In his “municipal meltdown” diary last week, Charlie quotes a Commonwealth piece extensively about the fiscal crisis facing cities and towns. One line from Commonwealth really pushed my stupid button:
When the leader of the Massachusetts Municipal Association (a group whose initials are mocked by critics to mean “more money always”)….
The only “critics” who crack that joke are on Beacon Hill. It’s not a standing joke at the VFW. The soccer moms don’t roll their eyes and complain that those greedy cities and towns need more money again. It’s legislators, staffers, and hangers-on.
Yuk it up, guys.
In the Beacon Hill – o – centric view of the universe, cities and towns are Not Invented Here and always have their hands out. (And they can’t even offer high-paying jobs to bored legislative leaders.)
Let’s be clear. Cities and towns are subdivisions of the commonwealth, not illegal aliens from outer space. Every power that they have, from assessment to zoning, is based on a chapter of the General Laws.
State law sets the terms of how they function. They must pay special-education costs that are inherently outside their control; in a small town a single special-ed student can lead to deep cuts in the non-SPED school budget. Many must reward law enforcement personnel with automatic pay (and pension) increases for taking night classes. Communities can’t even charge motor vehicles a tax that covers the damage they do to streets, and on and on and on.
It is state law that sets the terms of labor-management contract negotiations, state law that allows and prohibits practices to pay for and control health-care costs, and state law that says cities and towns must rely to the degree they do on the property tax. And, of course, that tax is capped at less than the rate of inflation for government services.
Those are not all bad things. But to set up this framework and then dump on the cities and towns for the consequences is cynical and rude. Only the legislature has the power to change the fiscal dynamic, and it has chosen not to do so.
In his diary, Charlie asks, rhetorically, “can’t you just smell the entitlement?” Well, it doesn’t smell. It stinks.
if the state covered some “standard” health care benefit cost for x town employees as a percentage of town’s population [for example, 1 employee per 1,000 residents]?
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It would help lighten overall cost, reduce the rate by which costs are outpacing inflation, and keep more onus of healt hcare reform at the state leg, which would help them have a more direct incentive to keep costs down. It’d also move a little more health care toward universal health care, since the revenue source would be moving “up” the ladder.
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Yeah yeah, union and other pre-negotiated contracts. I’m not saying that the transition would be trivial.
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It seems that government costs are rising higher than inflation, with health care and energy costs driving those increases. Energy costs might be mitigated with an expansion of renewable generation in New England [cough cough Cape Wind cough cough] as well as more state grants/bonds for improved energy efficiency projects in municipal buildings. But, what can the state do to relieve some of the pressure caused by double digit health care cost increases? I’m merely posing the thinking exercise: what would happen if [the|more] cost of municipal health care was paid directly from state coffers instead?
That’s an interesting approach, but the devil is in the details, because the approach you suggest is linear “one size fits all”.
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How many cops does a town like Dover need? How many cops does a city like Brockton need? Do you think that if Dover was as big as Brockton, the need for cops would scale linearly?
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Or is a more likely scenario that need for various municipal services varies based on the individual characteristics of each city or town? And that very few cities or towns are identical in their needs?
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Another thing to look at is legacy costs. Springfield is being hit hard because it has been a large city for a long time, and in the past it had a lot of employees. There are a lot of retirees that had promises made a long time ago, when times were very different. A city growing today doesn’t need as many employees, and times have changed so that benefits offered today are not the same as the past.
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In many ways this mimics the problems with US corporations — a startup can kill a large corporation because the startup has no legacy costs to worry about.
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The problem I see is that cities and towns have very little autonomy — as the original post mentions, all power comes from the state. Laws are written in ways that create winners and losers. Change the revenue sources from property taxes to sales tax generated within its borders and the fortunes of every city or town are flipped. Change it to a portion of the income tax collected from the residents in a town and it flips a different way.
is that it’ll be fraught with unfairness — and before you know it, Wyoming will get twice the homeland security funding per capita that New York gets.
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It’s true — people are integers, so going per capita is clunky. Towns have different characteristics, so per capita is clunky. Legacy costs vary, so per capita is clunky.
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But, everything else is both clunky, unfair, and complicated — check out lotto proceeds, CHERRY sheets, etc.
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Ultimately, the question is: what can the state do to help mitigate the health care costs of cities and towns, which are growing faster than the budget?
At the risk of oversimplifying, it can do any of three things:
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1) Ease specific local mandates,
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2) Change the framework (for example, labor-management rules, health care, pensions, taxes),
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3) Fund what is not changed adequately.
