Governor Deval Patrick
"With fiscal year waning, Patrick issues plan to close budget gap"
By Matt Viser, Boston Globe Staff, May 7, 2009
Governor Deval Patrick is planning to use $412 million in federal stimulus money and about $461 million from a state reserve account to make sure state government can stay afloat for the next two months.
State revenues have plummeted in recent months, particularly in April, and have caused a $953 shortfall in the current budget. With just two months left in this fiscal year, and 80 percent of the budget already spent, there are few spending items to cut that would close the gap.
Patrick’s proposal would ensure that the state can get through this year, but could also hamstring state budget writers in future years by tapping one-time funding sources.
"We have done our best to implement reforms, cut costs and protect the core services of government that people rely on more than ever in times like these," Patrick said in a statement. "There are no easy or pleasant options.”
The governor’s proposal to use about $461 million in reserve funds, which will need approval from the Legislature, will take the fund down to about $800 million, the lowest level since 2003. The state began this year with about $2.1 billion in that account. Patrick is also proposing to suspend a $100 million planned transfer to the rainy day fund.
Patrick is also planning to use $412 million in federal stimulus funding that is earmarked for education. Using the money involves some accounting tricks: the state will first cut its planned education payment by $412 million but then replenish it using federal stimulus money. Cities and towns will receive the same amount as they expected this year.
The stimulus money is being spent from $813 million that the federal government is giving to Massachusetts to restore state aid to school districts and higher education institutions over fiscal years 2009, 2010, and 2011.
Patrick had previously proposed using $168 million for local school districts that would otherwise fall below state-mandated funding levels, and $162 million to distribute among the state’s public colleges and universities and offset planned student fee hikes. That would leave only $70 million left for the state to spend.
The solutions Patrick is proposing today addresses only part of the problems. State House officials are still trying to stitch together a budget for next year as revenues continue to fall. Economists and fiscal watchdogs warn that this year is only the first in a four-year cycle that will put strains on the state budget and could increase calls for new taxes.
The governor and House lawmakers originally built their budgets on an estimate that the state would receive $19.5 billion in revenues next year. The House, Senate, and governor agreed this week to lower that estimate to $18 billion.
"There is no area of state government that will be immune to cuts in the budget," Senator Steven C. Panagiotakos, chairman of Senate Ways and Means, said yesterday in a statement. "We all have to share in the pain. This, unfortunately, is the stark reality we are facing."
Matt Viser can be reached at email@example.com.
"Governor Deval Patrick: Use savings, stimulus cash to close gap"
By Associated Press, Thursday, May 7, 2009, www.bostonherald.com - Local Politics
Gov. Deval Patrick is filing legislation to close an estimated $953 million budget hole using in part a mix of state savings and federal stimulus dollars.
Expected revenues for the fiscal year that ends on June 30 have steadily collapsed, leaving the state scrambling to make ends meet. Tax collections in April came in nearly $1 billion under April of 2008.
With less than two months left to the fiscal year, Patrick said he had little choice other than to dip once again into the state’s "rainy day" savings account for $461 million — which would bring the account under $1 billion.
Patrick is also proposing using $412 million in federal stimulus dollars.
Patrick said the action will help avoid last-minute cuts to state education aid.
"State pegs fiscal year 2010 revenues at $17.9B"
By Associated Press, Wednesday, May 6, 2009, www.bostonherald.com - Local Politics
Massachusetts’ shrinking budget just keeps getting smaller.
Leaders from the House, Senate and Patrick administration on Wednesday released a new estimate for how much state can expect to collect during the fiscal year beginning July 1, 2009.
They peg the revenue at $17.9 billion. That’s more than $1.5 billion lower than the estimate in January.
State leaders blame rapidly deteriorating tax collections and rising unemployment.
The Senate, which releases its version of the budget next week, will use the lower figure.
That means they way be making even deeper cuts than the House, which approved its version of the budget last week using the higher estimate.
It could also put pressure on senators to adopt some kind of tax increase.
"Officials take insurance fight to Boston"
By Michael Holtzman, Herald News Staff Reporter (News from the SouthCoast), May 12, 2009
Fall River — The city continues to battle for health insurance savings, with Mayor Robert Correia and City Councilor Cathy Ann Viveiros offering different perspectives after testifying on Beacon Hill Tuesday.
Correia said the city could find relief from rising insurance costs if the Legislature allowed municipalities to remove collective bargaining from design of health plans under certain conditions.
“We want the same latitude the state has itself with insurance,” Correia said after returning from his testimony before the Joint Committee on Municipalities and Regional Government.
“We’re looking for concessions so we can survive,” Correia said. He expected the Senate budget issued Wednesday would contain $10 million less in local aid next year for Fall River.
He said the city wants to offset a 6.5 percent, or $2.3 million, hike in insurance costs next year. A proposed replacement of the top tier Blue Cross Master Health Plus by Blue Care Elect would offset most of the that increase.
The proposal Correia supported, issued by the Massachusetts Municipal Association, would allow the city to design a health plan “that is no less in benefits to the GIC (the state Group Insurance Commission plan) and do impact bargaining.”
Correia said if there was no agreement between the city and its unions, under the MMA proposal, “the city can implement the plan and the Legislature can set parameters (on) co-payments, deductibles and tiered networks.
“Currently, any changes in health insurance must be approved by the city’s 11 bargaining units,” Correia said.
He did not seem to rule out using the carrier that issued this year a competitive bid lower than Blue Cross’ bid, United Healthcare of New England.
“If the plan design is approved by the state, the city will offer city workers the health insurance plan that provides employees with the same or similar level of benefits at the lowest possible cost to the city” Correia said.
The MMA’s proposal differs from options the joint committee is considering, including a report from the Special Commission on Municipal Relief and the governor’s Municipal Partnership Act II.
Gov. Deval Patrick’s plan would require communities to match the GIC plan costs or face deductions in local aid.
The Special Commission report recommends binding arbitration if municipalities and unions cannot reach an agreement.
Both Correia and Viveiros, who recently announced her bid for the mayor's office, said they oppose that stipulation, but for different reasons.
Correia said the city needs a balance between extraordinary costs “put on the backs of municipal workers” or “put on the backs of taxpayers.”
“My feeling was that what they were doing was just mandating procedures and penalties upon local communities,” Viveiros said of the state’s approach, “and taking a punitive approach to what is really a complex and costly necessity.”
She said, “Health insurance is a local issue to be negotiated in good faith with municipal employees, retirees and taxpayers in mind.
“First the state threatens to give us less money, and at the same time tries to tell us how to spend it. That’s not right,” Viveiros said.
Correia also had angry words for the state, noting that its Chapter 70 funding would be level-funded under current proposals, while the city’s told to pay $4.5 million more for education next year during equally hard times.
“They’re holding me to a different standard, and that’s unfair. That’s wrong,” he said.
Correia was asked how with the city facing at least $9 million more for expenses next year, by his estimate, and a $10 million state cutback would see an impact from $2 million saved in health insurance costs.
“It’s a damn good beginning,” he said.
Correia also disputed contentions by the union’s chairman of the Insurance Advisory Committee, Fire Lt. Michael Coogan, that their accepting a new Blue Cross option would save the city $2 million.
Correia said it was like the city had a $1,000 expense it could not afford, and the union offered reductions to save $600, “then asked for $200 back.”
Coogan and the IAC asked if the city would bring back any of the 133 laid-off workers, including 45 firefighters, 33 police and 20 DPW workers, and was told “there are no savings.”
Correia and City Administrator Adam W. Chapdelaine were reminded a 6.5 percent insurance increase has been typical many years and did not result in layoffs.
“You’re right, it does go up every year,” Chapdelaine said, “but we don’t have our state aid cut by millions and millions every year.”
E-mail Michael Holtzman at firstname.lastname@example.org.
The Boston Globe, Op-Ed
DAVID G. TUERCK
"The state's Chicken Little economics"
By David G. Tuerck, May 14, 2009
'IF IT BLEEDS, it leads." Or so we see from headlines prompted by a recent hearing on state revenues conducted by the Senate Committee on Ways and Means. "Worst fiscal crisis in state's history," said one headline. Declining revenues pose a "catastrophe" for the state, according to one expert. We're in for "the worst single year in the state's history," he said.
The fiscal frenzy has grown so strong that members of Governor Patrick's own party have turned against him for refusing to go along with a tax increase aimed at closing the supposed budget "gap." Senate President Therese Murray calls him "disingenuous."
So, does the current situation justify this kind of invective?
One way to gain some perspective is to look back to how a different governor faced the same problem. According to a Globe article of Oct. 15, 1994, the budget "was a chronic source of anxiety for taxpayers" and "a ticking time bomb on the verge of wrecking havoc with Massachusetts's economy" during most of Governor William F. Weld's first term in office. That period of fiscal anxiety came to an end, however, with the FY 1995 budget, which was, according to the article, "in vintage ways, a vital Weld achievement," aided by "original thinking" and "good fortune." Members of both parties praised the governor, who went on to easy reelection, for this fiscal accomplishment.
Now fast-forward to the 2010 budget. How much, we might ask, would the state have to spend in 2010 in order to achieve what was seen as sound budgeting just 15 years ago? The answer, after adjusting for inflation and population growth, is $26.78 billion.
Next let's ask how much the state could budget for 2010, given the existing revenue outlook. If we take the average of the highest and the lowest forecasts offered at the Senate hearing, we get $18.35 billion in state tax revenue. Combining this revenue with various non-tax revenues already figured on by Governor Patrick in crafting his budget, the state could spend $26.79 billion in 2010, $10 million more than it would need in order to match what Weld accomplished with his vaunted 1995 budget.
True, the state has come to spend more generously in recent years, but a return to the standards of 1995 can hardly be seen as "catastrophic." To argue otherwise is to engage in Chicken Little economics. Patrick, who has been faulted for not practicing this kind of economics, opposes a bill that would raise the state sales tax from 5 to 6.25 percent. Supporters claim that the tax increase would yield $900 million in badly needed new revenue.
On this matter, it is the governor who is right and the bill's sponsors who are being "disingenuous." For one thing, the $900 million estimate apparently ignores the fact that sales taxes drive business to other states and to the Internet. Under the new law, a TV set that could be bought for $1,000 in New Hampshire will cost $1,062.50 in Massachusetts, just another reason to drive an hour to make a big purchase and to stock up, along the way, on liquor, cigarettes, and other items.
The proposed tax hike will have negative consequences for the state economy. We predict a loss of 12,666 private-sector jobs, as stores in Lawrence and Lowell lose business to stores in Salem and Nashua. And because unemployed workers stop paying income taxes, the state will lose revenue from that source even as it gains revenue from the sales tax. In fact, the higher sales tax can be expected to yield only about $674 million in new revenue when losses in other revenues are accounted for.
Before the Legislature decides to inflict a new burden on state taxpayers, retailers, and workers, it would do well to ask just why it wants to enact a broad-based tax increase in the first place. A 25 percent increase in the sales tax would be a panicky response to what was seen just a few years ago as an exercise not in fiscal ruin but in fiscal dexterity.
David G. Tuerck is executive director of the Beacon Hill Institute and chairman and professor of economics at Suffolk University.
Massachusetts Governor Deval Patrick
"Gov: State government cuts won’t cover shortfall"
By Thomas Grillo, Friday, May 15, 2009, www.bostonherald.com - Business & Markets
Gov. Deval Patrick has a message for anyone who thinks that trimming state government will solve the fiscal crisis: No Way.
“We could fire every state employee and we’d still have a $1 billion hole in the budget,” Patrick said. “We cannot cut our way to a solution.”
Patrick has proposed $1.5 billion in cuts from the state’s $30 billion budget and an increase in taxes.
Amid the biggest fiscal crisis in years, Senate and House lawmakers have proposed budgets that deal with dwindling revenues through a combination of deep cuts and tax hikes.
Michael Widmer, executive director at the business-funded Massachusetts Taxpayers Association, said the shortfall in revenues for fiscal year 2010 is about $6 billion. “The governor is right when he says the elimination of state workers will not solve this crisis,” he said.
The state [government] employs more than 85,000 workers at an annual cost of $5 billion.
There are three ways to find savings: budget cuts, new taxes and reserves, Widmer said. “Cuts have to made across the board and no program can be spared,” he added.
While the association has not taken a position on tax hikes, Widmer said the Massachusetts sales tax is “very low” compared to other states.
“If we’re going to turn to a broad-based tax, that would be the one to do,” he said. “But with the revenue shortfall, an additional $875 million in cuts will still have to be made even with a sales tax increase.”
Noah Berger, executive director of the Massachusetts Budget and Policy Center, a think tank, said Bay State residents spend a lower percentage of income on taxes than two-thirds of the states.
“It’s a question of what quality of schools, public safety and access to health care you want,” he said. “Those are the trade-offs and there are no easy choices.”
Patrick continued to stress that, before he asks the public to pay more, he insists that the Legislature enact reforms.
“There will be pain and the pain will take more than one form,” he said. “But we can’t ask taxpayers to contribute to the status quo; we need real pension, ethics and transportation reform - not just legislation with the word ‘reform’ in the title.”
But Barbara Anderson, executive director of Citizens for Limited Taxation, said while she sympathizes with the governor’s efforts to force reform on the Legislature, she rejected calls for higher taxes.
“We fail to see why it’s the taxpayer’s responsibility to clean up the mess that the Legislature has created over decades,” she said.
Anderson is convinced the only way to solve the state’s fiscal crisis is to replace the elected leaders on Beacon Hill with people who will spend less than they take in.
“If we throw enough of them out of office so that they begin to fear the voters again,” she said. “We cannot roll over and give them a tax increase under any circumstance.”
"A tax hike primer"
By By Matt Viser, Boston Globe Staff, May 17, 2009
The debate over raising taxes in Massachusetts has featured twists, turns, and plenty of limbo-like contortions by the state's political leaders. And it's not over yet, as they continue to hunt for a politically palatable way to solve a budget crisis of historic proportions.
Governor Deval Patrick initially opposed increasing the gas tax, then became its chief advocate. He "ruled out" increasing the sales tax, but three weeks later said he was "not adamantly against" it.
House lawmakers pushed a gas tax increase in December, then panned it several months later in favor of the sales tax.
Senators for months have demurred on most tax discussions, but now seem ready to embrace a sales tax increase.
The one clear signal is that the taxes you pay probably will go up, in one form or another. Virtually every tax except the income tax has been seriously discussed, but there's been little agreement over which taxes to raise and how much to raise them.
Patrick has proposed taxes on items from water bottles to candy, and he also wants a 19-cent-per-gallon jump in the gasoline tax.
But so far, what's most likely to rise is the sales tax, which would increase for the first time in more than three decades.
The House three weeks ago approved, by a veto-proof margin, a plan to increase the sales tax from 5 percent to 6.25 percent. The Senate this week will debate whether to follow their plan or go even further.
It would then be up to the governor to decide whether to sign such a bill or to veto a tax hike approved by his fellow Democrats.
"Veto urged as resistance to tax hike grows"
By Hillary Chabot, Thursday, May 21, 2009, www.bostonherald.com - Local Politics
A veteran lawmaker who said his region near the New Hampshire border would be decimated by the 25 percent sales tax hike believes Gov. Deval Patrick - who vowed to veto the increase - still has time to erode a thin veto-proof majority.
“This governor is a great politician. He could change it if he wants to,” said Rep. James R. Miceli (D-Wilmington) of the vote by which the tax hike passed in the House. “That vote isn’t as solid as it appears to be.”
Patrick went on the offensive again yesterday, calling Tuesday’s vote in the state Senate to hike the sales and booze taxes a slap in the face to working-class families.
“To ask them to dig deeper into their pockets for higher taxes without first adopting meaningful reforms is thumbing our nose at them,” Patrick said in a statement.
Patrick met with a group of House lawmakers shortly after they passed the 25 percent sales tax hike in April by a veto-proof margin of two votes, and indicated to reporters the votes were soft. Patrick would need only three votes to uphold his veto in the Senate.
The Senate approved a total of nearly $1 billion in tax hikes Tuesday night (5/19/2009), increasing sales tax to 6.25 percent on the dollar, removing the sales tax exemption on alcohol, and allowing cities and towns to increase meals and hotels taxes by 2 percent.
Outraged small businesses and tax watchdogs promised yesterday they’ll be heard on the hikes, be it at a rally planned for the State House steps today or at the voting booth in November.
“It’s completely out of control,” said Barbara Anderson, executive director of Citizens for Limited Taxation. “The only thing they care about is not getting re-elected. We have to throw them out.”
Corie Whalen, who organized the conservative anti-tax Tea Party in Boston last month (April 2009), invited anti-tax citizens to gather at the State House starting at 11 a.m. today (5/21/2009).
“They’re misleading people when they act like necessary cuts have to be made when they haven’t worked to clear up real waste,” Whalen said.
Jeff Golden, a buyer at Downtown Wine & Spirits in Somerville, said the vote to remove the sales tax exemption from liquor at package stores means many smaller shops would close their doors.
“It’s frustrating for a smaller place. We’re operating on the margins already,” said Golden. “We’re going to have a hard time convincing people to come here when they can get it for less in New Hampshire.”
"Barbara Anderson: Hold onto your wallets, it's going to be an expensive ride"
salemnews.com - Op-Ed - May 21, 2009
Governor Deval Patrick, in an effort to let us know how serious the budget crisis is, says that "if we fired every single state employee, we'd still have a billion-dollar hole."
Of course we would. Many of those employees would go out on instant pensions. Others would collect unemployment, have state-subsidized health insurance, or get a job at one of the independent authorities where they would start to accrue bigger pensions like those available at the MBTA after 23 years.
Would we still have a $28-billion state budget to go with the billion-dollar budget hole? Who would be running it and spending the money? Governor, what's your point? That payroll costs aren't much of the problem?
Can we stop being silly now?
At least Patrick's sticking to his demand for "reform before revenues." Unfortunately, the Legislature is sticking to its resistance to reform.
As various Democrats have said: "We can't reform our way out of this crisis."
Translation: "Let's go directly to the revenues."
So the Senate opened its budget debate by passing a 25-percent sales tax hike and local option taxes. Maybe it will get to reforms after my column deadline. Darn, it's hard to write while holding my breath.
Of course, what they talk about is "a blended approach," which means: Some cuts, especially to the most vulnerable recipients of state services, so they can be used to make taxpayers feel guilty about resisting higher taxes; some new money from the federal government's stimulus package, money that's being charged to future generations in an enhanced national debt; and lots of new taxes and fees, as far into the future as we can see.
Let me offer a different "blended approach": Massachusetts taxpayers will continue to pay existing taxes — already among the highest per capita in the nation — as they have for decades; and legislators will set priorities that put services to seriously handicapped citizens ahead of their and the other public employees' benefits.
Pretend you have $28 billion to spend, roughly the same amount you had last year. To keep up with minimal inflation and the extraordinary cost of state-subsidized health insurance, which would you choose:
a.) cutting services to the mentally ill, mentally retarded, and physically handicapped; or
b.) cutting benefits to public employee unions and legislators that exceed the average benefits of their employers, the taxpayers?
If you get a speeding ticket, you must also pay a $50 surcharge that the ticket says is applied to the "Head Injury Treatment Services Trust Fund." But WBZ-TV reported last week that the Legislature voted a few years ago to put half that money into the General Fund where it's spent on whatever the Legislature considers more important than helping people with head injuries.
Here's another recurring budget debate phrase: "It's not our fault, this is a national economic problem."
Translation: the federal government has been spending beyond its sustainable means, too.
One of the items driving everyone's budget crisis is the cost of health insurance. A few years ago, Massachusetts passed a health insurance reform law that was sold as an affordable way to provide basic health insurance to everyone. Unable to leave well enough alone, legislators recently increased the cost with a mandated provision for prescription drugs. Now the new law is far less affordable.
Meanwhile, the federal government, already trillions of dollars in debt, is planning to emulate the failing Massachusetts experiment.
Moving right along: "It's not just a state and a national crisis, it's worldwide!"
Ask yourself: Is the answer to a scary worldwide crisis a tax assault on the private sector that will have to somehow recover to provide the jobs that provide all the revenue for all government services?
Senate Republicans have offered a package of reforms that includes a statewide wage and hiring freeze for government employees not critical to public safety, repealing corporate welfare and eliminating that prescription-drug mandate.
The Pioneer Institute and Beacon Hill Institute have been proposing savings from various reforms for years. Newspaper editorials list some, investigative reporters find more; pension scams are all the rage this year.
But instead of addressing these, the Senate has joined the House in voting to increase the sales tax; both votes are presently veto-proof. Without reforms, this is only the beginning of tax increases, and the beginning of what Paul Nicolai, former chairman of Citizens for Limited Taxation, calls the Commonwealth Death Watch. He cites economists who warn that Massachusetts has several years of recession ahead of it, and predicts that a gas-tax increase, supported by many elements of the business community to address infrastructure needs, will have to be used for operating budgets instead, leaving the infrastructure to deteriorate.
We can't hold our breath hoping for state government to become responsible. All we taxpayers can do is make major purchases before July 1, when the sales-tax increase goes into effect, and wait for the November 2010 election. If we fire every tax-hiking state legislator we'll still have a budget hole, but maybe a better chance to keep the entire commonwealth from falling into it.
Barbara Anderson, a Marblehead resident and executive director of Citizens for Limited Taxation, is a regular Viewpoint columnist.
"Democratic infighting escalates: Murray calls governor 'irrelevant'"
By Matt Viser, Boston Globe Staff, May 22, 2009
Senate President Therese Murray escalated tensions among leading Democrats on Beacon Hill this week, calling Governor Deval Patrick "irrelevant" during a radio interview and saying she wished he would be more conciliatory with the Legislature.
Patrick, meanwhile, continued yesterday to stick by his pledge to veto a sales tax increase unless it is preceded by a variety of reforms - a position that is at the root of his deteriorating relationship with lawmakers.
"Unfortunately he's kind of making himself irrelevant at this point in the game, which is too bad, because we really need him," Murray said Wednesday night on Dan Rea's NightSide show on WBZ radio. "We haven't had a Democratic governor in 16 years. This makes no sense to me. We need to work together."
"I'm very surprised," she added, before citing Patrick's 2006 gubernatorial campaign theme. "And I want to get back to his, 'Together we can.' "
The comments are another example of the infighting among top Massachusetts Democrats, even as they attempt to navigate a budget crisis of historic proportions, an ailing transportation network, and a raft of ethics and pension-abuse scandals.
"This ought not be so hard," Patrick said yesterday, when asked to respond to Murray's comments. "And it's not about anything personal. All I'm asking is that we change a few things and that we change them in ways that I care about, and I think the public cares about."
Patrick stood by his threat to veto the sales tax passed by House and Senate lawmakers, by veto-proof margins in both chambers, unless they first approve changes on ethics, pension laws, and transportation that he finds acceptable.
"I will support the sales tax, and have said so all along, provided we deliver on the reforms," Patrick told reporters after swearing in a judge at the John Adams Courthouse yesterday. "Doing the right thing isn't that difficult. Everybody knows what the right thing is to do; now let's get that done before the budget comes to me next month."
When asked if he would veto the entire budget or just the sales tax increase, he said, "I'm going to take that part when we come to it.
"But there's no good reasons why we can't get these reforms done," Patrick said.
The Senate, following a similar move by the House, voted this week to raise the sales tax from 5 percent to 6.25 percent, a 25 percent increase.
Yesterday Patrick highlighted several changes he wants lawmakers to make in the current legislation.
On pension reform, Patrick wants the changes to apply to both current and future employees, while the House has maintained that it should only apply to future employees.
On ethics, he wants the overhaul of state ethics laws to strengthen the State Ethics Commission; the Senate version of the bill would weaken the commission.
Patrick also said he would keep pushing for a 19-cent-per-gallon increase in the state's gas tax, which lawmakers have dismissed.
"I still think it's the best way," Patrick said.
Patrick's nuanced position on the sales tax has drawn criticism from lawmakers that he is distancing himself from the Legislature as he prepares a likely 2010 reelection bid.
"The Legislature, to their credit, has done what they believe is the hard work now by taking the votes on the budget and on the sales tax," Patrick said. "Now let's do what I think is the easy stuff and deliver some real and lasting reforms."
"It's not complicated," he added. "They know what the right thing is to get done."
Matt Viser can be reached at email@example.com.
"Not enough from the Hill"
By Adrian Walker, Boston Globe Columnist, May 22, 2009
Our legislative leaders are congratulating themselves for demonstrating the courage not to raise the state's income tax in a time of fiscal crisis.
But they can demonstrate some actual guts by deciding to police themselves.
"Reform before revenue" always sounded suspiciously like an empty slogan, and thus far it is.
But as the debate over the budget begins to wind down - budget debates without any money tend to go a lot faster - our legislative leaders are going to have to decide what reform, if any, they actually believe in.
Some people find the early results encouraging, but I'm finding it hard to get enthused. The Senate notion of ethics reform takes a harder line than current law on campaign finance violations but seeks to gut the State Ethics Commission. The House is in favor of pension reform, as long as it isn't the kind that would lower the pensions of current members. The overriding problem, as always, is that enforcement decisions are being made by the people who will have to live with them.
