"...you know what they say about assumptions..."

Discussing Governor Patrick's budget, Senate Majority Leader Berry yesterday commented, "He made a lot of assumptions, and you know what they say about assumptions... They don't always come true."

I've heard "them" say something else about assumptions, but of course I agree with the Senator's point. With the current economic outlook, it is downright terrifying to see the extent to which the Governor has relied on what he called "anticipated revenues" in order to claim a "balanced" budget.

It is heartening to see that with the departure of Sal DiMasi, Senate President Murray has apparently found her voice, and along with a number of other Senators is protesting the relatively shallow budget cuts, reliance on new taxes and use of unrealized revenues that permeate the Governor's budget.

Oh, and if anyone is still wondering whether Patrick has put blood in the political water by proposing new taxes in the midst of a recession, you can probably stop wondering after you read Treasurer Cahill's comments:

"It doesn't help grow the economy if you're taxing restaurants and meals and businesses," Cahill said. "It's not going to help businesses, and it's not going to help cities and towns as much as they think."

Does the economy provide Patrick enough political cover?

I read yesterday - I cannot recall where - that Governor Patrick's aides believe that the economic crisis will give him enough political cover to protect him from a voter backlash against his tax proposals (not to mention his failure to fulfill so many campaign promises). I wonder, is that an accurate assessment?

In the short term it probably is. In the longer term, I'm not so sure. Whether Patrick is to blame for the state's current mess (and he does share some blame), people tend on a very basic level to "blame" the person in office at the time of a crisis. This is the whole "the buck stops here" notion, embraced by true leaders and abhorred by most politicians. If Patrick's first term is largely characterized by cuts to essential services and tax increases, his sunny personality may not be enough to get him past a credible challenger in 2010. With yesterday's budget and related legislation, the man who promised repeatedly that he had "no plans to raise taxes" (careful wording noted at the time, important now) has now proposed an impressively long list of new taxes, tax hikes and fee increases. For two budget cycles in a row now he has "balanced" the budget with a heavy reliance on "anticipated revenues" - last year from casino gambling and this year from federal bailouts. There is not much reason to think that this reliance will pan out any better this year than it did last. And this year taxpayer ire will be enhanced by the higher taxes Patrick is forcing them to pay. I also think it is a huge mistake for him to stubbornly insist on preserving his Commonwealth Corps volunteer program, his DC office and this notion of a radical and costly re-vamp of state education programs (the "Readiness Project") in the current economy. Critics will continue to point out, correctly, that despite his constant talk about shared pain and sacrifice, he tends to hold his ego/legacy projects outside of the fallout zone.

So how will Patrick deal with all of this if, as he claims, he does in fact run for another term? I just read the Governor's budget letter (a message to the people that is released with every proposed budget), and it offers a big hint. The last line reads:

I look forward to working with the Legislature and our other partners in government, business and community leaders, and each and every Massachusetts resident, to build a bridge to our bright future . . . because I still believe that Together We Can.

That triggered my gag reflex a little bit. I would like to think that having seen what "Together We Can" gets us, voters will be less inclined to swoon the next time around. Of course I'm usually wrong when I try to predict voter behavior in Massachusetts.

I'm REALLY not happy to be this right

According to Boston.com, Governor Patrick's proposed budget:

...includes $1.6 billion in spending cuts and savings; withdraws $586 million from the rainy day fund; and anticipates $711 million from federal stimulus package that has yet to be approved by Congress.

Got that? The single largest line item, by over $100 million, in the Governor's plan for a "balanced" budget is "$711 million" that "has yet to be approved." And let's be clear here. There's no $711 million line item in the federal stimulus plan earmarked to bailout Massachusetts. We're at least two major steps away from ever seeing that money (which is itself borrowed).

To make matters worse, again according to the same article:

The governor also announced midyear budget cuts that include slicing $191 million from state government spending and cutting $128 million from local aid, which will force local officials to close public schools, curtail library hours, and lay off teachers, police, and firefighters. Patrick plans to withdraw $327 million from the state rainy day fund and is anticipating $533 million in federal bailout to make it to the next fiscal year, which begins in July.

So the single largest lump sum in Patrick's "plan" to "make it to the next fiscal year" is ALSO "anticipated" federal bailout money. The second-largest line item in both plans, by the way, is a major draw-down from the rainy day fund. As the State House News Service puts it:

Patrick’s plan washes away most of the red ink by drawing another $327 million from the state’s quickly vanishing rainy day reserve account and penciling in a whopping $533 million in anticipated federal aid, which he is confident that Congress and the Obama administration will approve.

One might quibble with my characterizations, since the article also claims that the Governor's plan includes "$1.6 billion in spending cuts and savings." The devil, I suspect, is in the words "and savings," which tend to describe speculative dollars that are very different from spending cuts. I'll be happy to be proved wrong and look forward to reviewing the budget.

Oh, and he also proposes a whole bunch of tax hikes...

I'm not happy to be right.

