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Home Crisis Investigation

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I was wrong. It's not the 2nd largest budget in history

It's the largest.  The deception was this, and I fell for it.  Governor gave his press conference, and the press took away that the Governor signed a $27.4 billion budget that was a 3% smaller than the budget the Governor signed, just a year ago.

First, there are several sections of the budget. There are the revenue estimates sections, then there are the spending sections. Sections 2, 2B and 2D, 3, etc.... Here are all sections combined in the 2010 not including the Legislature's reaction to the governor vetos:

Direct Appropriations.......$26,907,008,724
Retained Revenue...................$499,891,667
Chargebacks...........................$391,745,702
Federal Grants.....................$2,484,750,685
    Total.......................$30,283,396,778

Fair enough.  The "budget" counting only direct appropriations and retained revenues sums to $27.4 billion.   Now compare to 2009.

In 2009, apples to apples, AFTER 9c cuts, the spending was:

Direct Appropriations.......$25,998,093,826
Retained Revenue...............$1,306,200,459
Chargebacks..........................$297,852,050
Federal Grants............................$1,399,803
      Total.............................$27,604,356,138

See! The spending is budgeted to significantly increase. The deception arises when the politicians or press inaccruately compare the $27.4 to last year's $27.6.  They appear to ignore Section 2B and 2D of the budget. 

A strict comparison shows that the budget in total increased from $27.6 to $30.3 billion.  Or, Direct appropriations plus retained revenues increased from $27.3 to $27.4 billion.  Small percentage increase in the latter comparison to be sure, but certainly no decrease. 

Here's the questions for the governor, et al:

1: In year to year comparisons combining all sections of the budget, 2, 2D, 2B, 3 (local aid) and 4 (outside sections), is spending budgeted to increase?

2: Why all the talk about hard choices, cuts, pain, ect...when in fact spending appears to have increased by nearly 10%!

3: What costs were the cause of the significant increases? (there's apparently some controversy whether the Universal health is the source of the increase)

4: Who was responsible for spinning this 3% decrease nonsense?

Because nothing says high speed rail like tax free booze

First, for the sake of comparison,  consider that the feasibility studies from Fall River to Boston showed a daily ridership of about 12,000 at a cost of $1.2 billion. i.e. it may be expensive, but at the least the cars are empty. 

Second, consider, it's only about an hour, fifteen from, say Boston to Concord.  What to do, figure out how to get to Boston's train stop, park, hustle you and luggage into the station and onto a train, knowing you're going to have to figure out the same upon arrival?  Or, are you going to drive point to point?

New Hampshire’s Capital corridor will create easily accessible passenger rail service for more than 500,000 residents of Southern New Hampshire with stops in the cities of Concord, Manchester, Nashua and Boston.  The rail line will also stop at Manchester-Boston Regional Airport, creating a much-needed connection for tourists and travelers from across northern New England.  Eventually, this service will extend north to White River Junction, VT and to Montreal fulfilling the vision of this designated High-Speed Rail Corridor.  [the Governors' Vision]

The state should instead, opt for the tax savings package fare:  round trip ticket from Massachusetts ending at a New Hampshire mall instead of a train stations.  Last stop,  for sales tax free booze and shopping runs.

How else to compete?  It's the seemingly endless quest of the left to seek to turn the US into Europe, but consider that US lacks the population densities of much of Europe; gasoline is cheaper in the US and car and plane competition much more prevalent, as a result the competitition against the train, far greater;  and, likely by far the greatest variable, the US and its towns and cities were built around  the car as the prevailing transporation, whereas the large European cities developed around the train.

MBTA, stop it before it multiplies

Here's the premise.  Any Massachusetts public transportation EXPANSION must pay for itself.  Benefits Must Exceed Costs.  Got that?  Objections? That's my starting point.  It's not some libertarian rant, because public transporation is, hence the name, public.  It's not going private anytime soon.  

But, just look at the 2009 financials.  Revenues flat, costs up 10%, wages up 13%! 

First stop digging.  There are warning signals to not expand the monster, and it's not just the numbers, although the numbers are compelling.  I'll quickly dispense with the well known 85% paid health insurance and plump pension, and layer after layer and layer of middle, lower middle, upper lower middle management paid 100K +, salaries expense that have uncontrollably grown over the decade, and a Union that should be unilaternally dissolved.

Let's take first, the Green line. This line pays for itself.   Ridership per mile is high.  What to do? Expand it to densely populated areas.  Yeah, but first says the MBTA, let's connect Roxbury to the airport because ... because ... doesn't matter.  Let's just do it.   Wait, here's a reason: because there's a need for a one car, no transfer ride to the airport.  Ok, didn't say it was a good reason, but that was the reason.