The Senate, at least initially, won the battle of the headlines. It promised a tough overhaul of campaign finance regulations, though on closer inspection a lot of the overhaul was a direct attack at the governor's fund-raising operation.
In fact, there was a lot less to the Senate bill than the initial reaction might have led one to believe. Its proposed changes would have been bad for the Ethics Commission, a favorite Senate target dating back to the dark days of former Senate president William M. Bulger. Some of the commission's core functions would have been transferred to the Division of Administrative Law Appeals, an agency plagued with a long backlog and chronic underfunding. It is one of the last agencies to which anyone should assign new duties, at least new duties one really wants done.
Pamela Wilmot, executive director of Common Cause Massachusetts, said yesterday that she believes senators were surprised by the negative reaction to their brave effort at reform, especially the part involving the Division of Administrative Law Appeals.
"To give them the benefit of a doubt, I don't think they realized what an impaired agency it is," Wilmot said. "It is a very impaired agency, both in theory and in practice. It is so bad in practice that you don't even need to worry about what's wrong with it in theory."
This is the Senate president's vision of reform.
The House has been much better on ethics reform. But before lawmakers take any bows, we should note that House leadership has been lukewarm on major pension reform. That's because many of the people who would be affected are constituents, even cousins, of lawmakers. And it's because no one wants to close a loophole they might need someday.
Of course, everyone says they are for reform. David Falcone, spokesman for Senate President Therese Murray, said yesterday that the Senate is firmly committed to a better Beacon Hill.
"Our bill was passed unanimously," Falcone said. "That speaks to the fact that it is a strong bill."
The good news is that voter anger has created an environment in which some of the longtime excesses of the State House can finally be attacked. A bribery indictment, continuing revelations of pension and other ethical abuses, and the specter of higher taxes have led the public to pay attention to shenanigans that normally pass under the radar. This is all to the good.
But if your elected officials really believe what they say they do, here is what will emerge: ethics laws that curtail the cute fund-raising practices that have given lobbyists and companies too much power, stronger tools for enforcement, and an end to the pension rip-offs that are costing the rest of us millions of dollars.
Each house supports some of this, but not all of it. That isn't good enough, or even close.
Adrian Walker is a Globe columnist. He can be reached at firstname.lastname@example.org.
"Lawmakers still haven't heard us"
By Scot Lehigh, Boston Globe Columnist, May 22, 2009
WANT TO SEE meaningful reform in Massachusetts? Then pick up the phone and call your legislators.
Perhaps you've heard "reform before revenue" - and thought it actually meant something. After all, the Senate's slogan has such a nifty ring to it that Governor Patrick has adopted the idea himself.
So maybe you believed that before they raised taxes, Beacon Hill leaders would eliminate public pension pig-out of the sort that most workers, be they private- or public-sector employees, will never see.
And perhaps you figured lawmakers would address other inefficient, antiquated, unfair arrangements before they plucked more money from your pocket. Maybe you even thought they'd first clean up the way business is done on Beacon Hill.
Well, forewarned is forearmed. There's a real risk that we're on our way to higher taxes without true reform. After all, the Senate has just followed the House's lead, voting to hike the sales tax to 6.25 percent - and by a margin big enough to override a gubernatorial veto.
With the Senate tax vote, the message is clear: Legislative leaders have the numbers to do what they want.
And make no mistake, that's not good news.
"This is the moment," says Mike Widmer, president of the Massachusetts Taxpayers Foundation. "If there aren't meaningful reforms during this time of fiscal crisis, there never will be any reforms."
Widmer's exactly right about that. If not now, when?
Yes, the state budget needs more revenue. But we also need real change, particularly since the budget crisis promises to last for several years. If we don't fix enduring problems now, future challenges will only be worse.
Still, there are plenty of interests who think the old ways are just fine - and who are digging in against changes. One small example: Yesterday, votes for a proposed state wage-and-hiring freeze for the next fiscal year melted away after the unions weighed in. "At least 10 of the members told me they were going to vote for it and didn't," says Senate minority leader Richard Tisei.
On pensions, if the Legislature has its way, it would be a quarter century before an MBTA employee actually had to be 55 and to have worked for the T for 25 years before receiving a pension. The House, in particular, has made a mockery of the governor's pension reforms, applying many important changes only to future employees; though some not-yet-elected lawmaker wouldn't be able to leave office after 20 years and start collecting an early pension, 93 current members of the Legislature could still qualify to do just that.
As with pensions, the final ethics legislation isn't yet done, but new conversation-recording powers for state investigators are gone. So too is the provision that would make it a criminal offense for public officials to take gifts worth more than $50 even when those gifts aren't aimed at influencing an official act. Further, if the Senate has its way, the State Ethics Commission's powers will be weakened.
To his credit, Patrick has repeatedly threatened to veto the sales tax increase if the Legislature doesn't first deliver substantial pension and ethics reform, plus a transportation bill. But with the Legislature's two-thirds pro-tax majorities, such a veto would be little but a symbolic gesture - unless, that is, the governor wages a determined, high-profile public fight against his fellow Democrats.
Moreover, Patrick's reforms are only part of what really needs to be done. Last week, I outlined other measures that could lead to big saving. One is granting cities and towns the unrestricted right to join the state's Group Insurance Commission or the same powers of health-insurance plan design the GIC has.
Another is repealing the Pacheco law, which makes it difficult to contract with private companies for services.
The taxpayers foundation, meanwhile, has a package of other interesting proposals.
To date, however, the Legislature has shown little appetite for any of that. (Although senators voted to loosen the Pacheco law somewhat yesterday, a Republican amendment to repeal it outright lost handily.)
So if you want real reform before revenue, it's time to pick up the phone.
Scot Lehigh can be reached at email@example.com.
The Lively World
"For pols, it's about the perks"
By Milton Bass, The Berkshire Eagle, Op-Ed, Sunday, May 31, 2009
Think how frustrating life would be if we didn't have politicians. They allow us to vent our frustrations and blow our steam off even if they have nothing to do with what is bothering us. No matter what has gone wrong, it is so easy to say "Damn politicians" and immediately feel a bit better.
Of course, they have earned this capability by actions that have put them in a class by themselves. There have been too many misfits, stupids and crooks elected to office since the Australopithecuses first decided somebody had to institute order in the cave before the entire barrel of apples rotted.
What has been going on in Boston the past few months between Gov. Deval Patrick and the Democratic leaders of the Legislature would be funny if it weren't so frustrating. The governor wants the Legislature to shape up and reframe the florid pensions and perks they have granted themselves over the years. He also is campaigning for stricter ethics laws to prevent both male and female legislators from stuffing cash money under their shirts. The president of the Senate, Therese Murray, says the governor's desires are "irrelevant." The governor was speaking on behalf of the citizens of the whole state; Murray was standing up for her gang.
In 1866, Judge Gideon J. Tucker declared, "No man's life, liberty or property are safe while the legislature is in session." Nowadays that also applies to women.
Talk show host Neal Boortz concluded, "If there were any people safe to criticize, they'd be politicians and child molesters, doncha' think?"
The pension boondoggles, containing self-serving clauses inserted into bills years before they become applicable to legislators' personal welfare, have been as ingenious as they are spurious, and this is the kind of thing the governor wants to abolish. So do I. How about you?
The U.S. Congress has taken very good care of itself over the years with both salaries and perks. Congressmen and senators earn good wages, have very healthy health benefits and comfortable pensions. Their campaigns are mostly financed by lobbyists and corporations who all have axes to grind.
As Mark Twain noted, "We have the best Congress money can buy." Neal Boortz summed it up thusly: "It is the rare politician — maybe even non-existent — who will admit this, but number one on the politicians to-do list is always to get re-elected. Nothing else comes close. Staying in power is job number one."
In frustration, voters have at times imposed term limits for various political bodies, but this also has its drawbacks in that you are dumping experience, even though experience is too often the problem.
Many of the world's governments are so riddled with corruption that they make our feeble attempts look almost palatable. Right now the Parliament of Great Britain is going through contortions because several members were caught with their illegal expenses headlined in the tabloids. The list for the various members that were caught out includes charging the exchequer for horse manure, pornographic movies, a duck pond, and the most notorious one of all, having a moat cleaned.
Parliament made the mistake of passing a liberal freedom of information act, giving journalists a crack at the government expense vouchers for the first time. We had the eight-year experience of the Bush administration stamping lunch menus Top Secret and getting away with it.
There had been hope that President Obama would open the floodgates on all the ridiculous secrecy but as usual he is tipping his cards up just enough to see what possibilities might be available.
So there we have it, with both state and federal legislative bodies whose main concern is primarily their own present welfare and future comfort. We want them to do what is best for the people who put them in office and they sometimes do. But too often they reach the point where they consider themselves above both the law and the uninformed public.
There is a poem by Hilaire Beloc that fits the present situation:
"Here richly, with ridiculous display,
The Politician's Corpse was laid away.
While all of his acquaintance Sneered and slanged,
I wept for I had longed To see him hanged."
Milton Bass is a regular Eagle contributor.
Column: "Legislators know we'll continue to pay and pay"
Taylor Armerding - www.eagletribune.com - May 31, 2009
Here's the quote of the week — maybe of the month — from your top elected leader in Massachusetts.
This is Gov. Deval Patrick, still waving the laughable "reform before revenue" banner at the Statehouse: "If we don't get the reforms, I'm not going to support the new revenue, and in the absence of the new revenue, then we don't have a choice but to increase the tolls."
I'll offer a translation: "Reform is irrelevant. In the absence of new revenue, we don't have a choice but to raise new revenue." Which is to say, we're going to get the money we want out of you one way or another. It doesn't really matter if we call it a toll or a tax.
I'm sure you can do the same thing at your job. If your boss doesn't give you the pay raise you want, you just tell him that you have no choice but to file vouchers for phantom expenses equal to the amount of the raise you wanted, so that you can continue to provide essential services to yourself and your family. After all, you've just commissioned a study that shows there is a gap of hundreds of thousands of dollars between what you need and what you are expecting to make over the next 20 years. You can't provide services for free, you know.
The boss won't care if he's paying you expense money instead of salary, right? Good luck with that.
I'll also offer a prediction: Whether Patrick supports them or not, taxes are going to go up. Tolls are also going to go up. Reform? Surely you jest.
This is really all you need to know, if you plan to keep living in an alleged commonwealth where we are fast approaching, if we have not already arrived at, the tipping point where the only jobs with any security, good wages, gold-plated health care and a fat pension will be those with the government. The rest of us will be indentured servants.
In the hall of mirrors known as the Statehouse, you can speak the kind of utter absurdity our governor just did — absurdities that would crack up normal people if Jay Leno said them — and everybody from legislators to the misnamed Massachusetts Taxpayers Foundation will nod soberly and continue to hold forth with the usual lexicon of filler phrases to obscure rampant government spending, inefficiency and patronage: "essential services," "our most vulnerable citizens," "the children," "devastating cuts," "investment in the future" and, of course, the favorite of the current season, "We can't reform our way out of this."
I am not the first to observe — but it bears repeating — that during last year's heated debate over the proposed repeal of the state income tax, so-called "cooler heads" patronizingly patted us on the head and told us not to shoot ourselves in the foot because if we did vote for repeal, then they'd have to raise the sales tax.
So, we did what good sheeple do. We voted not to repeal the income tax and the Legislature has now taken a veto-proof majority vote to raise the sales tax by 25 percent.
I can only imagine the hilarity that goes on out-of-sight at the Statehouse when legislators talk about how staggeringly stupid we, the electorate, are. They could probably double the sales tax and we'd still re-elect them because, you know, our rep or senator got our relative a job or they sent us a citation because our kid made the honor roll.
This all works for the governor too. Now that the Legislature can override his veto, he is free to rail against the failure to pass meaningful reform and can pose as a taxpayer champion because he will "try" to overturn the tax hike.
What's not to like?
This will all be presented — it already is being presented — as painful and "courageous," because they simply didn't have a choice.
But of course they have a choice. They have many choices — too many to mention here. They could eliminate ridiculous perks like the Quinn Bill and "night differential for everybody" for police. They could cut the state workforce instead of adding 2,000 to it. They could stop creating six-figure "jobs" for friends and relatives. They could eliminate, rather than marginally reduce, police officers doing road details. They could eliminate the poison pill that allows local unions to veto their municipalities' efforts to join the less expensive state health insurance plan. They could cut the pay of everybody in state government by a percentage point or two, instead of using federal stimulus money to hand out raises.
But they won't. They don't need to. We'll pay whatever they want us to pay and keep putting them back in office.
And that is the ultimate absurdity.
Taylor Armerding is associate editorial page editor of The Eagle-Tribune. He may be reached at 978-946-2213 or at firstname.lastname@example.org. Read him daily at The Soapbox, the Eagle-Tribune blog at blogs.eagletribune.com/soapbox
"Massachusetts Governor proposes more cuts in 2010 budget"
boston.com - June 4, 2009
BOSTON --Gov. Deval Patrick has released a revised 2010 budget that does not include money from a 25 percent sales tax increase approved by lawmakers. He has threatened to veto it unless reforms are enacted.
Patrick's proposal Thursday reflects an expected revenue drop. It keeps his earlier proposed spending increases and has $794 million in new cuts. Those include a $80 million cut in non-education aid and a $164 million cut in MassHealth spending.
Also Thursday, the state Revenue Department reported that between the start of the fiscal year last July 1 and the end of May, total tax collections were $16.5 billion. That is $2.2 billion -- or 11.5 percent -- less than a year ago.
The steep drop has prompted three rounds of budget cuts and set the stage for more in the budget being developed for the 2010 fiscal year.
"Budget calls for tax hikes, deep cuts: Local aid could drop by 15%; Transportation overhaul OK'd"
By Matt Viser and Noah Bierman, Boston Globe Staff, June 19, 2009
House and Senate leaders unveiled last night a state budget for the next fiscal year that would slash services in nearly every area of Massachusetts government and that calls for additional sales, meals, and alcohol taxes.
Under the $27.4 billion spending plan, expected to be voted on today, some communities could see up to a 15 percent cut in local aid, officials said. The proposal would eliminate 50 line items and funding for 800 local projects. A dozen Registry of Motor Vehicle branches would be closed.
The dramatic spending reductions have been forecast for months as state revenue projections have plummeted.
“It was just a litany of bad choices that we had before us,’’ said Representative Charles A. Murphy, chairman of the House Ways and Means Committee. “There’s going to be a lot of pain, and there’s going to be a lot people who aren’t terribly happy.’’
Under the proposal, the sales tax would increase from 5 percent to 6.25 percent, which is estimated to bring in an additional $900 million annually, roughly a third of which would be earmarked for the transportation system.
The budget would also boost taxes on meals by 1.25 percentage points, which is estimated to raise $108 million statewide. Cities and towns would be allowed to raise the meals tax by an additional .75 percentage point.
In addition, the budget would eliminate a tax exemption on alcohol sold in retail stores and allow communities to raise the local hotel tax by 2 percentage points.
In a move sure to draw fire from police unions, the budget proposal would also slash by about 80 percent funding for the Quinn Bill, a controversial program that awards bonuses for police officers who hold college degrees.
The budget agreement capped a frenzied day on Beacon Hill. Hours before, lawmakers defied angry union leaders and approved, by a veto-proof majority, a long-awaited transportation overhaul that would reconfigure the confusing array of agencies that operate roads, rail, and bridges in Massachusetts.
Business and watchdog groups offered measured support for the plan, but the man whose opinion now matters most, Governor Deval Patrick, stayed mum throughout the day.
“Until I can comment thoughtfully and with some study, I’m going to withhold comment,’’ Patrick told reporters yesterday.
But close observers said the transportation bill, while leaving potential funding gaps and opportunities for further waste in state government, included most of the tools the governor would need to reform the state’s transportation system, which he has vowed to do.
“You have lots of language allowing you to do lots of great things,’’ said Stephen J. Silveira, a lobbyist who led an influential commission that released a major report on the state’s transportation crisis two years ago.
Union leaders, objecting to certain provisions in the legislation, roamed the State House halls with threats of lost endorsements. But the Senate passed the overhaul, 27 to 11. The House followed shortly afterward with a 130-to-25 vote.
The activity at the State House - lawmakers were also furiously finalizing an ethics overhaul package - set the stage for a high-stakes chess match that will unfold over the coming days.
Patrick, who has said he must see significant government reforms before considering tax increases, is weighing his moves very carefully.
“Listen, I applaud the Legislature for taking a very important step forward in transportation reform,’’ he said. “The bill, on first review, contains a lot of the efficiencies and the changes that we were looking for.’’
When approached later by a reporter on a State House elevator, Patrick said with a laugh, “What part of no comment do you not understand?’’
His reticence to comment substantively on the transportation overhaul was in stark contrast to his approach last week, when Patrick was so pleased with lawmakers’ work on pension overhaul legislation that he sent gifts to House Speaker Robert A. DeLeo (a box of cigars) and Senate President Therese Murray (a vase of flowers).
Patrick, looking ahead to next year’s reelection campaign, appears to be increasingly weighing such decisions for their politics as well as their policy. He will face a host of delicate decisions over the next several days as lawmakers send him the budget and an ethics bill that could be filed as early as today.
Top lawmakers remained deadlocked yesterday over the ethics package. The major sticking point was whether or not to ban all gifts to public officials.
On the budget, Patrick has vowed to veto any proposal to raise the sales tax unless the Legislature first agrees to make acceptable changes in pension, ethics, and transportation laws.
The political stakes for Patrick are high. He was elected pledging to change the insular culture of Beacon Hill and touted big plans for education, community policing, and infrastructure.
But with the state economy struggling and state revenues plunging, Patrick has been forced to consider raising taxes to keep programs afloat. And yet he is surely aware of the pitfalls: Governor Michael S. Dukakis was swept from office in 1978 after his first term in part because of antitax fervor.
Lawmakers had little time to read the transportation bill, much less study it, given that it was filed only 16 hours before debate began in the Senate. Some details, including a provision that would give the mayor of Boston authority to approve commercial development projects built over the turnpike, were slipped in with little notice.
The most tangible savings, about $30 million per year, come through changes to MBTA healthcare benefits that would force workers and retirees to contribute more for their insurance.
Labor unions blasted the transportation bill, saying the plan would “eviscerate the rights of workers to collectively bargain.’’ Any lawmaker who votes for it, the AFL-CIO warned, may not be considered a friend of labor at election time.
“It eliminates all unions at the Turnpike Authority and takes no regard for collective bargaining,’’ said Robert F. Cullinane, head of the Teamsters Local 127, which represents toll-takers. “We thought we were voting for Democrats up here.’’
Senator Stephen A. Baddour, a Methuen Democrat who leads the Transportation Committee, promised to address some of the concerns in subsequent bills. But most lawmakers said they were happy to vote for 80 percent or 90 percent of what they believed was a good plan.
Matt Viser can be reached at email@example.com.
A BOSTON GLOBE EDITORIAL
"Still waiting on ethics"
June 23, 2009
GOVERNOR PATRICK is threatening to veto a 25 percent increase in the state sales tax unless the Legislature passes an ethics bill. His threat irks lawmakers, but they should do the right thing anyway.
The public wants an end to business as usual. It has been a tumultuous year of scandal on Beacon Hill. Salvatore F. DiMasi was indicted after he stepped down as speaker of the House of Representatives. Two state senators resigned and also face criminal charges. The Globe has turned up a pattern of pension abuse by state employees.
Lawmakers already acted on pension and transportation reform measures. Now, they need to act decisively on ethics reform. The Ethics Commission should be strengthened - not weakened, as the Senate proposes. It’s also important to close a critical loophole by making it clear that gifts given to public employees because of their official position are illegal for the giver as well as for the recipient; and impose a criminal penalty in certain circumstances.
That may seem like overkill to some. Patrick himself ran afoul of current state ethics law when he sent a box of cigars to House Speaker Robert A. DeLeo and a bouquet of flowers to Senate President Therese Murray. The rules ban gifts of $50 or more to a public official in return for an official action. Instead of sending an ostentatious bouquet to one individual, the governor could have sent a more modest offering to the Senate as an institution.
But Patrick’s overzealousness with flowers doesn’t change the need for tighter ethics rules on Beacon Hill. It’s time to strengthen what’s already on the books and make sure it applies to everyone.
Massachusetts Governor Deval L. Patrick
"Patrick to OK sales tax hike"
By Matt Murphy, Berkshire Eagle Boston Bureau, Saturday, June 27, 2009
BOSTON -- First came the elimination of the most blatant abuses of the public pension system.
Then Friday Gov. Deval L. Patrick traveled to Springfield, where he signed a massive overhaul of the state's transportation bureaucracy that will eliminate the Turnpike Authority and generate an estimated $6 billion in savings over the next 20 years.
Next up? Signing a House- and Senate-approved overhaul and toughening of the state's ethics laws.
Signaling his support for the trifecta of major reform efforts on Beacon Hill this year, Patrick told The Eagle yesterday that he plans to sign off on the basic blueprint of the state budget by Monday capping a flurry of activity over the past several months that has left the governor claiming victory in his efforts to change business as usual in state government.
His support will extend "reluctantly" to a 25 percent sales tax increase that will raise the tax to 6.25 percent. It currently is at 5 percent.
"I think we've taken a giant step in delivering government that not only the public expects, but what it deserves. Taken together, they are a sweeping set of changes and a real down payment on credibility," Patrick told The Eagle in an exclusive, 15 minute phone interview.
The timely completion of ethics, pension and transportation reform by the House and Senate in the span of less than six months can be seen as a significant accomplishment for all involved given the relatively short stint between start and finish. It has also served to essentially call Patrick's bluff.
Since taking office, Patrick has, at times, chided the Legislative for its slow pace of doing business.
He has delivered speeches on the "cost of inaction," and he has prodded and provoked lawmakers with a veto threat of the sales tax increase to ensure action on ethics, pension and transportation reform.
"This was about getting people's attention and being clear about what I wanted. We set an ambitious agenda and the Legislature has responded," the governor said.
Patrick now plans make good on his promise to OK a 25 percent sales tax increase enacted by the Legislature in what will become the biggest broad-based tax hike in Massachusetts since Michael Dukakis served as governor.
"That's the bargain. I will keep my end of the bargain. They seem to be keeping theirs," Patrick said, referring to the Legislature. The governor said he was "appreciative that the Legislature responded to my call to these reforms and took courageous votes."
Though Patrick called himself a "reluctant" supporter of a the politically unpopular sales tax hike, he said he believes the public will understand that not raising taxes would have been devastating at the state and local level.
"The public, at the same time, is clamoring for services and are very, very concerned. We're still not done cutting," Patrick explained, adding that the sales tax will help avoid increased highway tolls and fare increases on the T and commuter rails.
Patrick himself called for a 19-cent gas tax increase to pay for transportation needs in what he considered a more targeted and appropriate approach.
Friday, he left the door open to future consideration of a gas tax hike in order to create a guaranteed revenue stream for transportation infrastructure.
"The Legislature has still not dealt with that, and until they do we have not solved all of the transportation challenges," Patrick said.
In addition to increased efficiency in the transportation system, Patrick said the days of the Turnpike Authority being a "repository for patronage" jobs are gone.
"That's over now," he said confidently. The plan also creates so-called "toll equity" for Western Massachusetts drivers ensuring that tolls paid on the Massachusetts Turnpike will not be funneled back to Boston to pay for costs associated with the Big Dig.
A mere six months into the new Legislative session, Patrick is rolling toward the start of his re-election campaign with a series of wins that will surely become a focal point of his message as he seeks a second term.
The progress, however, has not come without its cost, and Patrick insists his reform agenda is not complete. Talking up plans to return his focus to education, CORI and criminal sentencing reforms, Patrick will need allies in the Legislature.
Legislators bristled in April when Patrick first issued his veto threat of the sales tax increase, and relations between himself and House and Senate leaders grew decidedly frosty.
Yesterday state Sen. Steven Panagiotakos, D-Lowell, said he questioned how much credit the governor should take for enacting the three major reforms.
"Quite frankly I never looked at it as a bargain. We were on track at the beginning of the session to take up transportation and pension reform. Those were Legislative initiatives and a credit to the leadership of the Senate president and Speaker. The governor did lead on ethics reform and I will certainly give him credit for that," said Panagiotakos, who played key roles in crafting the state budget and pension legislation.
Asked if Patrick's prodding or veto threat contributed to the timely passage of the three bills, Panagiotakos said, "No, not at all." Still, the Senator indicated that despite a "cooling" of the relationship, lawmakers in both branches have always been willing to work with the governor to accomplish shared goals.
Patrick agreed, calling disagreements a natural part of the process and predicting there will be times in the future when both branches don't see eye to eye.
"I don't know that's its changed so much," Patrick said of his relationship with the Legislature. "We have 200 members of the House and Senate and governor with his own mind. My phone line has stayed open, my door has stayed open, our staffs have worked together."
"Tax drop feeding state woes"
The Berkshire Eagle, By Tony Dobrowolski, 6/27/2009, Sunday, June 28, 2009
PITTSFIELD -- Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, said he believes state unemployment will probably top out in the first or second quarter next year, and that the national economy will probably hit bottom in the third or fourth quarter of 2009.
"Massachusetts will trail, as it regularly does following a recession, and unemployment always trails a recession," Widmer told a Chamber of Commerce breakfast Wednesday.
