natick, these mothers were too exhausted to do much more than "vote, read, and sign petitions."
But as her children reached school age, Barrera had the time and inclination to become more involved. She and Valone describe a typical weeknight as a rush home, a kiss for the children, and a jump onto the Web to plan meetings and fund-raisers, and do research, often until after midnight.
That fits a long-established pattern of political activism for women, said state Representative Ruth Balser, a Newton Democrat who described her first political role as a "stop-sign mom."
As a young Newton mother in the mid-1980s, Balser got involved with city politics to fix a dangerous intersection at Hartman and Brookline streets so her children could cross safely. She said her "stop-sign mom" mentality was not so different from today's override mom activity. "I was so passionate because I felt my kids were at risk," she said.
Some characterize their advocacy against Proposition 2 1/2 as a form of mothering - teaching civic engagement by example to their children.
"I do like modeling this for my children. They see their parent involved, and we talk about the issues together all the time," said Ann Rappaport of Wellesley, a mother of two middle-schoolers.
Determined Wellesley activists - many of them mothers - raised $380,000 in 2005 in an attempt to preserve a Spanish language program in the elementary schools. The town later rejected the private funding. The activists also spearheaded six successful override campaigns that, since 2000, have raised close to $10 million for the town.
Still, Anderson said she saw the constant push for overrides as a dangerous lesson for young people.
"It is teaching kids to be selfish and to live off other people," she said.
But mothers advocating the overrides say they are here to stay, until Proposition 2 1/2 is repealed or the state finds a better way to fund municipal budgets.
Each budget season brings a new fight - a campaign to win the hearts, minds, and dollars of neighbors.
"Every year it's like pushing a boulder up a hill," said Rappaport of Wellesley. "You win or you don't, but next year, you're back at the bottom."
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Erica Noonan can be reached at enoonan@globe.com
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Proposition 2 1/2 overrides: a battle for hearts and wallets
The Boston Globe, Letters, March 9, 2008
RE "MOMS for more taxes: Women lobby for overrides as Mass. towns struggle" (Page A1, March 2): The "override moms" believe that their children are entitled to the best of everything, and that the cost of that entitlement, in regard to schools, must be borne by all homeowners regardless of individual financial circumstances. Their selfish disregard for others, such as the elderly on fixed incomes, is evident.
It is especially repugnant to read Natick mother Mari Barrera's question: "Who will plow the streets so my elderly neighbors can walk downtown?" Does Barrera really believe seniors cannot see her question for what it is - a ploy intended to frighten them with threats of unplowed streets if overrides are not passed?
In Wellesley, these predictions of dire consequences to residents in the case of a failure to override have included just about everything short of tsunamis.
LEE EARL
Wellesley
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AS A newly minted, and completely overwhelmed, override mom, I welcome your article, if only because it makes me and my colleagues in Hamilton-Wenham SOS (Support Our Schools) feel less alone. So, 40 Eastern Massachusetts cities and towns are asking for overrides, and parents of both genders are leaving behind their families, work, and leisure time to campaign for tax increases they themselves can ill afford? It's clear we have a problem with the way public education is funded in the Commonwealth.
The state slashed school funding in 2002 and has not restored it to its previous level, and it has not met its fiscal responsibilities to communities with regard to funding for special education.
The Legislature and the Patrick administration need to fix the broken funding formula for public education. We should not have to battle the poor and elderly in our own communities just to get our kids a passable education.
TRACY MAYOR
South Hamilton
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I WAS appalled by the misleading and inappropriate headline, "Moms for more taxes," applied to last Sunday's front-page article. Surely Globe editors realize the mothers' goal is not higher taxes. As with many other parents around the state, they want good schools and educational services for their children. Granted, higher taxes may be the price they pay, and if so, fine. But that is not necessarily the outcome. The town still has the option to cut other services, depending on overall priorities. But no one can fault parents for feeling that their children are priority number one.
By the way, often-mentioned senior citizens (I am one) most likely felt the same when their children were in school, as did their own parents before them. As a senior, I feel it is my responsibility to help pay for the same school services my parents and I received at that stage in our lives.
NEAL CARLSON
Belmont
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THE ASSERTION of Proposition 2 1/2 leader Barbara Anderson that override activists - I'd like to call us "angry soccer moms" - are looking for a private school experience without having to pay for it is ridiculous.
In Chelmsford, we had to fight just to get an auditorium at our high school. Chelmsford is no Newton North. We're talking the basics here.
It is senior citizens, not override activists, as Anderson charges, who are teaching our children "to live off other people." They selfishly insist on having a plush retirement, one that they obviously inadequately saved for. We pay school fees so that they don't have to pay their fair share in taxes.
Why doesn't Anderson shine a light on what a bad deal Social Security is for young families? Parents of my generation would love to opt out of what amounts to a senior welfare system. We could use that money as we see fit - namely for retirement and the education of our children.
BARBARA EHRENFELS
Chelmsford
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I AM a mom, but I am also a taxpayer. I see a call for an override as a sign that our elected officials are not managing our money wisely. If anyone is going to waste my money, I'd rather it be me.
It would be nice to see these moms pushing for fiscal responsibility first and an override second, after all other options have been exhausted. Here in Newton we are far from that point.
EMILY NORTON
Newton
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"Winthrop and Franklin vote down overrides; Holbrook passes three"
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"Overrides were defeated in Winthrop and Franklin Tuesday night, while three tax hikes passed in Holbrook."
June 10, 2008
In Winthrop, a special election on a $1.55 million override went down by a 3,027-1,594 vote. The funds would have been used for schools, the police and fire departments, public works, and planning and community development.
In the school department, 14.6 full-time teaching positions, as well as custodial and secretarial jobs, are likely to be cut. Two jobs in the Police Department and 2.5 in the Department of Public Works also are likely to go.
The tally was closer in Franklin, where votes turned down a $2.8 million override by a 4,290-3,402 margin. According to town officials, 43.5 teaching positions may now be eliminated.
Holbrook voters said yes to $395,128 for schools by a 1,442-909 margin; yes to the Council on Aging for $61,892 (1,442-909); and yes to the library for $356,989 (1,456-888).
In April, Holbrook voters rejected a $2.8 million override request that would have added $595 in property taxes for the owner of a $302,000 house. The $814,009 approved Tuesday night is expected to cost the average taxpayer an additional $172.
-- John Laidler
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"Out-of-staters fuel anti-tax effort"
The Associated Press, Tuesday, September 16, 2008
BOSTON (AP) — The effort to eliminate the state income tax has been financed primarily by donors from out of state who don't pay taxes in Massachusetts.