This morning's missive from the State House News Service begins:

Gov. Deval Patrick will close an estimated $1.1 billion midyear budget gap with over $300 million in additional cuts, heavy withdrawals from state reserves, and anticipated assistance from a developing federal stimulus package, according to two sources briefed on Patrick’s intentions.

(Heavy sigh.)

On the plus side, the same article reports that in his budget proposal Patrick will also seek to raise the cap on charter schools.

A prediction about the Governor's budget

Governor Patrick is slated to release his proposed state budget tomorrow at 11:00 am.  I'd like to make a prediction.  In much the same way as his last budget relied on highly speculative revenues to be generated by his not-yet-passed casino licensing plan (which, as it turned out, never passed), this year's budget will rely heavily upon highly speculative federal bailout funds for "balance."  Those funds, of course, have not yet been allocated and can in no sense at all be counted on - any more than the billions of dollars Patrick dreamed would flow into state coffers from developers eager to build casinos in Massachusetts could be counted on last year.

Our Governor will not let a small detail like the fact that federal bailout dollars do not actually exist yet get in the way of his ability to claim a "balanced" budget without having to make truly painful choices, however.  In the midst of the current economic crisis, few commentators bother to remind voters that last year's state budget was wildly out of whack from inception - in part because of our elected leaders' penchant for relying on unrealized funds and starry-eyed, wholly unrealistic revenue projections.  

I hope I am wrong, but I'll bet I'm right.  Speculative federal dollars and - watch for it - a very heavy draw on the already-depleted rainy day fund will make up a huge portion of the Governor's supposed budget gap filler.  Of course the Governor will not be alone in this.  The Legislature will be more than happy to buy into the ruse and stake their hopes on the federal government to send a whole lot of your tax dollars (and your grandkids' tax dollars, borrowed from tomorrow) our way.  They won't highlight this scheme; but look for it to be peeking out from behind a lot of rhetoric about painful cuts and shared sacrifice.

That's that: Welcome Speaker DeLeo

As I predicted, ahead of tomorrow's vote to succeed Sal DiMasi, Massachusetts' House Democrats have buried their internal divisions and are lining up behind Robert DeLeo. As the Globe reports,

DeLeo claimed the gavel in a brief press conference after House Speaker Salvatore F. DiMasi gave his farewell address. DeLeo said his rival -- majority leader John H. Rogers -- approached him before DiMasi's speech to concede.

"He is going to urge all of his supporters to support me tomorrow as the next speaker of the House," said DeLeo, a politically conservative and personally low-key Democrat from Winthrop.

Although it would have been refreshing to see some open discord in Beacon Hill's Democratic machine, this is not necessarily a bad result (given the alternatives). DeLeo is widely thought of as a "conservative." Of course context is everything, but still - he's better from the get-go than any number of his colleagues. In a brief press conference today, he also set forth an encouraging list of purported priorities: "transportation, pension overhaul and ethics reform."

"Ethics reform" is a sop to the genesis of his sudden advancement, of course, and is a prominent non-issue on the top of everyone's list of "priorities" these days. Let a couple of months go by without any new indictments or investigations and watch that one fade slowly away in deference to the time-honored Beacon Hill preference for circling the wagons against ethics charges.

"Transportation" can mean a lot of things, from massive new spending to desperately-neeeded reform and consolidation. Here's hoping he meant the latter, at least before the former.

"Pension overhaul," though - that's a good one. Of course we've seen no lack of Massachusetts politicians promising pension reform and then failing to deliver - or even try. Our Governor leaps to mind. Still, DeLeo did not have to reach for the third rail of Massachusetts Democratic politics today, and yet he did so. That is encouraging, especially in light of reports today that his predecessor's three weeks spent in the current legislative session will boost his pension payments by approximately $2000 per year.

The only real "debate" of the year will take place behind closed doors

Now this is fun stuff. A friend who works in the Statehouse told me this morning that yesterday she saw an aide running. "How often do you see a Statehouse aide running?" she asked. Never, that's how often. I guarantee you that eager beaver was not beating feet to deliver the latest iteration of the Governor's tax hike plan to a legislative ally. No, this legislative Usain Bolt was most assuredly delivering a message to, from or about either Robert DeLeo or John Rogers as the two jockey furiously ahead of tomorrow's caucus vote to replace Sal DiMasi as Speaker.

Are you paying attention? You ought to be, because even with the severe budget challenge looming, what is going on in our Statehouse right now represents a true break from form for Beacon Hill, and it is likely the only true "debate" that will take place on the Hill this year. Why, then, does it have to take place in the democratic caucus chamber, behind closed doors? If Representative X is a back-biting, lying, craven scum for backing one candidate and forsaking the other, do the voters not have the right to know that, and to hear Representative X's rejoinder? The answer is clear enough. As the Globe notes this morning, "It was a day in which policy discussion and issues were starkly absent from debate. Rather, the battle between DeLeo and Rogers was about personal loyalties and the potential for future favors, the currency of Beacon Hill." None of these guys and gals want the voters back home to know they will pull the lever based on "personal loyalties" or, worse, "the potential for future favors." And of course the Globe is being delicate here. It would be much more accurate to substitute the word "promised" for "potential."