He said the state's fiscal woes are due in large part to a reliance on the capital-gains tax, revenue collected mostly through the sale of stocks, bonds, and property, that was used to plug funding shortfalls.
The state collected $2.1 billion in capital gains in 2008, he said, but the global economic recession caused that figure to drop to $530 million this year.
"The No. 1 problem we are facing is the global economic meltdown and no one's immune," Widmer said.
Paying a heavy price
"But the particular problem in Massachusetts is that we relied heavily in revenue and on our tax base in capital gains. That was fine when the stock market was going up for several years. But obviously when it crashed as it has done that means we pay a very heavy price."
The precipitous drop in the capital gains tax means the state is now supporting an ongoing increase with a vanishing revenue source, he said.
"The debate I think that will take place longer term is what level of public services do we want in the state against what level of revenues and taxes are we going to raise to support them," he said.
The sales tax increase from 5 percent to 6.25 percent, to go into effect soon, "will be painful for some, but is "relatively modest" he said, compared to increases in previous fiscal crises be-cause the state's tax base is so narrow.
"Of the 45 states with a broad-based sales tax we're 45th at the bottom in terms of the burden," he said. "So given the reality of the fiscal crisis, I think it's a relatively modest tax increase."
"Patrick signs state budget"
By Matt Viser, Boston Globe Staff, June 29, 2009
Governor Deval Patrick today signed a budget for next year that cuts aid to cities and towns, pares back programs throughout state government, and imposes $1 billion in additional taxes on Massachusetts residents, shoppers, and visitors.
In signing the $27 billion budget, which is $400 million less than the proposal approved this month by House and Senate lawmakers, Patrick issued vetoes that cut funding in a number of areas. The budget takes effect Wednesday, the first day of the next fiscal year.
“The budget offers an honest assessment of the tough economic circumstances we face without losing sight of the better days we know lie ahead of us,” Patrick said in a statement. “By making thoughtful, careful decisions, we have protected services for the most vulnerable and made investments for the long-term in education and healthcare so that we’re ready when the upswing comes.”
Patrick's plan restores health care coverage for 30,000 legal immigrants and provides a record-high $4 billion in education funding for cities and towns, thanks in part to $167 million in federal stimulus money. It also includes more than $1 billion in new taxes, a portion of which will prevent a planned toll increase on the Massachusetts Turnpike.
His budget calls for nearly $150 million in line-item vetoes, eliminating or slashing programs that the Legislature approved. In addition, it eliminates $217 million in funding for county sheriffs, according to an administration official briefed on the budget. That funding will likely be restored through a bill that consolidates sheriffs departments throughout the state.
The Legislature now must decide whether to override the governor’s vetoes or let them stand.
The budget includes more than $1 billion in tax increases, which include new taxes on hotels, alcohol, meals, and satellite dishes. The new sales tax rate, which will increase from 5 percent to 6.25 percent, will go into effect Aug. 1.
Patrick had said he would agree to the lawmakers' plan only after they agreed to overhaul the state's ethics, pension, and transportation laws significantly. Over the past two weeks, House and Senate lawmakers approved plans on each of those items, all but forcing the governor to sign on to their tax proposal.
"You’re Deval Patrick, and you just don’t get it"
By Howie Carr
Friday, July 3, 2009, www.bostonherald.com - Columnists
Gov. Deval Patrick signs the 2010 budget including the 25 percent sales tax hike to 6.25 percent. Since that time, he has not ruled out a subsequent hike in the gas tax. (Photo by Angela Rowlings)
Your name is Deval Patrick, and you are a taxaholic.
On Monday, a reporter asked you a question about raising the gasoline tax, and you blurted out, maybe we’ll have to.
On Tuesday, you signed into law both a 25 percent increase in the sales tax and a new 6.25 percent sales tax on alcohol, which already has an excise tax on it.
On Wednesday, you floated a trial balloon about increasing the state income tax, saying that some high-income taxpayers would be willing to contribute more.
You’re Deval Patrick, and you’re way too busy to check out the latest DOR statistics on how many of those wonderful affluent moonbats were willing this year to pay income tax at the voluntary higher 5.85 percent rate - 1,500 out of 3.1 million filers, which is one-twentieth of 1 percent.
You’re a taxaholic, and if Step 5 of the program is admitting the exact nature of our wrongs, then is it too late for you to apologize to all the homeowners in Massachusetts who’ve been waiting since 2006 for the property tax relief you promised them?
You’re Deval Patrick, and has anyone seen Doug Rubin? Because you’d like to ask him why in the latest polls you have fallen behind both Tim Cahill and Christy Mihos.
Tim Cahill, who lost $15 billion in pension funds in the economic meltdown, and Christy Mihos, who said in 2006 that he’d vote for you if he weren’t running - where the hell did Doug Rubin leave the opposition research book?
You’re Deval Patrick, and you devoted most of Wednesday to Operation: Change the Subject, doing one-on-one interviews in which you fell off the wagon again, rhapsodizing about jacking up the income tax.
You did all those interviews and still nobody is taking seriously your ethics reform bill that authorizes the state attorney general to begin impaneling statewide grand juries - in 2015.
You still don’t get that the voters are a lot angrier about the Marian Walsh scandal (which is 100 percent your fault) than about the Dianne Wilkerson scandal (which isn’t).
After all this time, you don’t understand that voters are more amused than anything else about Dianne stuffing cash in her bra. She was only grabbing a grand for a weekend at Foxwoods, while Marian was setting herself up for life with a $135,000-a-year pension - and she couldn’t have done it without you and Doug Rubin, and where the hell is he anyway?
The Boston Globe, Op-Ed, JOAN VENNOCHI
"Governor, it’s not a pretty picture"
By Joan Vennochi, July 30, 2009
GOVERNOR DEVAL PATRICK is in deep political trouble if Massachusetts voters seriously trust their lawmakers more than their governor.
According to a recent Boston Globe poll, 40 percent of those surveyed said they trusted the Legislature when it comes to handling the state’s economic problems. Only 23 percent said they trusted Patrick.
Those 545 randomly selected adults who took part in the poll may technically reside in Massachusetts. But, whatever their zip code, they must live on another political planet.
Didn’t they hear about those high-profile cases of alleged corruption and misbehavior involving state legislators, including Salvatore F. DiMasi, the now ex-speaker of the House? They must not know that 135 of 160 House lawmakers voted to reelect DiMasi as their leader, despite serious ethical controversies. They must have missed the photographs of ex-state senator Dianne Wilkerson allegedly stuffing cash in her bra, along with the exploits of now ex-state senator James Marzilli, who allegedly made inappropriate sexual comments to assorted women in Lowell.
Or, maybe these Globe poll-takers knew about these less-than-sterling legislative role models and wrote them off as a few bad Beacon Hill apples. If that is their rationale, they simply don’t understand what the rest of their elected representatives have been up to.
For starters, they have been sticking it to Patrick, a fellow Democrat.
Proving that a woman can play the Bay State’s favorite game of petty, ego-driven politics as well as any man, Senate President Therese Murray proudly labeled Patrick “irrelevant.’’ Reacting to the gubernatorial candidacy of Republican Charlie Baker, Murray also released a statement that said, “I have known Charlie Baker for many years. I am familiar with his work and have a great deal of respect for him.’’
When Patrick sought to raise revenue by increasing the gas tax, House Speaker Robert DeLeo immediately sought to thwart him. He put his clout behind an increase in the sales tax. Of course, the House, and then the Senate, followed DeLeo’s lead.
Both branches challenged different aspects of Patrick’s ethics, transportation, and pension reform proposals. They ultimately reached a compromise after the governor threatened to veto the sales tax increase - and after DiMasi was indicted and the people’s representatives felt the need to deflect attention from their role as enablers.
Massachusetts is struggling to offset steep revenue drops caused by the national recession. Tough budget choices must be made. Instead of facing the crisis with a spirit of teamwork, too often lawmakers let petty political considerations drive the debate. Their willingness to override Patrick’s veto of $4 million to fund two zoos is a prime example. The zoo officials threatened to euthanize animals if their funding wasn’t restored. Lawmakers appear ready to cave in, even after the zoo officials backed off their threat to kill animals. People want to save the zoos, even as they complain about new taxes. Lawmakers want to keep their constituents happy and are pleased to do it at Patrick’s expense.
According to that same Globe poll, 52 percent of those surveyed have an unfavorable opinion of the incumbent governor. Patrick can’t blame this dismal rating on the Legislature. It stems from a series of well-chronicled political mistakes and an inability to showcase any accomplishments that connect with voters. It’s up to him to persuade those voters that the changes he championed to laws governing ethics, pensions, and transportation policy will truly improve the entrenched political culture.
Patrick’s core constituency will stick with him, but even some true Patrick believers have lost faith. The reality is that this governor, elected with such pride and promise, needs a three-man race to survive.
Any poll is the usual snapshot. The picture adjusts when Treasurer Timothy P. Cahill, who left the Democratic Party to plan a potential run as an independent, makes a formal announcement. The picture changes if Baker, who is untested as a statewide political candidate, looks better on paper than he does on the campaign trail. If the economy improves, the picture brightens for Patrick.
But, if people trust the Legislature more than the governor, the picture Patrick is looking at right now is not pretty.
In Massachusetts, that’s as ugly as it gets.
Joan Vennochi can be reached at firstname.lastname@example.org.
"Bottoms up, taxes up: Mass. raises fee on alcohol"
By Associated Press, Saturday, August 1, 2009, www.bostonherald.com - Local Politics
BOSTON — Add 6.25 percent to the cost of that cold one.
A new alcohol tax goes into effect Saturday on all beer, wine and alcohol purchases in the state, lifting a previous tax exemption on booze.
Gov. Deval Patrick has said lifting the exemption was needed to help balance the budget. The alcohol tax could raise another $80 million in tax revenues in the new fiscal year.
Store owners say the new tax will hurt sales.
The new alcohol tax also reflects an increase in the state sales tax, which is up from 5 percent.
A ballot initiative that would add alcohol back to the state sales tax exemption list may be considered next year.
"State budget is millions in the red"
By Matt Murphy, Berkshire Eagle Boston Bureau, Thursday, August 6, 2009
BOSTON -- Just a month into the new fiscal year, state officials are already staring at a balance sheet that's running in the red.
Tax collections for July came in between $24 million below estimates, according to the Department of Revenue.
The loss represents a modest decrease, but one that continues the trend of revenue collections coming in below projections, including a surprising $255 million shortfall in the month of June to close out fiscal 2009.
"July is not a big month [for tax collections], but what it does is support the case that the revenue estimate for fiscal 2010 is on the high side," said Michael Widmer, president of the Massachusetts Taxpayers Foundation. "It raises the concern that we may fall short $300 million to $500 million for the year."
After the collapse of the state and national economy last fall, state finance officials spent much of the year chasing the bottom-line as it revised its revenues estimates down four times and cut the budget accordingly to make up for the losses.
Widmer said he does not expect the same to happen this year because the economy is expected to rebound and should not come close to the $3.2 billion in lost revenue seen last year.
Still, Sen. Steve Panagiotakos, D-Lowell, said he will be watching the numbers closely.
"Any deviation downward is something we have to take very seriously because we don't have the surplus in reserve anymore to make up the difference," said Panagiotakos, chairman of Senate Ways and Means.
The state's "rainy day" account has been drained to less than $600,000 to balance last year's budget without making devastating cuts to local aid, schools and other public health and human service programs.
July and August are two of the smaller months for tax collections, but withholdings, corporate and sales tax collections are all reported to be off target.
Unlike big corporate tax collection months that can often reflect the business climate of the year before, these two months are often seen as an indicator of current economic activity.
"We haven't found the bottom yet," Panagiotakos said. "If August continues to be lower than projections, I would think the governor would have to step in and make emergency 9c cuts."
"Top budget chief resigns from Patrick administration"
By Matt Viser and Frank Phillips, Boston Globe Staff, September 25, 2009
Governor Deval Patrick’s top budget chief, who guided his administration through the last three years of fiscal crisis, is leaving for a top post at Harvard University, an administration official said this morning.
Secretary of Administration and Finance Leslie A. Kirwan is submitting her resignation to become dean of administration and finance for the Faculty of Arts and Sciences at Harvard University.
Patrick made the announcement at his weekly Cabinet meeting this morning, according to an administration source. The governor also announced that she was be replaced by Jay Gonzalez, who has been Kirwan’s top deputy and is highly regarded in the governor’s inner circle.
This is the third major departure in the last two months for the Patrick administration. His chief of staff, Doug Rubin, left to focus on campaign issues. Secretary of Transportation James Aloisi announced his resignation earlier this month.
Kirwan has been a candidate for past jobs at Harvard, and her departure has been expected. The administration official said Gonzalez’s elevation would be a “seamless transition.”
Kirwan has been in the job since Patrick became governor. Previously she was the budget chief for the Massachusetts Port Authority, where in the aftermath of the Sept. 11, 2001, terrorist attacks, she helped Logan International Airport regain its financial footing.
Her 2 1/2-year tenure has been marked by deep budget cuts and declining state revenues. Her departure also puts her out of the politically difficult position. She had been a top deputy to Charles D. Baker, a former administration and finance secretary and a Republican who is now challenging Patrick in next year’s election. Kirwan has remained close to Baker but is also loyal to Patrick.
Kirwan, the state's first female administration and finance secretary, has a quiet confidence and a dry wit. She keeps a whip in the corner of her office, she jokes, to keep people in line during budget seasons. A staff member gave her a sign last year that says, "Don't make me break out my flying monkeys" -- a reference to the Wicked Witch of the West.
"State may see $200m shortfall: Tax revenue drop could force more budget slashing"
By Matt Viser, Boston Globe Staff, September 29, 2009
State tax revenues are on pace to fall as much as $200 million below projections this month, signaling a disappointing year in tax collections that could trigger new rounds of emergency budget cuts, preliminary figures show.
The projected shortfall, based on figures from the state treasurer’s office, may require Governor Deval Patrick to slice hundreds of millions more from this year’s budget, which he signed only three months ago. It would be the fourth time in a year that Patrick has been forced to make midyear cuts.
The lagging revenues, despite increased taxes this year and signs of life in the state economy, could hurt Patrick politically as he heads into a re-election campaign next year. His opponents, running on themes of fiscal responsibility, argue that they would be better than Patrick at guiding the state out of its economic doldrums.
“We’re obviously watching the revenues very, very closely, and I don’t want to say anything about where we are until we get the final figures,’’ Patrick told reporters yesterday before heading into a meeting with House Speaker Robert A. DeLeo and Senate President Therese Murray. “We have a whole host of different scenarios, as you can imagine, that we have thought about and reflected on because we want to be prepared.’’
Asked whether there would be further cuts to local aid, which is the lifeline for many cities and towns, Patrick said, “I think it’s too soon to say.’’
With only two days remaining in September, the state has collected $316 million less than anticipated, according to calculations by the state treasurer based on the actual taxes deposited daily by the Department of Revenue. State revenue officials estimate that $92 million will be collected today and tomorrow, which would leave a shortfall of $224 million.
Several variables remain, and state treasury officials estimate that revenues will finally be $100 million to $200 million below expectations.
The figures must be finalized early next month. The governor, working with legislative leaders, has until Oct. 15 to revise the revenue estimates for the rest of the year. A lower revenue estimate would probably trigger cuts to the budget, to keep it balanced.
Administration officials declined to comment on the estimates, but a top State House official familiar with budget deliberations predicted that tax collections would be off by at least $150 million.
“It’s looking rather bleak,’’ state Treasurer Timothy P. Cahill, who is planning to run as an independent against Patrick in next year’s election, said in an interview. “This should sound the alarm. I certainly would be concerned in terms of spending going forward. I don’t know whether the administration has the time to wait to cut if these numbers are indicative of what’s to come.’’
Over the first two months of the fiscal year, July and August, tax collections were more than $30 million above expectations. But September, when school is back in session and spending typically increases, is often the early bellwether of how the fiscal year is shaping up.
“September is always the month where you get your most revenue,’’ Murray said yesterday after meeting with DeLeo and Patrick. “So if we’re down significantly in September, that doesn’t probably bode well for the rest of the fiscal year.’’
The state’s budget problems are compounded by the fact that Patrick and top lawmakers have relied in large part on one-time revenues to plug the previous budget gaps, using federal stimulus money that will dry up next year and a state reserve fund that is dwindling. Additionally, economists have warned that the state is in a multiyear cycle that will continue to strain budgets until at least 2014.
“Oh, Lordy,’’ said Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, when told of the estimates. “Numbers like this for September suggest [the state’s revenue estimates] could be $500 million or more too high for the year.’’
Revenue dropped despite a controversial decision by Patrick and the Legislature to increase taxes by more than $1 billion, including boosting the state sales tax from 5 percent to 6.25 percent. Retailers warned that the state would not raise nearly as much as estimated, predicting that customers would go to New Hampshire or the Internet to avoid additional taxes.
This is the first month of tax collections that will reflect the new sales tax increase, but revenue figures have not been finalized and released in detail, so it is unclear how much of a dropoff that accounts for.
News of September tax collections was released as the Patrick administration’s top budget chief is leaving for a new position at Harvard University. Patrick announced last week that Leslie A. Kirwan, secretary of administration and finance, was submitting her resignation after guiding his administration for the past 2 1/2 years.
The projected revenue drop indicates that the effects of the national recession are still being felt deeply in Massachusetts. Last fiscal year, which ended June 30, revenues dropped billions below initial expectations. Patrick administration officials say they have eliminated about 1,400 positions.
“At the state level and the public sector, we still have enormous challenges ahead of us,’’ Patrick said yesterday afternoon, pointing to signs of an uptick in the economy. “But we are confident that we’re on the right course, that we’re pointed in the right direction, that better times are ahead.’’
Matt Viser can be reached at email@example.com.
"Patrick says still no union concession deal"
(via) The Berkshire Eagle, 10/28/2009
BOSTON (AP) -- Gov. Deval Patrick said Wednesday state employee labor unions still have not agreed to job-saving concessions as he prepares to announce how he will cut $600 million from the budget.
Patrick said some layoffs will be unavoidable because he plans to eliminate several programs. But he has warned he will have to cut up to 2,000 jobs if employees don’t agree to furlough days or other cost-saving measures.
The state had already laid off 726 employees as of mid-October, after four rounds of budget cuts in the fiscal year that ended June 30.
"We have not gotten what we need," Patrick told reporters after addressing a disability conference at a downtown hotel. "I’m hopeful, but by no means do I want to give the impression that we have a deal."
He plans to outline his cuts by the close of business Thursday. They are necessitated by falling tax collections linked to the national recession.
A spokesman for the State Police Association of Massachusetts, one of the labor unions negotiating with the Patrick administration, was reviewing the governor’s comments before responding.
Patrick also said that while Margaret Marshall, the state’s top jurist as chief of the Supreme Judicial Court, has warned against judicial cuts, her concern is not unique.
"I have tremendous respect for the legal system and the judiciary in particular and for the chief justice, who’s been a friend for 20 years," the governor said. "I will say that it’s not very unlike what I hear from people who are advocating for all types of spending in the state budget."
Patrick has been besieged by users of the state’s human service system, who are begging him not to make any more cuts in their portion of the budget. That is difficult, however, because it consumes about half of the state’s $28 billion in annual spending.
Members of the disabled community tried to underscore their point by camping out in the governor’s office lobby this month so he could not enter or leave without seeing them.
On Wednesday, as he opened a conference aimed at making workplaces more accessible to the disabled, Patrick pleaded for understanding.
"I’m going to tell you simply that I see you, I hear you, I understand the need -- not just as a matter of policy, but as a matter of humanity -- and I am going to do the very best I can," the governor said.
"Patrick to end nearly 1,000 jobs: Cuts would hit all of government; reduction plan spares local aid"
By Matt Viser, Boston Globe Staff, October 30, 2009
WORCESTER - Governor Deval Patrick intends to close a projected $600 million budget gap by eliminating nearly 1,000 state jobs, shaving millions from human service programs, reducing help for local school building projects, and possibly closing the State House library, the governor and his aides said yesterday.
Patrick said he would move to make $352 million in cuts across state government, including $277 million from the executive branch. He will also seek authority from lawmakers to make $75 million in additional reductions in other branches of government, including the Legislature, the judiciary, and county sheriffs.
But Patrick’s budget cuts - which were met with a mixture of frustration, resignation, and even relief that they were not worse - were notable for what they did not touch: local aid, the money cities and towns rely on to run their schools, police, fire departments, and much more. Patrick made a point of saying he would fully protect that funding.
“We will not cut our record investment in our students and our schools. We will not shortchange our children’s future,’’ he said, in an address to the Worcester Regional Chamber of Commerce. “Local communities are the front line of both our economic and our social life, and they are struggling as it is.’’
The rest of the $600 million gap Patrick said he would close through $248 million in additional measures, including $62 million from the federal stimulus bill, which will offset cuts to higher education. In addition, the state plans to send $27 million less to the School Building Authority, which helps communities fund school building construction.
Patrick also said he would ask the Legislature to eliminate two controversial paid holidays for certain state workers, Evacuation Day and Bunker Hill Day, although that change would carry more symbolic weight than financial implications.
It is the fourth time in the past year that Patrick has been forced to make emergency cuts because tax revenues came in lower than expected. Tax receipts for the first quarter of this fiscal year missed projections by $212 million.
State revenues have yet to stabilize, and fiscal watchdogs warn that more cuts are probable, perhaps even later this fiscal year.
“There may have to be another round of cuts this year, and there certainly will be major cuts in the fiscal 2011 budget,’’ said Michael J. Widmer, executive director of the Massachusetts Taxpayers Foundation.
One issue with Patrick’s approach to budget-balancing, Widmer said, is it relies in part on one-time revenue sources, including federal stimulus funds and money from the state’s reserve account.
That means that next year, if that money is not available again, the state will be forced to cut further.
“It just delays the day of reckoning,’’ Widmer said.
Following Patrick’s directive yesterday, various departments will immediately begin crafting plans and determining how to reduce the number of state jobs by nearly 1,000 positions, which will come through a mixture of layoffs, retirements, and eliminating vacant positions.
Jay Gonzalez, Patrick’s budget chief, said another 1,000 state jobs are in jeopardy if state employee unions do not agree to $35 million in concessions. He said the state hopes to get an agreement by Dec. 1.
Those savings could be achieved in part through unpaid furlough days; state managers, under Patrick’s cuts, will take nine unpaid furlough days.
Other money-saving measures include a $5 million cut to the Quinn Bill, an education incentive program that has boosted the salaries of police officers.
The program has already seen a huge cut in this year’s budget.
Although primary sources of local aid were spared, Patrick did eliminate tens of millions of dollars that directly affect cities and towns, including $18 million to help regional school districts run school buses and $5.2 million in charter school reimbursements.
“The overall sense is that people were expecting a cut, and a cut came,’’ said Geoffrey Beckwith, executive director of the Massachusetts Municipal Association. “But it was smaller in magnitude than they had feared.’’
Patrick has broad discretion to make emergency cuts to balance the budget. But part of his plan remains up in the air, because he needs the Legislature to both grant him expanded budget-cutting powers and not override any of his proposals.
A leading House lawmaker, state Representative Charles A. Murphy, chairman of the House Committee on Ways and Means, suggested that the Legislature might not agree with Patrick’s approach in every area.
“The governor has given us some suggestions,’’ said Murphy, a Burlington Democrat. “There are many ways to skin this cat, so to speak. We may look at other ways to get this done. We recognize the governor has a difficult job in this, but that’s not necessarily the end-all.’’
Beyond the State House, Patrick’s cuts received a mixed reaction.
Advocates for the disabled applauded smaller cuts than they feared to human services, and they even came to Worcester to show their support. Cuts to human services ended up being $82 million, he said, and advocates had expected as much as $300 million.
“We’re psyched,’’ said Leo Sarkissian, executive director of The Arc, which advocates for 180,000 individuals and families with intellectual and developmental disabilities. “No one likes a cut, but this is good. Families and advocates are thrilled.’’
But Deborah Banda, the state director of AARP Massachusetts, criticized a cut in a prescription drug program for seniors.
“We question both the wisdom and the compassion of the $5.6 million cut to Prescription Advantage, the state’s pharmacy assistance program for seniors,’’ she said, calling the program “a lifeline for thousands of seniors who are struggling to afford their medications.’’
Shannon Grants, which help fund youth violence prevention programs, also saw a significant cut, on top of other cuts over the past few months. The program was funded at $13 million last year and was cut in half for this year. Patrick sliced another $2 million yesterday, bringing the program’s funding to $4.5 million.
Homelessness advocates said they felt their programs were singled out. Joe Finn, president and executive director of the Massachusetts Housing and Shelter Alliance, sent an e-mail to supporters calling the 7.4 percent cut to homeless assistance “both unconscionable and bad policy.’’
“This is going to force people onto the street,’’ said Lyndia Downie, president and executive director of the Pine Street Inn.
She said her shelter, which has a $34 million budget, will now lose $1.7 million in state funding. The shelter is still working on how to deal with the cut, she said, pointing out that it comes as the weather is getting colder and as the demand for shelter will increase.
Matt Viser can be reached at firstname.lastname@example.org.