The result of the proposed boondooggle? Hop a fare on the proposed Silver #3. Follow me on this, the new Silver 3: Diesel cranks up at the airport, fumbles through traffic, shuts down the engine (do you appreciate the issue of multiple starts and stops of a large diesel?) Goes electric in the under Charles Street tunnel and a speed slower than a union employee punches out at the end of the day.  Cargets to Charles Street.  Crank the diesel and back to being a bus. Add airport luggage, add tourists unfamiliar with the system and put them in a diesel not electric car that's already too small, just to get them to Roxbury.  Got taxi? Or, car. Absolutely.  

Silver phase III was doomed to be a silver elephant until thankfully  the cost of the Charles Street  tunnel grew from a billion to $2.1 billion AND the feds said no. (Fed rule:  whenever Massachusetts mentions digging a tunnel, just say no)  Had Fed  said here's the money, I'm sure, the Silver line #3, would soon be reality and 2 or 3 people a day would enjoy same-car commute from Roxbury to the Airport.

Wait! Back to the Green Line.  It's successful!.  They've been talking about expansion for decades (no joke, decades).  Someday.  But for now, the MBTA has sexier things to build and compensation packages to worry with.  Don't call us, we'll call you....

Route 66 busline.  Christ would someone just put a stake in this things heart. Or 86, Sullivan Sqare and Cleveland Circle by way of Union Square.  Anyone disagree?  All it takes if for someone with MBTA to ... you know ... ride the lines now and again to see what's working and what's not.

BTW, are they collecting fares on the Green line now or is the 'yeah, everyone has a pass' still the rule.  I haven't skipped a fare ridden lately.  (memo to self: why is everyone bitching about the cost of a pass when no one at MBTA bothers to check?)

To backtrack to those under street tunnels, ever wonder what happens when the hot brakes of a bus hit the cold water pooled in the tunnels.  $$$$. That's what happens.

How about a rail to Fall River and New Bedford?  They were actually going to do it if they'd gotten Fed money. 12,000 people/trips per day for a $billion plus. It may be expensive, but at least it's empty,  I can see the pols cutting the ribbon now, with the empty car in the background.

The Carmen Union. Soon after the train wreck before which the operator was text messaging a friend, the Carmen union actually resisted the  mandated ban on texting. You believe that? What are they, idiots? No, that's not a rhetorical question.  The MBTA isn't in the business of transportation; it's in the business of increasing salaries. Change that attitude first; expand later.

The MBTA is an abomination.  It's corrupt, run by people, not as a transportation business but rather as a payroll service,  more interested in feathering their own nest and employing a Union that does the same.  Politicians don't help by heaping on an unhealthy debt load then scapegoating Grabouskus when he couldn't print money to pay it off.  Politicians don't help when they'd rather build an unused track to their front door in Bumfucksville, Mass rather than expand a Line that obviously 'pays for itself'.  Greens don't help because they're operating under the sad notion that trains are good, when in fact, only FULL trains are good.  

In short, on't expand the monster and build more tracks to nowhere unless they pay for themselves". Pay for themselves means fare + subsidy covers the costs of effective and efficient transportation.

Failure to stop a rolling snowball

Just starting downhill, a growing, rolling snowball's easily stopped.  Wait too long, and it's a cartoon cliche, an uncontrollable slapstick disaster.  After today's news, you might well imagine that the State's been slicing and cutting to keep pace with the falling revenues. 

State revenues took yet another plunge last month, ending the financial year $180 million below even the dourest projections and forcing leaders to choose between draining the state’s reserve account and making further cuts in a budget approved just last week.

But no.  Here's the 2010 budget compared to 2009:

HISTORICAL SPENDING CATEGORIES ($000)

SPENDING CATEGORY	FY2006 Expended	FY2007 Expended	FY2008 Expended	FY2009 Expended	FY2010 GAA
Wages & Salaries	3,838,756	4,092,090	4,306,665	4,246,441	3,989,175
Employee Benefits	1,114,725	1,182,179	1,011,388	1,148,498	1,205,011
Operating Expenses	1,396,846	1,217,032	1,968,672	1,171,741	1,068,951
Public Assistance	10,779,003	11,663,047	12,590,650	13,118,165	13,000,239
Grants & Subsidies	5,350,815	6,055,275	6,185,698	5,808,427	5,719,110
Debt Service	1,832,219	2,008,220	1,989,968	2,045,025	2,063,525
TOTAL	24,312,364	26,217,844	28,053,041	27,538,297	27,046,010

From 2009 to 2010, a 1.7% reduction in spending. 

1.7% ! Got that?  In the face of a 23% drop in revenues the State budgets a 1.7% spending decrease.