So the political machinations - the "debate" - will take place where it always takes place on Beacon Hill, on the rare occasion when it does take place, that is: behind closed doors. Afterwards we will have a new Speaker, most likely Robert DeLeo, and on we'll march for a few years until the next round of investigations ramps up.

In the meantime, might the fourth estate seize this moment of transition to secure a pledge or two from the new Speaker? How about, to start, a promise that legislation will be debated on the floor of the House, rather than in caucus chambers for a change? Or even a pledge to debate the state budget on the House floor. They can start slowly to get used to the notion of the people getting to see how they make their decisions, and expand from there.

Almost too much

The State House News Service reports that John Rogers, widely thought to be trailing Robert DeLeo in the back-room jockeying to succeed resigning Speaker Sal DiMasi, is calling for a delay in the vote to elect a new Speaker.

Rogers said the House should allow for public input, and argued that the public grows disillusioned when one of the state’s top political figures is elected through agreements made behind closed doors.

“It’s an important office in Massachusetts and it’s not a coronation,” Rogers, the House’s most recent majority leader, told the News Service during a telephone interview Sunday night.

So far, so good - right? Whatever one thinks of Rogers, he's undoubtedly correct that the public is disillusioned by closed door governance, and "it's not a coronation."

Some of his comments further in the article, though, give reason to suspect that perhaps there's more politics than principle behind Rogers' indignation:

The Norwood Democrat also accused DiMasi of violating an agreement they reached in 2004 when both were jockeying to succeed then-Speaker Thomas Finneran. Rogers said DiMasi agreed to a pact, without a date certain, under which Rogers would succeed him.

“The understanding was crystal clear … that he would go first and I would go second,” Rogers told the News Service in a telephone interview Sunday night, saying DiMasi agreed “unequivocally.”

Rogers said he and DiMasi sealed the arrangement with a handshake across a dining room table, with Finneran looking on. “Talk to Tom Finneran, he was there,” Rogers said.

The last line is almost too much. "Talk to Tom Finneran, he was there"!!

Rogers' gripe comes down to: 'The public is sick of back-room deals... and he's refusing to respect our back-room deal!' Apparently since the years-past Rogers/DiMasi/Finneran dinner summit, resigning Speaker Sal has has a superceding dinner with Bob DeLeo - who is likely to be elected this week with Sal's blessing.

Then the voters will rise up! Won't they...?

That's it for Sal

It's official - Speaker DiMasi submitted his resignation this evening.

The headline of the story in the State House News is: "DiMASI RESIGNS, HOPES TO HAND GAVEL OFF TO DeLEO."

As far as I'm concerned, that alone ought to be enough to disqualify the heir apparent. It won't be, of course. Despite the media's desire to see a battle between DeLeo and Rogers, by the time there's a vote the Democrats will be lined up behind one or the other (much more than likely DeLeo). That's just how they do things.

Perhaps it's time for a new paradigm?

Looks like less than a month after being re-elected overwhelmingly by the democratic super-majority, Sal DiMasi is on his way out. Let's review a little recent history:

In 1996, House Speaker Charles Flaherty (a thirty year veteran of the Massachusetts House) resigned in the face of a three-year investigation and charges improper relationships with lobbyists and of tax evasion.

Flaherty was succeeded by Speaker Tom Finneran. Finneran (a 26-year veteran of the Massachusetts House) resigned in 2004 in the face of corruption charges. He later pled guilty to obstruction of justice and was stripped of his license to practice law. Finneran was succeeded by Speaker Sal DiMasi. Next week, DiMasi (a thirty year veteran of the House) is expected to resign in the face of federal and state investigations into his dealings with a lobbyist/friend.

DiMasi is likely to be replaced by Robert DeLeo (an - wait for it! - 18 year veteran of the House), or possibly by John Rodgers (a 16-year veteran of the House) who has a head start in the sense that he's already embroiled in his own ethics investigation.

Anyone seeing a pattern here? Anyone see the need to perhaps try something other than elevating the next decades-long veteran steeped in the Beacon Hill "culture" of arm-twisting, back room dealing and iron-fisted rule from above?

A few weeks ago when DiMasi was reelected to the Speakership by the overwhelming majority of the democratic caucus (including every single freshman rep, a mere two months after a campaign brimming with promises of independence and accountability), his legal and ethical problems were well known. This week's developments come as a surprise to nobody. The fact that virtually every single Democrat in the House felt compelled to support him - as they will feel compelled to support the next iteration of "him" - speaks volumes about the inherent problems with one-party rule.

The Speaker of the Massachusetts House controls everything in that chamber, from the daily agenda to the allocation of staff, office supplies and the comfy desk chairs. With no real opposition party, that control is absolute and unforgiving. For a Democrat, to buck the Speaker is, in a very literal sense, to surrender not only one's material comforts, but also all influence and ability to deliver for one's district.

