State Budget Problems

Matt Viser of the Boston Globe has a story in today’s Globe that outlines some of the hard realities facing State budget writers as they prepare for the new fiscal year. From the Globe:

As the sputtering economy sends shocks from Wall Street to Main Street, the reverberations are being felt on Beacon Hill, where key officials acknowledged yesterday that the signs are bad and the future may be even worse.

Treasurer Cahill announced that he will have to borrow short term to pay State bills.

State Treasurer Timothy P. Cahill said yesterday that, yet again, he must borrow hundreds of millions in short-term notes to pay the state’s bills – like a consumer using a credit card to make a mortgage payment.

All of this is set against some really difficult transportation and infrastructure issues:

All of this is set against the fact that the state already has the high est per capita government debt in the country – and now will be forced to borrow even more to keep a deteriorating transit system and its aging college campuses from completely crumbling.

“Every taxpayer and tollpayer in Massachusetts is overburdened at the same time as our infrastructure is about to implode,” said Senator Mark C. Montigny, Senate chairman of the Joint Committee on Bonding, Capital Expenditures and State Assets and a New Bedford Democrat. “We are headed for a much more dangerous time than people realize. We’ve got all these nasty variables converging at the same time.”

It appears that the state will try to fund this budget with stopgap measures, primarily a use of the rainy day fund coupled with some targeted tax and fee increases.

Moving forward, while few are talking about serious program cuts, a big increase in the cigarette tax, tightening corporate tax loopholes, and digging into the state’s rainy day fund are apparently the most viable means of balancing the next budget.

The rainy day fund is sizeable enough to achieve the goal this year, but with a massive structural deficit the day of reckoning is coming.

“We’re just teetering on the precipice,” said Michael Widmer, president of the Massachusetts Taxpayers Foundation, a nonprofit budget study group that is funded by businesses. “I haven’t heard any real ideas.”

Cahill said he will be forced to borrow $400 million by Monday to fulfill the state’s obligations, including local aid and pension payments. The state has occasionally had to borrow before to meet short-term cash shortages – including $600 million in 2006 and $1 billion in 2007 – but never this late in a fiscal year.

“This to me is a wake-up call,” Cahill said. “I’m hopeful that it’s going to be a message to everyone in the [State House] that we’ve got to get spending under control. It’s not just enough to look for new revenue sources.”

The comfort level that some have achieved by authorizing spending without worrying about how to pay for it has now pushed the Commonwealth to the fiscal cliff. If there is no will or political desire to raise taxes then spending must be reigned in. The political stalemate that has allowed programs to move forward without adequate funding sources must be broken. Either we a a state and nation recognize that some spending is essential and must be paid for, or spending must be cut. The luxury of spending without the ability to finance that spending is now gone. Some strong medicine is coming.

Posted in State News | 6 Comments

The Social Security Report

Social Security and Medicare trustees issued dire warnings in their annual reports about the financial problems that both programs face in the very near future. From the Washington Post:

The trustees, issuing a once-a-year analysis, said the resources in the Social Security trust fund will be depleted by 2041. The reserves in the Medicare trust fund that pays hospital benefits were projected to be wiped out by 2019.

But the problems dates are really much earlier than the two dates listed above. Since Social Security has a “book surplus” you might think that we have a little time to deal with the problem. But that surplus is made up of government bonds, which the sytstem would need to start redeeming once the payroll tax no longer covered annual expenses. The federal government has been utilizing the social security surplus to mask the true size of the federal deficit, and since that surpluis is now made up of government securities the real problem date comes when the payroll tax will have to be supplmented by these “redeemed securities”.

Both those dates were the same as in last year’s report. But the trustees warned that financial pressures will begin much sooner when the programs begin paying out more in benefits each year than they collect in payroll taxes. The first year that payments will exceed income for Social Security will occur in 2017, just nine years from now, reflecting growing demands from the retirement of 78 million baby boomers. Medicare is projected to pay out more than it receives in income starting this year.

At that point, the government will have to start replacing the money it has borrowed from the Social Security trust fund. It can do that only by increasing borrowing from the public, raising taxes or cutting other government programs. The elimination of the Social Security surplus is a key reason that experts are projecting sizable budget deficits in future years.

Treasury Secretary Paulson gave a severe warning:

Treasury Secretary Henry Paulson, one of the trustees, warned that the country was facing a fiscal train wreck unless something is done. “Without change, rising costs will drive government spending to unprecedented levels, consume nearly all projected federal revenues and threaten America’s future prosperity,” Paulson said in releasing the new report. “Our nation needs a bipartisan effort to strengthen both programs for future retirees.”

And both Republicans and Democrats continue to talk past each other, with no real effort to solve a major fiscal problem for our country. Not only is Washington dithering over this fiscal train wreck, they continue to act as if there is no upper limit on federal deficit spending. They continue to borrow billions to finance the Iraq war and the general operations of government while our dollar falls and Washington pols just try to gain some partisan advantage from these disasters. When will we get some grown up leadership in Washington?

