***Cross-posted on Jamie’s Beacon Hill Blog ***
Transparency. Accountability. Reform. These have become the buzzwords of the current Legislative session, repeated over and over in every debate to the point where I worry, occasionally, that they begin to lose their meaning.
And yet every time the Senate turns its attention to a new issue, the need for more transparency in government actions, and more accountability from decisionmakers, becomes all the more obvious, and all the more urgent.
The importance of transparency and accountability came up over and over again in the debate over ethics reform and pension reform. We also saw, with the indictment of former Speaker Sal DiMasi, the way greater transparency could have prevented some of the (alleged) crimes that were committed.
Recently, I’ve worked with a number of colleagues, including Senator Mark Montigny (who has been a leader on this issue for years) and Representatives Carl Sciortino and Steve D’Amico, to try to bring more transparency to our tax credit system, and to make information about which companies are receiving these tax credits, and what economic benefit the state is receiving in return, public knowledge.
And today, the need to demand transparency in government came up yet again, as the Senate considered a bill that would pledge a portion of new sales tax revenues to turnpike bondholders and reinstate the state’s credit behind interest rate swap agreements that the firm the United Bank of Switzerland (UBS) wants to terminate. The hope – though there’s no guarantee – is that passing this bill would prevent taxpayers and tollpayers from getting stuck with $274 million in new costs tied to the Big Dig.
This issue – the “swaptions” deal – is incredibly complicated, with many moving parts. It’s been discussed frequently on BlueMassGroup and elsewhere, and I’d refer you to a few excellent posts (here and here are two good examples) for a summary of what this swaptions deal is all about, and why the Commonwealth is currently in such big trouble over it.
I claim no expertise when it comes to complex financial transactions like this one – but I do know a risky deal and irresponsible actions when I see them. And in this situation, I see them. It’s clear to me that people who were entrusted with the care of millions and millions of public dollars, people who really should have known better, entered into an extraordinarily risky deal, a deal made with a callous disregard for the financial health of the Commonwealth, and the burden now being born by taxpayers and tollpayers.
And yet we still don’t know how this happened. We don’t know who made the deal, why these transactions were agreed to, and whether any criminal activity took place. The Commonwealth could be on the hook for hundreds of millions of dollars, and yet even these basic questions remain unanswered.
Senator Mark Montigny, who has been an unrelenting champion for transparency on this issue, proposed an amendment (which I supported) to the current legislation that would:
1. Require the head of the Turnpike Authority and Secretary of A&F to affirm in writing that there exists no feasible alternative to pledging the commonwealth’s full faith and credit.
2. Call for a detailed report from the commonwealth and quasi-public agencies, signed under oath, on each entity’s borrowing practices including: who was involved in past deals, how agreements were reached, and the rationale and impact of each signing.
3. Require all quasi-public agencies to seek and receive approval from the governor and A&F before entering into any future derivative financial transaction.
4. Instruct the Inspector General to investigate these murky Turnpike swap agreements (including the UBS agreement at hand).
Given all of the uncertainties surrounding the swaptions deal, this amendment is the least we can do to insert a measure of transparency into the process.
The fact is, we are currently in a lose-lose situation. If the Senate didn’t pass some version of this bill, the Commonwealth would likely have to pay hundreds of millions of dollars at a time when we certainly cannot afford it. And yet, as Senator Montigny noted in a letter he sent to colleagues today:
“With each guaranty extension, the legislature becomes more complicit in exposing taxpayers and toll-payers to financial risk while allowing the Turnpike to thwart transparency efforts and evade a permanent solution.”
We may not be able to come up with a good solution to this swaption situation. Certainly, I haven’t seen any on the table. We may well have to do the best we can with a limited set of not-so-great options.
But we CAN push for more accountability and more transparency with regards to past actions, and going forward – not to mention an adequate dedicated revenue source for our transportation system – so that the Commonwealth is never put in this situation again. That’s why I supported Senator Montigny’s amendment, and I look forward to seeing the results of the Inspector General’s investigation.