The only way to change that situation is to change the paradigm by electing more Republicans. We're not going to see a Republican majority in the Massachusetts legislature any time soon. Is it too much to hope, though, that in the subconscious minds of the voters the "three strikes" rule might kick in with DiMasi's resignation, triggering a little groundswell of anti-incumbent voting in 2010? Wake up, Massachusetts!

Globe getting it partly right

One of the Globe's editorials today, "Power to the Towns," seems promising for about two-thirds of its length. Our towns do need greater autonomy, particularly in dealing with their unions, and much greater flexibility to be creative in how they spend their (our) money. The most frequent two gripes I heard from local officials during my unsuccessful run for office last year were (1) the state imposes too many unfunded mandates on municipalities; and (2) there are far too many roadblocks to local governing innovations.

Unfortunately and predictably, by the final paragraphs the Globe's editors return to their comfort zone: higher taxes.

Let's look at the Globe's proposals (out of order):

(1) "Allowing municipalities more leeway to design health insurance plans for their workers is the most effective way to bring fiscal relief..." Absolutely. I'd take this a step further and say cities and towns should have even greater leeway than the state has currently (which isn't much). Health insurance costs - for current and retired employees - are for many cities and towns the single largest line item in their budgets. There are ways to reduce those costs significantly without eviscerating the benefits that municipal employees depend on, and local officials ought to have the power and the flexibility to explore all options.

(2) "In recent weeks DiMasi has embraced the idea of steering municipal workers into the state's health insurance program without union approval." This is a big one. During the last gubernatorial campaign, both candidates estimated that allowing cities and towns to join the Group Insurance Commission (GIC) would save hundreds of millions of dollars. There was a plan - formulated under the leadership of my old boss, Kerry Healey - to give cities and towns this option. Governor Patrick was elected and filed legislation to implement that plan, with one very significant change: his bill gave municipal unions an absolute veto over the decision. This has meant that only a tiny number of municipalities have joined the GIC, and some of those have had to make concessions to their unions that virtually negate the cost savings of the move. Municipalities should not be forced to join the GIC - a notion that the Speaker has voiced recently. For some, the move would actually increase costs. They should, however, be able to do so without having to buy off local union support.

(3) "They also need legislative approval to add at least one penny for local use to the state's 5 percent meals tax, and an opportunity to raise taxes on telecommunication companies that use loopholes in state law to evade property taxes." Stupid. Politicians at the state level like to say that tax increases should be a last option (they don't mean it, but they like to say it). Why is it, then, that this notion of local tax increases was one of Governor Patrick's first proposals? Why is it being trotted out again now, before any reforms have been enacted? I have news for the Governor, the legislature and for the Globe: a buck out of the taxpayer's pocket is a buck - it doesn't matter whose hand is reaching in and plucking it out. During a recession, the worst thing that the government can do is raise taxes. That is equally true as to consumers and as to businesses. Tax hiking is the opposite of the "stimulus" that everyone is so anxious to see enacted. Further, the Globe mischaracterizes the telecommunications exemption. It is not a "loophole." It is a deliberate incentive to telecommunications companies (Verizon, Comcast, etc.) to invest in our communities and expand in our state. Verizon, for example, owns and has erected hundreds of thousands of telephone poles - essential infrastructure for the service they provide. Elimination of the exemption would immediately subject them to property tax on the land where those poles are sited - a huge and immediate hit. Sure, that would bring in some dollars. It would also cost jobs and encourage Verizon to invest its capital in more business-friendly states. Whether fiscal incentives like the telecom exemption are wise policy is a legitimate matter for debate. Obviously I have an opinion. Characterizing it as some sort of nefarious "loophole" that big, bad corporations are exploiting at our expense, however, is counter-productive and disingenuous.

(4) "... reform of the disability retirement system." That's a nice way of saying "Eliminate the perverse incentives created by the ability of workers who just happen to be injured while "filling in" at a higher pay grade to retire at that higher pay grade." This one ought to be a no-brainer, but predictably the unions have strong feelings on the matter.

They're nothing if not predictable

Read this.

Then read this, which just popped up on Boston.com. Here's the money paragraph (excuse the pun): "Even if the board does approve the new plan, they may still raise tolls again by July 1, if the Legislature and Governor Deval Patrick do not find money elsewhere to meet the authority’s construction and debt needs, board members said at a meeting today."

One step closer to fulfilling my prophesy. Mark my words: the end result of all of this nonsense will be both a toll increase and a gas tax hike... and much self-congratulatory rhetoric from all involved for avoiding the "massive" toll hikes they used to scare the bejesus out of everyone who drives the Pike.

There is really only one appropriate reaction to all of this.

Legacy protection

I asked a while back whether, in promising to make tough decisions and painful cuts, Governor Patrick will be willing to cut some of his own initiatives that observers have posited might be less than, um, "critical."

Here's a partial answer, along the lines of what I expected.

In the midst of his herculean effort to squeeze every possible dollar of "efficiencies" out of the Executive Branch before cutting local aid, Governor Patrick cannot see his way clear to pare back (or eliminate!) his office in DC.