Posted in National News | 1 Comment

Live Call in Show on MCTV

Tommorow night Wednesday March 26 at 7:30 I will be hosting a live show on MCTV that will allow you to call in and ask me questions on the air. The call in number is 978-689-8627, and the show will be broadcast on Comcast Channel 22, and Verizon Channel 33. This show grew from some suggestions made to me on this blog that a more direct way of asking questions or making comments would be a good thing. I look forward to taking your calls on air, and I respectfully ask that no jokes be made about my weight. If this show attracts some interest I will do it on a regular basis. You can email me questions that I will read on air if you prefer that to calling. You can email those questions to mayorsoffice@ci.methuen.ma.us Look forward to talking to some of the readers of this blog Wednesday night.

Posted in Methuen | 1 Comment

Annual Easter Egg Hunt a big success

With State Representative Linda Dean Campbell doing the honors of announcing the countdown over 300 Methuen youngsters enjoyed our annual Easter Egg hunt at Veterans Park in Methuen, making a mad dash to collect the eggs hidden all over our play area. My thanks to Recreation Director Bill Pare, who puts together a great program for our kids every Easter. Read the Tribune article on the hunt here.

Easter Bunny

Posted in Methuen | 1 Comment

Foreclosure Legislation Workshop April 2

The Methuen City Council has scheduled a workshop on April 2 at 6:30 p.m. at the Great Hall, Searles Building to discuss the foreclosure ordinance I have submitted. The Council will also take public input as well. We are seeking public input as we craft this legislation, which is attached to an earlier post I did at this link. Read the Tribune story on the ordinance and workshop here.

Posted in Methuen, Methuen City Council | Leave a comment

Media Correction- Valley Patriot

The Valley Patriot has posted a headline on its website that is factually incorrect and leads to an inference in the smaller print that needs correcting. The headline:

With Chief’s fate “officially” undecided Methuen Posts Chief and Deputy positions

Methuen has not posted (which means that the City is declaring the position vacant or soon to be vacant) either position. The State’s Human Resources Division has posted civil service promotional exams, which have nothing to do with Methuen. The position of Deputy Chief of Police is not, and since its re-introduction, HAS NEVER BEEN a civil service position. Additionally that position (of Deputy Chief) has been phased out by Chief Katherine Lavigne
(Please read my posting of March 4th, which details the administrative changes in the Police Department, including the abolishing of the position of Deputy Chief of Police.) I am not sure why I would “post” a position that has already been abolished.
As far as the Chief’s position goes Methuen’s City Council voted to take that position OUT of Civil service by Home Rule Petition, legislation which is pending in Boston. That means that any potential successor to the Chief’s position would not be part of the civil service system and hence would not need to take the promotional exam posted by the State. I do not know why anyone would post a position inside civil service when the facts show that the position will be OUTSIDE of civil service.

The facts outlined here are public record and hopefully will get my friend “the chief” Tom Duggan to issue the necessary correction.

Posted in Methuen | 2 Comments

Linda Dean Campbell Reports

State Representative Linda Dean Campbell has issued a report to City officials detailing some of the many issues she has been actively involved in at the state level. As a first term Representative she has done a great job, and was instrumental in working to get the High School project placed on the State funding list in year one. As many of you know Methuen was one of forty nine communities selected to go to the feasibility phase of this process, a huge achievement for a freshman Representative. From the Campbell report:

Dear Community Leaders:

As State House sessions always convene at noon and extend through the evening to accommodate those traveling long distances, it generally prohibits me from attending evening meetings. I thought it would be helpful to update you on the status of some of the larger state projects and funding line items that impact our Methuen community.

The Budget:

Under the Governor’s proposed budget, Methuen will fare very well regarding Chapter 70 funding — receiving an increase of approximately a million dollars. Historically, the Governor’s proposal for this budget item usually remains intact without significant modification by either the House or Senate.

Lottery Aide to Cities & Towns:

As a result of current 1.3 Billion dollar shortfall, but more significantly, because of expected continued revenue declines, the Chairman of Ways and Means warns that distributions will likely be level funded for FY 09.

Current proposals in the House to Address the Deficit Include:

Budget cuts to state-wide programs; reforms expected to generate several millions of savings; enhanced collection of revenues partially through the closing of corporate tax loopholes; freezing the unemployment insurance rate; increasing the cigarette tax to help fund health care; and use of the state’s stabilization fund. These and many other options will be explored as the House and Senate begin debate which should continue on through to the end of July. Given current revenue projections, Methuen should plan for level funding for FY 2009.

My personal input to the budget process will include advocating for additional cuts to state programs across the board so that cities and towns can receive slight increases in aide. I shall also advocate for measures that will further facilitate City and Town participation in the state’s health care plan. Significant savings can be realized by cities and towns by switching over to the excellent and versatile health care plans offered by the Commonwealth.