The Boston Herald reports in its Tuesday editions that the Committee for Small Government, the group backing the Question 1 ballot initiative to abolish the state income tax, collected almost 60 percent of its $364,000 from out-of-state donors.
Contributors include Craig Franklin, a California software firm executive and anti-tax advocate who gave $25,500; and California libertarian Chris Rufer, who gave $13,000.
Michael Widmer of the Massachusetts Taxpayers Foundation, which opposes the measure, calls the out-of-state support "troubling."
Carla Howell, leader of the Committee for Small Government, defended the fundraising efforts.
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SPECIAL REPORT
"Runaway health costs are rocking municipal budgets: But there’s no will or willingness to roll back benefits granted in palmier times"
By Sean P. Murphy, Boston Globe Staff, February 28, 2010
First of two parts.
Elizabeth Debski spent eight years as Everett’s city planner, before losing her job in 2006 when a newly elected mayor installed his own team.
But Debski did not leave City Hall empty-handed. In addition to her pension, Debski, at 42, walked away with city-subsidized health care insurance for life. If she lives into her 80s, as actuarial charts predict, taxpayers could pay more than $1 million in all for her family’s health care benefits.
That’s not to say Debski manipulated the system. She simply took what she was owed under a municipal health care system whose generous benefits and colossal inefficiencies are crippling cities and towns across Massachusetts.
A six-month review by the Globe found that municipal health plans, which cover employees, retirees, and elected officials, provide benefit levels largely unheard of in the private sector. Copays are much lower. Some communities do not force retirees onto Medicare at age 65. Many citizens on elected boards - some after serving as few as six years - receive coverage for life, too.
As medical costs across the board rose over the past decade, municipal health care expenses exploded, draining local budgets and forcing major cuts in services, higher property tax bills, and billions in new debt.
“It has got to be dealt with,’’ said Richard Fortucci , the chief financial officer in Lynn. “Or we will all go bankrupt.’’
The cost of municipal health care more than doubled from fiscal 2001 to 2008, adding more than $1 billion in all to city and town budgets, according to state Department of Revenue data. A Globe survey of 25 communities found that they now devote, on average, 14 percent of their budgets to health care, up from 8 percent a decade ago. Somerville, for one, spends $20 million more annually than it did 10 years ago, now devoting almost 20 percent of its budget to health care.
So far, with powerful labor unions resistant to giving away hard-won benefits and a lack of political will in the state Legislature to force changes, efforts to overhaul the system have fallen short.
To be sure, many municipal employees, elected officials, and retirees are paying a greater percentage of their health premiums than ever. Still, almost all of the increase in municipal health care costs in the past 10 years has been shouldered by taxpayers, who are subsidizing plans that are often superior to their own.
“It’s a nice deal,’’ said Debski, now a part-time planner in Malden.
She could get insurance through her husband’s employer but doesn’t, for a simple reason: The municipal plan is far more generous and costs less.
“The system was there,’’ she said. “I find it hard to believe that anyone wouldn’t take what the system offered.’’
A crippling cost
The consequences of failing to face this crisis are on display in many cities and towns, nowhere more vividly than in Lawrence.
In that city, on Feb. 1, children were momentarily trapped in a burning apartment building, down the street from a fire station. But the city had recently shuttered the station, to help close a $24 million budget gap, and firefighters had to race from another location. The children escaped, but the fire chief warned the city it may not be so lucky next time.
Meanwhile, Lawrence, one of the poorest municipalities in Massachusetts, continues to pay among the highest rates in the state for health care benefits. The city’s health care kitty, which it uses to pay for coverage, is currently $4 million in the red.
Health care costs are not the only budget-buster for cities and towns, of course, but their rise has led not just to fewer firefighters in Lawrence but diminished services across the state.
Library hours have been cut in Wayland and Hull. Wakefield has deferred road and sidewalk repairs. Malden has introduced fees for trash pickup. Class sizes have increased in Chelsea. Major layoffs have hit, among others, Boston, New Bedford, Worcester, and Brockton - with officials in all those communities citing rising health care costs as a major factor. Revere last year closed City Hall on Fridays, to save cash.
“What am I going to do next, put a padlock on the police station and tell people to call the State Police instead?’’ asked Mayor Thomas G. Ambrosino of Revere, who, like other mayors, is covered by municipal insurance.
Communities, under a 30-year-old initiative known as Proposition 2 1/2, can raise their tax levy each year by no more than 2.5 percent. In Revere, health care costs are rising at close to 10 percent a year. This fiscal year, the rise in health care expenses alone is projected to consume all of Revere’s $1.5 million allowable tax increase - and then some.
With health costs soaring year after year, communities must ask taxpayers for more money even while providing fewer services. Indeed, local officials say, Proposition 2 1/2 overrides - loathed at kitchen tables - are often attributable, at least in part, to skyrocketing health expenses.
Voters in Weston passed a $1.1 million override in 2006, primarily because of health care costs, which had risen by more than 80 percent in four years.
It proved to be a temporary fix. By 2009 Weston needed more money to cover health care increases, said Donna S. VanderClock, town manager. The town avoided another override after unionized employees agreed to join the state’s health care system, saving about $1.7 million in the first year, VanderClock said.
Beyond the immediate costs, huge liabilities loom. Communities have promised current and future retirees billions in health care subsidies, a burden taxpayers will bear long into the future.
Lynn owes current and future retirees an estimated $450 million in benefits over the course of their lives - five times as much as it takes in annually in taxes, according to estimates by city actuaries. Brookline’s unfunded liability for health care is $320 million; Boston’s is $5.7 billion.
Though some communities, such as Wellesley, Needham, and Boston, have begun putting aside interest-earning money every year to help meet those obligations, the vast majority of municipalities have not. Local officials say they can barely afford to pay today’s health care bills, let alone tomorrow’s.
“We have an unfunded liability of more than $600 million and with no plan to address it,’’ said John Condon, Brockton’s chief financial officer. “Even if we wanted to address it, we don’t have the money for it.’’
‘Very, very rich plans’
Jane Teal said she only wanted to help her hometown when she ran successfully for Lynn City Council in 1995. She served for six years, then stepped down, eventually moving to Florida with her husband. Today, Lynn taxpayers are paying $22,600 a year for the couple’s health care.
“It never crossed my mind that I would get insurance when I ran for office,’’ she said. “But I am glad to have it.’’
Six former city councilors are insured by Everett, plus 12 current ones. In Kingston, 10 part-time elected officials receive town-subsidized health coverage, including four Planning Board members, three Health Board members, and a sewer commissioner, all of whom typically attend two meetings a month.