Maria Bonilla, 27, with daughter, Alyssa, 7. (Matthew J. Lee/ Globe Staff)
"Budget cuts will imperil state’s poor"
By David Abel, Boston Globe Staff, November 17, 2009
Maria Bonilla - who has trouble walking because of a congenital heart defect - feeds, houses, and clothes her two young children with $942 of state and federal cash assistance every month, though it barely covers her rent, utilities, and everything else her family needs to survive, from diapers to subway fare. But in a few months the 27-year-old victim of domestic violence expects to be homeless.
The Bonilla family is one of thousands of low-income families who will suffer from steep budget cuts.
The state estimates that the children of 9,100 families with parents so severely disabled that they qualify for federal Supplemental Security Income benefits will lose their state cash assistance as a result of the $600 million in budget cuts that Governor Deval Patrick announced late last month. The $15.8 million reduction of the Transitional Aid to Families with Dependent Children program, on top of $8 million in cuts made earlier this fiscal year, means families who receive the assistance will lose an average of more than $400 a month.
“I don’t want to be out on the streets,’’ said Bonilla, of Boston, whose family will lose $238 in state assistance Jan. 1, and she cannot work because of her heart. “That little amount of money helps a lot. If they take it away, my kids will suffer. I’m scared.’’
State officials said that they regret having to make the cuts but that the state budget is in such bad shape that they have no choice. While they acknowledge the pain, they said the cuts avoid eliminating programs and preserve the state’s workforce of case managers.
“In the face of unprecedented economic challenges, the governor has had to make some very difficult budget decisions,’’ said Jennifer Kritz, a spokeswoman for the Executive Office of Health and Human Services. “We recognize that there is a person behind every dollar; however, the governor has needed to make adjustments in order to close a significant budget gap. . . .. We are working with our community partners and other stakeholders to minimize the impact.’’
Advocates for low-income families contend that the cuts are unwise because federal stimulus dollars could reimburse the state up to 80 percent of the cost of paying the benefits, or $19 million of the $24 million eliminated. But Kritz said state officials are “confident that we will be able to identify other qualifying state funds’’ so Massachusetts does not lose federal money.
The advocates say the cuts mean that more families are likely to lose their homes, exacerbating the strain on the budget. In recent months the state has seen record numbers of homeless families, with 2,000 families packing state shelters and another 1,035 families living in state-subsidized motel rooms as of this week. It costs the state on average $36,000 a year to shelter a family.
“Just at the time the administration has vowed to end homelessness, hundreds of additional families will become homeless,’’ said Ruth Bourquin, a lawyer at the Massachusetts Law Reform Institute. “The state’s shelter system is already overwhelmed by demand. The last thing we need is to jeopardize the tenancies of disabled parents and their children, families who often have extra expenses due to disabilities and need to be residing close to their medical providers.’’
In addition to the cuts, which do not affect the other 41,000 families who receive transitional aid, the state will require parents who are capable of working and whose youngest child is between ages 6 and 9 will have to work 30 hours a week to get benefits, six more than required now. The advocates say the additional work requirement could lead to more families losing benefits.
“This cut is a prime example of the truly vicious cycle that we are in,’’ said Marylou Sudders, president of the Massachusetts Society for the Prevention of Cruelty to Children. “Pulling basic supports from children whose parents are so severely disabled will surely increase the number of children who end up in the care and custody of the Commonwealth. . . . The results, especially for the children, cannot help but be tragic.’’
The advocates say about 40 percent of the affected families have no housing subsidy and are unlikely to be able to afford rent. The rest of them will have to scrimp to pay for basic necessities, such as clothing, transportation, and medical supplies.
For Nasim Aziz-Rivera of Worcester, who has not been able to work since injuring his back in 2003 working for the Homeland Security Department, the cuts mean a loss of $199 a month for his family, or more than 20 percent of their cash assistance.
As a result, Aziz-Rivera, his wife, and their 6-year-old daughter are worried about how they will pay for basics, such as food. The 46-year-old said his wife, who earns less than $11 an hour working about 12 hours a week in school cafeterias, will seek more hours.
“It’s very hard,’’ he said. “It’s very hard to see your daughter, all three of us, in a situation that I don’t think any human being should be in.’’
David Abel can be reached at email@example.com.
"Massachusetts finance chief criticizes ‘risky’ budget move"
By GLEN JOHNSON, AP Political Writer, November 20, 2009
BOSTON (AP) — The top budget official in Massachusetts says the Legislature has taken a “risky” approach by adjourning for the remainder of the year without closing a projected $125 million state budget deficit.
Administration and Finance Secretary Jay Gonzalez told the Greater Boston Chamber of Commerce on Friday that Wall Street credit agencies recently reaffirmed the state’s bond rating in part because of its proactive financial management.
He said “crossing our fingers, and hoping our revenues will get better and solve our problem, is not responsible budget management. It’s risky.”
In response, Gonzalez said, Gov. Deval Patrick is now preparing a plan to close the remaining deficit unilaterally, since the House and Senate rejected his request to give him expanded authority to cut legislative, judicial and constitutional officer budgets. That could trigger deep program cuts.
“I am very concerned about leaving our budget shortfall unaddressed,” Gonzalez told the business leaders. “The longer we wait to make cuts that need to be made, the deeper the impact on programs and services.”
The sharp words amounted to a follow-up jab by the administration. On Thursday, Patrick made an unscheduled appearance in the Statehouse press gallery to make many of the same points himself.
He accused the Legislature of “brinksmanship” and urged members to reconvene to pass a crime bill, education overhaul and give him more budget-balancing authority.
House Speaker Robert DeLeo offered a tart response to the governor, who is gearing up his 2010 re-election campaign.
“Governor Patrick’s comments seem to be more about political necessity than ‘moral obligation,’” DeLeo aide Seth Gitell said in a written statement. “Speaker DeLeo’s obligation is to the commonwealth’s schoolchildren — not Governor Patrick’s political calendar.”
House and Senate budget leaders said they have done what’s needed by making over $400 million in cuts. They also said they are asking constitutional officers and the judiciary to make voluntary cuts within their own budgets, arguing they know how to control them better than the governor or the House and Senate.
In a related development, Gonzalez announced that four unions representing 75 percent of the state’s 40,000-person executive branch union workforce have agreed to forgo raises and take furloughs to join management employees in staving off potential layoffs.
Negotiators for AFSCME, NAGE, SEIU Local 509 and SEIU Local 888 struck the deals this week and now are presenting them to rank and file for approval.
Gonzalez said the deals would create “tens of millions in savings” and represented the first time a governor had gotten a furlough agreement and delay in contracted wage increase since state employee collective bargaining started in 1974.
Patrick said in October that Massachusetts would have to cut about 2,000 jobs to close an estimated $600 million budget deficit. He said 1,000 of those cuts would happen regardless, due to program cuts. But he called on unions to match management concessions to avoid up to 1,000 layoffs he feared would drastically harm the state’s delivery of services.
The governor ordered managers to take up to nine furlough days, depending on their salary. Gonzalez said the unions had matched the savings either through furloughs, compensation givebacks or a combination of both.
After his speech, the secretary told reporters that if the agreements are ratified, it would save “hundreds” of jobs.
The administration continues to negotiate with unions representing State Police troopers and other government employees.
"Massachusetts lawmakers to hear latest fiscal forecasts"
The Associated Press via Boston.com - December 12, 2009
BOSTON -- Just how bad is the Massachusetts economy and when will things turn around? Lawmakers are hoping to get some answers at a public hearing this week.
The Senate and House Ways and Means Committees are planning a public hearing Wednesday to listen to top economists, fiscal watchdogs and state officials including Treasurer Timothy Cahill and Revenue Commissioner Navjeet Bal.
Tax revenues have tumbled in recent years, forcing billions in cutbacks.
Michael Widmer of the Massachusetts Taxpayers Foundation, who is also scheduled to testify, said the state is facing a shortfall for the current fiscal year in the hundreds of millions and a gaping $3 billion hole for the fiscal year that begins July 1.
The hearing is scheduled for Wednesday at 10 a.m. at the Statehouse.
"State tax revenues may rebound as fed funds dry up"
By John J. Monahan - firstname.lastname@example.org - Worcester TELEGRAM & GAZETTE STAFF, December 16, 2009
BOSTON — After the steepest state revenue declines in decades triggered a multibillion-dollar budget deficit and major cuts over the last year, state tax revenues have stopped falling and may be stabilizing, according to new projections.
Revenue Commissioner Navjeet K. Bal told lawmakers today she is expecting small increases in revenue for the fiscal year that begins next July, which state officials are now planning for with budget proposals due in January.
Those increases, however, would come at a time when federal stimulus and stabilization funding — which reduced the need for further cutbacks and allowed level funding of local education aid this year — is expected to begin drying up.
The potential budget gap that could emerge as a result prompted Ms. Bal, the state treasurer and lawmakers to urge caution on any spending increases at a revenue hearing on Beacon Hill today.
Ms. Bal said the current year's revenues are on pace to come in 2.2 to 4.5 percent lower than those of fiscal 2009, and economic indications point to total tax revenues increasing between 1.7 and 3.9 percent in fiscal 2011. Sales taxes through the first five months of the current fiscal year have increased 9.2 percent, which she said reflects both a 25 percent hike in the sales tax to 6.25 percent, and expansion of the sales tax to include alcoholic beverages.
She said that so far in the fiscal year that began in July, state income tax revenues have fallen 35 percent, largely due to the collapse of capital gains tax revenues, while state payroll withholding tax revenue is down 3.8 percent.
State Sen. Harriette L. Chandler, D-Worcester, assistant vice chairman of the Senate Ways and Means Committee, said today it appears state revenues are bottoming out. While some tax revenue increases are anticipated late next year, she said it is no reason for state or local officials to begin counting on increased spending next year, especially with high unemployment rates expected to continue.
“I still think we have to be extremely conservative,” and the Legislature has to focus on ways to promote job growth, Ms. Chandler said. “If people don't have jobs, people aren't going to be able to pay taxes.” She does not expect cuts to be restored for many years, and thinks some reduced spending will likely become permanent.
Ms. Chandler said employer-paid unemployment insurance taxes are expected to go up next year, and that is one area in which the state may be able to consider changes to reduce the impact on employers.
Michael J. Widmer, executive director of the Massachusetts Taxpayers Association, a Boston-based business group, said that starting in January employers will see an increase of 30 to 40 percent in their unemployment insurance taxes, which are already among the highest rates in the country.
State Treasurer Timothy P. Cahill, who is planning an independent run for governor next year, also urged conservative budgeting for the coming year. While there are indications there could be some recovery in revenues in the second half of 2010, Mr. Cahill told the Joint Ways and Means Committee, “I would not bank on any increases in revenue going forward.”
Mr. Cahill said lottery revenues for the current year may still match the previous year, but he said much depends on the sale of lottery tickets during the holiday season, which accounts for up to 20 percent of lottery revenues each year. One bright spot, he noted, is the state expects to take in an additional $25 million to $40 million annually, with its introduction of the national PowerBall game here in January.
"Massachusetts budget deficit could hit $3 billion next year, Jay Gonzalez, secretary of administration and finance says"
By Dan Ring, The Springfield Republican (Online), December 16, 2009
BOSTON – Gov. Deval L. Patrick’s top fiscal aide on Wednesday gave a grim outlook for the state’s finances, saying the budget deficit for next fiscal year could be as high as $3 billion and that “everything is on the table” for possible cuts including state aid for cities and towns.
Jay Gonzalez, administration and finance secretary, issued the warning even though testimony from forecasters indicated economic growth is returning and that tax collections could grow by $1 billion over the next year and a half including as much as $373 million above current projections for the rest of the current fiscal year.
Gonzalez said the $3 billion gap for the fiscal year that starts July 1 would be lowered by any growth in tax revenues, a possible increase in federal stimulus money over current assumptions and other potential budget solutions such as consolidations of programs. When the governor unveils his version of the estimated $27 billion state budget for next fiscal year, it will also include cuts in services, according to Gonzalez.
“There’s no way that we will be able to avoid further cuts,” Gonzalez said after hearing four hours of testimony from economic forecasters. “It’s just a question of to what extent the solutions to that $3 billion gap need to include cuts.”
The estimated $3 billion budget gap assumes maintaining the current level of programs and services and no growth in tax revenues. Patrick will unveil his budget on Jan. 27.
Gonzalez said he was encouraged by testimony from economic analysts and state officials at a four-hour hearing at the Statehouse.
Navjeet K. Bal, commissioner of the state Department of Revenue, said the economy is emerging from the recession and could accelerate during 2011.
She said tax revenues for this fiscal year could be as high as $373 million above the administration’s Oct. 15 estimate of $18.279 billion.
Bal said that tax revenues for the following fiscal year could grow as much as $689 million over this fiscal year.
She said the state is reaping the benefits of a 25 percent increase in the sales tax to 6.25 percent and imposing the sales tax for the first time on the retail sale of beer, wine and alcohol. Through the first five months of this fiscal year, revenues from the sales tax total $1.8 billion, an increase of 9.2 percent from the same period last year. Without the increase and new alcohol tax, sales taxes would have fallen by 7.5 percent.
Sen. Steven C. Panagiotakos, D-Lowell, said a goal is to provide at least the same level of unrestricted and general education aid to cities and towns in next fiscal year’s budget.
After the governor submits his fiscal 2011 budget next month, the House and the Senate will craft their own spending plans. Legislators will then send a House-Senate compromise to the governor, probably in June.
The budget for this fiscal year, which ends June 30, is balanced with $214 million in rainy day money and $1.6 billion in federal stimulus dollars. Panagiotakos, the chairman of the Senate Ways and Means Committee, said the same level of such “one-time revenue” likely won’t be available next year.
This year’s budget includes $936 million in unrestricted municipal aid, down 29 percent from last year, and $4 billion in general education aid, a slight increase.
Treasurer Timothy P. Cahill, an independent candidate for governor, said the improving economy may also help return more lottery aid to cities and towns this fiscal year than estimated in July. Cahill said lottery sales are improving partly because people have more confidence in the economy.
Cahill upped estimates for lottery sales for this fiscal year by about $100 million to about $4.3 billion. He said those sales will provide about $850 million in profits for aid to cities and towns, down about $9 million from last fiscal year but an increase of about $35 million from earlier projections.
Cahill also said the treasury will sell about $75 million in stock and bonds that are categorized as abandoned property. The state can sell the property because it went unclaimed after being held by the state for three years.
Cahill said that he is skeptical that tax revenues will grow much for the fiscal year that starts July 1. He said the Patrick administration and state legislators should use the most conservative revenue estimates in developing a new budget.
Testimony by other analysts also reflected the improving economy.
David G. Tuerck, executive director of the Beacon Hill Institute at Suffolk University in Boston, said tax collections this fiscal year may rise $357 million more than the administration’s estimates and then increase by an additional $820 million for the fiscal year starting July 1.
He said the state’s unemployment rate peaked at 9.3 percent in September and fell to 8.9 percent in October. He said data indicate smaller businesses, startups and sole proprietors are adding jobs. “This is a very positive sign for the state labor markets and bodes well for the future,” Tuerck said.
"Governor Deval Patrick’s $28B budget slashes services, taxes sweets"
By Hillary Chabot, Wednesday, January 27, 2010, www.bostonherald.com - Local Politics
Facing a bruising re-election year, Gov. Deval Patrick filed a politically tough $28.2 billion budget that slashes human services, boosts taxes on candy, soda and smokeless tobacco products but holds local aid harmless.
“Services will suffer and people and communities will feel it,” Patrick said this morning. “But we will do everything we can in every way we can to meet the demands of the public.”
Patrick defended his budget from early attacks by Republican gubernatorial rival Charlie Baker, who slammed the governor for using too much in rainy day funds and accused Patrick of letting the budget, “get away from him.”
“It was raining, first of all,” Patrick said. “There’s no governor living in Massachusetts who’s had to deal with what we’ve had to deal with.”
Patrick also reduced the film tax credit - a program he has staunchly defended - by $75 million saying it “has been wildly successful but has been very expensive.”
He also scaled back the state’s life sciences tax credit by $5 million.
The governor proposed to raise $51.7 million by eliminating the 6.25 sales tax exemption on candy and soda while raising $15 million by eliminating the tax exemption on smokeless tobacco. Patrick pushed both initiatives in last year’s budget but lawmakers largely ignored them.
“We’ll try again,” Patrick said. “We thought it was right before and we’ll try again.”
The budget includes $797 million in cuts, including $56 million in adult dental services under MassHealth, $5 million for a program paying police officers for earning a college degree, and a $3.2 million cut to state parks.
Michael Widmer, president of the Massachusetts Taxpayers Foundation, said the budget is savvy because it doesn’t touch local aid in what looks to be a competitive election year. Cities and towns depend on the $5.2 billion in local aid, which funds everything from schools to city government.
It also means less pressure on property taxes, a campaign issue for Patrick when he ran for election in 2006.
"The governor's budget"
The Berkshire Eagle, Editorials, January 29, 2010
The $28.2 million budget for the next fiscal year released by Governor Deval Patrick Wednesday contains painful cuts and hazardous assumptions, but maintains funding levels for education and local aid for cities and towns. Once again, the governor is left to file a budget that doesn't come close to resembling the kind of budget he had planned on filing when elected but it reflects the realities the state will be facing for yet another year and protects what most needs to be protected.
It is not easy to find painless cuts these days, and one of the few is the $5 million for the theoretically valuable but oft-abused Quinn Bill program to pay police officers to pursue higher education. The $56 million cut from the adult dental care program for low-income adults is a tough one as that program prevents other health issues. Trimming $9 million in job-training programs during high unemployment is painful as well, and cutting $3.2 million from state parks means further deterioration of those once-cherished lands. If the administration is off target on an anticipated $600 million in federal stimulus funds, more cuts would be necessary.
In light of the magnitude of the cuts and the economic problems facing the state, it is difficult to see how opposition to raising $67 million in additional taxes on soda, candy, smokeless tobacco and cigars, all of them unhealthy, can be justified. These hikes should be included in the budgets to be filed next by the House and Senate.
"State House Weekly Roundup: For Scott Brown so loved the commonwealth"
By Jim O'Sullivan - State House News Service - Swampscott Reporter - January 29, 2010
Boston — Gov. Deval Patrick on Wednesday expressed into the public sphere the first operating budget proposal given life since Scott Brown was elected to the United States Senate.
This is the way things are time-stamped on Beacon Hill now. There’s “B.S.” (before Scott) and “P.S.” (post Scott).
And so it was that the governor published his $28.2 billion operating plan for next year, which is 4.3 percent more than currently authorized for this fiscal year, although revenue growth is expected to run 3.2 percent, and about 3 percent of the bottom line is assistance that has yet to be authorized by Congress. Lots of percentage gaps, not all that much certainty.
“Every budget is based on reasonable assumptions, and this budget is based on reasonable assumptions, and because of the work that I’ve done with the congressional delegation, with the leadership in the Congress, with the president, I’m confident that we will have those resources when we need them,” Patrick said in response to lawmakers who were aghast at the idea of relying on almost $800 million in speculative federal revenues – even more than originally expected.
Under Patrick’s schematic, local aid, mostly, and education assistance go virtually untouched, tax breaks for the film and life sciences industry would grow less generous, safety net hospitals reported a potential shortfall close to $100 million, while parks take it on the chin again and human services in general would receive lower funding.
There’s a refinancing of $300 million in debt payments, spreading them over seven years to avoid an uncommon spike that had been slated for fiscal 2011, a $175 million draw on state reserves, about $1.4 billion in federal stimulus. It’s a desperation patchwork, officials acknowledged, because it has to be.
Some were also unimpressed with Patrick’s most celebrated reform proposal, a harnessing of the parole and probation departments – both of which lawmakers eye with complicated feelings these days – that the governor says will allow for more effective post-release supervision and maybe save some money.
“He’s concerned about patronage?” asked one House committee chairman, with expletives deleted. “What’s he going to do? Have his patronage, gubernatorial patronage. It’s jobs that he’ll be able to place.”
Patrick makes $800 million or so in cuts, and looks to impose new taxes on candy, soda, cigars, and smokeless tobacco – sometimes known as “chew” or “dip” and defended by users as a recreational habit that does not inflict secondhand smoke-like ancillary effects on others – and apply the five-cent deposit on beverages like flavored water, coffee-based drinks, sports drinks, and, uh, plain water.
Any bets on whether Tim Cahill or Charlie Baker might make an issue out of the governor taxing water? Or Christy Mihos, if he resurfaces?
Of course, the jokes about what legislators do to governors’ budget proposals still apply, and Speaker Robert DeLeo quickly took a no-new-taxes pledge for this year’s budget, which sounded a lot like last year’s saber-rattlings, which went unfulfilled to the tune of about $1 billion in new revenues.
The governor, though, said he’s playing a bigger game.
“If all you see, when you look at this budget, is numbers and line items, you make one set and type of decisions," Patrick said. "If you see people, you make different kinds of decisions. We see people, so we make decisions accordingly."
It kind of made the governor sound like, well, Scott Brown, who’s going to see even more people this weekend when he rocks the Canyon around the Commonwealth on an open-house tour before the official transfiguration on Feb. 11.
Capitol inhabitants had begun by Thursday, Jan. 28, referring to Scott Brown as “Elvis,” as in “Elvis is in the building.” Colleagues broke into spontaneous applause when he returned to the chamber that day. Stories were exchanged about the last time so-and-so talked to Scott Brown, or the time Scott Brown said this, the way he laughed. When you go from the junior-most member of a puny minority in the state Senate to the country’s most scalding political commodity, stuff like this happens.
One Democrat spoke aspirationally of being “more Scott Brown than Scott Brown,” which is not something a lot of people were saying a month ago.
Scott Brown told the AP that he wanted to ride bikes with Lance Armstrong, and give him a hug. This came on the heels of Scott Brown’s naked appeals to President Barack Obama to play basketball, and hours before Scott Brown taped Leno.
What we may come to expect is a sort of Scott Brown Fantasy Celebrity Hangout Tour. There’s Scott Brown shredding Wachusett Mountain with Shaun White. Here’s Scott Brown whipping up shrimp risotto with Rachel Ray. Watch Scott Brown teach the cast of “Jersey Shore” how to drive a truck. Blindfolded, backwards, showing skin, while healing ensanguined partisan chasms and summoning the middle class out of exodus.
Everything that moves
Senators on Jan. 28 approved legislation regulating all-terrain vehicle use by anyone under the age of 14, unless in a sanctioned race with adult supervision, requiring registration and mandating helmets. Led by Senate President Therese Murray, and cheered by the parents of an 8-year-old who died from injuries suffered in an all-terrain vehicle accident in 2006, the bill passed on voice vote.
Prospects are less clear in the House, where there appears to be little enthusiasm for the bill, and some outright opposition. Rep. Denis Guyer, a Dalton Democrat who announced Friday he would not run for reelection, said he wants more education and training, but not a ban on youngsters driving ATVs.
“I represent a lot of people who ride as families,” said Guyer. “Bordering these state parks, they come home from school every day, they come home from work, and they ride. It gets them away from the Wii game and the Nintendo, and they ride for a few hours. And for the most part they do it safely. [The legislation] just seems like a knee-jerk reaction to a horrible situation.”
There’s a certain geographical split here, western Massachusetts members said.
“Things like that are viewed as hobbies and fun out here, probably more than people in the eastern part of the state look at it,” said Rep. Christopher Donelan, an Orange Democrat. The next motor vehicle safety issue on the horizon, in the House anyway, is that texting-while-driving ban, which cleared committee Thursday and has precedent in other states.
"Tipping the balance: As investment losses climb, cities and towns struggle to keep up with pension payments"
By Kathy McCabe, Boston Globe Staff, January 31, 2010
The city of Lynn spent $22 million this year on retirement costs. That’s more than the cash-strapped city allotted for any other department, including the police, fire, and public works departments.
Lynn has an unfunded pension liability of $257 million, the largest of any Massachusetts community north of Boston. And its annual pension contribution next year is due to increase by $1.5 million on July 1 to $23.5 million, according to the state’s Public Employee Retirement Administration Commission, which oversees 106 public pension systems.
“It’s a big number that has to be paid,’’ said Richard Fortucci, Lynn’s chief financial officer. “It’s getting to a point where it could hurt other areas of our budget.’’
Investment losses have meant higher pension costs for cities and towns. Funds in the area lost at least 20 percent of their value in 2008, according to state data. Although Wall Street is recovering somewhat, the 2009 gains might not be enough to offset the pension pinch on local budgets. “It’s not all rosy,’’ said Saugus Town Manager Andrew R. Bisignani. “The jury is still out as to how well [the stock market] will do.’’
Local leaders are banking on help from a pension-overhaul effort on Beacon Hill. Governor Deval Patrick has filed a bill that would give local pension systems until 2040 to pay off unfunded pension liability. State law now has a deadline of 2030.
The bill, separate from a bill Patrick filed last week to improve the state pension system, aims to help prevent local systems from being hit with huge increases in pension costs because of market losses.
“It’s not feasible for a system to absorb a 30 percent increase in its appropriation,’’ said James Lamenzo, an actuary for the Public Employee Retirement Administration Commission. “What we have proposed, by extending the payment schedule. . . . If we are not allowed to go beyond 2030, we’re going to have big problems.’’