The Rotary (At Routes 110/113 and I-93):

A committee of extraordinarily committed Methuen Citizens, state engineers and transportation experts are just concluding the very technical and complex task of selecting from among the many, one or two viable proposals to fix or replace The Rotary. These final proposals are being documented in technical detail and will be soon be available on the website: (www.methuenrotarystudy.org) for everyone’s review. The next step in the process will be public review with the goal of obtaining community consensus on a finalized proposal. This final proposal will require state and federal environmental reviews before work starts.

Current planning also calls for one more immediate improvement that will be included in any final plan. Utilizing federal funds, and funding put forth in this transportation budget by Senator Baddour, will allow the state to address the back up of traffic that occurs on routes 93 north and south during rush hours. Additionally, a bypass for trucking traffic from Route 113 to 110 has not been ruled out by either Dracut or Methuen. The website (www.methuenrotarystudy.org) is very informative and helpful — I highly recommend that you disseminate it to all of your constituents and/or neighbors who are interested in this project.

The High School:

Mayor Manzi, Superintendent Whitten, and our local state legislative delegation have had a very productive first meeting in Boston. The state is presently reviewing our School Building Committee members to ensure it meets all of the many statutory requirements. Methuen citizens constantly ask me, “How long will it be before our students are in our new high school?” The SBA’s answer for a school project of this magnitude is typically four to five years if everything proceeds without unexpected roadblocks.

Home Rule Petitions:

Home Rule Petitions to convert our police chief’s position into a non- civil service one and to move our credit union from City Hall to the Quinn Building are progressing at a good pace through the House and Senate and will be completed before they are needed.

Bea’s Boat Launch:

After considerable negation between the state and city whose aim was to address the concerns of local residents, the state and the city are finalizing the contract which will allow the permitting process to begin (usually a six month process.)

Frye Road Flooding:

Mass Highway has completed what it perceives to be its responsibility to address flooding. However, Senator Baddour, at my request is scheduling a return visit of Mass Highway this spring which will finalize responsibilities for Methuen and Mass Highway.

Please contact me regarding any city or state issue that is of concern to you – Most sincerely – Linda

You can contact Representative Campbell at campbellmethuen@comcast.net

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Final Report of Route 110/113 Rotary Study

Senator Steve Baddour has issued a constituent letter informing us that a draft version of the “Final Report of the Route 110/113 Methuen Rotary Study” is now available for review. From the Baddour letter.

I am writing to inform you that a draft version of the Final Report of the Route 110/113 Methuen Rotary Study has been drafted and is now available online at www.methuenrotarystudy.org/documents_html/documents1.html for review and comment. Submissions are due by the close of business on March 28th and instructions for forwarding comments are available at the site.
The finalization of the report is the last step in the first phase of our efforts to fix this regional transportation problem; upon its final submission I will be actively lobbying the Executive Office of Transportation to accept the report and initiate the project and the environmental impact review process.
As you know, resolving congestion and safety issues at the Exit 46 Interchange Rotary is a high priority for the region. Your input and support during this final stage of the process is critical in moving improvements forward and their ultimate success.

Posted in Methuen, State News | Leave a comment

Richardson endorses Obama

A.P. is reporting that Governor Bill Richardson of New Mexico will endorse Barack Obama at an event today in Portland, Oregon. Richardson is the only Hispanic governor in the country, and his endorsement was heavily sought by both Obama and Clinton. Richardson’s statement, from the Washington Post:

“I believe he is the kind of once-in-a-lifetime leader that can bring our nation together and restore America’s moral leadership in the world,” Richardson said in a statement obtained by the AP. “As a presidential candidate, I know full well Sen. Obama’s unique moral ability to inspire the American people to confront our urgent challenges at home and abroad in a spirit of bipartisanship and reconciliation.”

Richardson mixed in words of praise for Hillary:

Richardson praised Hillary Clinton as a “distinguished leader with vast experience.” But the governor said Obama “will be a historic and great president, who can bring us the change we so desperately need by bringing us together as a nation here at home and with our allies abroad.”

Obama makes a nice pickup that should be helpful with the Hispanic constituency, where Hillary has been pretty strong.

http://www.msnbc.msn.com/id/22425001/vp/23745548#23745548

Posted in National News | 2 Comments

Dimasi closes the coffin

In a vote that was no suprise the full House stood by the Speaker and voted to kill Governor Patrick’s casino proposal by referring it “to study”. The vote count was 108-46, with all of our local reps voting to kill the bill. Voting locally against the casino proposal were Michael Costello (D)Amesbury, David Torrisi (D) North Andover, Barry Finegold (D) Andover, Barbara L’Italien (D) Andover, Linda Dean Campbell (D), Methuen, William Lantigua (D) Lawrence. This rout completes the Speaker’s total victory politically over the Governor. I do not believe that the Governor will ever refile this bill while Speaker Dimasi is in charge of the House, so casinos in Massachusetts are dead for the forseeable future. I do not believe that any other gambling expansion will be on the horizon either, although the tracks will make their annual effort to get slots. Goodbye gaming revenues, hello ?.

Posted in Methuen, State News | 3 Comments