Meghna Chakrabarti and Kathleen McNerney reported last week about the rather sketchy “turnaround” record of Luis Ramirez, Charlie Baker’s and Stephanie Pollack’s choice for T chief. It gets worse, a lot worse: His former company, Global Power LLC, may have to declare bankruptcy, pretty much as a direct result of those earnings misstatements made under his leadership. Immediately after Ramirez’s departure, they company had to re-file several earnings reports: down — way, way, down. And as a result they lost their line of credit to make short-term commitments, like payroll. As anyone who has run a banana stand can tell you, that’s a tricky position to be in — and it may lead the company straight into bankruptcy.
Global Power lost access to that critical credit line in May 2015, immediately after the company announced that its former financial statements could “no longer be relied upon.” With that admission, the company was no longer in compliance with the terms of its loan from Wells Fargo Bank, its former creditor. The bank also took control of some of Global Power’s accounts.
Unable to access credit for daily operations, “we have … funded our operations from our net cash flows from operating activities,” Global Power wrote in a 2017 report. “That is not sustainable,” the company said.
Well, what do we have here? What hand is Baker trying to play?
With a typically Republican skepticism towards the public sector, Baker has chosen the old “reform before revenue” path, with no realistic plans whatsoever for investing in a re-imagining and modernization of the T. We are supposed to view the Governor as just the person to bring modern management accountability and distinctly private sector know-how to a bloated, rusting, public bureaucracy — the MBTA’s Sir Topham Hatt. (The clichés write themselves.) We are told that we don’t need a T chief with public sector or public transit experience, just one that has turned around private sector corporate divisions.
To put it mildly, this is already a very narrow path. It represents a pretty aggressive disregard of the most obvious qualifications and approaches. The one resource for Baker’s team is credibility — the ability to show the public that their daily transit experience will improve through better management alone …
… Except that their choice for the T’s “turnaround” seems to have recently led his company to the brink of bankruptcy. And that doesn’t seem to trouble Team Baker at all:
On Tuesday, after days of repeated questions, Governor Charlie Baker defended Ramirez’s hiring, saying he was “quite confident” in the new GM’s ability to succeed. “I have no doubt that when we have this discussion a year from now, most other people will agree with me,” Baker said.
It sounds like Baker has started to believe his own hype. But this is plainly the most obvious and avoidable blunder of his administration, on probably the highest-profile reform project that was forced upon him. You can call partisanship on this one from me; but my family and I ride the bus, subway or commuter rail practically every day. This is personal. I am skeptical about Baker’s methods, but along with the rest of Greater Boston, I am heartily rooting for Baker, Pollack, the T control board, T employees — anyone — to make this thing work better. But you really have to wonder about the internal decision-making process that led to Ramirez’s hiring.
This just won’t do. We can’t afford to “have this discussion a year from now.” They must rescind the offer to Ramirez and try again.
I suggest that it’s time we start figuring out what happens after the MBTA is dismantled.
ALL the parties involved — specifically including Mr. DeLeo and his toadies who dominate the legislature — have been “starving the beast” for decades, and the damage is likely to be mortal.
The MBTA is dead.
In my view, the question therefore is “What comes next”?
For example — what happens to the much-vaunted Green Line extension (and the massive amount of federal funding already spent) after the MBTA declares bankruptcy and is dissolved (or whatever happens to a massive entity like this when its management refuses to fund its operations, refuses to maintain it, and refuses to repair it).
Not the most important thing but: This looks like a real unforced blunder on Baker’s part.
I’m surprised the Gube hopefuls are not all over it already.
Jay Gonzalez compares this appointment to putting Donald Trump into the Red Sox pitching rotation.
CAMBRIDGE – Wednesday, August 23, 2017 – The following is a statement from Jay Gonzalez, Democrat for Governor.
“Governor Baker’s appointment of Luis Ramirez as the new $320K a year MBTA General Manager completely misses the mark. Giving someone with absolutely no transit experience the top job at the country’s oldest and 5th largest transit system makes as much sense as naming Donald Trump starting pitcher for the Red Sox. Calling Ramirez a “turnaround guy” when the company he recently led is under federal investigation and facing bankruptcy raises real questions about Governor Baker’s judgement, his vetting process and his ability to understand what it will actually to take to fix the ailing MBTA. Taxpayers and transit riders deserve better than this.”
By injecting Trump into the comparison, Jay is coming across as desperately hyperbolic, nationalizing a race that doesn’t need to be.