Under Patrick’s bill, a retirement system would require that any future gains be used to shorten a payment schedule, not reduce annual payments, a state spokeswoman said.
“When the market comes back, and their assets come back, local pension funds will be in a better position to meet their obligation,’’ said Cyndi Roy, spokeswoman for the state Executive Office for Administration and Finance. “The governor recognizes there is a need to give additional tools to help manage pension liability.’’
Pension funds get money from investment income, worker contributions, and tax dollars.
But for decades, communities did not set aside enough money to pay for future retirement costs. Since 1988, the state has required communities to make scheduled payments, with a goal of paying down the debt. A system is considered fully funded when it has enough money to pay for benefits if every employee retired at once.
The original payoff deadline was 2028, extended to 2030 last year as the economy worsened. Still, communities have been hit by cuts to state local aid and lower tax revenues, and some fear the pension burden will only further strain local budgets unless the payoff deadline is extended.
“It’s like a ticking time bomb waiting to go off,’’ said Andy Bagley, research director at the Massachusetts Taxpayers Foundation, a nonprofit fiscal watchdog group. “When cities and towns see payments go up 50 percent, when local aid is cut, it’s a pretty tough time to find another five, six or seven million dollars.’’
Local leaders agree the pension tension is growing. “It’s a real budget-buster, ’’ said Methuen Mayor William Manzi. “It’s a fixed cost, just like health insurance. . . . Add those two 800-pound gorillas together, and you get a one-two knockout punch.’’
Methuen’s pension costs increased $600,000 this year, to $6.6 million. Manzi will tap a reserve fund to pay most of the increase, after the City Council voted last month not to pay the hike by increasing property taxes. Methuen’s pension costs are due to increase $700,000 next year, according to state data.
Manzi favors extending the funding deadline to 2040, even though it will likely mean added costs. “It’s not the best fiscal policy,’’ he said. “But it ought to be extended, because if you don’t stretch it out somewhat, than then these payments are just going to crush municipal budgets.’’
In 2008, Lynn was one of several communities that was told it had to invest retirement assets with the state Pension Reserves Investment Trust Fund. A local retirement system whose returns over a 10-year period do not come within 2 percentage points of the state fund must transfer its assets to the state.
But in 2008, the state fund lost 29.5 percent of its value, leaving Lynn and other communities with higher costs. “It’s ironic that we had to put our money into the system and then, boom, the market crashed,’’ said Gary Brenner, administrator of the Lynn Retirement Board. The PRIT fund had a 17.69 percent gain in 2009, state data showed.
Lynn was facing a $2.7 million increase for next year, until the state agreed in November to lower the amount to $1.5 million. The remainder of the increase will be spread out over the next three years, Brenner said.
Even retirement systems that have historically performed well have had to adjust. In Danvers, the town was on track to pay its $51.54 million by 2024. But after its investment portfolio took a 27 percent hit in 2008, the board voted last month to extend its payment schedule to 2028, trimming its payment by $1 million, to $5 million, for next year, said Leonard Marshall, the town accountant and chairman of the Danvers Retirement Board.
“It’s made things more tolerable,’’ he said. “If a system didn’t do that, you’d take a bigger hit. That is very difficult when everyone is trying to balance dollars and there are fewer dollars to balance.’’
Kathy McCabe can be reached at email@example.com.
"Hack bailout defended - Official: Stimulus meant for state, local aid"
By Jay Fitzgerald, February 3, 2010, www.bostonherald.com - Business & Markets
Gov. Deval Patrick’s finance chief acknowledged yesterday that a massive infusion of federal stimulus funds has served to prop up the state budget - and preserve government jobs.
Appearing at a Beacon Hill oversight hearing on the federal stimulus program, Jay Gonzalez, Patrick’s secretary of administration and finance, lashed out at a Herald story that showed the vast majority of jobs his boss bragged about creating or retaining last quarter were actually government jobs.
Gonzalez, testifying before the Legislature’s Joint Committee on Federal Stimulus Oversight, said it was always the intent to use the billions of dollars flowing into Massachusetts’ coffers for government programs and services, including education, unemployment insurance, health services and local aid.
That money came with federal strings attached, giving the state little flexibility on how to spend it, Gonzalez said.
“We can’t choose” how to spend the money, said Gonzalez, adding the money effectively kept the state from making deeper cuts into government budgets and services.
“This (stimulus) money is for state budgetary relief,” said Gonzalez.
Democrats on the committee backed up the Patrick administration, saying state and local governments would have been devastated by budget cuts had it not been for stimulus money.
But Sen. Michael Knapik (R-Westfield) said both federal and state officials boasted last year, after the $787 billion stimulus bill was passed, that the emergency funding would help generate mostly private-sector jobs.
“The reality has been quite different,” he said. “There’s a huge frustration out there. . . . It’s largely been a public-sector story (on jobs).”
Over the weekend, the Patrick administration touted how the state’s economic stimulus spending last quarter had created or saved the equivalent of about 4,700 full-time jobs. But the administration didn’t mention that about 70 percent of those jobs were government positions - and that about 70 percent of the 4,700 jobs were “retained” posts, not newly created jobs.
The state has since claimed that separate federal grants created or retained an additional 4,500 jobs last quarter, many of them private-sector jobs.
Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, said cuts will probably be needed before June.
"More cuts loom as state faces $295m in red ink: MassHealth, other services blamed for drain on coffers"
By Michael Levenson, Boston Globe Staff, March 19, 2010
Massachusetts is potentially facing a new budget gap of up to $295 million this year, a grim forecast that state officials said could spell yet another round of painful cuts before the fiscal year ends in June.
Patrick administration officials blamed the gap on rising demand for the joint state and federal health care program for low-income residents known as MassHealth, increasing demand for homeless shelters, and on below-projected revenue from state fees and federal aid.
Massachusetts, like other states, has grappled with more than two years of declining revenue as a result of the global economic downturn, which prompted Governor Deval Patrick to make midyear budget cuts four times last fiscal year and once already this year, in October.
Jay Gonzalez, secretary of administration and finance, said that officials were monitoring the situation and that the gap could ultimately be as low as $195 million.
He said officials would decide in the next few weeks how to find savings, with the potential for further cuts and additional withdrawals from the state’s dwindling reserve fund.
“We’ll need to solve it, and we’ll look to cuts and whatever other options we have to make sure the budget is balanced,’’ Gonzalez said yesterday.
Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, said the state could potentially manage a $295 million budget gap with relatively little pain in a healthy economy.
But after two years of budget cutting and with the state facing at least two more years of dire budgets, this latest shortfall “is a very big deal,’’ he said.
“So there’s no end to the bad news here,’’ Widmer said. “The state fiscal situation is already so dire that any additional bad news is magnified.’’
Cuts, he said, will almost certainly be necessary before June, unless tax revenue this month and next exceeds projections, a scenario that he said “may be a long shot.’’
In addition to posing a stark policy challenge, the new shortfall immediately reverberated in the governor’s race, in which Patrick is facing a tough road to reelection.
Republican gubernatorial candidate Charles D. Baker Jr., who served as budget chief in the Weld and Cellucci administrations, released a statement yesterday calling the shortfall “just another example of Deval Patrick and Tim Cahill’s fundamental incompetence when it comes to the Commonwealth’s budget.’’
Cahill, the state treasurer, is an independent candidate for governor.
“In the face of the worst economic times since Governor Dukakis, their failure is intolerable,’’ Baker said. “Our state’s budget should be the top priority for the governor and the treasurer, yet time and time again unanticipated spending and rising costs catch both of them off guard.
“Their lack of leadership on the budgetary process is unacceptable, and the taxpayers and business owners of Massachusetts deserve better,’’ he said.
Cahill, who argued earlier this week that the state’s universal health care law is bankrupting Massachusetts, said the latest shortfall “is further evidence that we have a broken and mismanaged health care system in this state.’’
“I warned on Tuesday that health care spending in Massachusetts was blowing a hole in the state budget,’’ Cahill said in a statement. “I’m glad that the governor’s office is finally acknowledging that fact.’’
Gonzalez called Baker’s criticism that the shortfall caught the administration off guard “a complete mischaracterization of what’s going on here.’’
“It’s the exact opposite, in fact,’’ Gonzalez said. “We are actively managing our budget and addressing it promptly.’’
Gonzalez pointed to three major rating agencies, which reaffirmed the state’s healthy bond rating this month.
Moody’s, for example, cited the state’s “effective management during economic downturns, with a willingness and ability to promptly identify and close gaps through use of both new revenues and spending reductions.’’
Gonzalez also rejected Cahill’s assertion that the universal health care law is exacerbating the state’s fiscal crunch. The law, he said, is costing the state less than 1 percent of its budget a year.
Steven C. Panagiotakos, a Lowell Democrat and Senate chairman of the Ways and Means Committee, agreed with Gonzalez that the cost of the state’s universal health care law is unrelated to the latest budget crisis.
He said the latest shortfall is being driven by between $150 million and $200 million in rising costs for MassHealth, a program that predates the universal health care law.
The huge MassHealth program, 60 percent of which is paid for by the federal government, costs the state about $10 billion out of its $27 billion annual budget.
“For us to really control our budget, we have to be able to stabilize MassHealth expenditures,’’ Panagiotakos said. “It’s a huge chunk of our state revenues.’’
He said it was too soon to know if cuts will be needed this year and said the extent of the cuts will depend, in part, on how deeply lawmakers decide to dip into the state’s $675 million reserve fund.
“This new one is certainly troubling,’’ he said, “but we’ve managed through them before. We’re getting used to it.’’
Levenson can be reached at firstname.lastname@example.org.
"Patrick says gap in budget $100m less than forecast"
By Michael Levenson, Boston Globe Staff, March 31, 2010
Governor Deval Patrick said yesterday that a midyear budget gap discovered earlier this month is not as large as initially forecast and proposed closing the shortfall through a mix of spending cuts and money from the state’s reserve fund.
Administration officials said the shortfall, which they initially predicted could reach $295 million, is instead $195 million.
Of that, about $77 million will be covered by the federal government in reimbursements to the state’s Medicaid program, leaving the state to cover the remaining $118 million.
Under the plan, this would be accomplished by reducing spending by $38 million in 10 accounts, draining a $50 million surplus from a state transportation fund, and taking $30 million from the state’s rainy day fund.
“We’re consistent with what we’ve done throughout this fiscal crisis,’’ Patrick’s budget chief, Jay Gonzalez, said yesterday. “We’ve identified budget issues through active monitoring, and we’re promptly addressing the deficiency after learning of it.’’
Steven C. Panagiotakos, Senate Ways and Means chairman, said the Senate will probably vote on the governor’s proposal next week.
“I think it’s reasonable and it’s prudent,’’ said Panagiotakos, a Lowell Democrat. “I do hate that we have to use any money from the rainy day account, but we really have no choice at this late time in the budget cycle.’’
About $600 million is left in the rainy day account.
Charles A. Murphy, House Ways and Means chairman and a Burlington Democrat, said he was happy to learn that the gap is not as severe as predicted. He said the governor’s plan for closing the shortfall relies on “reasonable savings.’’
The new shortfall, administration officials said, was largely driven by increased demand for services in the economic crisis.
The state spent $125 million more than anticipated on Medicaid, the joint state and federal health insurance program for low-income residents, as well as $19 million more than anticipated for homeless shelters, officials said.
The figure also includes $7.2 million that the state spent on the special US Senate election in January.
Administration officials insisted that the blueprint offered yesterday will not result in reduced services because it relies mostly on redirecting money from programs that were given more than they needed.
The plan, for example, reduces spending on reimbursements to local communities that host charter schools by $4.5 million, but officials said that too much had been set aside in that account and that communities would receive everything owed. The plan also takes $3 million from the Department of Children and Families, money that administration officials said the child protection agency does not need because it has been using less costly services.
In addition, administration officials said, the plan relies on savings in the state’s debt payments. For example, officials said, the administration has learned that $8.8 million in Big Dig debt and $11 million in debt on the state’s bridge repair program that it had initially expected to pay this year will not come due until next year.
The administration also proposed taking $50 million in surplus money from the Commonwealth Transportation Fund, a reserve account recently established to pay down debt on highway repairs and construction projects.
“In these challenging economic times,’’ Patrick said in a statement, “it is critical we maintain our safety net services for residents most in need.’’
Michael Levenson can be reached at email@example.com.
"MA House passes budget that aims to close deficit"
Boston.com - May 1, 2010
BOSTON --The Massachusetts House of Representatives has passed a $28 billion budget which leaders said closes a $3.2 billion deficit.
House leaders said their plan, unlike Gov. Deval Patrick's, does not raise taxes or draw from the state's reserve account. It includes spending cuts of $1.4 billion, and relies on nearly $1.6 billion in federal stimulus dollars.
House Speaker Robert DeLeo said the plan, passed Friday, "efficiently and compassionately tackles the fiscal challenges facing the Commonwealth."
Republican Rep. Karen Polito criticized the budget as a "product of poor policies and even poorer procedures."
The plan now moves to the Senate for debate later this month.
A BOSTON GLOBE EDITORIAL
"By postponing hard choices, Beacon Hill risks greater pain"
May 2, 2010
THE STATE’S predominantly Democratic leadership might not be expected to pick fights with public-employee unions and other entrenched interests in an election year. But state finances are tight, and voters are restless. Unless Governor Patrick and state lawmakers enact further reforms — so that the state’s public sector shares more equitably in the sacrifices that the private-sector workforce has made during the recession — these officials will face a far worse budget picture next year.
Or their replacements will.
Under budget plans offered by Patrick and House leaders, Massachusetts would only tread water until after November. The House would balance the budget in part by cutting into higher education and state aid to local governments; Patrick would use a mix of spending cuts, reductions in tax exemptions, and further withdrawals from the state’s dwindling rainy day fund. Neither approach amounts to an aggressive response to the state’s underlying financial troubles.
In recent budgets, the state has relied heavily on federal stimulus money and the state’s ever-shrinking rainy-day fund. This one-time money is likely to dry up much faster than tax revenues recover; the Massachusetts Taxpayers Foundation is predicting a $2.5 billion shortfall in fiscal 2012. That’s bad enough. But voters will likely be confronted in November with ballot initiatives to cut the state sales tax from 6.25 cents to 3 cents and to repeal the sales tax on alcohol purchases altogether. Should those measures pass, billions of dollars in expected revenues would vanish. Those measures are more likely to pass if voters believe the Legislature tends to noisy special interests over the broader public good.
A firefighters’ rally at the State House last week was a baleful sign. Fresh from his role on an arbitration panel that gave Boston firefighters a budget-busting 19-percent raise, Robert McCarthy, head of the state’s main union for firefighters, appeared at the rally to rail against possible cuts in state aid to municipal governments. He also denounced legislation to give local governments more power to cut costs by modifying the terms of their employee health care plans. This took some nerve: Cities and towns wouldn’t need as much local aid if they could keep their employee health costs in check. But McCarthy, it seems, wants the state to keep bailing cities and towns out after they make — or as in Boston’s case, are cudgeled into making — utterly unjustified concessions to their public employees.
It’s not just the firefighters; many other unions have resisted cost-cutting changes. It’s not just the unions; public employees at multiple levels benefit from a pension system that remains overly generous. And it’s not just payments to employees and retirees; some entire agencies, including the Probation Department, need to be overhauled, and others, such as most pension boards, need to be abolished altogether.
The tolerance for bloat and dysfunction threatens the viability of progressive government in Massachusetts. Last week, presidents of public colleges and universities were begging to avoid further cuts, and private colleges were desperate to preserve state scholarships to students who attend those schools. Human-services advocates are trying to preserve money to fight child abuse. Meanwhile, the state can’t fix enough roads. It can’t upgrade the community college system. It can’t expand a historic-rehabilitation tax credit that would spur faster redevelopment in the state’s old mill cities.
Last year, the Legislature did pass pension reforms that will free up money, at least in the long term. But there are signs that, in this election year, lawmakers are inching in the wrong direction. Just last week, the House passed a “municipal relief’’ bill that will let pension boards grant larger cost-of-living adjustments to retirees. Never mind that defined-benefit pensions are increasingly rare in the private sector, and that very few of the remaining ones grow with inflation.
In an age of layoffs, furloughs, and pay cuts, it’s hard to convince most private-sector employees that pensions for workers who retire at 55 should be untouchable, while initiatives to develop the economy, encourage higher education, and protect children are strictly optional. The purpose of budget season isn’t to find a way to scrape by until next year; it’s to set priorities. And if the governor and the Legislature want to soothe voters’ anxieties, they’ll lay the groundwork now for a government that is both progressive and efficient.
"Patrick budget chief: Tax cuts, loss of fed aid could leave state with $4B gap"
By Michael Norton - State House News Service - bostonherald.com - Local Politics - May 11, 2010
Voter approval in November of a pair of tax-cutting ballot questions, combined with the drying up of federal stimulus law funds, would leave state government with at least a $4 billion annual budget gap at this time next year, Gov. Deval Patrick’s budget chief told local officials Tuesday.
The $4 billion gap would represent the “starting problem” for fiscal 2012, which begins July 1, 2011, Administration and Finance Secretary Jay Gonzalez told local mayors and selectmen. The tax cuts would account for $2.5 billion in lost government revenue, with $1.5 billion in stimulus revenues disappearing.
“The numbers are getting so big,” said Gonzalez, who is working with lawmakers to address a $3 billion gap between projected revenues and spending in the fiscal 2011. The Senate budget is due out next week.
Tax relief proponents are in the midst of citizen-driven campaigns to reduce the sales tax rate to 3 percent after the Legislature and Gov. Deval Patrick raised it to 6.25 percent from 5 percent last summer. A second citizen petition, pushed by package store owners, repeals the new application of the 6.25 percent sales tax to alcohol purchases.
Revenue Committee House chair Rep. Jay Kaufman said Tuesday he hoped to pursue “comprehensive reform” to the state tax code next session, calling for “a difficult and adult conversation about how we tax ourselves.”
With voters exhibiting anger over the state of the economy and with government, Massachusetts is bracing for a potentially volatile election cycle. Few are boldly making predictions in the wake of Sen. Scott Brown’s surprise victory in the U.S. Senate special election in January.
Both questions, if adopted, would take effect on Jan. 1, 2011, in the middle of the fiscal year the Beacon Hill officials are planning for currently. Gonzalez said the questions, if approved, would pull just over $1 billion out of the state’s tax base in the second half of the fiscal year.
If approved, the tax cuts would present an immediate challenge for Patrick or his successor in January.
Natick Selectman Chairman Joshua Ostroff said he understands that taxpayers are concerned about feeding and sheltering their families, paying their bills and their taxes, and that they distrust government and often don’t agree with policy decisions. But Ostroff said he thinks the tax cuts would lead to a reduction in services that people need.
“This is an emotional overreaction to that problem,” Ostroff said. “For people who are unhappy with government, my advice is to get involved. Get involved in town meeting. Get involve with your city council. Run for office, lobby your legislators. The things that you don’t like, fix it. Don’t break government because it’s ultimately going to come back to bite the stakeholders. We all own government. It’s not an us versus them.”
On an annualized basis, the sales tax reduction would allow consumers to be spared of $2.5 billion in sales taxes in fiscal 2012 and $110 million in alcohol taxes, according to the estimates outlined Tuesday, which are similar to projections offered earlier this year by the Massachusetts Taxpayers Foundation.
Gonzalez said the tax cuts would compound the “unprecedented” drop in state tax collections, noting $4 billion has vanished from the state’s peak $21.4 billion tax base. By contrast, he said next year’s projected growth in state tax collections would total $560 million, even with roughly $1 billion in new taxes, and projected collections of $19.05 billion would be roughly equal to the total in fiscal 2007, when Patrick first took office.
On WBUR-FM Tuesday, Patrick called cutting the sales tax a “great idea when the time is right” but assailed his campaign rivals, saying they’re unwilling to discuss spending cuts they’d make to accommodate tax cuts. “Believe me, I’ve been dealing with these issues,” said Patrick, whose promise of property tax relief has gone unfulfilled.
Implementing the tax cuts would affect “everything we do,” said Gonzalez, adding, “We have enough challenges as it is.” When Sherborn Selectman Paul DeRensis asked Gonzalez about projected impact on government services, Gonzalez said, “I think the word devastating was used before. I think that was accurate.” He said state government had “already pared back” and that there “isn’t anywhere else to go” for savings in public safety and other areas.
Asked how he’d push to block the tax cuts during an election year where many are struggling economically, Kaufman told the News Service, “We’re all in this recession together. And were we to pass either of these initiatives the cuts to services across the board would be devastating.”
Asked if the “devastating” assertion, which has been regularly and successfully deployed by opponents of tax cuts, was still a convincing one, Kaufman said, “I do think the time has come for the difficult and adult conversation about how we tax ourselves. I’m not saying the tax system we have in place is perfect. As a matter of fact I think it’s quite imperfect. So what we need to do is rebalance the way we tax ourselves and an argument about taxes are too high or taxes are too low is probably the wrong conversation for now.”
Kaufman said state and local taxes currently are “regressive,” with low-income residents “paying the largest share of their income” on state and local taxes and wealthier residents paying less as a percentage of income. “I don’t think you can fix this tax system in small pieces,” he said. The committee has conducted a “listening tour,” heard from tax experts and other states, and plans additional tour dates to gauge the appetite for comprehensive reform.
“It would be my hope to do it next session,” Kaufman said. “It’s an intellectual challenge first and then a political challenge next, so stay tuned. I’m heavily invested in rose-colored glasses. I think we can do this but we’ll see.”
"State faces $700m budget gap, if Congress nixes funds"
By Jim O’Sullivan, State House News Service via Boston.com - June 3, 2010
Reliance by the Patrick administration and the Democrats who control the House and Senate on nearly $700 million in additional health care funding has become a riskier proposition. Congress is balking at extending the funds, potentially creating a gap in the state’s fiscal 2011 budget just as lawmakers begin to work out differences in their proposals.
If the federal aid, excised last week by the US House of Representatives, is not authorized, state budget writers would probably have to turn to more aggressive cost-cutting or turn again to dwindling state reserves.
“I’ve always been concerned about it,’’ said House Ways and Means Committee vice chairwoman Barbara A. L’Italien, an Andover Democrat.
Aides to Governor Deval Patrick have reassured lawmakers for months that the funding was a near certainty, since Patrick included $608 million from an anticipated six-month extension to the Federal Medicaid Assistance Percentage program in his budget for the fiscal year that begins July 1.
The House followed suit, and the Senate ramped up its expectation for federal reimbursement to over $680 million, calculating that the state’s unemployment rate would draw more from Washington.
Budget authors in both chambers have acknowledged that they would probably have to impose deeper spending cuts if the aid does not materialize.
States have been pushing Congress to find another vehicle for the funding, and US House Speaker Nancy Pelosi sounded a note of optimism Tuesday that the House would tackle the Medicaid and unemployed health benefits spending after it returns from recess next week.
Massachusetts House budget chief Charles Murphy said: “Was it a risk going down that road? Absolutely it was risk. But, again, we feel confident that it’s going to come through.’’
Asked if the Patrick administration is drafting contingency plans in case the funds don’t come through, Health and Human Services Secretary JudyAnn Bigby said, “We’re following this very closely.’’
In a letter to Patrick dated yesterday, Senate minority leader Richard R. Tisei and House minority leader Bradley H. Jones Jr. asked for a contingency plan, calling the governor’s assumption of the revenues “arguably reasonable, but risky.’’
“Should the FMAP extension not materialize, the state budget will be left with a $700 million gap, and few solutions to fill it,’’ the Republicans said.
Senator Panagiotakos backs measures to prevent immigrants from receiving state services. Governor Patrick favors putting current practices into law, but would not like to go further. (David L. Ryan/ Globe Staff)
"Budget would cut services, local aid: Lawmakers’ plan eases crackdown on illegal immigrants"
By Noah Bierman, Boston Globe Staff, June 24, 2010
State lawmakers last night completed a $27.6 billion budget plan for next fiscal year that would cut local aid for cities and towns, require all government offices to remain open on Bunker Hill Day and Evacuation Day, and impose a softer crackdown on illegal immigrants than the measure approved by senators last month.
A group of six House and Senate negotiators had been hammering out the final budget, which includes a broad range of policy and spending plans, behind closed doors since June 7, trying to reconcile differences between plans passed earlier this year by the two legislative bodies.
But the lawmakers were thrown off course in recent days as they were forced to plug an additional $687 million gap to account for federal stimulus money that had been expected to keep some state programs afloat, but is now far from certain to arrive.
“We are, I would suggest, under no illusion that this . . . money is coming,’’ said Representative Charles A. Murphy, a Burlington Democrat who leads the House Ways and Means Committee.
The budget features cuts in social services, the court system, higher education, and nearly every other aspect of state government. That includes complete elimination of a $56 million program that gives health care to low-income immigrants who are considered legal, but not permanent, residents, plus another $68 million from other health programs for low-income residents covered under MassHealth, the state Medicaid program.
Some programs could be restored, or partially restored, if the additional federal stimulus money is approved in Congress. To avoid deeper cuts, lawmakers also called for withdrawing $100 million from the state’s rainy day fund, a move they had earlier pledged not to make because the fund has been tapped with regularity in recent years.