“That’s the way it’s been done for a long time in Kingston,’’ said Dennis Randall, vice chairman of the Board of Selectmen. “But in tough times, everything should be under review.’’
The extension of benefits to local elected officials is one vivid example of how generous many municipal health care plans are. In fact, national data show that state and local government pay significantly more for health benefits than private employers.
Municipal health care plans were once deemed affordable and have helped cities and towns attract workers to the public sector, where salaries have often been lower. Today, however, they stand out for their comparatively low cost to subscribers and favorable terms.
Taxpayers now underwrite as much as 89 percent of active employees’ premiums in some of the state’s largest cities, while private-sector employers often cover less than 70 percent, local and state data show. As health care expenses have climbed for everyone, taxpayers - already paying a generous share of municipal benefits - have been hit especially hard as those benefits have grown more costly.
The insurance plans many cities and towns offer to employees, retirees, and elected officials also require minimal out-of-pocket expenses, with copayments for office appointments as low as $5. Most have copays for emergency room visits of $25 or less.
By comparison, private-sector copays for office visits are typically at least $20, sometimes more, with $75 copays standard for emergency room visits, according to a survey of Massachusetts employers by the state Division of Health Care Finance and Policy. Unlike most municipal plans, private-sector plans also often force subscribers to pay thousands annually in deductibles before insurers pay anything.
In addition, cities and towns are among the last employers to offer costly indemnity plans, which provide virtually unrestricted medical care. Though phased out in much of the private sector, indemnity plans live on in about a third of Bay State municipalities, according to a 2008 survey by the Massachusetts Municipal Association.
Even with family HMO plans, which typically limit access within a defined network of providers, municipal premiums are, in some cases, 30 percent higher than in the private sector, according to a Globe survey of communities and state data.
Though cities and towns have some control over what benefits they provide, they are limited by state law: Not only does the law subject health benefits to local collective bargaining, the state also imposes certain mandates on municipalities. Communities that offer health care to active workers, for example, must also offer coverage to retirees.
The generous terms of municipal plans compound the problem, because they create incentives for higher use: Low out-of-pocket costs - particularly the minimal copays - encourage subscribers to use more medical services, thus driving up the overall expense to communities.
“When a group uses a high number of services, high premiums result,’’ said Brian Pagliaro, senior vice president of Tufts Health Plan.
Among the communities that pay the highest family premiums are Framingham, which spends $34,075 per family; Waltham, at $30,100; and Everett, at $26,000.
“The municipal plans are rich plans,’’ said Mayor Joseph A. Curtatone of Somerville. “They are very, very rich plans.’’
A boon for retirees
For taxpayers, there is no relief in sight, and for one simple reason: Municipal health benefits are especially good in retirement, and the number of retirees has grown by a steady 2.5 percent per year since 2001, in part because of longer life expectancies.
Under state law, any municipal employee with 10 years service is eligible, in retirement, to get health care benefits for life from age 55, a benefit typically worth hundreds of thousands of dollars per person. (People such as Debski, who have 20 years public service - she worked 12 years in Salem before going to Everett - can immediately qualify if they are terminated, regardless of their age.)
Most municipalities also grant spouses generous health care benefits.
In some cases, retirees and spouses live decades beyond the date of retirement, the Globe found in a review of thousands of pages of municipal retirement records. The widow of a Lynn police officer who retired on disability in his 30s in 1953 is still receiving city-subsidized insurance - 57 years later.
Less than one-quarter of private-sector retirees nationally receive any health care benefits from their former employers, said Roland McDevitt, director of health care research for the consulting firm Towers Watson.
Some cities and towns do not even compel retirees to use Medicare for nonemergency care once they reach 65, in effect leaving millions of dollars in federal subsidies on the table. Instead, retirees choose to stick with the more generous, and more costly, municipal plans.
Communities, under a state law passed in 1991, can force employees to enroll with Medicare, but only if the change is approved by the city council or town meeting. In some places, that has proven politically difficult, given the clout of active and retired municipal workers.
Boston, Lowell, and Lawrence are among those that have yet to adopt the provision. In Boston alone, there are more than 1,500 retirees who are eligible for Medicare but do not take it, costing the city almost $5 million, according to city estimates.
“Getting into Medicare is a tough vote,’’ said Condon, of Brockton. “People don’t like change. And in Brockton, we have more than 700 retirees on the voting rolls.’’
Other municipal retirees don’t sign up for Medicare simply because they are not eligible. Most police, firefighters, and teachers retire before age 65, and are thus too young to be covered by the federal system. That means cities and towns pay as much to insure them - at least until they reach 65 - as they do to insure active employees.
Even when retirees are on Medicare, it is still expensive for municipalities, because state mandates require communities to help cover drug costs and other expenses not paid by the program. By contrast, private-sector retirees are typically on their own.
“In the private sector, when you turn 65, most employers say, ‘Good luck on Medicare,’ ’’ said McDevitt, the national health care consultant. “And that’s it.’’
Tomorrow: How cities, towns, and the state have tried and often failed to solve the problem.
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Sean Murphy can be reached at smurphy@globe.com.
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www.boston.com/news/health/articles/2010/02/28/runaway_health_costs_are_rocking_municipal_budgets/?comments=all#readerComm
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Graphic:
www.boston.com/interactive/graphics/20100301_health/
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Robert McCarthy, president of the Professional Fire Fighters of Massachusetts, an umbrella group for municipal firefighters, said unions aren’t going to give away health care benefits won in tough negotiations over many years. (Pat Greenhouse/ Globe Staff)
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SPECIAL REPORT
"Unions safeguard health benefits: Strapped towns seek law change"
By Sean P. Murphy, Boston Globe Staff, March 1, 2010
Second of two parts
It was the spring of 2009, and Salem Mayor Kim Driscoll, staring at a $1 million shortfall for her city, had an idea: What if she could get employees to pay more for their health care?
Salem had already trimmed 18 positions since 2008, partly to help offset rising municipal health care costs, and Driscoll offered the city’s eight unions a deal: No further layoffs if they agreed to raise, from $5 to $15, certain copayments. She even pledged to pay the first five higher copayments for every worker.
“To my mind, it was a no-brainer,’’ Driscoll said. “But we got turned down by all eight unions. One of them, the police, wouldn’t even discuss it.’’
It is a familiar lament. Mayors, city and town leaders, and state officials, including Governor Deval Patrick, have launched repeated efforts to rein in the expense of providing health care to municipal workers, retirees, and elected officials.
But organized labor, fiercely protective of its members, has largely refused to budge, resisting local efforts to transfer more health care costs to workers and move communities onto the state’s health care plan. State lawmakers have shown little appetite for forcing an overhaul of the system.