All the while, they're boasting of reform.  Isn't reform a meaningless slogan without seriously addressing the failure to cut costs, or, painful as it is to this fiscal conservative, communicate the need for higher tax?

Great that the Legislature reformed the silly rules: credit for library trustee, 23 and out, extras for not running for re-election, ethics, no gifts to politicians, rearrange a handful of agencies, etc... .  I can sleep well knowing that some random Representative from Bumfarksville, Mass won't get the extra $200 a month added to his pension because he served as a Trustee on the local library for 5 years. 

Isn't it just great that your Rep can't accept gifts.  You're life's been made full.  Or that the Transporation Authority that hemorrages red ink is doing it as a State Board and not as an Authority.  It's nuance that make the Commonwealth great.

For every day that passes without meaningful reduction in spending, reserves grow smaller and the deficit snowball larger.

Solution, said the leaders, add a sales tax.  That's an extra $900 million in cash, a smidge short of the $3.0 billion shortfall.

Neither the Governor nor the Legislature are addressing where to find the $2.6 billion. By ignoring that short fall, and focusing on  the meaningless (i.e. immaterial money savings) they're guilty of  pure negligence.

Where to cut?  Three places for government: 1) transfer payments (i.e. welfare, medicaid,) 2) employment and benefits 3) local aid, which then translates to employment and benefits,  but at the town level.

Transfer payments are temporarily off limits for the most part because of Federal money coming in although the rumblings are louder that the universal healthcare boondoggle is a target.  Already dental is gone from MassHealth coverage, and certain legal aliens are excluded from Commonwealth Care coverage.  Local aid has been reduced.

What's left is state employment.

Headcount in State government has been locked at 85,000 to 86,000 for many months now. Despite layoff anecdotes, the state appears to have a stealth no-layoff policy in place.

Every 10% cut in heads means approximately $500 million in savings; no cost in unemployment because of Federal $.

The real call ought to be 'savings before revenue'.  Reform is meaningless if it means no dollars saved. 

Globe, what would you pay now?

Given these projections, a fair value over zero looked optimistic.  But add to those projected losses, the unfunded $59 million pension liability of the Globe plus Worcester Telegram, and the NYT might actually end up paying someone to take it off their hands.

This says it all:

The New York Times Co. has postponed tomorrow’s deadline for prospective buyers of The Boston Globe to submit preliminary bids for the newspaper, people briefed on the sales process said.

No new date has been set for the bids. Goldman Sachs Co., the investment banking firm hired by the Times Co. to manage the newspaper sale, have told interested parties they will be given more time to prepare an initial offer for the Globe and its sister paper, the Worcester Telegram & Gazette, the people said.

Looks like buyers aren't terribly  motivated.

 

Hysteria of large numbers

Here's the lede from Mass Budget and Policy Center (Blue, the color theme by no coincidence):

Seeking to close a $5 billion budget gap, the legislative Conference Committee crafted a budget that will require sacrifices across the board.

Oh my God, billions in the hole. Why?

Overall, state taxes as a share of the economy were $3.3 billion lower in FY2008 than they were in FY1998. The two primary causes of this decline were income tax cuts and erosion of the state sale tax.

Income tax:

• The income tax rate was reduced from 5.95 percent to 5.3 percent, costing $1.3 billion.
• The tax rate on dividend and interest income was reduced from 12 percent to 5.3 percent, costing $720 million.
• The personal exemption was increased from $2,200 per person to $4,400 per person, giving each taxpayer a cut of $117, and costing $440 million.
• In 2002 the state repealed the capital gains tax cuts enacted in 1994 which increased revenue by $1.1 billion.

Overall changes in the state income tax resulted in net loss of $1.4 billion in income tax revenues.

Nevermind that tax revenue has grown almost 50% over the past 10 years; nevermind that  2009 budget was the second highest in the history of the State. 

 

 

Tough times

Lamenting the 'tough economic circumstances', the Governor signed the budget.  For goodness sake, it's less than a 3% reduction from the prior year, and you'd think the politicians lost a collective kidney.

The budget signed by the Governor today, coupled with the supplemental legislation he is filing, is 3 percent lower than budget he signed just one year ago.

It is, as noted earlier, the 2nd largest budget in the history of the state, and almost 6.5% greater than the 2007 budget.

 

For $25, you're innocent until proved guilty

Armed with the knowledge that more than 250,000 tickets for civil motor vehicle infractions were challenged in the state last fiscal year, legislators have voted to charge drivers $25 for such hearings. The budget Gov. Deval L. Patrick signed into law this week includes the change, which took effect yesterday, according to Trial Court spokeswoman Joan Kenney.  Worcester Telegram

Imagine how much cash the State could rake in if it charges more for crimes more serious!  Murder, $50K gets you a trial.