Both the House and Senate are expected to vote today on the budget. The fiscal year begins July 1.
Lawmakers decided not to impose some of the stricter immigration measures that passed the Senate with great fanfare last month, including the establishment of a 24-hour hot line to report companies that hire illegal immigrants and a requirement that the attorney general begin discussions with federal officials to offer help in enforcing immigration laws. Instead, lawmakers said, they decided to make official current practices that bar illegal immigrants from receiving state services .
A group of opponents to the Senate measure, called the Student Immigration Movement, has been holding around-the-clock vigils outside the State House for 17 days in protest. But polls have generally shown that much of the public favors stricter immigration enforcement.
Senator Steven C. Panagiotakos, who chairs the Senate Ways and Means Committee, said many residents are unaware that current state practices already keep immigrants from receiving state services and that putting those practices into law will ensure they remain enforced, while also bringing attention to them. Though illegal immigrants are currently barred from receiving in-state college tuition, the compromise language would not put that practice into law.
Governor Deval Patrick, who is running for reelection against two opponents who favor stricter immigration enforcement, must sign off on the budget before any of the immigration measures agreed to last night become law. He has said he favors putting current practices into law, but would not like to go further than that.
The budget compromise submitted last night also includes a measure that would give the state’s top administrative judge some power over the Probation Department’s budget, an issue that emerged last month after the Globe Spotlight Team chronicled widespread patronage hiring and lax spending controls at the agency. The measure would eliminate the lifetime appointment for any future, but not the current, commissioner of the department and initiate a study on who should ultimately oversee it.
The budget compromise left out language passed in the Senate that would have given cities and towns more power to curb the fast-rising costs of employee health plans, by giving them the authority to amend employee health plans without union approval. Municipal leaders have been demanding the changes, saying health costs are busting their budgets, but unions have fought the changes; many lawmakers have also been resistant, saying they do not want to weaken collective bargaining.
The provision requiring government offices to remain open on Evacuation Day and Bunker Hill Day would not affect collective bargaining agreements; union members with those days off under their contracts would still get them.
The City of Boston also stands to lose at least $2.4 million more in library funding if, as planned, it closes four branches during the next budget year. The Legislature’s compromise plan includes language taking that money away to prevent closings, even though the city says it is forced to close the branches largely because state funding has been declining in recent years.
Andrew Ryan of the Globe staff contributed to this report. Noah Bierman can be reached at firstname.lastname@example.org.
"Patrick signs $27.6b budget; seeks money to extend health coverage for legal immigrants"
By Michael Levenson and Noah Bierman, Boston Globe Staff, June 30, 2010
Governor Deval Patrick, again going to bat for health care for legal immigrants, is seeking to restore enough money to the state budget for next fiscal year to cover the program for six months. Under Patrick's proposal, the program would be covered for the rest of the year if additional federal Medicaid funding comes through, which remains uncertain.
Patrick made the announcement as he signed the budget for fiscal year 2011, which begins Thursday, in his State House office this afternoon. But Patrick did not specify exactly how he would pay for extending the coverage, instead instructing his administration to figure that out.
The governor signed the $27.6 billion spending plan and made $457 million in cuts, to account for the fact that Congress has yet to approve the Medicaid funds.
"For the fourth consecutive year, our budget is balanced, responsible and on time -- not something many other states can say." Patrick said in statement. "For that achievement, I want to thank the Legislature and my team for effectively responding to challenging and quickly changing circumstances, and doing the hard work required to get this done thoughtfully and on time."
Patrick's decision to try to restore health care spending for legal immigrants would mark the second time in two years that he has advocated strongly for the money. At issue is $56 million for a program that subsidizes care for eligible low-income legal immigrants.
The federal government does not reimburse the state for the immigrants, making the program, which serves those who have been here less than five years, a prime target when legislators are looking to cut costs. Last year, they eliminated $130 million set aside for the program. After a battle with Patrick, they restored about a third of the money, giving about 26,000 immigrants a program with less care and significantly higher copayments for medication and treatment.
Patrick today also signed into law budget amendments codifying state practices restricting illegal immigrants from many public services and making state funding for Boston libraries contingent on keeping branches open. The budget would also tap the state's rainy day account for $100 million, and delay payments into the fund next fiscal year.
Meanwhile, across Beacon Street from the State House on Boston Common, hundreds of union members, including many who are in town for a national convention of the American Federation of State, County, and Municipal Employees, protested budget cuts at the city and state level. AFSCME president Gerald McEntee singled out proposed cuts to Boston libraries, calling them, "wrong, insulting, and unfair." He led the crowd in chants of "Show some guts! Stop the cuts!"
Republican Charlie Baker, who is vying against Patrick in the November election, criticized the Democrat's signing of the budget, saying the budget was "unrealistic" in its spending and revenue assumptions and would lead to tax hikes and lost jobs.
"Nothing is changing under this budget because Beacon Hill is satisfied with the status quo," he said in a statement.
State Rep. William ‘Smitty’ Pignatelli, D-Lenox, listens to a presentation on Tuesday by Michael Widmer, head of an independent, public policy watchdog
organization. Pignatelli said he believes there is the political will on Beacon Hill to address the huge budget challenges facing the state in the coming year. (Photos by Ben Garver / Berkshire Eagle Staff)
"State budget expert projects $2B shortfall, aid cuts"
By Trevor Jones, Berkshire Eagle Staff, November 17, 2010
LENOX -- A prominent state budget analyst on Tuesday (11/16/2010) painted a grave picture of the state's immediate fiscal crisis and the long-term sustainability of its budgetary practices.
Michael Widmer, president of the Massachusetts Taxpayers Foundation, an independent, public policy watchdog organization, spoke at Town Hall to an audience made up mostly of municipal and school officials, projecting a $2 billion shortfall for the 2012 state budget and a 5 to 10 percent cut in local aid.
"We're going to have one more tough year as part of this fiscal crisis," said Widmer.
Widmer based those projections on entrenched increases in the budget, revenue streams that aren't meeting pre-recession levels, and a loss of one-time funds, like the federal stimulus dollars, used to displace shortfalls in the last three years.
State Rep. William "Smitty" Pignatelli, D-Lenox, hosted the event. Beyond local aid, he said, other cuts will need to be made that will likely impact higher education, the creative economy, and health and human services.
Widmer said there was some encouraging news, however, because revenues in the last two months have exceeded expectations, and there is "close to no chance" of mid-year cuts in 2011. He also expects Chapter 70 funds, the primary state aid to elementary and secondary schools, to not see any cuts next year.
The larger problem, Widmer said, is the long-term fiscal problems facing the state since the current model is unsustainable.
"My sense is there is not going to be any time soon, or maybe never, a return to normal," said Widmer.
Widmer said the state can't grow its way out of this problem, while health care costs and benefits for public sector employees are "cannibalizing the state budget."
Local officials in attendance said they have little flexibility to address their own revenue problems, because they rely heavily on property tax to generate revenue. One change some officials said they would like to see would be giving towns the authority to remove health care policies from collective bargaining with employee unions, the same way it is done for state employees and most companies in the private sector.
"Health plan design, that to me is critical," said Great Barrington Town Manager Kevin O'Donnell afterward.
Widmer acknowledged it will be exceedingly difficult politically to rein in health care costs and enact pension reforms, but "the consequences are enormous if we do not address it."
When asked if there is the political will on Beacon Hill to address these issues, Pignatelli said: "I think so. There's enough new faces in the Legislature now."
Pignatelli said it will be up to Gov. Deval Patrick to take the lead on many of the major problems, including health care costs, during his final term.
"He's got to show us that he's got the gumption to follow through."
To reach Trevor Jones: email@example.com, or (413) 528-3660.
The Berkshire Eagle, Editorial, November 18, 2010
Michael Widmer, president of the Massachusetts Taxpayers Foundation, can be counted upon to give a realistic assessment of the state's economic situation, and the sobering analysis that he provided at Lenox Town Hall Tuesday was certainly that. Little of it was shocking, however, and while he was far from optimistic, he saw glimmers of hope generated by the state's success in weathering the worst of a persistent recession.
Most strikingly, Mr. Widmer, whose organization is a respected independent watchdog, said there may never be a "return to normal" in terms of the state's economy. Pittsfield and Berkshire County have come to grips with that reality, if belatedly, and are redefining "normal" in more realistic ways. If "normal" was once defined as salaries, stock market dividends and home equity that would rise throughout infinity, than that normality was never realistic. An objective assessment of a normal economy will make the state and nation less likely to float off on Wall Street bubbles that will inevitably pop.
It is difficult to dispute Mr. Widmer's assertion that the state will never grow its way out of its economic problems as long as it is held back by rising health care costs and benefits for employees in the public sector that are "cannibalizing the budget." The complex combination of cost increases generated by medical science, profit-driven insurance companies and big-footing major hospitals defies easy resolution.
However, communities must take advantage of opportunities to reduce insurance costs by, for example, joining the state Group Insurance Commission, and be given the authority to remove health care policies from collective bargaining, as is largely the case with state workers and those in the private sector.
Public sector employees have been well behind the curve in coming to grips with the "new normal" in Massachusetts. Their pensions are unrealistic in an era when few in the private sector have pension plans, and municipal unions have to give up on the notion that the expiration of each contract triggers pay hikes and benefit increases in the next one. Those days are over and aren't coming back.
While noting that painful budget cuts next year are inevitable, Mr. Widmer observed that revenue did increase more than anticipated the last two months and the mid-year budget cuts needed to close deficits are unlikely in 2011. Under Governor Patrick, the state experienced a significant spike in job growth this summer and a commensurate increase in payroll taxes in the fall. These are not the glory days, and they may never return, but by making and following through on tough decisions and exploring new ways of building and creating jobs, better days could be ahead.
"Budget leaders forecast more pain: Economy growing, but not enough to cover $2b gap"
By Michael Levenson, Boston Globe Staff, December 14, 2010
For months, Governor Deval Patrick has repeatedly sidestepped questions about how he intends to close a massive budget hole next year, saying that rising tax collections suggest that the gap is shrinking.
But his generalities and wait-and-see approach will give way to stark assessments today when administration officials, economists, and state lawmakers gather at the State House to begin confronting the budget for the fiscal year that begins in July.
Those specialists and lawmakers say that, despite some signs of life in the economy, the state continues to face an estimated $2 billion shortfall for the upcoming year, a chasm that will necessitate yet another round of painful cuts in services.
They say that even though the state has collected about $500 million more in taxes than was expected so far this year, that gain is being completely absorbed by increasing demand for health insurance for the poor, homeless shelters, and public defenders. In addition, about $1.5 billion in federal stimulus money that the state used to avert deeper cuts this year is gone, leaving the state with few options to paper over its problems.
“It’s a $2 billion gap, and the difference between that and the past is, that’s a real gap,’’ said Steven C. Panagiotakos, the Senate’s outgoing budget chief. “So that $2 billion is going to really mean huge cuts in services and in employees. Let’s face it: It’s government services across the board.’’
Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, said the state is headed in the right direction for the first time in about two or three years, but is not growing fast enough to dig itself out of its budget problems next year.
Widmer said that he is predicting that the state will collect about $1 billion more in revenues next year than it did this year, but will still be short $2 billion, because the federal funds have dried up, demand for services continues to rise, and those services are increasingly expensive to provide.
“There’s no way the economy can grow enough to cover that hole,’’ Widmer said, adding that it will “require another round of significant budget cuts.’’
Alan Clayton-Matthews, an economist at Northeastern University said he and a colleague at Harvard, James H. Stock, have forecasted that revenues will grow by 3.9 percent next year, compared with about 4 percent this year.
“We’re getting back to almost normal revenue growth, but we’re in a huge fiscal hole and revenues aren’t growing fast enough’’ to eliminate next year’s shortfall, he said.
Christian E. Weller, an economist at the University of Massachusetts Boston, predicts that the state’s 8.1 percent unemployment rate will hold steady or dip slightly next year, but will still be high.
That sluggishness in employment suggests continuing problems for state finances, which need strong job growth and greater consumer spending to recover fully from the recession.
“My overarching point is that the economy is stuck in a slow-growth pattern,’’ said Weller, who is also a senior fellow at the left-leaning Center for American Progress. “There is some pain ahead.’’
Patrick, pressed by his rivals in the heat of his reelection campaign and in recent weeks, has declined to offer his own estimate of the gap, saying he needed to wait until today’s economic hearing to offer his own view.
He and state lawmakers have offered no details of how they intend to close next year’s gap, although they have said they have no plans to raise taxes.
“The good news is that state tax revenues are outperforming estimates, the economy continues to create jobs, and we are recovering faster and stronger than the nation as a whole,’’ Patrick’s budget chief, Jay Gonzalez, said in a statement yesterday.
“It will take time, however, to build our way back to where we were before the recession, and we will be losing $1.5 billion in federal stimulus funds next fiscal year,’’ Gonzalez said.
Advocates for the poor and disabled are deeply worried about the looming cuts. Yesterday, they pleaded with state human services officials to spare programs for the deaf, blind, and physically impaired.
“I’m frightened; I’m honestly frightened,’’ Diane Squires, who is deaf and advocates for the hearing-impaired, said at a State House forum, according to State House News Service. “I’m one of those people that will be affected.’’
The state expects to have about $550 million in reserves, but lawmakers and budget watchdogs have warned against spending that money to help balance next year’s budget. They say it should be saved for unforeseen, emergency expenses.
House Speaker Robert A. DeLeo, who estimates next year’s gap is about $1.5 billion, said yesterday that he sees no easy fixes. ‘Primarily,’’ he said, “I would see further cuts to the budget.’’
Michael Levenson can be reached at firstname.lastname@example.org.
"Mass. budget chief warns of tight finances, tough choices ahead"
By Martin Finucane, Boston Globe (online), By Michael Levenson, Boston Globe Staff, December 14, 2010
Governor Deval Patrick's budget chief said today that next year's state budget will have to be $1 billion to $1.5 billion less than this year's state budget because state revenues have not recovered fully after the recession, federal stimulus money has dried up, and demand is rising for state services.
"Tough choices are going to have to be made," said Jay Gonzalez, secretary of administration and finance. Gonzalez noted, however, that there are some positive signs on the horizon, saying state tax revenues are expected to end this fiscal year in July about $515 million to $600 million above estimates.
"Massachusetts is coming out of the recession faster and stronger than the rest of the nation," Gonzalez said at a packed State House hearing.
The budget chasm is likely to necessitate yet another round of painful cuts in services, the Globe reports today.
Advocates for the poor and disabled are deeply worried about the looming cuts. On Monday, they pleaded with state human services officials to spare programs for the deaf, blind, and physically impaired.
“I’m frightened; I’m honestly frightened,’’ Diane Squires, who is deaf and advocates for the hearing-impaired, said at a State House forum, according to State House News Service. “I’m one of those people that will be affected.’’
"Challenges in 2011"
The Berkshire Eagle, Editorial, January 1, 2011
When Deval Patrick is sworn in for a second term as Massachusetts governor he will begin confronting budget challenges that may be even more formidable than those of his first term. The difficulties Beacon Hill will confront will trickle down to the communities of Berkshire County.
Massachusetts actually rode out the recession better than many other states, and although there are signs that the economy is rebounding the recovery will be painstakingly slow. Even with increased tax revenues, the state is facing a roughly $2.5 billion deficit. With no state tax hikes in the offing, local aid is surely to be cut.
Beyond the economy, the biggest story on Beacon Hill in 2011 may the rehabilitation of the patronage-laden Probation Department. With so many residents unemployed or facing pay cuts, the revelation of years of patronage hires to high-paying jobs for politically connected but unqualified applicants was particularly infuriating. Ideally, the department will come under the purview of the executive branch, but however reform is ultimately enacted, shaping up the department for the long run will be a major test for Beacon Hill.
With state aid likely to be reduced in 2011, there are major challenges ahead for financially strapped Berkshire communities, in particular the cities of North Adams and Pittsfield. They will come in the context of mayoral races that, in Pittsfield at least, are sure to be heated.
While Pittsfield is not Atlanta, the efforts of Atlanta Mayor Kasim Reed in turning his city's financial fortunes around during tough times are informative. A pension review led to major reductions in pension money paid to city employees, and Mr. Reed invested in the city even when money was tight. Mr. Reed has said that if a city is focused only on surviving it will never move out of survival mode.
If Pittsfield hunkers down and waits for better times to come those times will never come. It has to pave the way toward better times. Voters should expect candidates to offer a vision for making that happen.
"Massachusetts budget builders agree on $20.5B in revenues"
By Associated Press, bostonherald.com - Local Politics, January 18, 2011
BOSTON — Massachusetts budget builders agree they will have $20.5 billion in expected tax collections to work with as they construct their spending plans for the coming fiscal year — a heady sum that will still not prevent an estimated $1.5 billion in cuts to state services and programs.
The Patrick administration, as well as the heads of the Senate and House Ways and Means committees, made their declaration Tuesday as they unveiled the so-called "consensus revenue estimate" they will all use as the basis for their proposed budgets. The figure is rooted in actual and estimated tax receipts, as well as projections by economists and others.
Gov. Deval Patrick will kick off the budget dance later this month, when he unveils his version. The House will follow, and then the Senate, before all three spending plans are merged this spring.
The state begins its 2012 fiscal year on July 1.
"It’s realistic news," the governor told reporters just after he cried "Yippee!" when asked about the figure. He said he planned to propose spending less in the coming fiscal year than in the current one.
Michael Widmer, president of the business-oriented Massachusetts Taxpayers Foundation, branded the figure "reasonable" and said, "It’s slightly on the conservative side, which is a good thing."
Noah Berger, executive director of the Massachusetts Budget and Policy Center, a nonpartisan budget watchdog, said the estimate was "reasonable and cautious."
The total of $20.525 billion in tax revenue estimate reflects growth from the revised estimate of $19.784 billion for the current year.
The latter figure is a $706 million increase from the original estimate, based on tax revenue collections to date that have exceeded estimates.
The new estimate also takes into account the loss of revenue incurred after voters passed Question 1, which repealed the 6.25 percent sales tax on alcohol. The repeal took effect Jan. 1.
Administration and Finance Secretary Jay Gonzalez also said in a statement that considering the unexpected collections, Patrick will file a supplemental spending list for the current fiscal year that includes a mandatory $100 million deposit in the state’s rainy-day fund. That will bring the balance to $770 million.
Despite the positive news, both the administration and outside experts forecast pain for state residents in the coming budget year. The current budget is built on $2 billion in one-time money, primarily federal stimulus funds, that will not be available next year.
The consensus is officials will have to cut $1.5 billion to $2 billion from the normal growth of state programs and services, as well as aid to cities and towns.
"Although revenues are recovering, there’s no way they can make up for this huge gap in one-time money that’s vanishing," said Widmer.
Berger said: "I think it’s going to mean very hard choices and potentially severe cuts in everything from education and local aid to health care and human services."
By Boston Herald Editorial Staff, bostonherald.com - Editorials, January 24, 2011
Gov. Deval Patrick on Friday did what governors do when they have bad news, he added a little sweetener to the pot. Patrick told a gathering of municipal leaders that his budget will propose cutting unrestricted local aid to cities and towns by $65 million, the fourth year such aid has shrunk. But he will also try to give mayors and boards of selectmen more power to control their exploding health care costs.
We like the sentiment — the administration plans to act, finally, to grant some relief to property owners who are forced to bear the growing burden of insuring municipal workers (he could have just said so during the campaign). And with a possible $2 billion hole in the budget, a local aid cut is, quite frankly, inevitable.
The health plan part of the equation is an improvement on the status quo, but still carries pitfalls. The governor has set a deadline for union/management negotiations over health care benefits, and if the two sides are unable to reach a deal that reflects sufficient savings, the community would be forced into joining the state’s health plan. His proposal, he says, would save municipalities up to $120 million.
Patrick would have scored more points had he filed a bill that would give cities and towns the outright authority to design health plans, authority the state currently has for state workers, setting co-payments and deductibles without being forced to get union sign-off or trade off other, richer benefits. It would have been a bold stroke that angered his union base even further, but it would have had a powerful impact.
The governor points out that cities and towns negotiated their way into this mess, and that’s certainly true. We hope his audience took that point to heart. But today’s property owners are being held hostage to bad decisions made by local bureaucrats in better economic times.
"Patrick budget has $1.5B gap"
Associated Press, January 27, 2011
BOSTON -- Massachusetts Gov. Deval Patrick unveiled his state budget for the 2012 fiscal year, a spending plan that would dip deeper into the state’s rainy day fund to help close a projected $1.5 billion spending gap, but avoid new taxes while making cuts to state services.
The budget proposal totals $30.5 billion. It would end some state programs and eliminate 900 positions from the state work force.
The governor has already told cities and towns to brace for a $65 million cut in unrestricted aid as the state continues to recover from the recession and faces the end of key federal stimulus funds, none of which are used in the budget, Patrick said.
The release of the governor’s budget is the first step on a long fiscal journey. The House and Senate will craft their own versions, then merge them into a single budget to send back to Patrick for his signature and vetoes.
The 2012 fiscal year begins July 1.
Patrick said his budget proposal grapples with the state’s sober fiscal reality, even as it withdraws $200 million from the rainy day fund, leaving just $569 million in cash reserves.
He said there are no tax hikes in his budget.
"In all of these ways this budget deals with the current challenges we face without passing the buck to future generations," Patrick said.
Patrick is again pushing an expanded version of the state’s bottle bill and is proposing a new fee -- $2.50 to $2.75 on auto insurance policies that he said would help fund a permanent State Police cadet class.
Other reductions in Patrick’s budget include a $23 million cut to emergency homeless shelters, a $16 million cut to the Department of Mental Health hospital and a $45 million reduction in spending by ending the practice of hiring private attorneys to represent the state’s most indigent criminal defendants.
Patrick would instead hire 1,000 salaried lawyers.
Patrick said his budget proposal also would continue to provide tax credits to the film industry, a benefit that backers say has helped create jobs and showcase the Bay State on the silver screen. Patrick last year tried to cap the tax credit at $50 million.
House Speaker Robert DeLeo said the film tax credits are key to the state’s economic recovery.
"As we strive to put folks across Massachusetts back to work, the film tax credit continues to stimulate local business and job growth throughout Massachusetts," DeLeo said in a statement.
Critics of Patrick’s budget include the American Heart Association and the American Cancer Society. They said it will end up forfeiting $6 million in federal matching funds for programs that support the prevention and early detection of disease.
Patricia Quinn, executive director of the Massachusetts Alliance on Teen Pregnancy, also criticized Patrick for proposing to end funding for a job training program for the state’s poorest teen parents.
The budget would force the closing of two state prisons.
Administration officials would not say which two prisons might be shuttered, but said the prison closings would not result in the release of any inmates, who could be relocated to other prisons.
Last year, Patrick fought to avoid prison closings by pushing through a $400 million midyear spending bill. He’s backing a separate bill that he said would alleviate prison overcrowding by ending mandatory minimum sentencing for drug offenses that do not involve guns or children.
Patrick also is calling for the elimination of a series of other state programs, including an employment services program at the Department of Transitional Assistance, a shellfish purification plant in Newburyport and one of four enrollment centers for MassHealth, the state’s Medicaid program.
He also would close a community access program for the Massachusetts Commission for the Blind and end funding for a program to retrain former dog track workers.
A year ago, Patrick released a budget proposal that he said had a bottom line of $28.2 billion.
Patrick’s top budget official, Administration and Finance Secretary Jay Gonzalez, said that when off-budget spending is added in, as well as supplemental spending during the year, the actual spending for the current fiscal year tops $31.1 billion.
The $30.5 billion budget proposed by Patrick for the new fiscal year represents a $570 million spending reduction from that higher number, Gonzalez said.
Gonzalez said the budget plan tries to slow the growth of health care costs.
He said funding for Commonwealth Care, a subsidized plan to provide insurance to those earning up to three times the federal poverty level, would not be increased while MassHealth would rise by $100 million.
Senate Minority Leader Bruce Tarr, R-Gloucester, said the best test of the governor’s plan is "whether the proposal truly achieves savings or merely shifts costs among the state’s agencies and programs."
Rep. Brad Jones, the Republican leader in the House, sounded a more skeptical note.
"Gov. Patrick often paints a rosier picture than perhaps what reality suggests," said Jones, R-North Reading, in a statement. "It will be days, maybe weeks before we know whether or not his numbers add up."
"Officials: Patrick’s school aid is ‘a wash’"
By Jennifer Huberdeau, North Adams Transcript, January 28, 2011
NORTH ADAMS -- Local officials aren’t impressed with Gov. Deval Patrick’s proposed $3.9 billion increase in Chapter 70 school aid for fiscal 2012, saying the increase doesn’t outweigh cuts to regional transportation funds, unrestricted municipal aid and declining charter school reimbursement rates.
"It’s definitely a wash for us," Florida Town Administrator Christine Dobbert said Thursday. "While our Chapter 70 funding is increasing about $2,800, from about $526,000 to $528,000, our unrestricted general governmental aid is dropping by $3,000. Our charter school reimbursement rate is also declining by about $10,000, which is a big deal."