None of this is anything that has not been observed before, here and elsewhere, but let's do our second reality check of this young day. Both of our US Senators are Democrats. All of our US Representatives are Democrats. The President is a Democrat, and a buddy of our Governor. Does Patrick REALLY need his own staff of lobbyists officed in DC? Set political party aside, and the question remains the same: we have ample representation on the federal level. Why do we need an office staffed by the Governor's own paid lobbyists? Patrick does not say.

Senator Tisei (R), the Senate Minority Leader, had this to say: "They should be able to pick up the phone or use one of the Congressmen's offices. (Patrick) talks a good game about cutting nonessential items in the budget, but when it comes to his own projects he has been unwilling to do that." Just so.

Oh, like you've never paid of thousands in bills for a friend's in-laws??

In the real world, this would be pretty earth-shaking stuff. Turns out that while he was lobbying for a massive state contract on behalf of a software company (and remember, he wasn't even a lobbyist), AND around the time he loaned his "friend" Speaker Sal DiMasi a quarter of a million dollars for a third mortgage, Richard Vitale (henceforth to be known as "the most gosh-darned generous fella on the planet) also paid off $7,500 in legal bills on behalf of the Speaker's in-laws.

Unfortunately, we don't live in the real world. We live in Massachusetts, where a government official at the heart of these ridiculous goings-on can be reelected to what is arguably the most powerful position in state government by an overwhelming majority of his colleagues. In Massachusetts, apparently, this kind of thing goes on all the time. What's the big deal? Doesn't every good friend shell out thousands of dollars, no strings attached, to help out his friends' in-laws? What, you think someone motivated to do such kindness might also be inclined to mention it to his friend? How cynical are you?

I'm pretty cynical, and becoming more so every day. Snapping back to reality for a moment, how much more apparent could it possibly be that this guy was willing to spend thousands upon thousands of dollars to curry favorable action from the Speaker, knowing that once said action was implemented he'd recoup his "investment" and more? Maybe there's an explanation for all of this, but the Speaker sure is not giving it... just like the overwhelming majority of the House that voted a couple of weeks ago to reinstall him as Speaker likely won't ever explain that, either. Ah, Massachusetts.

Haven't we seen this movie before?

I got a kick out of this Herald News piece, titled "Local pols moved by hope, unity." The words these "pols" use to describe their reactions to President Obama's inauguration are just so... familiar. Maybe all of this vague, gauzy "hope/change" rhetoric sounds new and refreshing to the rest of the country, but here in Massachusetts have we not seen this movie before? Recently? And do we not know how the middle of the movie - if not the end - goes?

I got that "seen this movie" feeling over and over during this presidential campaign. That feeling was the reason I was convinced way back during the primaries that we'd see Obama sworn in yesterday. The obvious biographical similarities between Obama and our Governor Patrick are really the least of it. They used many of the same consultants, and therefore many of the same broad themes - and even much identical verbiage. Their campaign colors, fonts and slogans were even the same. Massachusetts liberals were chanting "Yes We Can!" long before most of the country knew anything of Barack Obama.

None of this means, of course, that Obama will be the let down on the national stage that Patrick has been here in the Commonwealth. The expectations people have for him, though, are also familiar - and they are just as unrealistic as the expectations his supporters had for Patrick. High expectations tend to lead to a big let down.

I felt proud yesterday, watching the inaugural. I don't agree with much of what Obama says, and I worry that his policies will be harmful to our country; but I was proud to watch him sworn in as President. There is an article in this morning's Globe about reactions to the inaugural at Logan airport yesterday, including several accounts of people openly weeping as they watched. I overheard someone this morning mocking that reaction. I do not think it should be mocked. If someone's life experience leads him to weep with joy at the ascension of an African American to the presidency, then I think that is a very powerful, very moving thing. My pride stems from a lesser measure of the same emotion. Obama's election is a milestone in our history, and one that not too many people saw coming before he arrived on the scene. That is something to be celebrated.

Still, that "seen this movie" feeling persists. I am not faulting the "pols" quoted in the Herald News today for falling back into the same reverie of "hope" that so many in Massachusetts fell into just two years ago. A good movie can have an impact even when you know the ending. Heck, I still get a lump in my throat when the potted flower stands up at the end of E.T.

Let's all just hope that President Obama lives up to his rhetoric - and our expectations - better than Governor Patrick has here. Let's also hope that the Republican party gets its act together so that the voters have an alternative should President Obama falter.

Well, that's it then.

I was wrong all along. The case for a gas tax hike is now indisputable, with the announcement by a group of "concerned taxpayers" (comprised entirely of labor unions) that "even Tom and Ray Magliozzi, hosts of the “Car Talk” show on National Public Radio and whose column appears Saturdays and Sundays in the Telegram & Gazette, want a gas tax hike in Massachusetts."

With proponents like the guys from "Car Talk," how can the gas tax hike proposal possibly be wrong. After all, tolls are assessed on people in cars, and these guys know a lot about cars. I feel so stupid, and so ashamed.

Read all about it here.

