IN HIS budget, Governor Patrick proposed to avoid cuts in state aid to cities and towns - an accommodation that, in practice, means dipping deeper into the state’s rainy day fund or refinancing more debt. This may be inevitable; in an election year, nobody on Beacon Hill wants to push further pain onto municipal governments.
Yet lawmakers shouldn’t just take local governments’ budgets as a given. The 351 cities and towns could make do with less aid if they could bring down the costs of their employees’ pensions and health care without cutting benefits. Patrick and the Legislature should give them the means and the encouragement to do so.
The most obvious step is to give towns the power to buy health insurance through the state’s thrifty Group Insurance Commission. Right now, even minor changes to health plans are subject to collective bargaining, and current law gives unions a veto over whether a community joins the state insurance group. The Legislature should nix the veto - and even consider bonus aid to towns that sign up.
So far, only a handful of communities have made the change. But the Massachusetts Taxpayers Foundation and the Boston Municipal Research bureau credibly estimated in 2007 that moving all communities into the commission would save more than $200 million in fiscal year 2011 alone. The state currently spends $936 million in unrestricted aid to local governments, so the change would amount to more than a 20 percent increase in local aid. There’s too much money at stake to tolerate the status quo.
Local communities are also suffering under the weight of their pension obligations. Patrick’s budget plan would let them stretch payments, but what’s needed is long-term relief. On the upside, Patrick has proposed another round of reforms, from an increase in the retirement age to a cap on pension payments. Over 30 years, his proposal would save an estimated $2 billion across the 106 retirement systems in the state.
But however promising, Patrick’s plan doesn’t include one vital change: merging all those retirement systems. Smaller systems have higher administrative costs - and may be more likely to endorse sweetheart deals that provide unwarranted increases to some individuals’ pensions at a cost to the whole system. Abolishing these boards would save towns money over time.
Such structural reforms will require complex legislation of their own, and wrestling over such bills may seem an impossible task for legislators in the heat of the budget cycle. Yet the disconnect between municipal government and state government shouldn’t be an excuse to let hundreds of millions of dollars in savings slip away every year.