Patrick’s $30.5 billion state budget, released on Wednesday, cut $65 million in municipal aid and included a proposed a municipal relief package that would require cities and towns to either join the state Group Insurance Commission, or provide an employee health insurance plan that is equal to or better than the state insurance plan.
Adams Town Administrator Jonathan Butler said he was prepared for the 7.2 percent cut in municipal aid, but a loss of $143,175 is no small amount for a town already facing a deficit exceeding its Proposition 2 1/2 levy limit by $400,000.
"We’re been preparing for this since November," he said. "We’re looking at alternative ways to save money; cutting from departmental budgets and restructuring departments. Everything is on the table. Sometimes cuts like these can lead to better ways to do business and make things more cost effective. That being said, we’re going to have to make a lot of hard decisions. We’re taking it one day at a time."
Butler said the biggest challenge for the town will fall to the Adams-Cheshire Regional School District, which is facing devastating losses in regional transportation and charter school tuition reimbursement funding.
"We continue to work with the Berkshire Arts and Technology Public Charter School, but the charter school funding formula continues to be a real funding challenge," he said. "At the end of the day, our school district still has to maintain the same amount of buildings, programs and staffing with less money."
According to the governor’s budget, Adams-Cheshire stands to gain $176,085 in Chapter 70 funds, but will see a decrease of $160,904 in regional transportation funds and a drop of $102,038 in its charter school tuition reimbursement funds.
"The numbers can be deceiving," Adams-Cheshire Superintendent Alfred W. Skrocki said on Thursday. "We’re actually being level-funded when it comes to Chapter 70 funding. Our district is heavily reliant on our Chapter 70 aid, with 60 to 68 percent of our revenues coming from that source. The problem with regional transportation reimbursement, which we argue every year, is that we’re promised a 100 percent reimbursement, but this year we’re only anticipating about receiving 50 percent of that."
He said the district will have to make significant cuts in the coming budget year -- a hard pill to swallow for a district that has already made significant cuts over the last two years.
"Two years ago, we trimmed $1.3 million from our budget," Skrocki added. "I don’t think the cuts will be that high this time around, but making cuts on top of what we’ve already done makes it even more difficult for us."
Williamstown Town Manager Peter Fohlin said the cuts to his town’s budget are equal to a net loss of $65,189; an amount includes the town’s Chapter 70 increase of $4,781.
"I don’t know if we want to call that a "commitment" to education when that still amounts to less than the amount received in 2000," he said. "At least we’re headed in the right direction since Chapter 70 funding hit bottom in 2004."
He said the cut in unrestricted municipal aid will have an impact on the town’s bottom line as a whole.
"The impact will be no increases in municipal, elementary school, Mount Greylock, and McCann budgets," Fohlin said. Whether that affects delivery of services will depend upon collective bargaining with all the town and school unions."
In North Adams, the net loss to the city’s municipal and school budgets is about $330,000, according to Mayor Richard J. Alcombright.
"At the same time we’re experiencing a budget growth of about 2 percent to 3 percent," he said. "We anticipate an increase in our pension payments from $60,000 to $70,000. We’ve also anticipating needing another $30,000 to $40,000 in our sewer budget, and we’ve budgeted for an increase of 5 percent for our health insurance costs, about $240,000. It’s also no secret that we have a budget shortfall of $1.2 million already for the fiscal 2012 budget. Any type of cut like this is a step backward as we try to close our funding gaps."
"Harsh budget reality"
The Berkshire Eagle, Editorial, January 30, 2011
Those who believed that Governor Deval Patrick was too vague during the gubernatorial campaign in explaining how he would deal with a substantial budget deficit if re-elected now have their specifics. A projected $1.5 billion deficit for the fiscal year beginning in July means major cuts on top of major cuts made in the past two years, all compounded by the loss of federal stimulus money that filled some gaps for a year. The cuts are painful, and to the credit of the governor last week, he attempted to spread the pain around as fairly as he possibly could.
This is far from the final word on the budget as the House and Senate will still produce their proposals, but unless tax increases are in the offing, and we don't believe that they are, the budgets out of the Legislature will also include cuts to some programs and the elimination of others. It won't be enough for individual lawmakers to say that this program or another cannot be cut. In the absence of new revenue streams, it will be necessary to specify where other cuts can be made to account for the preservation of a favored program.
Given that the governor's $30.5 billion budget reduces overall spending by 1.8 percent, the largest cut in 20 years, it is no surprise that the reductions are so painful. On the bright side, Governor Patrick maintained his commitment to higher education with $3.9 billion in K-12 education, the highest in state history, and he has set aside $3.6 billion in spending for infrastructure improvements, double the amount spent when he took office. Infrastructure work would not cost nearly $4 billion if roads, bridges and railroads had not been allowed to decay through several administrations, and this program would have the benefit of producing jobs.
A cut of $65 million means that local aid will be cut for the fourth straight year, and it will pose additional difficulties for communities trying to fund police and fire departments as well as other basic services. The eradication of the Employment Services and Youth Parent Programs will hurt those in the Berkshires who need government help most -- the young people trying to better position themselves in a tough economy. These are the kinds of programs that should be restored first if savings can be found elsewhere.
Tourism and cultural organizations are accustomed to being hammered by budget cuts, but the Massachusetts Cultural Council and its 16 regional councils, the Berkshire Visitors' Bureau and other related agencies are facing particularly large hits. This will make it all the more important for Berkshire cultural groups to cooperate in marketing and promotion, a process, happily, that is now well under way.
We wish we could share Mr. Patrick's optimism that $1 billion can be trimmed from the state's costly Medicaid program by reaching new contracts with health care providers. There will formidable institutional opposition, and even if the governor could save half that amount, which would constitute a victory, the remaining $500 million would have to be accounted for elsewhere. The governor wants to trim the state's outrageous pension liability by in part raising the minimum retirement age for future employees, but help is needed now, which means pressuring state employee unions to immediately accept the pension reductions that workers in the private sector conceded years ago.
Massachusetts is emerging from the recession in better shape that most other states, but even with tax revenue increasing it is not increasing quickly enough to address the budget shortfall. Good news on the revenue front in the next few months may preserve some programs and reduce some cuts but that cannot be counted upon. We'd like to think that better days are coming for Massachusetts and the nation. They are not here yet, however, and the immediate reality consists of painful reductions and difficult choices.
"Report: Mass budget cut by $3B since recession"
By Associated Press - www.bostonherald.com - Local Politics, April 3, 2011
Massachusetts has been forced to cut $3 billion from its state budget and slash local aid to cities and towns by nearly 40 percent since the start of the national recession, according to an analysis by an independent research group.
The report by the Massachusetts Budget and Policy Center, released Sunday, compares state funding levels for the fiscal year that ended July 1, 2009 to levels in the spending plan proposed by Gov. Deval Patrick for the fiscal year beginning July 1, 2011. The report made adjustments for inflation.
"When you look at the budget you see we have had very deep cuts, pretty much across the board," said Noah Berger, president of the center. He added there’s no simple way to absorb such cuts. "There are no easy answers," he said.
The local aid reductions have been harsh on municipal officials, who are likely looking at a fourth straight year of cuts. The report said the $834 million requested for unrestricted local aid in the governor’s fiscal 2012 spending plan represents a $528 million cut (38.8 percent) from fiscal 2009 levels.
In one of several statements from local officials accompanying the report, Fitchburg Mayor Lisa Wong said the local aid cuts have been tougher on less wealthy communities that rely more heavily on state assistance.
"I believe this has contributed to the growing gap between rich and poor communities," Wong said. "If we must have cuts, I would like to have a more equitable formula that looks at the impact of cuts on the overall budget."
Among the report’s other findings:
- Higher education, funded at nearly $1.1 billion in fiscal 2009, is $953 million in the governor’s budget, a nearly 16 percent cut spread among the state’s public colleges and universities.
- The nearly $507 million proposed in fiscal 2012 for K-12 education programs would be about $133 million, or 20.7 percent, lower than three years ago.
- Funding for Children, Youth and Family programs has been reduced $162 million, or 15.7 percent, in the fiscal 2012 spending plan compared to fiscal 2009.
- Child care subsidies for low-income families, funded at $446 million in Patrick’s budget, would be down $62 million, or 12.2 percent, from fiscal 2009.
- The budget for the state court system and legal assistance is funded at $587 million in the spending plan, a drop of nearly 14 percent from three years ago.
Some line items have increased during the same period. For example, funding for affordable housing programs has risen $12.4 million over the past three years. The report attributes that to the demand for emergency shelter for families left homeless during the recession.
The state’s share of costs for health insurance for state employees also continues to rise, with the governor proposing a 2.4 percent increase from current year levels that would bring total health insurance costs to nearly $1.4 billion.
The comparisons made by the center were adjusted for the effects of inflation and are based only on proposed spending for the next fiscal year. The Legislature will act on its own version of the budget in the weeks ahead.
But even with the state’s employment picture slowly improving and tax revenues on the upswing, Patrick administration officials and lawmakers have warned that further budget cuts are unavoidable.
Broad-based tax increases have been virtually ruled out on Beacon Hill and the billions in federal stimulus funds that have softened the blow over the last three years will disappear in the next fiscal year.
The center’s report did not suggest specific solutions for the state’s fiscal dilemma or call for tax increases, but Berger said in an interview that everything, including ways to raise new revenues, should be on the table.
"These will be serious choices about maintaining what have been very deep cuts in local aid and the rest of state government, or making revenue reform part of the solution," he said.
"DeLeo releases House version of state budget"
By Michael Levenson, Boston Globe Staff, Posted by Glen Johnson, April 13, 2011
House Speaker Robert A. DeLeo, setting up a fight with unions, today proposed a $30.5 billion annual state budget that cuts more deeply than Governor Deval Patrick’s proposal and goes further than the governor to strip local public employees of their right to bargain over health care.
House leaders said their plan would cut $94 million more than Patrick’s proposal unveiled in January, and would represent the biggest year-to-year cut in state spending in two decades. The Senate still has not released its proposed budget.
State leaders are grappling with the loss of $1.5 billion in federal stimulus funds and a shaky economic recovery.
House leaders said their plan would close, overall, a $1.9 billion budget gap, in part by matching the governor’s proposal to withdraw $200 million from the state’s rainy day fund.
The hit to social services and local services will be considerable. The House plan would cut programs for the elderly, the developmentally disabled and the mentally ill. House leaders would increases spending on schools by $120 million, but that is $20 million less than Patrick’s plan.
The House plan matches the governor’s proposal to slash local aid by $65 million, or 7 percent, a reduction that will hit police officers, firefighters, senior centers, and other local services. Local aid has already been cut by 32 percent, or $416 million, over the last three years, according to the Massachusetts Municipal Association.
But House leaders said they would more than offset this year’s local aid cut by going further than the governor to control soaring municipal health costs. The House plan would give local officials — the mayor or the town council — unfettered authority to set the co-pays and deductibles for local public employees without having to negotiate with the workers’ unions. Premiums would remain on the bargaining table.
Patrick has sought to preserve some power for the unions to negotiate by giving them a brief period of time to bargain before local officials would be allowed to impose their own terms unilaterally.
Public employee benefits have become a national flashpoint, sparking protests in Wisconsin, Ohio and New Jersey, among other states. House leaders in overwhelmingly Democratic Massachusetts have traditionally been reluctant to touch the issue because they have enjoyed strong union support.
Some Massachusetts House members, as well as Senate President Therese Murray and the governor, have all said unions must retain some voice in the negotiating process. But House leaders said today that local health costs have been eating away at public services, including school spending, and local officials need more power to override their unions.
“It’s the most significant reform we can make this year,” said Brian S. Dempsey, a Haverhill Democrat and chairman of the House Ways and Means Committee, which controls the budget process.
The House plan rejects Patrick’s sweeping proposal to create a new public defender agency by hiring 1,000 lawyers and 500 support staff. Patrick claimed the proposal would save money over the current system, which relies on contracts with private lawyers. But House leaders said they doubted the savings and they would instead adopt more modest changes.
The House plan would hire 200 state public defenders and establish a new system to screen out defendants who can afford to pay for their own lawyers. House leaders said their plan would $12.3 million, while Patrick said his proposal would save at least $45 million.
House leaders also rejected the governor’s plan to close two state prisons. Dempsey argued that the governor, who has yet to identify which prisons would close, hadn’t done enough to discuss the issue with the leaders of cities and towns that host prisons. Instead, Dempsey said, the House would adopt a less ambitious plan to encourage prisons to renegotiate their contracts for food and medical services.
House leaders would also make deep cuts in services for the mentally ill. While the governor wants to eliminate 160 of the state’s 626 mental health beds, DeLeo’s plan would instead cut 140 to 145 beds.
Michael Levenson can be reached at email@example.com. Follow him on Twitter @mlevenson.
"$30.6B state budget at the ready"
By Johanna Kaiser, Associated Press, July 1, 2011
BOSTON -- Massachusetts lawmakers have filed a 2012 state budget that includes no new taxes and effectively does not cut state aid to cities and towns. But it does cut funding to many state agencies and tries to help cities and towns reduce escalating health care costs by limiting municipal workers' ability to bargain over their health insurance.
The $30.6 billion spending bill, filed only hours before the new fiscal year begins on July 1, gives municipal officials more flexibility to make changes in co-payments, deductibles and other aspects of public employee health insurance by changing the collective bargaining process.
Under the proposal, cities and towns could shift their workers into the state's Group Insurance Commission or another lower cost plan after a monthlong discussion period with unions.
If the unions and municipal officials cannot come to an agreement within the 30 days, a 3-member committee would be authorized to implement the changes.
The committee, which would consist of a union worker, a manager and an arbitrator, would also have ten to days to decide how to offset the impact of higher costs to retirees and low-income employees.
"The compromise we have reached will provide for a very fair and balanced approach that will allow for folks to have a voice, but will also allow for us to achieve the savings that we all want to achieve," said Rep. Brian Dempsey, D-Haverhill, who worked with Sen. Stephen Brewer, D-Barre, and four other lawmakers from the House and Senate to craft a final budget based on the separate budget proposals filed by each of the chambers earlier this year.
Both House and Senate versions of the budget featured similar negotiation plans.
Lawmakers estimate cities and towns could save up to $100 million by joining less expensive health care plans.
The budget also aims to keep health care costs in check by reducing Medicaid reimbursements to doctors and hospitals, and eliminating some coverage areas under MassHealth.
A new provision would prevent welfare recipients from using electronic benefit cards to purchase alcohol, tobacco or lottery tickets.
Lawmakers hope to realize savings in the state's indigent defense system by requiring 25 percent of cases be handled by state attorneys, instead of the current 10 percent. The remaining cases are handled by more costly privately employed attorneys.
The budget also cuts millions in funding for many state departments, which will affect various services and aid to the state's most vulnerable populations.
Brewer said this budget was particularly difficult because the state did not receive any federal stimulus money, which lawmakers had relied on during previous years to avoid drastic cuts.
"This has been probably the most difficult fiscal year we've had in a generation," he said.
The House and Senate plan to vote on the budget bill Friday. They would not be able to make any changes to the bill before the vote. If approved, the bill will then go to the governor's desk.
Earlier Thursday, Gov. Deval Patrick, had expressed frustration that a budget would not be finalized before the start of the fiscal year.
Patrick will have 10 days to review the budget and issue vetoes. Earlier this week, signed a 10-day stopgap measure to keep crucial state operations continuing until the new spending plan is in place.
Governor Deval Patrick, appearing today in his office at the State House, reaches for a pen to sign the Massachusetts 2012 fiscal year budget. (Stephan Savoia/AP).
"Gov. Deval Patrick Signs New State Budget"
By Steve LeBlanc, Associated Press, July 11, 2011
BOSTON (AP) — Gov. Deval Patrick has signed a $30.6 billion budget that he said reduces overall state spending while laying the groundwork for an ongoing economic recovery in Massachusetts.
Patrick signed the budget in his Statehouse office on Monday, 11 days into the 2012 fiscal year that began July 1. He made no vetoes to reduce spending in the budget plan sent to him by lawmakers.
The budget is one of the tightest in recent memory as the state continues to pull out of the recent recession.
The spending plan contains no broad-based taxes, draws $185 million from the state’s rainy day fund, and overhauls Massachusetts’ public defender program by reducing the state’s reliance on higher-paid private attorneys.
“This budget reflects tough decisions and sacrifice across state government,” Patrick said.
The state begins the new fiscal year with $585 million left in its one-time rainy day fund, far below the more than $2 billion in the account at its peak, but still among the top 10 largest stabilization funds of any state, according to the administration.
Patrick said the budget also includes changes to help reduce homelessness in Massachusetts, tightens oversight of quasi-public agencies by requiring annual audits and maintains funding for programs designed to close the racial and ethnic achievement gap in the state’s schools.
The spending plan also supports increased efforts by the state to reduce youth violence.
The budget signing follows an agreement reached Friday on a contentious plan to reduce the cost to cities and towns for providing health insurance to municipal employees.
Amendments filed by Patrick to the budget would give cities and towns more flexibility to make changes in co-payments, deductibles and other aspects of public employee health insurance outside of the collective bargaining process.
Under the proposal, cities and towns could shift their workers into the state’s Group Insurance Commission or another lower-cost plan after a monthlong discussion period with unions.
The issue had been one of the thorniest of the lengthy budget negotiations on Beacon Hill, with intense lobbying by union leaders who claimed it would violate collective bargaining rights won over the years. Meanwhile, cities and towns facing cuts in local aid demanded that the state provide them relief from the soaring costs of providing health insurance to workers.
House Speaker Robert DeLeo and Senate President Therese Murray support the changes.
The House and Senate are expected to vote on the amendments later Monday.
Despite the souring national economy, Massachusetts’ jobs picture has brightened somewhat. In May, the unemployment rate in Massachusetts fell to 7.6 percent, well below the national rate that rose to 9.2 percent in June. The June numbers for Massachusetts have yet to be released.
Associated Press writer Johanna Kaiser contributed to this report.
Turning his attention to the budget, which was signed into law 10 days late, the governor highlighted several of his priorities that will receive more money, such as education and programs to reduce youth violence.
Patrick also said he reluctantly approved an increase in funding for the scandal-seared state Probation Department, even though the House and Senate have not approved changes intended to reduce patronage and cronyism in the agency.
Patrick said he could not emphasize enough how urgently he wants lawmakers to act on those changes.
Patrick also approved changes that will limit the collective bargaining rights of teachers, police officers and other municipal employees, in an effort to save cities and towns $100 million in health insurance costs.
The budget will also slash spending on higher education by $70 million, cut home care services for the elderly and disabled, and impose cuts on social services for the poor. Among those cuts: reducing the yearly clothing allowance for poor children from $150 to $40.
Other areas of the budget that the governor highlighted include a measure that will shift some of the state’s criminal defense work for the poor away from private lawyers, toward more public defenders. Patrick has argued that public defenders can perform the work more cheaply.
The budget also includes a change designed to send more homeless people into permanent housing, to reduce the state’s reliance on emergency shelters.
Source: "Patrick troubled by Big Dig report avoidance" - Boston.com - July 11, 2011 - By Michael Levenson, Boston Globe Staff.
"State enjoys extra $723M"
By Bob Salsberg, Associated Press, July 20, 2011
BOSTON -- Tax collections for the Massachusetts fiscal year that ended June 30 exceeded projections by $723 million, leaving the state with what appeared to be a significant surplus despite continued economic and financial uncertainty.
Preliminary tax revenue estimates for the 12-month period were just above $20.5 billion, a 10.6 percent increase -- nearly $2 billion -- over the previous fiscal year, the state Revenue Department reported on Tuesday.
Personal income tax collections rose 14.5 percent over the prior year, exceeding the state’s benchmark by $650 million. Sales tax receipts grew 6.4 percent while corporate and business tax collections rose 5.1 percent.
Revenue Commissioner Navjeet Bal credited the overall revenue increase to economic growth combined with a large boost in capital gains receipts.
"The increase of nearly $2 billion in collections reflects a Massachusetts economy that grew noticeably stronger over the past 12 months," Bal said.
The revenue growth and surplus seem in contrast to the general gloom-and-doom tone of the recent budget debate that produced a $30.6 billion spending plan for the new fiscal year that started July 1, and has prompted some calls for restoring cuts in programs that have occurred during the economic downturn. It could even trigger a slight cut in the state income tax.
But budget-writers and fiscal watchdogs say the windfall is primarily due to an infusion of one-time revenues and they caution that the state’s financial condition remains tenuous at best, in part because of continued uncertainty about the direction of the national and international economy.
Senate President Therese Murray said Monday that some of the additional revenue has already been accounted for -- the fiscal 2012 budget, for example, includes a provision to offset a planned $65 million cut in local aid to cities and towns if the 2011 surplus is large enough -- a prospect that now appears likely.
Murray also said the state is awaiting a final accounting from the Federal Emergency Management Agency of federal money to help western and central Massachusetts communities recover from the impact of the severe June 1 tornadoes, suggesting that the state might provide additional aid if necessary.
Yet state officials are likely to feel pressure to restore some of the billions that were slashed from state programs after the economy soured.
"We now we now have an opportunity to restore some of the cuts that were made in services to people who are at the most vulnerable levels of society," said Michael Weekes, president of the Provider’s Council, a group that represents community-based human services providers.
Weekes, who plans to request a meeting with Patrick administration officials, also said human services workers deserve a "modest" pay hike after going four years without raises.
If the positive revenue growth continues, it could trigger an automatic, albeit small, cut in the state income tax rate from 5.3 percent to 5.25 percent for calendar year 2012. State officials said it would not be clear until the fall whether such a reduction is in the works.
Rep. Bradley Jones, the House Republican leader, said while the first priority should be replenishing the Rainy Day Fund, a continuation of revenue growth should prompt discussions of broader tax cuts.
"Over the course of the next year we should absolutely be talking about how we give a piece of (the surplus) back to the people who put it in, the taxpayers," Jones said.
The brightening fiscal picture also appears to be improving the chances of the state declaring another sales tax holiday in August. Murray said following a leadership meeting with Patrick and House Speaker Robert DeLeo that there was "mostly a consensus" for a tax-free day or weekend, something that has been enormously popular with shoppers and retailers in the past, though costly to the state in lost revenue.
"State budget proposal could include ‘modest’ hikes in fees or taxes"
By Noah Bierman, Boston Globe Staff, 01/12/2012
Citing huge growth in the cost of state health and social programs, Governor Deval Patrick’s top budget official said today that he will offer “modest and limited new revenue proposals” for next year’s budget.
Jay Gonzalez, secretary of administration and finance, would not specify whether those would mean taxes, fees, or some other new revenue source. He said they would be a small part of the state’s approach to fixing a budget hole, but he would not rule out higher taxes as part of that fix.
Patrick is set to release his proposed spending plan on Jan. 25 for the budget year that begins in July. The state House and Senate will have their own proposals, and have in recent years rejected tax hikes. Once the Legislature passes a spending plan, Patrick would need to sign off.
An administration official said later this afternoon that the proposals would be the types of revenue increases that Patrick has proposed previously, and ruled out reintroducing an increase in the state gas tax. Patrick in recent years has proposed a number of small increases in fees and taxes – including an expansion of the state’s bottle deposit law to include bottled water that has been rejected by the state legislature. He has also tried unsuccessfully to eliminate an exemption in the state sales tax that applies to soda and candy.
Gonzalez today unveiled the state’s annual tax collection estimate – which he portrayed as mixed news. On the one hand, state officials expect tax collections to grow by 4.5 percent, or $940 million, over last year’s estimates, a sign the state economy is recovering. On the other hand, costs for indigent health care, homelessness assistance programs, and other social safety net programs are on pace to grow by $1.2 billion. Legally required costs for pensions, negotiated union contracts, and other fixed costs are set to go up by another $400 million, he said.
That will mean many state services could either be cut or have no increases in their budgets to account for inflation, he said. He promised to also propose a number of reforms to some state programs in hopes of saving money without cutting services. He said the state will also withdraw money from its rainy day fund, which he said is now one of the largest in the country. By July, it’s estimated to total about $1.3 billion to $1.4 billion.
“We’re headed in the right direction,” Gonzalez said in a phone interview. “We still have a ways to go to get to a full recovery, and from a budget perspective, we still have a very challenging year.”
Gonzalez has been meeting with advocates for various causes in recent weeks, trying to manage expectations. Many had hoped to have funding restored for areas such as higher education and social services that were cut during the heart of the economic downturn.
"Patrick administration promises $5.2 billion in local aid, including $145 million jump in spending for local school districts"
By Andrew Ryan and John R. Ellement, Boston Globe Staff, 1/20/2012
The Patrick administration today said it wants to send $5.2 billion in local aid to Massachusetts cities and towns in the next fiscal year, including a $145 million increase in funding for local school districts.
The bulk of the local aid plan -- $4.1 billion -- would be sent to municipalities in so-called Chapter 70 monies that provide financial support for public education, according to a summary released by the administration.
That total, the administration said, is $145 million more than was provided in the current state budget, and also represents the highest level of state aid to local school districts in state history.
However, the overall local aid spending $5.2 billion is equal to the money the state’s 351 cities and towns received last year, the administration said.
Lieutenant Governor Timothy Murray disclosed the local aid spending plan today during a speech at the annual meeting of the Massachusetts Municipal Association, being held at the Hynes Convention Center in Boston.