The truly disturbing thing here is not that a coalition of labor unions has lined up against proposed Pike reforms. That was expected and inevitable. No, the truly disturbing thing is that these groups routinely win political battles in Massachusetts with arguments no more sophisticated than "the guys from Car Talk agree with us." Of course it isn't their arguments that win the battles - it's their political clout.

Tenacious Ds

Having experience the unusual phenomenon of losing a tax battle in Massachusetts back in the 1990s when my friend Governor Weld managed to push through significant cuts, Massachusetts "progressives" have not forgotten. These people know how to hold a grudge.

Hence, this blurb in the State House News this morning:

REPORT: REVENUE CHOICES COMPOUNDING BUDGET WOES | Beacon Hill leaders frequently point to the steep economic downturn nationally and globally as the reason for the state’s deep budget problems, but a report out Wednesday morning says another factor has contributed to the red ink: revenue choices. The Massachusetts Budget and Policy Center report says the short-term causes of the state budget crisis are largely issues outside of the control of state policy makers, but concludes that permanent state tax cuts enacted in the late 1990s left Beacon Hill with structurally unbalanced budgets after the 2001 recession. "While the economy was growing the past five years, the state's fiscal condition was never truly strong," said MassBudget Executive Director Noah Berger. "After cutting taxes deeply in the late 1990s, the state suffered in the 2001 recession and then spent the subsequent years delaying needed investments in infrastructure and in people, and not being able to build the reserves needed to weather the next recession." The report found that from 1998 to 2008, net state spending declined modestly as a share of the economy, while state revenues declined sharply as a share of the economy. The report’s authors estimate the fiscal 2010 budget gap at more than $3 billion and take a stab at explaining how state government went from posting surpluses ten years ago to today’s fiscal shambles. Bipartisan proponents of the tax cuts targeted in the report billed those efforts as economic stimulators that would create jobs even as state officials built up one of the largest rainy day funds in the nation.

This is just another go-round in a time-honored dance among fiscal liberals. Having behaved badly for much of the past decade, they reach back over ten years to find the cause of the damage they have done. Surprise! Instead of wondering "how state government went from posting surpluses ten years ago to today's fiscal shambles," how about explaining how state government went from posting a BILLION DOLLAR surplus TWO years ago to today's fiscal shambles?

The answers are not difficult. With the exception of the 2000 recession, until this year the state budget grew every year between the Weld tax cuts (which, by the way, propelled us out of the Dukakis recession) and now. Both "revenues" and spending grew. Guess which grew faster? We also DID build up one of the largest rainy day funds in the nation - and our legislature dipped into it liberally to balance the budget, even when it was not "raining" by anyone's estimation. They repeatedly and casually overrode budget line item vetoes by Republican Governors intended to keep spending in check. They blithely ignored the fact that much of their spending relied upon one-time revenue items. They continued to underfund local services even as the state generated revenue surpluses year after year.

It is easy to look at a crushing credit card bill and blame one's employer for not paying enough. I can't buy a Ferrari and then turn to my law firm and demand that they increase my salary so that I can make the payments. This, essentially, is what this "study" does: it ignores a decade of excessive spending and says, "oh, if only we'd raised taxes higher, we could have afforded all of this great stuff we bought." Sadly, we residents of the Commonwealth don't even get to enjoy the state government equivalent of a Ferrari (and no, I cannot imagine what that would be). Our overspending gave us such baubles as wildly excessive pensions for workers at all levels of government, a transportation system drowning under layers of redundancy, patronage and waste, a legislature that spends freely to please everyone, and feels accountable to no one.

I'd rather a Ferrari.

Not fer nothin'...

But the latest proposal by the Patrick Administration to reform the state's transportation system is yet another example of how they are simply rolling out piecemeal virtually the exact same proposal put forth by Governor Romney at the end of the Romney-Healey Administration. The latest sub-proposal is explained in the State House News:

STATE HOUSE, BOSTON, JAN. 13, 2009..... The state’s bid for transportation reform convulsed again Tuesday, as Gov. Deval Patrick’s new transportation chief proposed selling the 11 service plazas on the Mass. Turnpike, only to draw a quick smackdown from Senate President Therese Murray, who called the plan more evidence of the administration’s “piecemeal, disjointed approach” to one of the gravest policy dilemmas facing the state.

The Patrick administration did not have an estimate Tuesday for how much the Mass. Turnpike Authority could reap by selling the 11 service plazas on the western toll road, and will allow the Pike board to decide whether the market is palatable, new Transportation Secretary James Aloisi said in announcing the plan.

Aloisi said the board would decide how to use the money, including on areas like safety, toll relief, and infrastructure, but acknowledged that the administration has not settled on a likely price tag.

“Unless we have an RFP out there that will get us real answers to that question, we’re just theorizing,” said Aloisi, a former state transportation official and longtime attorney who earned Patrick’s nod last month. “So I want to get past the theory, and I want to get to facts.” The RFP should go out within the next week.

