25 towns, 25 plans
If God helps those who help themselves, why should taxpayers be expected to do more?
On Sunday, John C. Drake's enterprising lead story in the Globe reported that 50 communities are considering property tax hikes to close growing local budget gaps. Of 25 towns that have scheduled Proposition 2 1/2 overrides this year, the average request for new tax money is $1.9 million -- about triple the average request of a year ago.
The state's cities and towns are all facing the same problem -- with, ironically, the same solution. Rising healthcare and pension costs for municipal employees are the problem; consolidation should be part of the solution. The 25 communities seeking tax hikes are like the worst dysfunctional days of the Red Sox, when the team was defined by 25 guys and 25 cabs. In this case, it is a matter of each community clinging to its underperforming local pension fund and its expensive local health insurance plan.
It is a luxury, a relic of the past, we can no longer afford. Every year homeowners are paying more and getting less for their property tax dollars. There is a better way.
Start with healthcare. With annual double-digit premium increases, healthcare is the budget buster that can't be ignored. Sam Tyler, president of the Boston Municipal Research Bureau, estimates that half the city's new revenue next year will go to pay the rising cost of healthcare alone. There is an alternative: Boston, like the 25 communities seeking tax hikes, could join the state's excellent employee health insurance plan. Over the past six years, Boston's healthcare costs went up 92 percent; the state's costs rose 61 percent. The key difference: In the state system, health insurance is largely taken off the negotiating table.
Only Springfield, under the state's financial oversight, is now part of the state's group insurance plan. Legislation being considered on Beacon Hill would allow communities to join the state plan on a voluntary basis. The approach is too tepid, giving employee unions too much leverage to dictate the terms. The same is true for the state's approach on pension reform.
Governor Deval Patrick has proposed forcing underperforming local pension funds into the state's top-performing pension fund. Of the 25 communities seeking tax hikes, 18 are in local pension funds that would be folded into the state fund under Patrick's plan. The Worcester Regional system, which invests for towns like Harvard and Northborough, returned just 3.15 percent annually over the last five years; Hampshire County, which invests for Amherst, returned just 3.89 percent. The state system, by contrast, returned 7.04 percent a year. We're leaving millions on the table.
No one is even talking about doing anything about consolidating the wasteful benefits side. They should be. Why should each town be mailing retirement checks? It would also be far harder to qualify for a disability pension with a bad charley horse if your pals weren't sitting on the local board.
The big obstacle to municipal healthcare and pension reform is the public employee unions. The leader of the pack: the "Just Say No" firefighters' union, which opposes even the meekest efforts to rein in costs on healthcare and pensions. "The two biggest benefits to my union are health insurance and pensions," says Robert McCarthy, president of the 12,000-member Professional Fire Fighters of Massachusetts. "My job is to protect their benefits."
I like firefighters as much as anyone. But the situation is getting worse, not better. There is a huge bill coming due for retiree healthcare, which state and local governments are just starting to face. Boston alone puts the unfunded obligation for retiree benefits at $5.2 billion. Unless we get a handle on the costs, next year there will even more override petitions, and the dollars will be even bigger. Taxpayers can say "no," too.
Steve Bailey is a Globe columnist. He can be reached at bailey@globe.com or at 617-929-2902. 