The state forbids cities and towns from shifting health care costs to employees without bargaining with unions. It is this aspect of state law that municipal officials say the Legislature must rewrite to address the crisis.
Municipal unions and retiree groups, however, have for decades cultivated close ties on Beacon Hill - spending generously in campaign contributions - and have so far successfully fought major changes.
Nancy O’Donnell, president of the Salem Police Patrolmen’s Association, which represents about 50 patrol officers, said police rejected Driscoll’s proposal for higher copayments because just a year earlier they had reluctantly agreed to her demand that officers pay an additional 5 percent in premiums.
“We didn’t feel it was right to come back for more,’’ she said. “Basically, we had to stand our ground.’’
O’Donnell bristled at the suggestion that employees should bear a greater burden of health care costs. She said it was up to the mayor and other City Hall officials to come up with “creative solutions’’ to the budget crisis, including possible tax increases and better management.
Still, she said, “I really don’t know what the answer is.’’
In recent months, cities and towns from Braintree to North Reading have tried to win similar health care concessions from unions. In Arlington, town officials spent a year at the bargaining table before all unions finally agreed in November to join the state’s health care plan, a move the town said would save as much as $2.5 million annually. But at the last moment, the teachers union backed out, killing the deal.
“It was terribly disappointing and discouraging,’’ said Brian F. Sullivan, town manager. “Without the deal, we’re back to facing a substantial budget deficit.’’
Robert McCarthy, president of the Professional Fire Fighters of Massachusetts, an umbrella group for municipal firefighters, said unions are not about to just give away health care benefits won in tough negotiations over many years.
“It’s not like we’re just sucking this thing dry,’’ he said. “We go by the law. We go by collective bargaining. That’s the system. What are we supposed to do? Give them everything? They have to negotiate. That’s the system.’’
BENCHMARKS SET EARLY
So how did we get to this impasse?
The Legislature first gave cities and towns the authority to provide coverage in the 1950s, but only if approved by the local city council or by town voters.
Many communities initially decided against providing benefits. Those that did give them were limited by law to paying no more than 50 percent of premiums. Across the state, about 10 percent of municipalities - mostly towns - still adhere to that original 50 percent rate, including Hingham, Barnstable, and Hudson, according to a 2008 Massachusetts Municipal Association survey.
Lawmakers gradually gave cities and towns wider discretion in setting the proportion of premiums they could pay. With health insurance historically not a huge budget driver, some municipalities offered, during contract negotiations, to pay a higher percentage in exchange for lesser pay raises.
In 1989, the Legislature established a cap of 90 percent on municipal contributions to HMO premiums. But that cap became a benchmark as many unions fought to increase their benefits.
“Since that time, municipal unions have been aggressively resisting municipal efforts to increase employees’ share of premium cost,’’ said Paul Mulkern, an attorney who specializes in municipal health care law.
The Legislature decades ago also linked health care and pension benefits. Anyone who qualifies for a pension qualifies for health care coverage. But there is one key difference: With pensions, employees have to work decades to earn full retirement benefits; with health care, municipal employees, the moment they reach 10 years of service, are entitled under state law to full benefits when they retire, from age 55.
This has made even relatively low-paying jobs, such as teachers’ aides and school cafeteria workers, highly coveted.
“People understand the value of health care benefits, and there’s great competition to get any job because of the benefits,’’ said Frank J. Zecha, director of the Brookline retirement system.
PUSH FOR CHANGES FALLING SHORT
With great fanfare, Patrick in his 2007 inaugural address invited municipalities into “a new partnership with state government,’’ one that promised to bring long-sought relief from persistent increases in local property taxes.
The Legislature responded by crafting a bill to allow cities and towns to shift their employees and retirees from locally managed health care plans to the state’s much larger, more flexible one, called the Group Insurance Commission. Consolidating all municipal plans into the state GIC would save more than $1 billion a year by 2018, according to estimates by the Massachusetts Taxpayers Foundation and the Boston Municipal Research Bureau, two nonpartisan business-backed watchdog groups.
The GIC saves taxpayers money in two ways, including by requiring employees, retirees, and elected officials to pay more out of pocket.
In contrast to cities and towns, the GIC is free by law to make changes in the health care plans for its 265,000 subscribers without union bargaining. As recently as Feb. 1, the GIC imposed higher copayments to meet a funding shortfall. The GIC, in some cases, requires a $250 copay for hospitalizations; in Boston, subscribers pay nothing.
The GIC also uses its market clout, as the state’s largest purchaser of health care insurance, to get better rates, said Dolores L. Mitchell, the GIC executive director. “We get better service because we are a bigger customer,’’ she said.
But the bill allowing local communities into the state plan contained a major catch. It required a 70 percent vote of a committee of local union representatives before a municipality could join, effectively giving teachers unions, typically the largest, a veto.
After some early interest, unions have shut the door, and the initiative has fallen far short of expectations. In the first year the GIC was offered, 10 municipalities, school districts, and charter schools joined; the second year, there were 15. But then the exodus from local plans ground almost to a halt; only Brookline and Hopedale have signed up to join, as of July 1 of this year.
“The City of Boston would save more than $18 million a year if its employees paid the same copays and deductibles as the state GIC,’’ said Lisa Calise Signori, director of administration and budget for the city. “That’s the entire budget for the Parks Department.’’
Leaders of communities that have joined the GIC say it has made a huge difference. Springfield officials credit the GIC as a major factor in the city’s recent financial turnaround. With Springfield’s finances still shaky, the city’s unions agreed in 2007 to become the first municipality in the GIC. The move lowered annual health care costs by about $7 million.
“The city has definitely saved money,’’ said Linda Parent, Springfield’s city insurance director. “Every study that’s been done shows it.’’
One study, conducted in 2009 by the University of Massachusetts-Boston and Harvard University’s Kennedy School of Government, confirmed Springfield’s savings.
There are two bills pending on Beacon Hill that would give cities and towns the authority to reduce health care benefits without union approval. One was filed by Boston Mayor Thomas M. Menino, the other by the municipal association.
“It’s simple: Health insurance costs are unsustainable over the long term,’’ Menino said. “The more we pay for health insurance, the less we have for city programs.’’
Both bills remain in committee, and proponents are not optimistic they will move forward. A separate measure on Beacon Hill originally included a provision to give communities greater flexibility in setting health care benefits, but it was deemed “too controversial’’ and removed, said state Representative Paul J. Donato, Democrat of Medford, the bill’s lead sponsor.
