Union Power Under Attack

With state budgets throughout the country sinking into the abyss public sector unions are now under attack everywhere. And unlike prior battles organized labor in the public sector is losing the battle where it counts, with the public. From the New York Times:

Across the nation, a rising irritation with public employee unions is palpable, as a wounded economy has blown gaping holes in state, city and town budgets, and revealed that some public pension funds dangle perilously close to bankruptcy. In California, New York, Michigan and New Jersey, states where public unions wield much power and the culture historically tends to be pro-labor, even longtime liberal political leaders have demanded concessions — wage freezes, benefit cuts and tougher work rules.

Throughout the country, from New York to California, states are facing unsustainable public spending, billions in unfunded pension and health care obligations, and a public unwilling to pony up more tax money. The result has been a political backlash against public sector unions who have been, in many cases, unwilling to make any concessions to protect services or to save the jobs of their most junior members.

The political fight has not been with exclusively with Republicans, although major Republican gains in statehouses throughout the country spell bad news for the public sector unions. Real pitched battles have occurred with Democrats, including some with strong pro-labor credentials. In many cases those fights are with Mayors, including the Mayor of Los Angeles Antonio Villaraigosa, who was an employee of the teachers union before becoming Mayor. Mayor Adrian Fenty of Washington D.C. and his superb Chancellor of Schools Michelle Rhee were targeted for political destruction by the teachers, outraged at the quick pace of educational reform championed by the Mayor. And the Morning Joe clip attached below talks about Mayor Cory Booker of Trenton New Jersey and his battle with an intractable police union. Mayor Booker is a Democrat, and one of the outstanding Mayors in America.

The unions continue to fight not only on the financial front, but on the reform front, and that is not only in education. Archaic work rules, insistence on the protection of incompetent and illegal behavior on the job, refusal to consider efficiencies that save taxpayer dollars, have all been hallmarks of public sector unions throughout the United States. Mayors have been on the forefront of reform efforts, but are consistently hamstrung by state laws that prevent implementation of common sense management techniques that would bring us into the new century. And now Mayors are being joined by Governors, notably Republican Chris Christie, who has gained great political traction from his open battling with public sector unions. Christie is winning that fight. He is now apparently joined by newly elected New York Governor, Democrat Andrew Cuomo, who is calling for strong medicine to be applied to the New York state budget.

And while the jury is still out on California Governor Jerry Brown, that state’s enormous budget deficit and huge unfunded pension liability, is going to force his hand. David Crane, a Democrat who was a senior advisor to former Governor Arnold Schwarzenegger, has penned an article in the LA Times decrying the refusal of California’s Legislature to even think about pension reform.

Last summer Gov. Arnold Schwarzenegger proposed exactly that. Since then? Silence. State legislators are afraid even to utter the words “pension reform” for fear of alienating what has become — since passage of the Dills Act in 1978, which endowed state public employees with collective bargaining rights on top of their civil service protections — the single most politically influential constituency in our state: government employees. Because legislators are unwilling to raise issues that might offend that constituency, they have effectively turned the peroration of Abraham Lincoln’s Gettysburg Address on its head: Instead of a government of the people, by the people and for the people, we have become a government of its employees, by its employees and for its employees.

Ouch! Unfortunately the numbers must be dealt with. And that is a continuing problem in American politics today. A refusal to talk numbers. Additional taxes on the “rich” can be debated, but no matter what side of that question you are on you cannot “tax” your way out of the pension and health care costs that are destroying local and state governments. Until the unions nationwide stop putting forward the notion that the fiscal situation is not dire (they would have you believe that the economic meltdown is a management negotiating ploy) they are going to continue to slide backwards. They need to move to the middle and deal with Democrats who do not hate unions, but must balance budgets and preserve services. Methuen’s unions have, to some degree, accepted that reality. But sadly the reality has yet to hit most public sector unions in Massachusetts and nationwide.

Friday Add on- Today’s Boston Globe calls for the repeal of the Pacheco Law, which makes it almost impossible to privatize services currently handled by the public sector.

Read the New York Times story here.