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What’s wrong is to keep the mandates and the framework but not fund the consequences. Someone surely gets hurt that way.
I agree. That’s why maybe its time to give cities and towns more autonomy over their revenue streams. If a town is big on restaurants, maybe they can add 2-3% to the restaurant tax. If a town has a lot of retail, maybe they can add up to 2-3% to the sales tax. If a town has a lot of businesses within it, maybe they can get 2-3% of the corporate taxes. If a town has a lot of wealthy residents, maybe they can get 2-3% of the income tax. If a town is used as a cut-through for a lot of commuter traffic, maybe they can put up some tolls.
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What would be the incentive to not do it all and squeeze out the most revenue? The same factors that prevent businesses from increasing prices through the roof — competition. If a town raises its meals taxes too high restaurants will go elsewhere. If a town raises its income taxes too high residents will go elsewhere. If a town imposes tolls that are too high drivers will drive elsewhere. Supply and demand.
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Sure, some towns will still cry “unfair”. It’s happening now with the proposed meals tax — towns with few restaurants are crying “no fair, we won’t get any additional revenue, why should they?”. They’re don’t want some communities to get the ability to help themselves because they won’t be able to help themselves either. They want to keep others down because they themselves aren’t getting ahead. That’s a little perverse, isn’t it?
there’s a fine line between a few relatively transparent local options and an unpredictable tangle of local fee/tax constructs making every purchase in a foreign town a fiscal adventure.
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One part of the local options I thought was really elegant was something akin to revenue sharing. IIUC, for every two cents a town collected, they’d keep one and the other would go “in the pot” to be shared amongst all towns. This would give a little revenue to towns that are outside of 495 and a few on the Cape. Not as much as the towns with the revenue — but not using any money from their own residents, either.
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It seemed like an elegant way to create a low-pain revenue stream, giving more reward to the communities paying the tax but some relief to all cities and towns in the Commonwealth.
there’s a fine line between a few relatively transparent local options and an unpredictable tangle of local fee/tax constructs making every purchase in a foreign town a fiscal adventure.
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Other states do it–what I have referred to as local options taxes. It strains credulity to believe that it could not also be done in Massachusetts. Particularly with easily updated computer check-out software used at most stores.
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Going up a bit regarding restaurants and meals taxes, I would almost be willing to bet that most people don’t know that they are paying meals taxes on prepared foods from grocery stores. Next time you go to a WholeFoods, Roche Bros, Stop&Shop and buy a “prepared food” item, take a look at your receipt. The meals tax is usually referred to as something like “Tax2” (non-grocery items are “Tax1”). Meals taxes aren’t only charged at restaurants.
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And, by the way, the computer controlled checkouts disambiguate between the two. It isn’t that difficult.
Go shopping in Illinois. You’ll never pay the same sales tax rate twice.
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It’s technically feasible; it’s just confusing and annoying as a consumer. Computers are easily programmed to differentiate between grocery food+clothing+prescription meds
and “everything else” [including prepared food like salad bar and sliced pizza at groceries]. Massachusetts has gone the other direction in many respects — consistent regulation for building codes, taxes, etc. Perhaps it’s been taken too far in that direction, but going “all out” in the other direction may not be savvy either, which is why I really liked DP’s proposal to “revenue share” some of the meals tax revenue with communities that don’t enact the reg. This way everybody gets a bigger slice, not just some towns, and you don’t have an overbearing patchwork of local regs.
You’ll never pay the same sales tax rate twice.
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I presume that you mean that sales taxes vary among neighboring taxing jurisdictions. They do in Ohio, too. Usually a percent or two from the state’s rate. I doubt very seriously that many people travel from Hamilton Cty (Cincinnati’s cty) to Butler Cty (just north) merely to avoid the sales tax differential (it’s slightly higher in Hamilton Cty).
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…consistent regulation for building codes…
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This actually makes sense, since, in the event of fires, fire departments from neighboring communities are oftentimes called into service. (I’d make a snide remark about the low grade of the housing stock in the US, but I’ll refrain.)
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…taxes, etc. Perhaps it’s been taken too far in that direction, but going “all out” in the other direction may not be savvy either, which is why I really liked DP’s proposal to “revenue share” some of the meals tax revenue with communities that don’t enact the reg.
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Don’t put your blinders on. Why should cities and towns not be able to enact local option sales and income taxes? Particularly since it is clear beyond peradventure that the state is going to continue to impose mandates on them but not fund the mandates?