Meanwhile, even with greater attention in Massachusetts and nationally toward reining in the expense of medical care, no one expects health care costs to stop their rapid rise anytime soon.
“It’s a cataclysmic situation,’’ said Marc Waldman, Wellesley’s treasurer. “Something has to happen.’’
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Sean Murphy can be reached at smurphy@globe.com.
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www.boston.com/news/local/massachusetts/articles/2010/03/01/mass_law_helps_keep_cities_towns_from_cutting_health_costs/?comments=all#readerComm
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"‘Crisis mode’ for municipal health plans"
By Scot Lehigh, Boston Globe Columnist, March 5, 2010
A BUDGETARY iceberg looms ahead, a peril identified by fiscal experts but given insufficient attention by those guiding the ship of state, who fear a dramatic course correction will cause their union passengers to mutiny.
We’re talking here about lavish - and unaffordable - municipal health care plans, a problem that came into sharp focus this week. First, the Globe’s Sean P. Murphy presented a look at the way munificent municipal plans - plans that typically see the locality paying a much greater proportion of premiums and employees making much smaller co-payments than in the private sector - are hampering the ability to provide basic city services.
Then came a Boston Foundation study detailing the annual savings three Massachusetts municipalities could realize if their health insurance costs tracked the state’s: $41 million or more for Boston, at least $3.7 million for Cambridge, and $450,000 or so for Marshfield. Meanwhile, Melrose, which has joined the Group Insurance Commission, the agency that provides health plans for state employees, stands to save more than $1.6 million.
So why don’t more communities join? Simple: Unions don’t want to change a status quo highly favorable to their members - not without compensatory concessions, anyway. And they have a de facto veto.
The solutions here are obvious, though politically difficult: Give municipalities the same authority to design health plans without negotiating every detail that the state now has. And make it easier for them to join the GIC, if they prefer to go that route. Savings would result from a more realistic cost-sharing with local employees and through lower premiums.
“That would be the biggest thing the state can do to help municipalities deal with their enormous fiscal problems,’’ said Michael Widmer, president of the Massachusetts Taxpayers Foundation.
So what do the gubernatorial candidates prescribe to treat that growing municipal malady?
Republican hopeful Charlie Baker says his preferred approach is to let local governments “make the decision on plan design,’’ provided those plans are comparable with GIC offerings. “That would be the backstop’’ to ensure quality coverage, he said. Baker would leave who pays what share of premiums to local negotiations. He’d also let cities and towns join the GIC without a union veto.
Republican rival Christy Mihos favors removing the de facto union veto on joining the GIC and would go even further on plan design by letting cities and towns set the premium split as well. “It is time to get really serious,’’ Mihos declared. “We are in crisis mode.’’
Deval Patrick, the Democratic incumbent, is more incremental. He has filed legislation to reduce from 70 percent to 50 percent the union-committee OK required for a municipality to sign up with the GIC. Patrick says “it is wrong for municipal unions to be inflexible about this because if we stay on the path we’re on, we’re going to be talking about a lot of layoffs and a profound impact on municipal services.’’ But he also insists that unions deserve a say in that decision because “these are things that have been collectively bargained.’’
The governor said he’s told municipal leaders he’d consider legislation to give them enhanced plan-design authority, “but you’ve got to bring us a proposal that includes everybody’s voice who needs to be at the table.’’ Translation: Don’t try to cut the unions out.
The office of Treasurer Tim Cahill, an independent gubernatorial candidate, did not respond to a request for comment.
If Patrick seems tentative, so, too, do legislative leaders. But here, politicians must decide whom they really represent. It’s simply not tenable to ask taxpayers to fund health insurance plans for municipal employees that are much more generous than their own coverage.
Nor is it fair to let those costs squeeze out local services everyone else depends on.
“It is consuming the financial capacity of local governments,’’ says Boston Foundation President Paul Grogan, who notes that Boston is contemplating closing 10 library branches that could be kept open with the savings the city would see if it were part of the GIC.
Further, though unions often claim public sector workers have forgone better salaries or other benefits to obtain or preserve generous health-care plans, US Bureau of Labor Statistics data suggests that Boston-Worcester area public-sector jobs are just as likely to pay more than private sector posts as they are to pay less.
“I think the salaries for the most part have caught up so they are comparable, and yet they still have the better benefits,’’ said Sam Tyler, president of the Boston Municipal Research Bureau.
Campaigns should be about important issues, and this is a big one. So far, the Republican candidates are the ones showing the moxie needed to tackle it head on.
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Scot Lehigh can be reached at lehigh@globe.com.
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www.boston.com/bostonglobe/editorial_opinion/oped/articles/2010/03/05/crisis_mode_for_municipal_health_plans/?comments=all#readerComm
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"A costly proposition?"
The North Adams Transcript, Letters, April 12, 2010
To the Editor:
It’s springtime and a young man or woman’s fancy, at least in Williamstown, turns to, uh, Proposition 2 1Ž2 overrides, debt exclusions and capital outlay expenditure exclusions.
With that in mind, I thought I would share with you the results of a little number crunching I conducted using Williamstown taxation data that I found on the Internet. I am providing this information because I do not think it is readily available to all taxpayers.
In Massachusetts, towns are limited by law as to the amount they can annually increase property taxes by what is known as Proposition 2 1Ž2. Simply said, a town can increase its taxation limit by increasing last year’s limit by .025 and adding that to any new growth that occurred in the previous year.
However, there are three exceptions, or ways that this limit can be further increased: debt exclusion, capital outlay expenditure exclusion and override. The first two of these are temporary increases in the taxation limit and do not permanently increase the tax levying limit. However, they do increase property taxes, often by very significant amounts.
An override is not only a permanent increase in the tax levy limit, the amount of the override that is passed into law increases by an additional 2 1Ž2 percent each and every subsequent year. Thus, a Proposition 2 1Ž2 override is the "gift that keeps on giving" -- forever!
Here is what I discovered:
In 1995, Williamstown’s levy limit was $6.1 million. There were no debt exclusions, capital outlay expenditure exclusions or overrides that inflated the levy limit. From 1996 through 2009, Williamstown taxed citizens and businesses an additional amount above the levy limit via, either debt exclusion or capital outlay expenditure exclusions, by a cumulative amount of $5.2 million.
Williamstown also passed two overrides, one in 1998 and another in 2003, totaling $1,145,266. As of 2009, the effect of these two overrides, alone, causes the town’s levy limit to be $1,377, 536 higher each and every year and growing, providing a bonus tax-limit increase via the miracle of the cumulative effect of Proposition 2 1Ž2 in the annual amount of $232,270. The total cumulative increase in taxation caused by these two overrides alone since 1998 through 2009 has been $10.7 million.