Read the David Crane LA Times article here.

http://www.msnbc.msn.com/id/32545640

Visit msnbc.com for breaking news, world news, and news about the economy

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Tina Gagnon is the January Artist of the Month

Mayor William M. Manzi has named Tina Gagnon as January’s Artist of the Month. Tina is an exceptional color pencil artist whose work is often displayed at art shows across New England. Largely self-taught, she honed her craft through study at the New Hampshire Institute of Art, and maintains membership in the Greater Salem Art Association, the Methuen based Art Institute Group of Merrimack Valley, the New Hampshire Art Association, and the National Colored Pencil Society. In 2010, Tina’s work earned several awards including 1st place ribbons at the Deerfield Fair and the Greater Salem Artist Association Spring and Winter Show.

Using colored pencils allows Tina to capture the very vivid and sometimes subtle colors found in nature. Her work is characterized by a high degree realism and fine detail that recreates subjects found in New England’s gardens, woods, and mountains. Besides depicting indigenous flora, butterflies, and birds, she regularly accepts commissions to draw people’s pets. Through “Pet Portraits by Tina,” she has drawn horses, dogs, cats, and other beloved pets. At tinagagnon.com one can view her portfolio and inquire about commissioning a work.

Tina encourages prospective colored pencil artists by saying, “Keep those pencils sharp!” Tina loves working in colored pencils, and her work is on display in the Mayor’s Office.

Mayor Manzi stated, “I’d like to personally thank Tina for her participation in this program. She is one of the many talented artists working in our community. It is an honor to display her drawings. I encourage people to come to my office and view her work.”

The Methuen Artist of the Month Program was created by Mayor Manzi four years ago in order to give members of the Methuen Arts Community a forum to display their work and to encourage participation in Methuen’s growing creative economy. Methuen artists interested in being considered for Artist of the Month should contact the Mayor’s Office.

Tina Gagnon is the January Artist of the Month

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WCCM Interview: Michael Widmer

I joined Lou Blasi on WCCM last week, during the snowstorm, to talk about municipal health care, pensions, and the upcoming state budget. We were joined by Michael Widmer of the Massachusetts Taxpayers Association, who I consider to be the preeminent budget expert in the Commonwealth of Massachusetts. Mr. Widmer testified a couple of weeks back at the consensus revenue hearing held at the State House. Widmer has been a leading voice statewide on the necessity for health care plan design authority for municipalities. An interesting conversation.

http://ecdn0.hark.com/swfs/player.swf?1292974224 Listen to Lou Blasi and Michael Widmer

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Republican Budgetary Fiction

The new Republican majority in the House of Representatives has put in place many new rules and procedures, including a gutting of the budgetary pay-go rules that reflect the right wing insanity on budgets and deficits. In plain language what the Republicans have implemented is a rule that replaces so called pay-go rules (where any new spending must be paid for with either tax hikes or other spending cuts, or where tax cuts that diminish revenue must be made up with spending cuts) with a rule that says any increase in spending can only be made up with other cuts in spending (no tax increases possible) and that tax cuts do not have to be paid for. From the Center on Budget and Policy Priorities:

The new rules announced December 22 would replace pay-as-you-go with a much weaker, one-sided “cut-as-you-go” rule, under which increases in mandatory spending would still have to be paid for but tax cuts would not.

In addition, increases in mandatory spending could be offset only by reductions in other mandatory spending, not by any measure to raise revenues such as by closing unproductive special-interest tax loopholes. For example, the House would be barred from paying for continuation of a provision enacted in 2009 (and extended in the just-enacted tax compromise) that enables many minimum-wage families to receive a full, rather than a partial, Child Tax Credit by closing wasteful tax breaks for multinational corporations that shelter profits overseas. Use of such an offset would violate the new House rules because the provision expanding the Child Tax Credit for working-poor families counts as spending and hence could not be paid for by closing a tax loophole. Yet the same new rules would enable the House to expand tax loopholes for multinational corporations and wealthy investors without paying for those tax breaks at all, because any tax cut, no matter how costly or ill-advised, could now be deficit financed.

The new rules would stand the reconciliation process on its head , by allowing the House to use reconciliation to push through bills that greatly increase deficits as long as the deficit increases result from tax cuts, while barring the use of reconciliation in the House for legislation that reduces the deficit if that legislation contains a net increase in spending (no matter how small) that is more than offset by revenue-raising provisions.