“Massachusetts is leading the nation out of the global economic recession thanks to our targeted investments and strong partnerships with cities and towns,” Murray said in a statement.
He added, “Governor Patrick and I are proud to support our municipal partners with these record investments in local aid and education, which continue to provide municipalities with tools needed to improve the delivery and efficiency of local services and help cities and towns thrive into the future.”
Murray’s speech only summarized the administration’s local aid proposals. The House and Senate historically generate their own versions and ultimately will fashion the state’s spending plan for fiscal 2013 later this year.
The administration plans to release its full budget plan next Wednesday, a plan that is expected to draw on “reforms’’ and cuts to some state services. Human service providers are already anxious that they will have to reduce the level of care they currently provide.
In his speech, Murray confirmed what the Globe reported earlier this month, that the state is expecting a 4.5 percent increase in tax revenue, worth about $940 million.
“That’s good news and part of an encouraging trend, but it doesn’t mean we’re out of the woods yet,’’ Murray said in his prepared remarks, “because our projected revenue growth does not cover significant increases in costs from healthcare, vital safety-net programs and other fixed costs across state government.”
The Globe also reported fixed costs for the state budget - pension costs and union contracts -- will rise by about $400 million.
House Speaker Robert DeLeo is in attendance.
(Globe reporter Noah Bierman contributed to this report.)
John R. Ellement can be reached at firstname.lastname@example.org.
"Governor Deval Patrick’s budget would boost aid to local schools, cut positions -- and raise some taxes"
By Noah Bierman and Stephanie Ebbert, Boston Globe Staff, 1/25/2012
Governor Deval Patrick released an annual $32.3 billion spending plan this morning that would boost K-12 education spending, eliminate 400 positions in the executive branch, and close the Bay State Correctional Center in Norfolk.
The budget proposes a record-high amount of state aid to local schools, $4.136 billion, along with $10 million toward efforts to close the achievement gap, and a $10 million increase in funding for community colleges. The elimination of 400 positions would save $30 million, while the closure of the prison would save $8.9 million.
With the budget edging up 2.98 percent overall over the current year, Patrick also called for new revenues from several sources that he suggested were widely supported by the public -- eliminating a sales tax exemption on candy and soda; increasing taxes on cigarettes and raising taxes on cigars and smokeless tobacco to the same level as cigarettes, and expanding the bottle bill.
“All together, these new revenues amount to less than 1 percent of this budget,” the governor said. “They are not new. They are still sensible, still widely supported in the general public, in most cases, and still necessary.”
“As I’ve said before, I am asking the Legislature to make tough choices. This budget is no different. But the progress we are making is happening because we are making those tough choices and made them together, inspired by our commitment to leave a better commonwealth than we found.”
The House and Senate will each propose their own spending plans within the next three months. The sides must agree to a final product before getting it to Patrick’s desk for a signature in time for the next budget year, which begins July 1.
The governor positioned his budget as austere but sensible, saying that the state’s approach has protected the state’s rainy day fund and boosted its credit rating, while continuing to extend public services to people at a time of greater need.
“Revenue has continued slowly to recover as more people are getting back to work, which is great news on many, many levels, but we still have unprecedented needs to meet on health care, emergency housing, and other essential services because of the numbers of people whose lives have been turned upside down by the global economic collapse,” Patrick said.
“With the support of the Legislature, we have managed to do this rather well, though not without pain. Our budgets have been responsible and balanced. We have reduced headcount by almost 6,000 positions. We have reduced spending on, or eliminated entirely, a whole host of programs. We have found more efficient ways to deliver services with less money. These approaches have, in some instances, been difficult, but effective. You will see examples of them again in this budget.”
At the same time, Patrick said, the state has invested in areas that will increase opportunity and the state’s position in the future.
“We chose to grow our way out of this recession and you can’t grow without a growth strategy,” Patrick said. “That is why we have invested significantly in education, innovation, and in infrastructure, and why we propose to do so again in the coming fiscal year. Those investments are why we are fifth in the nation in job growth and why our economy is growing faster than the rest of the country’s and why we lead the world in student achievement and the world in math and science.”
Asked how much his budget relies upon the level of funding coming from Washington, Patrick said, “We aren’t taking a whole lot for granted. “We know this is going to be a challenging budget and there are uncertainties as far as the level of federal support. But there have been uncertainties for years now.”
Asked about cuts to the state Registry of Motor Vehicles, the governor encouraged motorists to get services online whenever possible.
“We have to start doing things differently in a whole host of areas -- and that is not just government doing things differently,” Patrick said. “It is asking citizens to interact with their government differently – not less, but just differently. I get that not every transaction can be done on the Web, not everybody has access to the Web. Which is why we still have staffing and we have work to do.”
State officials expect tax collections to grow by 4.5 percent, or $940 million, over last year’s estimates, a sign the state economy is recovering.
Costs for indigent health care, homelessness assistance programs, and other social safety net programs are on pace to grow by $1.2 billion. Legally required expenses for pensions, negotiated union contracts, and other fixed costs are set to go up by another $400 million, Patrick said. That will mean many other state services will see no increases in their budgets to offset the effects of inflation.
Social service providers have been nervous, organizing rallies and lobbying campaigns. This morning, hundreds of people gathered at the State House’s Grand Staircase to plead for AIDS funding, which has been cut by $3 million in recent years.
“A lot of the services get discontinued” without the money, said John Collins, a 46-year-old man who has had AIDS for 28 years and lives at a residential program that receives state funding.
Patrick has said over the past week that despite challenging budget times, he would increase funding for K-12 schools, community colleges, and veterans’ services. Patrick said in this morning’s statement that he planned to save roughly $730 million by containing growth in health care costs.
Martin Finucane of the Globe staff contributed to this report. Noah Bierman can be reached at email@example.com. Follow him on Twitter @noahbierman.
"Governor’s proposed aid cuts draw heat from local officials"
By John Laidler, Boston Globe Correspondent, December 15, 2012
Governor Deval Patrick’s proposal to impose a midyear cut in local aid is drawing grumbles from local officials but, so far, few cries of alarm.
Patrick announced last week that he will seek approval from the Legislature to cut unrestricted general aid to cities and towns by 1 percent, or $9 million. The cut is part of a plan to erase a projected $540 million deficit for the current fiscal year that has resulted from lower than projected tax collections.
“It’s unfortunate but it’s not unprecedented when revenue shortfalls have occurred with the state,” said Peter Morin, chief of staff to Braintree Mayor Joseph C. Sullivan. He said the town’s responsibility is to “meet the challenge rather than pointing a finger of blame.”
Billerica Town Manager John C. Curran said the town should be able to weather the $50,000 loss in aid he estimates will result from the cut. But he is not pleased at the timing of the reduction.
“I think it’s a little late in the game to start talking about cuts halfway through the year,” Curran said.
Maureen Lemieux, Newton’s chief financial officer, said, “We are certainly understanding of the governor’s dilemma, and for Newton, we believe the impact of the reduction will be minimal,” estimating the city would lose $49,000 in unrestricted aid.
Municipal leaders said that coupled with $29 million in other cuts that directly affect municipalities — including for special education, regional school transportation, and homeless student transportation — the reductions in unrestricted aid will only sharpen the financial pinch that many cities and towns already face.
Patrick said he would cut $225 million, or 1 percent, from executive branch agencies, which would yield a net savings of $157 million when factoring in federal revenue losses. He plans to seek legislative authority to tap $200 million from the state’s rainy day fund and to make $34 million in other cuts, including the $9 million in local aid. The remainder of the budget gap would be closed through other savings, reserves, and anticipated revenues.
Geoffrey Beckwith, executive director of the Massachusetts Municipal Association, said his group is asking lawmakers to reject the proposed cut “because communities are already doing their part” by shouldering the $29 million in other cuts and have absorbed $416 million in cuts to unrestricted aid since 2008.
“I certainly understand the governor’s dilemma and motivation. But given the fact that our budget is locked in stone . . . it just becomes very difficult for a community to react halfway through the year,” said Robert J. Halpin, Framingham’s town manager.
Halpin said that while the town is not happy with the possible cuts, reductions in other areas — notably those affecting the schools — would have an even greater impact.
Needham Town Manager Kate Fitzpatrick said of greater concern than the approximately $15,000 loss in unrestricted aid to the town are funding cuts to special education, veterans benefits, and police training.
“We have a projected revenue shortfall this fiscal year and we need to solve it and make sure we are living within our fiscal means,” Jay Gonzalez, the state’s administration and finance secretary, said in a telephone interview.
“We are trying to solve it in a way that minimizes the impact as much as possible, and in part we are doing that by asking all our partners to share in the impact.”
Gonzalez noted that even after all the cuts this year, the support the state provides cities and towns this year is up $370 million over the level when Patrick took office in 2008.
He said in the past fiscal year alone, cities and towns also raised or saved more than $400 million through tools provided to them by the state.
But some municipal leaders maintain that the cuts to cities and towns could have been avoided by better budget planning at the state level.
“They saw an uptick in revenues and they loaded up the operating budget prematurely, and now we are in a position where we have to cut,” said Gloucester Mayor Carolyn Kirk.
“I’m certainly disappointed the revenue estimates assumed by the state would not be sufficiently conservative to handle the current economy we’re in,” said Andrew Maylor, North Andover’s town manager.
Gonzalez said the need for midyear cuts was the result of economic growth — and resulting revenues — lagging behind what not only the state but economists had predicted.
Melrose Mayor Robert J. Dolan called it “disingenuous” for the administration to present the local aid cut as 1 percent when it is “proposing reductions that are far more than 1 percent.”
“I am disappointed, but when you read about revenue projections not meeting the actual revenue collections, you know at some point in time you are likely going to face a cut,” said Brockton Mayor Linda M. Balzotti. “I had hoped it wouldn’t impact local aid, but clearly it’s going to do so.
“We will try to find ways to cut and control [costs] so we don’t have any midyear layoffs to make up for that revenue,” Balzotti said of the $177,000 she estimates Brockton would lose in unrestricted aid.
Quincy would be able to absorb the $160,000 the city estimates it would lose in unrestricted aid, according to Christopher Walker, spokesman for Mayor Thomas P. Koch.
“By the same token,” he said, “I think every mayor would suggest to our friends at the state [level] that we should be thinking about increasing local aid and not cutting it.”
“I think we have to share in the pain. I’d rather not have it, but . . . I guess we all have to do a little bit,” said Beverly Mayor William F. Scanlon Jr.
“I’m not going to criticize the tough choices the governor has to face. What I’m hopeful for is that the revenues can hold sufficiently that he doesn’t have to go through with the cuts,” said Amesbury Mayor Thatcher W. Kezer III.
John Laidler can be reached at firstname.lastname@example.org.
"Mass. lawmakers face budget, drug lab questions"
By BOB SALSBERG, Associated Press, berkshireeagle.com - December 29, 2012
BOSTON (AP) -- Massachusetts lawmakers are returning to face pressing issues that have developed within state government in recent months.
The 2013-2014 session begins Wednesday, with money matters likely at the top of the agenda.
The Legislature is expected to address the state’s broken transportation funding system, though it’s not yet clear how it might be fixed.
Gov. Deval Patrick wants prompt action on measures to close a projected $540 million gap between revenues and spending in the current budget. He’s proposing a $200 million transfer from the state’s so-called rainy day fund, and a 1 percent cut in aid to cities and towns.
Patrick is also asking the Legislature for $30 million to cover initial costs associated with a drug testing scandal blamed on a rogue chemist in a state lab.
"Mass. Governor Deval Patrick warns of revenue decline, plans cuts; decries ‘fiscal cliff’ uncertainty"
By Noah Bierman, Globe Staff, 1/15/2013
Governor Deval Patrick blamed gridlock in Washington’s fiscal cliff negotiations for a $540 million state budget gap he announced today, and said he would begin immediate efforts to cut local aid, reduce spending on safety net programs, and dip into the state’s reserves.
The cuts, some of which need legislative approval, are expected to have an immediate impact. They include $9 million less in the local aid funding used to pay salaries for teachers and firefighters, $11 million less than budgeted for special education funding, reductions in local reimbursements for towns to bus homeless students, and across-the-board reductions in spending on the overburdened court system.
Just under half of the shortfall will be bridged by a $200 million withdrawal from the state’s rainy day fund, which is expected to have about $1.2 billion left at the end of the budget year on June 30. The Patrick administration said the state would still have one of the highest reserve fund ballances in the country.
Municipal leaders vowed to fight the $9 million local aid cut in the Legislature.
They say it comes on the heels of several difficult budget years and, when combined with other local cuts Patrick announced Tuesday, would amount to $28.75 million loss in local spending, plus another $20 million in cuts to a school building fund.
Patrick cast the situation as serious but not catastrophic. He said the state faced a gap that was six times larger during the height of the fiscal crunch in 2009. And he said the state would not need to raise taxes to fill the current void. But he continued to warn of a potential tax increase to cover the longer-term problems in transportation, which lawmakers are expected to take up in the new year.
“We’ve been here,” he said at a State House news conference. “We know how to do this.”
“I don’t think this is draconian,” he added. “We are spreading the pain as broadly as possible.”
Patrick decried the “fiscal cliff” facing the country if President Obama and Congressional Republicans cannot come to an agreement in deficit reduction talks. He said the uncertainty posed by the looming cliff and the resulting slowdown in growth were “the direct cause of our budget challenges.”
“Congress and the President must come to terms on a solution so the private sector will continue to make the kind of investments that create jobs, grow state and federal tax revenue collections and contribute to a lasting economic recovery. Until then, just as we have throughout the course of this Administration, we face these challenges together and take a balanced, purposeful approach to dealing with them,” Patrick said in a statement.
"Governor Deval Patrick proposes $34.8b state budget, boosted by $1.9b tax increase"
By Michael Levenson and Noah Bierman, Boston Globe Staff, January 23, 2013
Governor Deval Patrick today proposed a $34.8 billion state budget that increases funds for transportation and education, as well as aid to cities and towns, while at the same time calling for a major hike in taxes.
Patrick said the vast majority of programs would not see cuts under his budget, though some of the increases proposed would not satisfy the programs’ supporters.
The Patrick administration also revealed today that a $1.9 billion package of income tax increases and other revenue-raising measures the governor unveiled last week included new or higher taxes on candy, soda, and cigarettes.
The goal of the entire plan, Patrick said, was to boost investment in areas that, he said, are important to the state’s economy.
“It’s a growth budget,” he said.
Michael Widmer, president of the Massachusetts Taxpayers Foundation, a business-backed budget watchdog group, said of the ambitious tax plans, “He’s really rolled the dice. This is a very aggressive budget.”
Patrick unveiled his plans for a major tax hike last week, in his State of the Commonwealth speech. The proposal, if approved, would raise taxes on about 50 percent of residents, beginning in January 2014, with the biggest increases on upper-income earners.
The heart of the plan would hike the income tax from 5.25 percent to 6.25 percent while cutting the sales tax from 6.25 percent to 4.5 percent. It would also double the personal income tax exemption, eliminate 45 income tax deductions (for T passes, college scholarships, and dependents under 12, among other items) and tie the gas tax to inflation, ensuring gradual increases at the pump. Three corporate tax breaks would be eliminated. MBTA fares, Turnpike tolls, and Registry fees would also increase periodically.
Patrick said the plan was aimed at making the tax code simpler, fairer and more progressive, while raising enough money to put the financially ailing transportation system on a path toward long-term stability.
He said the people left out in the frigid weather today due to a shutdown of the Green Line “totally get” the need for more transportation spending.
The increases on candy, soda, and cigarettes were also in the proposal outlined last week but weren’t highlighted at the time by the administration.
Critics have said the taxes would make an already high-cost state even costlier and raise taxes for spending on a smorgasbord of transportation projects beyond what is necessary to fix the debt-ridden MBTA.
Taxes will dominate debate on Beacon Hill this year, but will not be the only point of contention. The state faces a significant budget deficit of $1.2 billion, according to the Massachusetts Budget and Policy Center, a liberal research group. Some estimates have put the gap a bit lower, closer to $1 billion. The gap shows how Massachusetts has not recovered fully from the recession and its aftermath, which stunted growth in tax collections.
Over the past several years, Patrick and the Legislature have papered over budget gaps in part by taking money from the state’s emergency reserve fund and other one-time sources. So far this year, Patrick has withdrawn $350 million from the “rainy day fund,” and has asked for legislative authority to withdraw another $200 million, which would leave $1.2 billion in the fund.
Patrick’s newest budget would take another $400 million from the fund. But money added back in would leave it with $1 billion by July 2014, which state budget analysts contend is a healthier balance than most states have.
Patrick’s budget is likely to change significantly before it becomes law in time to start the new budget year on July 1. Last year, he proposed many initiatives that the House and Senate scuttled when they released and debated their own versions of the budget. The House and Senate ultimately agree on a compromise budget, which is then sent to the governor’s desk for his signature.
Among those Patrick ideas that were jettisoned last year were plans to close a state prison and merge the Parole Board with the Probation Department. Patrick also sought $260 million in new revenues last year, including new or higher taxes on candy, soda and cigarettes, none of which made it into the final $32.2 billion budget that he signed.
This year, the political debate around taxes has shifted. With lawmakers not facing elections in November, House and Senate leaders have indicated they will consider at least some tax increases, though possibly not at the level Patrick has proposed.
"House panel calls for $33.8B Mass. budget"
By BOB SALSBERG, Associated Press via Boston.com / April 10, 2013
BOSTON (AP) — A state budget plan unveiled Wednesday by a key House panel calls for about $1 billion less in total spending in the next fiscal year than proposed earlier by Gov. Deval Patrick.
The $33.8 billion budget announced Wednesday by the House Ways and Means Committee would boost state spending by nearly 3.9 percent over current levels. Patrick had sought a 6.9 percent increase in total spending for the 12-month period starting July 1.
The Legislature rejected Patrick’s call for $1.9 billion in new taxes, including a hike in the state income tax that would have paid for major new initiatives in transportation and education.
The full House separately approved a transportation finance plan on Monday that would raise about $450 million in the next fiscal year by adding three cents to the gasoline tax, boosting cigarette taxes and some business tax changes.
The spending plan announced by lawmakers on Wednesday does not seek any tax increases beyond those contained in the transportation bill.
‘‘We certainly respect the governor’s proposal, we respect his vision, we applaud his leadership on the issues,’’ said Rep. Brian Dempsey, chairman of the Ways and Means panel. ‘‘But we take a different approach.’’
While the House budget does not approach the same level of education spending as sought by the governor, Dempsey said it significantly increases funding for higher education. The plan would direct $39 million in new funding to the University of Massachusetts, $29 million for community colleges and $15 million for the state’s other public universities.
UMass officials said Wednesday that the additional funding would allow for a two-year freeze on increases in tuition and student fees.
The spending plan would increase state support for school districts to $109.5 million, well below the governor’s proposed $226 million hike that he said would guarantee a minimum $25-per-child increase for each district.
The House panel also did not include Patrick’s call to invest $131 million in early education and child care to help relieve a waiting list that exceeds 30,000 for state services. The House instead called for creation of a 10-member special commission to study and make recommendations for early education.
Noah Berger, president of the independent Massachusetts Budget and Policy Center, said the House plan represents a ‘‘missed opportunity’’ to improve education in the state.
‘‘The governor had proposed a fairly forward looking effort to invest significantly in education to improve our economy in the long term and help families who are trying to get a quality education for their kids,’’ Berger said.
Patrick’s top budget official, Secretary of Administration and Finance Glen Shor, said in a statement that the administration was pleased with the boost in higher education but concerned about a lack of funding for early education and youth violence prevention programs.
Michael Widmer, president of the Massachusetts Taxpayers Foundation, called the House budget responsible in light of continued sluggishness in the economy.
‘‘Revenue growth has been anemic in this economic recovery,’’ said Widmer, whose group had been skeptical of the governor’s proposed tax increase.
Both the House plan and the one proposed by the governor calls for withdrawing funds from the state’s reserves, better known as the ‘‘rainy day fund.’’ Lawmakers call for using $350 million, compared to the $400 million that Patrick sought to tap from the fund. In either case, the state would still have a balance of slightly more than $1 billion in the fund after the transfer.
The House budget — scheduled for debate later in the month — would boost unrestricted local aid to cities and towns by about $21 million, the first increase in four years, but about $10 million less than proposed by the governor.
Geoffrey Beckwith, executive director of the Massachusetts Municipal Association, said lawmakers however would use an existing formula for distributing local aid, rather than a new formula proposed by Patrick. That would provide a more stable approach for cities and towns, he said.
The proposed House spending plan includes steps aimed at ending abuse of Electronic Benefit Transfer cards for welfare recipients by tightening legibility standards and requiring photo IDs on the state-issued cards. The budget would also create an independent office within the state’s human services agency to address potential fraud in public assistance programs.
Recent reports from the state inspector general and auditor had pointed to millions of dollars in benefits going to people with unconfirmed eligibility. Republican lawmakers had been pushing for reforms in the EBT system.
Rep. Brad Jones, the House minority leader, offered some praise to Democratic leaders for a budget that would spend less than Patrick and called for reforms in government.
‘‘However, the plan offered today relies too heavily on revenue found in the recently passed transportation finance bill, and House Republicans will continue to oppose this fiscally irresponsible approach,’’ Jones said.
"Massachusetts pension plan ranks worst in US, study finds"
By Beth Healy, Boston Globe Staff, May 1, 2014
The Urban Institute, a Washington think tank, gives Massachusetts a failing grade in its new study on public pensions, ranking the state the worst in the nation.
The institute cited low funding levels, as well as pension plan designs that it says hurt younger workers and fail to encourage older employees to work longer.
According to the study, Massachusetts receives an “F” for its plans’ funding level, along with three other states — New Jersey, Pennsylvania, and North Dakota.
The state’s pension system, which covers Commonwealth employees and teachers, was 60.6 percent funded in early 2013. That compares with an average of 74 percent funding across all US states, according to the institute.
“Over the years, they’ve dug a pretty deep funding hole, and that’s getting worse,’’ said Richard Johnson, the project’s lead researcher. Even as Massachusetts has made reforms to its pension plans, most recently in 2012, Johnson said the state still “pushes older workers out the door but doesn’t attract younger workers.’’
Nick Favorito, executive director of the Massachusetts State Retirement Board, said the report does not reflect recent commitments to improve the funding levels.
Earlier this year, the Patrick administration and leaders of the Legislature agreed to boost funding for the state pension plan over the next three years and beyond, with a goal of fully covering retirement obligations by 2036.
Under the plan, the state would increase its annual contribution to the fund by 10 percent a year for fiscal 2015 through 2017. After three years, the increases would be 7 percent annually.
In terms of plan design, the Urban Institute singles out Massachusetts police and fire employees as having the worst plans in the country.
It says the plans offer little incentive for older workers to stay on the job instead of retiring and beginning to collect benefits at an earlier age. Many retirement benefit systems, including the Social Security system, offer larger payments for participants who start drawing checks at later ages.
The institute also criticized Massachusetts plans because young workers must be employed by the state for 10 years before earning any pension benefits beyond their own contributions and modest interest on those savings.
Carolyn Ryan, assistant director of policy and research at the Massachusetts Taxpayers Foundation, who reviewed the report, said it makes sense to require a waiting period before people qualify for a pension.
“The Urban Institute gives us a demerit for our 10-year investing requirement. We disagree with that,’’ Ryan said.
However, both she and Michael Widmer, who is president of the Boston-based foundation, agreed that the plan was not geared to today’s workers, who are likely to change jobs frequently over the course of their careers.
“It’s a quandary,’’ Widmer said. “Essentially, you have a plan that doesn’t really reflect the reality of modern employment.’’
A 401(k)-type retirement savings plan might be one way to fix that, they said. But that option raises the inevitable problem of who will support the pensions of older workers.
“The criteria used by the Urban Institute unfortunately tell an incomplete story, particularly for a state like ours with a traditional defined benefit plan,’’ Favorito said in a statement. “In fact, recent pension reform measures —which have been widely recognized to be both fiscally responsible and fair to workers — actually result in a lower grade for the Commonwealth using the Urban Institute’s methodology.’’
Another difficulty for young workers in Massachusetts and some other states, the Urban Institute pointed out, is that those employees do not participate in the Social Security system. Instead, they contribute 9 percent to 11 percent of their earnings to the pension plan — and that money is returned to them, with interest, if they leave before 10 years.
That means they would not earn investment returns on the money upon withdrawing it, said Jon Carlisle, a spokesman for state Treasurer Steve Grossman. They also would not have lost money if the market declined. The interest rate is currently 3 percent.
“These plans aren’t working well for young workers who won’t spend their entire career in government,’’ said Johnson, of the Urban Institute.
- Jonathan Melle
- Amherst, NH, United States
- I am a citizen defending the people against corrupt Pols who only serve their Corporate Elite masters, not the people! / My 2 political enemies are Andrea F. Nuciforo, Jr., nicknamed "Luciforo" and former Berkshire County Sheriff Carmen C. Massimiano, Jr. / I have also pasted many of my political essays on "The Berkshire Blog": berkshireeagle.blogspot.com / I AM THE ANTI-FRANK GUINTA! / Please contact me at email@example.com
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