Howard Rich's Blog

May 11, 2009

Let communities off the leash

From the Boston Globe

THE MOST SEVERE budget crisis in Massachusetts history may at last break the back of a legislative tradition that treats cities and towns like wards of the state. Recognizing that local communities need more financial aid than the state can afford, top legislators are backing a municipal relief act that gives communities new autonomy to raise revenues and manage their own budgets. It’s a big improvement. But the proposals from a special bipartisan commission still keep the communities on a short tether.

For years, cities and larger towns have wanted the option of raising local meals and lodging taxes. But the Legislature held tightly to the purse strings, preferring to dole out local aid from state tax revenues. The special commission’s plan, expected to get a legislative hearing tomorrow, gives communities the option of raising an additional 2 percent on the 5-percent meals tax, which could yield an estimated $230 million if all communities participate.

Half of the money raised would still go back to the Legislature for redistribution to the communities – minus a small percentage for incentives aimed at getting towns to try regionalization schemes. But that compromise may be necessary to win support from legislators who represent bedroom communities that lack restaurants or hotels.

Where the leash tightens uncomfortably is in the area of health insurance for municipal workers. Governor Patrick made much of his legislation in 2007 to allow local communities to join the state’s Group Insurance Commission, to take advantage of economies of scale. But only 30 communities or districts have joined, even as municipal healthcare costs rose 63 percent from 2001 to 2005. Plus, the Patrick plan requires ratification from the municipal unions, many of which have resisted asking their members to contribute more of their own healthcare costs under the GIC.

The commission recommends a combination of carrots and sticks, including local aid penalties, to get more communities to join the GIC. But the plan seems needlessly complex, and it still allows for a union veto.

Geoff Beckwith of the Massachusetts Municipal Association says that real reform would allow communities to adjust the designs of their existing healthcare plans – a freedom the GIC itself enjoys. Currently, communities must negotiate with employee unions for changes as simple as raising a co-pay for an office visit from $10 to $15. The debate over GIC or local plans is unproductive; communities should be encouraged – and allowed – to make whatever choice is best for the taxpayers.

Local communities are in very dire financial straits, and things are going to get worse. They need the tools to be able to manage more with less, and the Legislature needs to set them free.

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