The so called Republican “deficit hawks” are now showing that a true “pay-go” system is unpalatable, and that the real goal is more deficit spending to finance more tax cuts. Pure and utter hypocrisy on the deficit.

On “pay-go” the hypocrisy is not limited to Republicans. Democrats are in a position where they nominally support “pay-go”, but simply exempt spending they consider important or worthwhile from the rule. That puts them in no position to be critical of the Republican budgetary insanity. The road to fiscal sanity is not as complex as Washington folks would have you believe. It is simply a road with choices that need to be made, and those choices will apparently be avoided until the fiscal disaster is upon us.

Read the Center on Budget and Policy piece here.

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The Liquor Tax

Saw a couple of media stories on the end of the sales tax on beverage alcohol, including the symbolic dumping of wine into the harbor by store owners. As a former owner of a package store I have tried to avoid these stories on the blog for obvious reasons. But I cannot resist this one. Critics of the repeal have pointed to the underfunding of “substance abuse programs” that have been funded by the imposition of the tax. Fair point, as far as defending what are worthwhile programs. The rest of it is all so much nonsense, based on what are underlying distastes for the products sold. Destroying an entire regional industry and the jobs and capital invested is no joke, but to hear critics of repeal talk store owners who have had their businesses essentially destroyed by Massachusetts tax policy should just shut up and take it, and watch their life investments go down the drain. So what are the tax policies that have wiped out border stores that sell alcohol? Let us list them.

1) The Bottle Bill- The bill has had some undeniably positive impacts statewide, and I believe it likely has majority support in the Commonwealth. But it has been, and continues to be, an unmitigated disaster for border retailers. Let us remember the bottle bill campaign, in which proponents argued that the legislation would lower costs for consumers. It has raised those costs substantially, including handling costs that were about 50% of the added costs for deposits. The campaign by proponents lied about the price consequences, and border retailers were priced out of the market for bulk purchases of beer and soda. The honest approach would have been to say that you will have to pay more, but the benefits outweigh the additional costs to consumers, and border retailers will have to accept a huge loss of business. And it was a huge loss of business. New Hampshire has no bottle bill, and prices their products so far below Massachusetts that business fled in droves to New Hampshire.

2) Tobacco Tax- Border retailers have seen a huge hike in tobacco taxes, including the imposition of a sales tax where none had existed, and a massive hike in the tax assessed at the wholesale level. Before the massive increase in tax (to fund tobacco cessation programs) New Hampshire had a large competitive advantage. after the series of Massachusetts tax hikes New Hampshire was free to raise some revenue by hiking their tax on tobacco, but making sure that there was still a large competitive advantage for their state. Net Impact: Retailers on the Massachusetts border are essentially out of the tobacco business.

3) Beverage Alcohol Excise Tax- Massachusetts assesses a tax on beverage alcohol at the wholesale level. Before the imposition of the sales tax on top of the excise tax the State of New Hampshire was selling major products BELOW the WHOLESALE price paid by Massachusetts retailers. After the imposition of the sales tax the spread became so wide that it was not a competition but a bigger rout that started wiping out what little was left of border business.

The shrieks of protest from those that simply don’t understand business is laughable. Many of the retail stores are mom and pop operations with little infrastructure to collect and pay sales tax. I have always wondered why the Legislature did not apply an increase to the excise tax if they really wanted some additional revenue from the product. That increase is paid without fail, and would at least spare the retailers the pain of additional paperwork. Ahh, but that would make too much sense. When Marian Walsh proposed this (sales tax on alcohol) some years ago she at least had the honesty to speak the truth to border retailers. She said something to the effect of, “maybe you should not have invested in a business this close to a control state (New Hampshire). Yes we get it up here on the border. Better to leave investment in retailing operations, not just package stores, to the New Hampshire side of the border, with all of the attendant jobs, property tax revenue,and capital investment, to the Granite State.

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Senior Whole Health on Mayors Corner

Lisa Tkachuk, from Senior Whole Health, guesting on the Mayor’s Corner Show on MCTV. Interesting program for seniors, and an intriguing model for health care payments for patients in the program. The model is the universal payment, as opposed to the fee for service model. Can this model be expanded to the population as a whole? Interesting stuff from Lisa and Senior Whole Health.