I’ve never claimed that people hop jurisdictions to save a few percent [although I’d expect it would happen for really big ticket items like a day of Christmas shopping or buying high end electronics or jewelry] — just that the patchwork of different taxes is annoying and confusing to consumers. And btw, when I lived in Cincinnati, I knew plenty of people who drove across the river to Kentucky to buy cartons of smokes.
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The building code standards aren’t just about fire protection — they have lots to do with keeping development cheap too. Having to be “up to spec” when each town has slightly different rules is just plain wasteful.
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As for local options, I never claimed that cities and towns shouldn’t have any local options. In fact, I’ve made it clear in this thread and others that I support some local options. I only pointed out that a long laundry list of local levies is ludicrous. As for the “unfunded mandate” claim, I wonder: what’s the total cost to towns of the state mandates, and what’s the total revenue towns receive from the state? Just how unfunded, net, are these mandates anyway?
the kinds of local-option taxes that cities and towns have been asking for for decades boil down to hotel and meals taxes.
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I don’t mean that it’s not interesting and even useful to kick around other ideas, just to reflect on the actual political discussion.
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Most recently, Governor Patrick’s municipal partnership act would allow rooms and meals taxes at local option, and also
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* end the ridiculous property-tax exemption on telephone poles
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* fold under-performing local pensions into the state system
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and
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* let cities and towns into the state health-insurance plan.
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These modest proposals are dead in the water in the Great and General Court, where the wags are having such a jolly time making jokes about those clueless local officials.
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and has been since the first Weld administration.
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The only exception of note has been Governor Patrick, and I guess we will learn in the fullness of time what difference that makes.
I heard an advertisement this morning from a group called the “sixty-plus association”. I looked it up they describe themselves as:
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The ad hammered on the “we don’t need new taxes” theme, saying that DiMasi supported cutting spending instead. It kept saying that seniors can’t afford to pay more taxes. It urged people to call their legislators.
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At the end the ad was very specific in saying that taxes shouldn’t be raised on “phone lines”. It seems like maybe the 60+ association got some funding from Verizon.
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Would any conservative support government-sponsored price-setting in any industry, to “force those industries to reduce their costs”? I doubt it. Would anyone invest in a business that had constrained revenue but unconstrained obligations? I doubt it. So why should cities and towns be so constrained in how they raise revenues? Instead of relying on the property tax, why can’t each city or town be allowed to raise revenues in the way that makes the most sense for their specific circumstances? That’s the way free enterprise does things, isn’t it?
your metaphor is off NoPolitician,
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free enterprises are incentivized to streamline costs, keep prices down, and eliminate waste because all extra costs come out of their pockets, whether its partners, single owner, or shareholders. When you can say you have confidence that government can do that (when the money does not come out of their pockets), then we can let them raise taxes as much as they need to
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wait a second…we can outsource our legislature to India and not have to worry about patronage, pensions, and high salaries!
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free enterprises are incentivized to streamline costs
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…rolling on the floor laughing at this. Private companies are quite wasteful.
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Compared to what? Certainly not government or other non-profit agencies.
…and my father’s (GE LJED/Evendale OH), apparently you have never heard of the DEC VAX 8000 and 9000.
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Do a little research.
Is extreme here. The lack of local autonomy shocked me when I moved here from Michigan. That it takes legislation to hire and fire town employees is very strange, in my eyes.
The lack of local autonomy shocked me when I moved here from Michigan.
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I’ve been beating on the lack of local funding options (I call them “local options taxes”) here for amost a year.
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I’ll go to the spending side. As far as I can tell, more than a few of the mandates that the MA state government puts on cities and towns are actually, under the state constitution, obligations of the state. One example: education. But the state has delegated responsibility for education to the school committees of the cities and towns, and it is the school committees who are jealous about their prerogatives. They–particularly in wealthier towns such as Newton, Weston and others–don’t want state interference, and they have ensured that they won’t get any.
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It is probably similar with local policing, utilities, and so on.
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It’s not just a top-down, it’s also a bottom up.
…and they want their talking points back.
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Anyone who can say that private companies compare well to governments or NGOs after the Big Dig and Iraq is believing want they want to believe, at this point.
and a few companies in this state that ran into the ground. Both sectors are comprised of (surprise) fallible human beings, not that much difference in the gene pool, from one who has worked in both sectors, except I could usually find the “public” folks, the senior ones, at least, working longer hours …
that standard of fallible human beings doesn’t seem to apply to people working for government if you talk to the so-called free marketers.