Baker is running as a socially tolerant steward of the taxpayer dollar. Comparing him to Trump allows him to coast on how different he is. Comparing his perceived performance to his actual record is how you beat him.
Look at Bakers actual record and we see the following examples of poor fiscal stewardship:
-Deep cuts to MassHealth
-Deep cuts to state education aid
-Deep cuts to local aid
-Deep cuts to the MBTA
-Deep cuts to public colleges
-Approving unnecessary corporate handouts we can’t afford
-Approving bloated public salaries we can’t afford like Meehans
-Refusal to give tax relief to working families to maintain low burdens on the wealthy or corporations
-Failure to invest in innovation from the T, the marijuana industry, or higher public education
If you can’t run against that record without invoking Trump, you have no business being our nominee.
Have to agree w much of this, especially the mention of Trump. Over the top.
I’m not sure this is entirely fair (especially Rep. Gonzalez’s comments). I want to reserve judgment.
Companies go bankrupt a lot. Earnings statements also get revised pretty often. Unless this guy did something personally — I’m all ears if he did — I think we’re jumping too soon.
Baker is (probably) too smart to appoint someone who has no idea what he’s doing. It’s not impossible, but is it likely?
Sure they go bankrupt, and sure they get revised. But based on what we know, is this the first person we’d choose to run an organization like the MBTA?
Well that’s the thing. Based on what we know, no. But what does Baker know?
Maybe Ramirez is a GOP guy who’s been around … like Rudy. Or Chris Christie (neither of who would be good AGs, but both of who would get confirmed by the Senate).
To clarify — If that’s the game Baker is playing, that’s notable too.
This guy still strikes me as a corporate hack. I will add to JimC’s comment though that we shouldn’t assume bankruptcy is universally bad. Bankruptcy gets a bad rap and Ch 11, (corporate bankruptcy) along with Ch 9 (municipal or public agency bankruptcies) are a good way to unshackle corporate persons from unsustainable debt loads.
In Chicago, the conversation is about avoiding bankruptcy, when in reality a Chapter 9 would solve a lot of the CPS budgetary problems. Would you rather tax dollars go to kids and teachers or foreign banks? Similarly, the pension and debt load MBTA was saddled with could be renegotiated with the creditors for better terms and the money could then be freed up for capital improvements and expansion.
Just to be clear-I absolutely think this guy is unqualified. Transit voices as diverse as Salvuci and Aloisi are in agreement on that. And we absolutely need to pass Fair Share to shore up our budget. That said-Ch 9 can be a progressive solution to public debt that tells the creditors to screw and redirects the taxpayer money back toward services citizens use.
You need to hear the WBUR story.
This is not nearly strong enough. What are the man’s qualifications for this job?
Even if, arguendo, being a turnaround artist is more important than experience, we now know that he hasn’t turned anything around . So why would he even be a candidate at all?
Or is it the position of the Commonwealth’s executive that any white businessman is qualified to run the MBTA?
The funny thing about Republicans is they are so quick to mock government and praise the private sector to manage critical public services even though “Companies go bankrupt a lot”….but they never seem to admit that and Democrats, especially the new “neoliberals” are very hesitant to admit it.
True. It’s funny how they invoke “business” as it’s perfect. It is not.
That’s where Democrats need to sharpen their small talk skills. Republicans are quick to point to the RMV or DMV when trying to smear government services (although I’ve been very happy with the RMV)….
Democrats need to rib Republicans with comments like “So, do we really want the likes of Lehman Brothers to manage our retirement savings OR do we really want the likes of Enron to be in charge of energy policy? “….or my FAVORITE!……:
The Affordable Care Act is FAILING because MARKETS fail, and the Republican solution is More Markets!?
Or the canard “run government like a business” but refuse to do the things businesses have to do to survive. Invest in capital improvements, invest in R&D, invest in customer service, restructure corporate debt, and raise revenues and use them to reinvest in the company.
If the MBTA were a private company the board would be looking for investors to fund its expansion and increase its utilization-not drowning it in a bathtub.
Well, in fairness, if the MBTA were a private company it would have crashed and burned years ago because its board AND investors resolutely refused to fund ANY maintenance, as little expansion as possible, ANY equipment updates, and so on.
I have serious doubts about whether the MBTA as we know it today can survive, and even whether it should. If Mr. Baker or anyone else would candidly and frankly step forward and say “the current organization cannot be saved. Here is our plan to dissolve and rebuild it”, then I think progressives would and should flock to celebrate that response.