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City of Methuen Storm News

Due to the severe winter storm I have, in consultation with the Director of the Department of Public Works, declared a state of emergency in the City of Methuen at 4:00 p.m. today. City Hall will be closed tomorrow, Monday December 27th. Public Safety personnel and DPW work crews will report for duty as scheduled. Every effort should be made to stay off the roads during this storm. Thank you for your cooperation. If you have an emergency please dial 911. If you need non-emergency assistance please dial the Fire Department line at 978-983-8940.

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Shadi's in Methuen Burns on Christmas

The Methuen landmark Shadi’s Restaurant, on Osgood Street in Methuen, has burned this Christmas morning. Alarms went off at around 8:00 a.m. The Methuen Central Fire station is right across the street, and the blaze was spotted by firefighters working at that station. The Restaurant owners, Michael and Hind Asmar, were on the scene of the fire. My condolences go to them and the staff. They are long time owners who produce a superb product.

Photos at this link.

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And Then There Were Nine

Massachusetts, as expected, will lose one of its ten Congressional seats, opening the door for some real jockeying amongst the ten Democratic incumbents. The national census produced a big gain for the Republican west and south, with Texas picking up four Congressional seats. In Massachusetts the news has the political class chattering, laying out scenario after scenario. The parlor chess games are interesting, but it really is premature to speculate accurately on which scenario may play out. The western Congressmen, John Olver and Richard Neel, have both announced their intention to run for re-election in 2012. Speculation will continue to center on the potential for one or more of the ten to look at a challenge to Senator Scott Brown in 2012, which would make the job of redistricting honcho’s Rep Moran, and Senator Rosenberg, a little easier.

Let us remember that the last time we talked about a potential redistricting then Speaker Finneran had some sharp blades out for Fifth District Congressman Martin Meehan. The interaction between the state legislature and the Congressional delegation should be a joy to watch. Any grudges or perceived slights could come back to haunt some of the delegation, as their fate now lies with the Legislature. Our Congresswoman, Niki Tsongas, is already making the case for the preservation of the Fifth, and the maintenance of Lowell as its hub.

Tsongas said her district should be preserved, as it has been for nearly 50 years, because the Merrimack and Concord river valleys that she represents have similar needs.

“I believe these river valleys and the communities that lie along them including the birthplaces of the American and industrial revolutions should continue to serve as the geographic and economic linchpins of the district with Lowell at its center,’’ she said. Tsongas has not given up hope that someone will bow out and vacate a seat, averting the need for an electoral faceoff between members. “A year or two is a long way out, so things can change,’’ she said.

Too early to tell, but not to early to speculate on the politics.

http://c.brightcove.com/services/viewer/federated_f9?isVid=1&isUI=1

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Massachusetts Fiscal Forecasts

The Massachusetts Taxpayers Foundation, following the consensus revenue hearings on Beacon Hill, has released a primer on the outlook for the next fiscal cycle in Massachusetts, with the forecast looking less than rosy. The outlook is cloudy despite a pretty good growth rate in state revenue of almost $1 billion dollars. With the loss of federal stimulus, the drop in the rainy day fund to about $600 million, and a massive increase in medicaid spending gobbling up that billion and more, it looks like a bleak year for Massachusetts, with local aid cuts on the horizon again. From the MTF Report:

“Despite almost a billion dollars in revenue growth, the state faces a fiscal 2012 shortfall of approximately $2 billion with no federal stimulus dollars and limited state reserves,” Mr.
Widmer said. “The 2012 budget will require yet another round of cuts in local aid, human
services, higher education, and almost all other state programs.”

The estimated $2 billion structural gap in 2012 is driven by the use of $2.1 billion of one-time
funds in the 2011 budget and at least $1 billion in increased spending on obligatory accounts
such as Medicaid, pensions and debt service. The improving revenue picture in fiscal 2011 will
not make a meaningful dent in the 2012 deficit because the higher tax collections will be needed
to make up for shortfalls in non-tax revenues and to fund deficiencies, principally in Medicaid, in
the 2011 budget.

I have submitted, and City Council has approved, the tax classification factor for Methuen. I will do a separate post on that, but Rep. Linda Campbell came to the hearing and warned of those impending state aid cuts. I have attached the Mass Taxpayers document below.

The Tribune editorial on this subject is here.

mtf-fy-2011-revenue

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