When Romney/Healey proposed the same thing, it was widely derided as a "gimmick" or a "political stunt" - including by then-candidate Patrick. That's politics, of course, but it would be nice to see one or two members of the 4th estate call him on it.

By the way, this is also a good idea, as is rolling the Pike into Mass Highway and taking down the tolls - all proposed over two years ago. If Romney had his way, the tolls would have been gone over 18 months ago now.

Told ya.

A cynic or a conspiracy theorist might wonder if I have the Governor under some kind of mind control. From the State House News Service:

PATRICK SAYS GAS TAX HIKE MIGHT BE ALTERNATIVE TO TOLL HIKE: Saying he hates planned toll increases, Gov. Deval Patrick on Monday indicated he might be willing to raise the gas tax as an alternative to boosting tolls. Patrick cautioned that Big Dig debts are coming due and toll revenues are being eyed to pay for the project, but said the gas tax could be a "serious alternative" with three conditions. The conditions include the size of the gas tax hike, with toll implications and MBTA funding as significant factors to consider, reforms such as having a single transportation agency, and the dedication of gas tax receipts, and reforms. "I would want to be sure that is is sealed off so that it could not be used for non-transportation purposes when the next idea comes along," Patrick wrote during a Monday afternoon chat with visitors to Boston.com. Patrick later told reporters that his position on an increase in the gas tax, which he said during the 2006 campaign would not occur during his tenure, has not changed: "I'm in the same place I have always been about the gas tax. I'm not hostile to it." Toll increases, including the doubling of downtown Boston tunnel tolls, have been the subject of Mass Turnpike Authority public hearings and, after receiving preliminary approval, were marked for a final turnpike authority vote at the board's Jan. 22 meeting. An alternative plan could emerge on Beacon Hill before then.

"How'd you like to be a freshman rep?"

From the always-excellent Jim O'Sullivan's weekly wrap-up in the State House News:

How’d you like to be a freshman rep? Fresh off the campaign trail where you droned on for months about the importance of opening up the governing process, and moments after being sworn in, you get to cast your first vote as a legislator for a guy whose court-approved reasoning for resisting an ethics investigation is that legislative deliberations should be kept secret. Then, the next day, you have to deal with the satellite trucks lined up on Beacon Street trying to find out whether or not you’ll be accepting the pay raise, which isn’t really a pay raise because you haven’t started work yet. Welcome to the NFL. Or at least the Arena League.

I'm not going to go into this too much, since one of those freshman reps beat me fair and square in November. I will say, though, that it must in fact have been a tough pill to swallow to be forced to cast a vote for Sal after months of just the sort of rhetoric that O'Sullivan paraphrases above. I have no doubt that most or all of these folks meant that rhetoric when they spoke it. I'm sure my opponent did. I also have no doubt that they had no choice but to cast the votes that they cast. To do otherwise would be to render themselves impotent from their very first day in office, depriving their districts and their constituents of all influence and likely inuring to the very serious detriment of their cities and towns. Republican reps, I will note, faced no such Catch-22. There are two cures for this: (1) new leadership; or (2) true balance in government. Since new leadership would very quickly revert to the form of the old, number (2) is the only real solution. We'll see if the voters ever catch on.

Next step in the toll/tax scheme

As I've argued here, and during my (unsuccessful) campaign, I have believed all along that the massive toll hikes announced last year were nothing more than a stalking horse for the gas tax increase that Beacon Hill (and the Boston Globe) have long sought.

Here's the next step in the progression. Having scared the bejesus out of Mass Pike Commuters and residents of East Boston, and at the same time having convinced the "conventional wisdom" that we absolutely need either a massive toll hike or a gas tax hike, the Governor now allows for the possibility that the massive toll hike won't happen after all. This is the "ratchet back" stage of the game.

In the end, will great fanfare, Beacon Hill will settle upon "compromise" legislation that implements both a modest toll hike and a modest gas tax hike, and that also nibbles around the edges a little bit on true transportation reform. I'd bet my Fast Lane discount on it.

Pay Raises

This is an interesting one. The (uniformly grouchy) legislators who plan to keep the 5.5% legislative pay raise announced yesterday point out - correctly - that the voters very deliberately instituted an automatic process to remove politics from the question of legislative pay. That process triggered the current increase. Absolutely correct.

Of course, politics can never be removed from the question of government pay. It strikes me that those legislators (led by the small but intrepid band of Republicans, I'll note) who have decided to "accept" the pay raise but donate it to charities in their districts have it exactly right. Press releases these days overflow with rhetoric about "shared sacrifice," "everything on the table," and so-on. Local aid will almost certainly see a significant cut within the next few weeks. In a state where each election cycle brings the threat of a contested election for most seats, we'd see a whole lot more legislators lining up to donate their raises to charity. Of course, we do not live in such a state, and the raise donors are therefore in the significant minority.

I note with pleasure that the woman who defeated me in November, newly-sworn Rep. Carolyn Dykema, is among that minority. According to the State House News Service today:
"Another just-elected representative, Carolyn Dykema of Holliston, also said she’d be donating it to local food pantries. 'I think it’s only reasonable that in these tough times that I make the sacrifice as well,' she said."