No such plan is going to happen without enormous increases in funding from the legislature. Such increases can only happen after a significant increase in tax revenue, resulting from significant tax increases on the very wealthy. That’s not going to happen with Mr. DeLeo in charge.
This is a back-door way to kill the MBTA. I think that both Mr. Baker and Mr. DeLeo know that the complete collapse of the MBTA will be the inevitable result of this. I think they each view the resulting chaos as a political opportunity.
I think Charlie Baker and Bob DeLeo are each literally throwing the rest of us under the bus.
And again just as bankruptcy often helps businesses get back on their feet it could also help public agencies and municipalities do the same. The Chicago/IL financial crisis is so severe that my sisters alma mater can’t afford staples and couldn’t afford paying her the last month of work study she had. A city or state bankruptcy coupled with a modest federal bailout would eliminate all the debt payments and allow the state to develop pay as you go budgets that work. It would force lawmakers to be fiscally responsible.
The MBTA is the rare example, like the Post Office, of an agency saddled with unsustainable pension debt that no other comproable agency has to pay out. Pensioners should get paid. but by filing Ch. 9 the agency wipes out its creditor obligations, pensioners get paid out, and it can then be restructured to avoid incurring future debt. This can be coupled with new revenue from the progressive income tax to shore it up for the long term.
The downside is the severe hit to the bond rating which could affect its ability to take on new debt for needed projects. My hope is the infusion of new revenue from a progressive income tax coupled with paying for capital improvements out of the general operating budget now freed from debt repayments would be sufficient to pay for projects. It’s possible that’s not the case-but it’s something we shouldn’t be scared of.
The Detroit Renaissance is directly linked to their decision to go under Ch 9. With that debt burden gone their middle class is now coming back, the schools are getting fully funded, and municipal services are finally available to all neighborhoods.
I understand what you are trying to say… and it is commendable… but let us remember that this story of revised earnings and possible bankruptcy could be strike two on Ramirez, strike one being the complete absence of transit and public policy experience.
Two strikes on him and he hasn’t even started yet…
I have a prediction about the future of the MBTA:
1. The current MBTA will be dissolved and “privatized”.
2. Rail and subway service will be terminated and the equipment sold at auction
3. The existing subway tunnels and subway right-of-way will be converted for use by rubber-tired electric buses.
I think that public rail transportation in Massachusetts is dead.
I wouldn’t go that far, but I do think the fact that spoiled yuppies like me can telecommute, and that many influential, even more spoiled people never take the T anyway, is affecting the thinking of the Legislature.
Only trouble is, the replacement is nowhere in sight.
Sadly, I just sketched the replacement — privately-owned buses driven or serviced by scab labor.
Exactly. Any poor slob living a miserable live tied to dependency on the MBTA needs to improve their skill set and get a college degree that will double their wages. Just ask a lot of Democrats and they will tell you this. The problems with the working class are the problems with the working class, not the system. The system is working just fine, just ask any successful college grad. College for everyone and all the problems go away.
Troll
Why not just call me “fake news”? That’s what Trump does when he does not like the truth.
Nothing in your comment is true. And you know it. That’s what makes it, and you, a troll.
Many Democrats (far too many in my opinion) are only interested in “raising the ceiling” for the working class and far too few are concerned with raising the floor. The proof is in the pudding, as they say, when a “Blue” state like Massachusetts can’t even make $15 an hour and health care the law of the land. But hey, if it make you feel superior to working class guys like me and call me a troll., go ahead. I’ve heard worse.
I think you have a chip on your shoulder against women, blacks, and people with college degrees. I’m sure you think you’re “supporting” the working class.
You’re not.
You are getting rather predictable there Tom. As soon as your argument weakens, you surround yourself with rhetoric regarding women and blacks. That’s also a major problem with the Democratic Party, one that lead to the election of Charlie Baker and Donald Trump.
Why you press on with this approach is a mystery to me.
Truth tends to be more predictable lies of convenience.
You two need to get together at a stammtisch (Are you still doing those, Tom?) and discuss this over a beer. I suspect you can find more common ground off line than these exchanges let on.
Charlie Baker does not really care about the MBTA (unless it costs him an election). I recall (though I can’t find a link to it) a comment on BMG years ago about how someone who worked in Kendall Square ended up in an elevator with Baker. The commenter happened to mention how working at a business in Kendall was very easy because there was a T stop right there, and Baker got this look like, “what? there’s a T stop here?”
I suggest persistent calls to the Mass Governor’s office so that Baker’s staff knows commuters and voters are watching Luis Ramirez and Charlie Baker like a hawk.
call 617 725 4005