Added together, since 1996, Williamstown had taxed its properties by an additional $15,824,390 than would have been possible had there been no debt exclusions, capital outlay expenditure exclusions or Proposition 2 1Ž2 overrides. Since 1995, Williamstown has more than doubled its levy limit, which in 2009 ballooned up to $12.9 million. On average, the Williamstown levy limit has grown by 8 percent each year!
Is $15.8 million mere "chump change?" I report. You decide.
Ken Swiatek
Williamstown, Massachusetts
April 10, 2010
The writer is a former town selectman.
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"Law has put towns in a quandary"
By Trevor Jones, Berkshire Eagle Staff, May 30, 2011
Proposition 21/2 was heralded as a means to prevent excessive property taxes and force cities and towns to find greater efficiencies when it was enacted in 1980.
But with locked-in expenses rising faster than the rate of inflation and local receipts flagging, the law is forcing a growing number of communities to decide between requesting even more money from cash-strapped voters or cutting services.
The law prevents municipalities from increasing property tax revenue by more than 2.5 percent of the levy limit -- a figure based annually on the total value of property in the community. Once a levy limit is reached, a town seeking to further increase its budget must have a Proposition 21 2 override approved by voters at the ballot box.
Municipalities deciding between overrides or cuts in services will probably be the norm in the years ahead, according to Lenox Town Manager Gregory Federspiel.
"We're there," said Federspiel. "If new growth doesn't kick in and the state continues to level fund or reduce funding, you will see many more attempts at override or you're going to see reductions in services."
So far this year, voters appear to be siding with cuts in services. Overrides have been rejected in Otis, New Marlborough, Sandisfield and Sheffield. Cheshire and North Adams have their own override votes in June.
But budget cuts could still be forestalled. In the towns with rejected overrides, the corresponding regional school districts had their budgets rejected, too. When the districts present their new budget, it's likely each town will hold special elections again seeking overrides.
In Sheffield, if a second override fails, the town's total budget would have to be lower than this year's.
"We would have no choice but to have a special meeting to cut town services," said Sheffield Town Administrator Joseph Kellogg.
Many local towns and cities were able to keep their budgets balanced in the 1990s by offsetting increased expenditures through new growth. But that growth has become almost nonexistent since the start of the recession.
"We're all having the same problem with growth," said Kathy Jacobs, chairwoman of the Sandisfield Finance Committee. "There's a lack of growth and our taxpayers are feeling the pinch on so many different fronts that it's difficult from a town perspective to saddle them with these big tax bills."
Overrides have typically been used to exempt borrowing for purchases like new fire trucks or highway vehicles, or to fund specific programs. The South County overrides, for example, singled out the school budget spending as all or part of their override request.
But a growing number of towns are simply reaching their levy limits as energy and insurance costs outpace inflation and state aid continues to decline.
Lenox is at its levy limit. Federspiel said insurance costs alone absorb the town's levy capacity increase each year. Though the town avoided an override this year, he believes it's inevitable if growth doesn't pick back up.
"In some ways we've dodged bullets and avoided those draconian cuts others have had to make," said Federspiel. "But our days are numbered. It's coming; there's no question in my mind that it's coming."
To reach Trevor Jones: tjones@berkshireeagle.com, or (413) 528-3660.
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"Pittsfield's taxing capacity faces test"
By Jim Therrien, Berkshire Eagle Staff, 4/7/2014
PITTSFIELD -- The city has been advised to consider raising property taxes to create a stabilzation fund because Pittsfield's leeway to tax more without an override vote is rapidly disappearing.
Thomas Scanlon Jr., of the firm Scanlon & Associates of Deerfield, made the suggestion while briefing the City Council's Finance Committee on March 27 on the final city audit for fiscal year 2013.
While the city has been taxing for years below its annual Proposition 212 levy limit -- having $8 million in excess levy capacity this fiscal year -- the 1980 law also specifies a "levy ceiling," which in Pittsfield's case is falling. That's because it is based on a municipality's total property assessed valuation, Scanlon said, and that figure has declined in Pittsfield since the nation's real estate bubble burst about six years ago.
Total property value is now at $3.3 billion, and the Proposition 212 levy ceiling is 2.5 percent of that, or $83.3 million.
Proposition 212 limits local tax hikes to 2.5 percent annually plus growth in the valuation, and for Pittsfield this fiscal year that equals $78.8 million, compared to the amount actually levied in the current budget -- $70.3 million. This means the city could raise another $8 million for an unexpected expense without an override vote, but the levy ceiling has fallen to near the maximum tax limit and apparently is still dropping.
"This is where I would caution you," Scanlon told councilors in his audit presentation. From fiscal 2009 to fiscal 2014, he said, the levy ceiling figure has plummeted from $22 million above the city tax levy maximum to $4.7 million above.
Which means, he said, Pittsfield might be more than $8 million below its annual levy limit, but the ceiling could soon restrict the city's capacity to raise that amount in taxes without an override vote.
"This is something that bond companies look at," Scanlon said, and they consider that taxing capacity a kind of reserve fund that can enhance a municipality's bond rating.
In the extreme, the accountant said, property values could sink to the point where it is difficult to raise taxes even in small percentages. "There are some cities that are in that bind now," he said.
In a telephone interview this week, Scanlon said the falling levy ceiling "is economy-driven" and could resolve itself if the local economy picks up. He added that he doesn't foresee the ceiling for Pittsfield falling enough within two or three years to affect the ability to raise taxes without an override.
But that has happened, he said, in other Massachusetts communities, such as Spring field. In the county, North Adams is nearing the point where its levy ceiling and levy limits could meet, according to information on the state Department of Revenue website.
"As the ceiling approaches the levy limit, you lose the ability to tax [without an override vote]," he said, and bond companies monitor such developments.
The rapid drop in the ceiling over five years in Pittsfield prompted his firm to make the recommendation, Scanlon said, suggesting that adding $1 million or a similiar amount to a stabilzation fund each year might be advisable.
At the moment, Scanlon said, "it's nice that you have some flexibility."
Mayor Daniel L. Bianchi, who did not attend the meeting, said afterward that placing money in a fund "certainly will be looked at" during prep aration of the next budget, but he added that such a decision would be difficult given other likely increases facing the city.
That would mean raising property taxes to create a fund, and none of the Finance Committee members or other officials present at the meeting seemed eager to do that. Councilor at large Barry Clairmont joked after the meeting that the auditor could make such a comment but elected officials wouldn't fare well with voters if they advocated a tax hike.