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For every $351 hammer, there’s a story of how the Post Office’s mail bins [those translucent guys with handles that are like milk crates on steroids] cost $1 each.
For every $351 hammer…
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…exactly what?
The government can roll along burning money forever.
Isn’t that what Louis XVI said about burning money forever?
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I’m not sure what you are saying here? Please clarify…
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Both the big dig and the Iraq war are cooperative (sic) ventures between public and private entities. Govt doesn’t build bridges or dig tunnels (unless it’s the Army Corp of Engineers… and sometimes not even then..) but only funds them and performs (sic) oversight. Under Donald Rumsfeld, wars are now fought in this same way. While I agree with the first instance of public private ventures (though I find the execution and oversight wrt big dig thoroughly incompetent) I find the second instance of wars as profitable for mercenaries abhorrent in the extreme. Makes my stomach turn just thinking about it.
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At last check, the Big Dig and the Iraq War weren’t privately run ventures. Just saying.
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Nominally, this is true… But they sure aren’t being run by the government…
If the Big Dig and the Iraq War weren’t the responsibility of Government, and not the responsibility of private parties, who’s left?
the fundamental problem for both?
But, other opinions notwithstanding, it’s clear in my eyes that the Big Dig, and Iraq War, and all the other stuff including the famous missing $23 billion “it was spent by someone on something, but we don’t know by whom or on what…” were the ultimate (as in “the buck stops where?”) responsibility of government.
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It hard to imagine the naivete so as to think that a for-profit venture is more wasteful than a not-for-profit entity. Certainly, such bold claim requires some bold proof.
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The numbers are often bigger because the scope is often larger not because waste is more prevalent or more likely. Naivete derives from the collision of cynicism and poorly attended syllogisms.
(or any other accountability mechanisms) that punish waste, there is absolutely no reason why for-profit enterprises wouldn’t be wasteful as all get-out…the whole notion of their “efficiency” is tied to market conditions, i.e., competition, something that does not exist under no-bid government contracts obtained through political patronage. Freed of the need for efficiency, those who are motivated by profit are, if anything, more likely to fling (other people’s) money around like confetti.
I don’t remember state workers on the payroll hammering in nails.
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The state chose companies for the Big Dig, handed them a big check and said “make it happen”. The companies fouled it up.
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As for Iraq, at the moment I’m not sure who’d be more of a threat to my life: 5 members of al-Sadr’s Mahdi army, or 5 Blackwater operatives.
But the point about incentives still holds. The purpose of Bechtel is not to make government look good; it is to profit Bechtel. Likewise KBR, Halliburton, and Blackwater. Measured as companies they did well in Iraq. Measured by the mission — to the extent that it can even be defined — they did poorly, but they had no incentive to do well.
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Compared to the statement made: “free enterprises are incentivized to streamline costs“.
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We just had this debate about waste
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Now corporations often can make a fantastic amount of money with relatively little upfront expenditures. If you want to define ‘waste’ on those terms, feel free, but that doesn’t obscure the fact that an awful lot of that upfront money goes nowhere…
Why do you make it seem like I haven’t “actually worked in the private sector?”. I’ve worked in both sectors. Does this make me a more viable poster?
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Private companies tend to get more wasteful, the larger they get, same as government.
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BTW, I researched the EC VAX 8000 and 9000. Thanks for the tip.
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However, the private sector doesn’t just misplace $24.5 billion. Federal budget 2003. How do you like to phrase it Raj? Something like..”do a little a research?”
$24.5 billion’s got me curious, and google wasn’t much help.
local governments actually do use private contractors–a lot–when doing so is appropriate and would save money. They have done so for decades. Savings typically come from economies of scale and/or shifting risk.
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Privatization is not always appropriate for public functions, of course, but sometimes it is. I don’t think you can decide this based on ideology; it’s a case-by-case thing.
they stop sending multi-ton portable high power water pressure machines, with the men to operate them, to medical emergencies?
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Then I might shed a tear.
Why a Zero for that?
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‘Cause it ought not to have been posted! Duh…
You are saying that sending fire engines witn manpower to medical emergencies when an ambulance and perhaps a police cruiser would do is not a big waste of taxpayer money?
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I bel;ieve it is a huge waste of money and indicitive of municipalities not willing to tighten the belt/
You are saying that sending fire engines witn manpower to medical emergencies when an ambulance and perhaps a police cruiser would do is not a big waste of taxpayer money?
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I bel;ieve it is a huge waste of money and indicitive of municipalities not willing to tighten the belt/
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I guess my opinions “ought not to be posted”
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thanks
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Now I know