Reforms That Lead To Big Savings
"Make no mistake: If Beacon Hill policy makers don't get there on Pacheco and these important reforms during this fiscal crisis, they will never take place. And if not, lawmakers will be playing Pinocchio should they later claim they did everything possible to enact savings before finally turning to taxes."
- Boston Globe Columnist Scot Lehigh, 5/15/09
"Make no mistake: If Beacon Hill policy makers don't get there on Pacheco and these important reforms during this fiscal crisis, they will never take place. And if not, lawmakers will be playing Pinocchio should they later claim they did everything possible to enact savings before finally turning to taxes."
- Boston Globe Columnist Scot Lehigh, 5/15/09
Reforms that lead to big savings
The Boston Globe, 5/15/09
By Scot Lehigh, Globe Columnist
OPEN YOUR Beacon Hill misfortune cookie, and here's the prophecy you'll find inside: Higher taxes are in your future.
Now, no one wants to dig deeper, particularly in tough times. But nor do I want to have elders lose their home care or developmentally disabled kids deprived of vital programs or teachers laid off.
So I would be willing to pay more, under the right circumstances.
However, citizens have every right to expect that state leaders have done everything they reasonably can to save public dollars first. And let's be clear: That condition has not yet been met.
What further should be done? Here are several obvious reforms that could lead to big savings.
First up, that lamentable Democratic gift to the public-employee unions known as the Pacheco law, which effectively ended the state's ability to contract with private firms for services they can deliver more efficiently than state workers. Although Senator Pacheco, the measure's proud papa, denies it, I have it on good authority that his signature "accomplishment" was thought up and written by lobbyists, then given to him to file. The Legislature passed it over a gubernatorial veto back in 1993, bringing the portcullis crashing down on Bill Weld's efforts to reap public savings by tapping the private sector.
Ever since, repealing Pacheco has been a reform that dare not speak its name. Not among Democrats, anyway.
But this year, Senate Republicans, who estimate the state could save $150 million to $300 million a year by aggressively contracting out, plan to try.
"If people are really serious about saving taxpayer dollars and making government more efficient, then we have to look at sacred cows like the Pacheco law," says Senate minority leader Richard Tisei.
Amen.
Here's a second sound idea Tisei is pushing: a fiscal year 2010 state hiring and salary freeze (including "step" increases), which he estimates would save about $140 million. Wage cuts have become commonplace in the private sector; that being so, surely the state can temporarily hold level public-sector wages.
"Most people would be shocked to know we haven't done that already," Tisei notes.
Next, it's time to do away with all so-called termination pensions, which let public employees of 20 years duration start collecting at least one-third of their salary upon losing their jobs, regardless of age. That counterproductive program should be low-hanging fruit.
The state also needs to grant cities and towns either the unrestricted authority to join the state's Group Insurance Commission or GIC-like ability to design their own health-insurance offerings. Currently, every change in local health-insurance plans has to be bargained with the local unions.
"There are a lot of communities that can't get the unions to agree even to increase a $5 co-payment for a doctor's visit," reports Geoff Beckwith, executive director of the Massachusetts Municipal Association.
The GIC, by contrast, sets co-pays and deductibles and other insurance plan features without having to bargain the changes. If the ability of municipalities to join the GIC weren't subject to a union veto or if they had similar plan-design power, the savings would be large.
Springfield saved $14 million to $18 million in just two years by joining the GIC, according to a new study by UMass-Boston's Collins Center for Public Management and Harvard's Rappaport Institute. A 2007 report by the Massachusetts Taxpayers Foundation and the Boston Municipal Research Bureau estimated that if all municipalities joined the GIC, after 10 years the total annual savings could be as much as $2.5 billion. This simple safeguard would protect employees: local health-insurance plans would have to be at least as generous as those the GIC offers.
Asked about the municipal health insurance issue on Wednesday, Senate Ways and Means Chairman Steven Panagiotakos said the Senate would consider it later. Queried about repealing the Pacheco law, he replied: "We haven't got there yet."
Make no mistake: If Beacon Hill policy makers don't get there on Pacheco and these important reforms during this fiscal crisis, they will never take place. And if not, lawmakers will be playing Pinocchio should they later claim they did everything possible to enact savings before finally turning to taxes.
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