He did say, however, that the situation is a concern and the city should continue to actively monitor it if property values fail to rise.
* Levy ceiling FY 09 -- $86.3 million
* Levy limit FY 09 -- $64M
* Levy ceiling FY 14 -- $83.6M
* Levy limit FY 14 -- $78.8M
* Levy (actual) FY 14 -- $70.3M
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"Stabilization fund idea has merit"
The Berkshire Eagle, Editorial, 4/8/2014
An auditor’s recommendation that Pittsfield raise property taxes to create a stabilization fund may not be popular with city voters, and it is not the auditor who would court the wrath of voters next year at the polls if such an action is taken. Politics aside, however, city officials have to consider the recommendation seriously.
Thomas Scanlon Jr. of the Deerfield firm Scanlon & Associates raised this idea last week before the City Council’s Finance Committee (Eagle, April 6). The issue involves the city’s declining levy ceiling which governs its ability to raise taxes within the parameters of the Proposition 2-1/2 law of 1980. Pittsfield’s declining property values are lowering the ceiling, and it is the auditor’s recommendation that a stabilization fund be created that Pittsfield would have the option of drawing on as it approaches the 2-1/2 levy limit.
The Berkshire economy being what it is, it is difficult to ask voters to approve a Proposition 2-1/2 override. Pittsfield voters have not been asked to, and the familiar complaints about taxation aside, residents have not been taxed irresponsibly. The city is currently $8 million below its levy limit, but the declining levy ceiling could cause that $8 million buffer to evaporate.
As Mr. Scanlon explained to the finance committee, bond companies regard the taxing capacity as a reserve fund, which keeps a municipality’s bond rating high. A stabilization fund would protect the city against the possibility of a lowered levy ceiling pushing it to the Proposition 21Ž2 limit, which is the case with North Adams, according to state Department of Revenue figures. North Adams, which just lost its hospital and more than 500 jobs, is not in an ideal position to create a stabilization fund, but Pittsfield is at this point. While there remains some flexibility, Pittsfield officials must pursue the heads-up it has received from its auditor.
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Our Opinion: “Taking a look at Proposition 2 1/2"
The Berkshire Eagle, November 29, 2019
The landmark education funding bill that Gov. Charles Baker signed into law on Sunday has generated plenty of well-deserved comment, but the law has a provision that could have considerable impact on the state overall: An analysis of the impact of Proposition 2 1/2 with recommendations for possible changes.
Proposition 2 1/2 became law in 1980 during a wave of anti-tax sentiment in this commonwealth in what was then derided, not entirely without merit, as Taxachusetts. Proposition 2 1/2 prevents cities and towns from increasing taxes by more than 2 1/2 percent a year (new growth is excluded) and caps taxation at 2 1/2 percent of the value of all taxable properties within the municipality.
The economic struggles of communities in the western end of the state, however, have exposed the limitations of Proposition 2 1/2. Boston and the economically thriving towns within the Route 128 belt have no trouble living within its restrictions, but towns in the Berkshires, for example, are having increasing difficulty meeting their financial obligations while staying within the limits of Proposition 2 1/2. City and town officials can request an override of Proposition 2 1/2, but this is a tough sell to voters, as North Adams found out in 2011. And communities up against the levy limit of $25 per $1,000 of a municipality's total property value can't resort to an override vote. This is a worrisome problem for Pittsfield and other county communities where operating budgets keep rising, generated in part by increasing health care costs and higher price tags on capital projects and other improvements, and the approaching ceiling restricts revenue-raising proposals.
Boston Globe business columnist Jon Chesto observes that this dilemma confronting Northampton led to the successful legislative effort to take another look at Proposition 2 1/2. New state Sen. Jo Comerford, a Northampton Democrat, observed that a number of towns in her district shared Northampton's dilemma, prompting her to advocate for the provision in the bill calling for a study of Proposition 2 1/2. Proponents say they are not interested in expanding or eradicating taxation limits but believe regional economic inequities must be factored in.
Citizens for Limited Taxation, the state organization that effectively argued for Proposition 2 1/2's passage, is opposed to this effort and asked Governor Baker to insist that it be dropped from the bill before signing it. He declined to do so, a wise decision. Those objections would have merit if the legislation included changes to Proposition 2 1/2 that had not been adequately vetted with public input but the bill asks only for a study and recommendations for legislators to consider and the public to discuss. Proposition 2 1/2 was passed nearly 40 years ago and Citizens for Limited Taxation should acknowledge the changes that have taken place. By any measure, Massachusetts is no longer Taxachusetts, and economic inequities between rich and poor and east and west require an analysis of Proposition 2 1/2 and its impact on economic health of many communities and the taxpayers within them.
We look forward to the creation of a legislative group to study Proposition 2 1/2 and to its analysis and recommendations. This assessment is necessary and overdue.
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December 16, 2022
To the Editor of The Boston Herald,
I have studied the Libertarian-leaning Citizens for Limited Taxation and their fiscally conservative policies in Massachusetts over many years. I found that the end result of their supply side economics and financial policies led to Beacon Hill lawmakers playing a lot of financial shell games that cost state taxpayers a lot of money, while Boston's corrupt career politicians are able to use Proposition 2.5 to blame local governments and public school districts for Beacon Hill lawmakers' long list of DISSERVICES throughout Massachusetts.
Proposition 2.5 is a flawed 40-year-old state law that municipalities openly mock by playing their own financial shell games. From Beacon Hill to Pittsfield City Hall, the taxpayers are kept in the dark about how and why the government "Cooks the Books". Everytime public advocacy groups push for Sunshine Laws to stop the Creative Public Accounting schemes in state government, a majority of the delegates in the Massachusetts State Legislature always votes down the proposed rules reform measures going back decades.
It is obvious that the corrupt career politicians do not want clean financial books, especially in Boston, because then they wouldn't be able to enrich themselves and their wealthy campaign donors at the public trough to the tune of a little less than $18 billion in state tax breaks and giveaways per fiscal year.
The only way to reform state and local government in Massachusetts is for the people and taxpayers to vote out all of the corrupt career politicians, and then replace them with candidates who will support and codify Sunshine Laws so that we may finally know how and why our tax dollars are being spent.
Jonathan A. Melle
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Local News | "Citizens for Limited Taxation, long-standing fiscal conservatism powerhouse, ‘passes the torch’"
By Grace Zokovitch [gzokovitch@bostonherald.com], The Boston Herald, December 16, 2022
After 48 years as a staple in the state’s watchdog community, Citizens for Limited Taxation officially closed its doors Thursday — finally handing off the anti-taxation mantel.
