LESLIE KIRWAN, secretary for administration and finance, says the Commonwealth faces a budget deficit of at least $1.3 billion next year. That doesn't include a down payment on a number of new programs Governor Deval Patrick has proposed that have one thing in common: They would cost a lot of money.
Patrick wants to spend $2 billion to repair crumbling state colleges and $1 billion to boost the commonwealth's biotech industry. Building a commuter rail line to New Bedford and Fall River would cost another $1.4 billion and add about $21 million to the MBTA's annual operating deficit.
Universal early childhood education, a longer school day, and free community colleges would cost yet-uncalculated billions. A dramatic increase in capital spending will add to interest costs that are already the fourth-largest line item in the state budget at nearly $1.8 billion.
The governor proposes to use proceeds from his casino gambling proposal to provide property tax relief and invest in our deteriorating transportation infrastructure, but the new revenue wouldn't be enough to solve these existing problems, never mind close the budget gap or fund any new spending.
In a September speech before a business group, House Speaker Salvatore DiMasi took a different approach. "When people . . . say 'new revenue,' " he declared, "I like to say, 'What about efficiencies and cutting costs?' "
What about cutting costs? Here are a few savings ideas that would improve the Commonwealth's fiscal condition.
Get public employee benefits under control. State pension laws allow public employees to begin collecting at a younger age than private employees. Last year, the Commonwealth paid out more than $500 million in pension benefits to retirees and their survivors under the age of 60.
State employees currently pay 15 percent of their health insurance premiums. Tens of millions of dollars could be saved by bringing the Commonwealth more into line with the private sector by boosting the employee share to 25 percent.
For years, the argument for generous public sector benefit packages was that government employees earned less. But according to the federal Bureau of Labor Statistics, public employees in Eastern Massachusetts now earn an average of 15 percent more than their private sector counterparts who perform similar work.
Common-sense construction. Project labor agreements require that owners use exclusively union workers on a construction project. Since only about 20 percent of Massachusetts construction workers choose to join a union, the agreements increase costs by limiting competition. The premium is at least 12 percent, according to a 2003 Beacon Hill Institute study of Massachusetts school construction.
Twelve percent can add up quickly when you're talking about almost $1 billion. This year alone, the Massachusetts School Building Authority will provide about $500 million in aid to municipal school projects and the Department of Capital Asset Management will get another $300 million in capital funds for state building projects.
Massachusetts also requires that police patrol roadway construction projects. One recent analysis found that the Commonwealth could save $44 million this year by joining the 49 other states that allow civilians to perform the work.
There is little appetite for new broad-based taxes, and they might slow a state economy that already shows signs of sputtering. Other ideas could raise additional revenue. One is to grant a long-term lease to operate the Massachusetts Turnpike (and collect the toll revenue) in return for a large upfront payment that could be dedicated to maintaining transportation infrastructure. In the last couple of years, Chicago netted $1.8 billion for its toll highway and Indiana's toll road attracted a $3.85 billion payment.
A similar deal to operate the state lottery and collect the proceeds could produce enough money to guarantee that state aid to cities and towns would be at least held harmless for years to come. These ideas should be explored, but care must be taken to ensure that any deals protect the public interest.
Any prudent approach to addressing our strained state finances must begin with capturing savings. Only when we know how to pay the bills can we intelligently decide whether the governor's proposals represent the best path for Massachusetts.
Lovett C. Peters is founding chairman of Pioneer Institute, a Massachusetts public policy think tank.