Exactly right and well-done. Unfortunately, many more of our legislators are of the same mind as Representative Mariano (D-Quincy), who responded to a reporter's question about the raise with a curt, "What about it? The Governor submitted 5.5." (also from the State House News Service).

Somewhere in MA is a truck that is short a lot of turnips.

That's all I have to say about this.

An interesting nugget from the State House News Service: "Speaker Salvatore DiMasi was nominated for reelection by the House Democratic caucus by a wide margin on a voice vote Wednesday morning, with only one audible dissent."

Who was the "one audible dissent"? Are we sure that everyone who went into the caucus chamber came back out again?

Who wants to go down to the State House basement and stand a post next to the darkest, grimiest office in the building to intercept the movers who will soon be trucking this courageous individual's belongings to his (or her) new digs?

New Door. Empty Barn.

This is such a classic government response. In the wake of a year that saw the resignation of not one but two sitting state senators under, er, ethical clouds, and the convening of a grand jury to investigate the Speaker of the House, Governor Patrick is proposing "a sweeping overhaul of the state's ethics and lobbying laws that would give an array of state authorities unprecedented powers to tap phones, subpoena records, and punish corrupt officials." That's wonderful.

Here's another idea: how about the entrenched cabal on Beacon Hill makes a resolution (it's only a week into the new year - not too late!) to stop circling the wagons around the crooks in their midst. Or even better - how about the voters make a resolution to impose some turnover on our ossified government (he types with not a hint of self-interest).

Harsher ethics penalties and more stringent lobbying laws would not have prevented Diane Wilkerson from stuffing wads of money up her shirt in a local greasy spoon. Just a few people in leadership who cared more about ethics in practice than about protecting a member of the Beacon Hill Club would have forced Wilkerson out of government years ago. She was a crook. Everyone knew she was a crook.

James Marzilli's extra-curricular escapades came, perhaps, as more of a surprise to most people "in the building." But once he was arrested (after a foot chase through Lowell and a desperate attempt to duck responsibility by identifying himself as a colleague), why was he maintained in office - even in his chairmanship - until an ill-advised junket to Germany and the resulting publicity was too much for even Senate President Murray to bear with a straight face? the answer is simple: the people who we entrust with our proxies in government look at each other and think, "which of us might not get picked up for some 'indiscretion' next? How can we just push out a colleague on the basis of 'mere allegations'?"

The best illustration of the culture on Beacon Hill (and that's saying something) will come today when the House re-elects Sal DiMasi as Speaker, despite a federal grand jury looking into some - ahem - "highly suspicious" dealings between Sal's best buddy (and benefactor), a state contractor and the Speaker. A few House members will "stand up" and vote "present" - though not "nay." Most won't. I very much doubt any of the new members will take a stand, despite countless pledges to be "independent" during the just-passed campaign. Why should they? They are part of the club now, and they might need its protection somewhere down the road.

In response to all of this highly-preventable nonsense, the Governor and the system he sits atop will push legislation to "toughen" state ethics laws. Maybe that will have some sort of effect. I doubt it. Mostly it will make the process of interacting with government even more of a pain in the ass than it already is.

Everyone talks about "transparency," but nobody truly works towards that ideal. In this day and age, true transparency ought to be simple. Legislators' complete schedules - who they are meeting with, when, and to what purpose - should be posted on the internet. Every single dollar contributed to a campaign ought to be reported in a simple, straightforward manner and likewise posted on the internet. That's it. That's all. In conjunction with leaders willing to stand up to their own, that would be more than enough. Ah, but there's the rub. We do not have nearly enough of those.

I forgot one.

In my earlier post suggesting we ought to brace for a slew of new tax proposals, I forgot the always-popular internet sales tax. Governor Patrick, however, did not.

Unsurprisingly, Patrick's people are spinning this as old news. They are right, of course, that the notion of muscling up the mechanisms to tax internet sales is hardly a new idea. It's hardly a popular one, either (except on Beacon Hill, that is).

I am a big believer in the notion that our elected officials ought at a minimum to be held to their own rhetoric about "reform first." It is easy in an economic crisis to claim that the government needs "new revenue" now now now, so there is no time for cost-saving reforms. We'll do that later. Unfortunately, there is little support in our recent history for the supposition that when good times return, our "leaders" will make good on their deferred promises. Whether we can realize enough savings to dig out of our budget hole in the short term, what is the harm in insisting that whatever savings can be realized through reform ought to be realized, if not *before* consideration of any new taxes, then at least concurrent with such consideration?

On a more basic level, I agree - as usual - with Grover Norquist: "Why in the world would you think increasing taxes on people buying stuff would help the economy?"

Mom, Dad... I need you to pay my credit card bill.

Having dug themselves enormous fiscal holes, our nation's governors - including our own Governor Patrick - are turning to the federal government with a massive wish-list. No word yet on whether they will drive to DC in hybrid cars to beg.

Let's not forget that whether they spend federal or state dollars, these guys are spending our money.