“It’s time for CLT to close down,” said CLT executive director Chip Ford. “It’s time for me to take my leave. And I’m just thrilled that we have somebody to pass the torch on to, and I am confident the politics team and Mass Fiscal are going to be able to hold the line as CLT has done for almost half a century.”
CLT was founded in 1974 by businessman Edward F. King to organize the push against a ballot question proposing a graduated income tax constitutional amendment. For the fourth time, the amendment was defeated.
The recent $3 billion tax refund was triggered by a CLT law passed in 1986.
On the November 2022 midterm ballot, 48 years later, the sixth iteration of the proposal now called the “Millionaire’s Tax” was finally approved by voters — tidily bookending CLT’s lobbying career.
But in the middle, the organization jumped in on just about every one of the state’s legislative tax fights.
Under executive director Barbara Anderson, CLT successfully lobbied for municipal and real estate tax limits through 1980’s Proposition 2½ and help rally against the unsuccessful fifth graduated income tax ballot question.
Both executive director Barbara Anderson and associate director Chip Faulkner, served at the organization until their deaths at age 73, in 2016 and 2019 respectively.
Having reached 73 years old last month, Chip Ford said, he knew “it was time to find some new blood.”
“I’m not particularly superstitious,” Ford said, “but why tempt the fates? With Paul Craney and his team at MassFiscal so ably advancing the mission this is a good time and place for CLT and me to take our leave.”
Mass Fiscal Alliance — “the new generation,” Ford said — is a decade-old organization advocating for “fiscal responsibility, transparency, and accountability in state government and increased economic opportunity for the people of our Commonwealth,” according to the mission statement.
The organizations have worked together on several campaigns, including the 2019 push against the multi-state Transportation and Climate Initiative proposal and advocating for this year’s tax cap refunds.
“Mass Fiscal Alliance will do everything in its power to continue the legacy of Chip Ford, Chip Faulkner and Barbara Anderson and CLT,” said spokesperson Paul Craney. “We will protect the taxpayers and most notably, we will protect the laws they got passed: the reduction of the 5% income tax; Proposition 2 ½, which protects property owners; and as we all know the wonderful 1986 law Chapter 62F, which rebates taxpayers.”
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REAL ESTATE NEWS: "Should the Proposition 2½ tax limit get the ax?"
Home values in the Commonwealth are cooling off, and commercial real estate is teetering on the brink. The tax revenue has to come from somewhere.
By Cameron Sperance, Boston.com correspondent, May 24, 2023
Is it time to revisit Proposition 2½?
Inflation, rising labor costs, commercial real estate valuations teetering on a cliff — any one of these factors by itself is enough to test the limits of municipal budgets.
But pair all of that with a sharp decline in pandemic relief funding that beefed up state and municipal coffers, and you have a potential tax shortfall catastrophe.
Massachusetts tax revenue in April fell nearly $2.2 billion below the same month in 2022.
While Greater Boston may have been the poster child for commercial real estate’s boom times in the years between the Great Financial Crisis and the pandemic, the region’s office vacancy rate approached 20 percent at the beginning of this year — a 20-year high, the Globe’s Catherine Carlock reported in April.
Higher vacancy rates typically mean landlords float lower rents to woo tenants. This leads to lower property values — and less tax revenue.
“There’s a substantial decline in commercial real estate values underway, impacting the assessed values used for the tax base,” said Thomas J. Jensen, principal and executive director of Boston Appraisal & Consulting, LLC. “Increasing the commercial tax rates will result in a further decrease in assessed value … They can’t get blood from a stone. The gap between residential and commercial tax rates is likely to close.”
The poster child for commercial real estate cratering sits across the country, where a 22-story tower in San Francisco valued at $300 million in 2019 could sell at an 80 percent discount this year, according to The Wall Street Journal.
“We’ve been riding this fantasy for the last five or six years with skyrocketing commercial property value, and that was because the economy was good,” Jensen said. “It’s going to get ugly. It’s not going to be fun for any politician that has to pass a big tax increase.”
Plugging the gap means looking for new income streams — and perhaps revisiting a more-than-40-year-old statute that limits how much property tax local governments can collect. It’s a move that won’t be politically popular and almost certainly put pressure on homeowners across Massachusetts.
‘There will be lots of 2½ overrides in the suburbs.’
LARRY DICARA, real estate attorney and former Boston City Council president
Proposition 2½ is the product of a 1980 statewide ballot initiative after years of hefty inflation in the 1970s. The measure limits how much property tax revenue a community can raise via property taxes. The measure states property tax revenues can’t increase more than 2.5 percent annually without an override majority vote.
But the teetering commercial real estate sector has some wondering whether Prop 2½ is eroding the ground of that budgetary cliff upon which cities and towns across Massachusetts may be sitting.
Communities rely on property tax revenue to pay for a wide range of measures, from government salaries to infrastructure, and wages have soared in recent years amid a highly competitive labor market and global supply chain breakdown.
“If there’s no new construction, then you don’t have that additional revenue and all you’re left with is that 2.5 percent incremental cap,” said Larry DiCara, a real estate attorney and former Boston City Council president. “In an inflationary environment, 2.5 percent is not going to be enough to take care of your municipal wage contracts. It’s just math.”
“There will be lots of 2½ overrides in the suburbs,” DiCara predicted.
Newton voters declined a Prop 2½ override earlier this year that would have gone toward closing a school funding gap, but the city passed them in 2013 and 2002.
Any commercial real estate revenue shortfall also puts more pressure on assessments.
“I could see things like assessors putting more effort into making sure they’re picking up renovations and coming out more immediately after a sale — things of that nature,” said Adam H. Langley, associate director of tax policy at the Lincoln Institute of Land Policy. “They’re just making sure that the assessments are accurate and not lagging and not trying to exaggerate values.”
But not every homeowner in Massachusetts will feel the sting.
“The impact of declining office property values is not going to affect all cities equally,” Langley added. “Certainly, in Massachusetts, I would expect a much greater impact in Boston than in bedroom communities where the commercial property tax base is really small.”
Commercial property tax revenue accounted for a little more than 27 percent of the total tax revenue in Suffolk County (home to Boston, Winthrop, Chelsea, and Revere) in fiscal 2023, according to the Massachusetts Department of Revenue. In Barnstable County, which spans all of Cape Cod, commercial property tax revenue accounted for only about 5.5 percent.
“I’m not saying that there isn’t a shift,” R. Lane Partridge, director of the town of Barnstable’s tax assessor’s office, said of potential declines in commercial property tax revenue. “But the impact is not huge because you’re talking about a very small percentage of the total tax base.”
Send comments to camsperance@gmail.com.
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