How much did the State aid the Harvard Pilgrim Turn-Around?

Megan Woodhouse has an interesting piece in the Boston Globe relative to how much the state helped in the turn-around. The article argues that a $58.5 million "accounting error" back in 2000, shortly after Baker took over at Harvard Pilgrim had the insurer teetering on the brink of insolvency. It was Democratic Attorney General Tom Reilly who rode to the rescue, argues the article, by petitioning the Supreme Judicial Court to put Harvard Pilgrim into receivership, thereby granting the organization protection from creditors.

Baker still gets credit in the article for his astute leadership of Harvard Pilgrim -- but the point of it is that the state and it's willingness to intervene should also be credited.

Pledge on No New Taxes

Joan Vennoichi has a story in the Boston Globe relative to newly-minted Gubernatorial candidate Charlie Baker making the George H.W. Bush pledge on "read my lips: no new taxes." I got to go with Joan on this one: this isn't the smartest pledge to make. Even for the Governor's who ostensibly didn't raise taxes (see Mitt Romney) they ended up closing "tax loopholes" and raising fees through the roof. I don't think that really ends up saving the average taxpayer a lot of money.

Details on Governor's Vetoes

Although the Governor has published a document entitled "parchment" on his veto page, and that document does give the details of what the Governor has and has not vetoed, it's not really the most user friendly document.

First of all, it doesn't tell you the name of the items that the Govenror vetoed. To get that information you either must have memorized the items or go to a different document on the Governor's website.

Here at the budget blog, in order to be helpful to our loyal readers -- sparse though they may be -- we've created one document that lists all the line-item vetoes in chronological order, with the Governor's explanations, and with the language that the Governor proposes to delete from the line-items. Our doucment also includes the outside sections that the Governor proposes either to vetoe, or to substite for with new outside sections. It's all clickable below:

Where's the Veto message?

In the category of things that are not being published on the state website, I think we have to add the Governor's veto message, which has already received a bill number -- House 4139 -- but the text of which is nowhere to be found on the House website.

How long does it take to print the Governor's veto message? Didn't the Governor sign the budget back on June 26? Didn't the Governor publish his vetoes on his own website a couple of days later? How long does it take to format a bill for printing?

Governor's Fy 2010 Supplemental

Well, it didn't take long for the Governor to file the first supplemental budget for FY 2010. Normally one of those isn't filed until at least a few months into the fiscal year. This supplemental, according to the Governor, appropriates $269.4 million to "address immediate exposures identified for the upcoming fiscal year."

I guess that makes up for the $147 million in vetoes that the Governor just issued. Most of the dough ($70 million) is to continue funding the state-subsidized universal health care program adopted a couple of years ago under the Romney administration. The program, it turns out, has been more successful in getting the uninsured enrolled than the architects of the program actually thought it would be. I guess that cuts both ways, since the success must be funded.

A little Self-Congratulatory

It seems like the legislature is being a little self-congratulatory about the fact that they actually passed, and the Governor actually signed, the FY 2010 before July 1st, the beginning of the fiscal year. At least according to an article in the Boston Globe by Eric Moskowitz. Of course, that article also points out that "In the previous 10 years, Beacon Hill missed the start of the fiscal year seven times, with lawmakers and the governor blowing deadline by an average of 38 days." So bully for them for getting it done this year. Of course, I'm not sure I'd get carried away with the occasional success when the performance has so consistently been lacking.

The Unions have Miscalculated on this one

The Boston Globe reports this morning that the police and firefighter unions have filed suit challenging pension reform, claiming that the reform illegally strips them of benefits. Whatever the legal merits of that argument -- and I'm no expert on pensions -- the political fallout is clear. Here is an excerpt from the article:

---

Unions sue over pension changes Police, firefighters call overhaul illegal; Say it discriminates against disabled By Andrea Estes, Globe Staff | July 3, 2009 Police and firefighter unions filed twin class-action lawsuits against the state yesterday, arguing that a new law designed to curb pension abuse illegally strips them of benefits guaranteed by the state constitution and federal law. The Boston Police Superior Officers Federation, Professional Fire Fighters of Massachusetts, and Boston Firefighters Union Local 718 - on behalf of public employees statewide - assert in a suit filed in US District Court that a provision in the new law amounts to breach of contract. The law, they argue, unfairly reduces retiree benefits by limiting what kinds of compensation count toward their pension. Under the new rules, public employees can no longer use additional pay - such as educational stipends, uniform allowances, and the value of unused vacation and personal days - in their pension calculation. Most public employees, lawyers for the unions say, use such extras to raise their base pay substantially, which in turn boosts their retirement checks. A second suit, filed in Suffolk Superior Court by the Superior Officers Federation and the Professional Fire Fighters of Massachusetts, challenges a new calculation of benefits for police officers and firefighters who are injured on the job, contending that the new law discriminates against disabled workers by treating them differently than other workers. With the new pension law, disability benefits will be based on workers’ salaries for the year prior to when they became disabled, not the year prior to their retirement. It can take months, even years, for retirement boards to approve disability pension requests. In the meantime, employees out on injury leave are entitled to pay raises and cost-of-living increases. In the past, those pay increases would boost a worker’s disability pension by thousands of dollars a year, union lawyers said. Together, the two lawsuits represent a direct challenge to efforts at cracking down on pension abuse and excesses by some public employees, which have been highlighted by a series of stories in the Globe. If the suits are successful, public workers could see their old benefit levels restored and taxpayers could be forced to pay damages. Andrea Estes can be reached at estes@globe.com.

© Copyright 2009 The New York Times Company

---

Now if you look at the reader comments that were posted in response to that article, the verdict is unanimous, and far from charitable:

---

READER COMMENTS (120)

Sort: Chrono Order | Latest First | Most Recommended

Report item as: (required) X

Obscenity / Vulgarity Hate speech Personal attack Advertising / Spam Copyright / Plagiarism Other

Comment (optional):

	stowe wrote: Union Scums! 7/2/2009 11:29 PM EDT Recommend (33) Report abuse Permalink
	bf5113 wrote: They were caught with their hands in the 'cookie jar' and are now suing to get the 'cookie jar' returned so that can continue stealing from it. What a bunch of jerks! They have no shame. 7/2/2009 11:49 PM EDT Recommend (43) Report abuse Permalink
	dislocatedworker wrote: Agree with both comments. Like the firefighter who was muscle building, and wasn't there a restraining order from a girlfriend? How many people on any disability are truly disabled. It hurts it for those who TRULY have a disability. There are many who milk the system. They could be your neighbors, ladies out meeting their friends for lunch, working under the table, etc. It is rampant. So sad people don't have integrity or pride. For those truly disabled, of course, they should receive everything coming to them! 7/3/2009 12:24 AM EDT Recommend (27) Report abuse Permalink
	pinopino wrote: Scr3w them. Dissolve these Unions. 7/3/2009 12:36 AM EDT Recommend (31) Report abuse Permalink
	pinopino wrote: These id1ots don't realize that the result of this is that many more investigations will be initiated and all the scumbags who have been faking disability will be busted. It's about time. That is exactly what the state wanted. 7/3/2009 12:38 AM EDT Recommend (22) Report abuse Permalink
	johnm4 wrote: Unreal... 7/3/2009 12:40 AM EDT Recommend (16) Report abuse Permalink
	DJLBoston wrote: Man these guys are bad. 7/3/2009 12:41 AM EDT Recommend (14) Report abuse Permalink
	phonyuser wrote: There really aren't too smart. This will just create more (well deserved) backlash. The next time the contract comes around they will get even less. How about we just cut out the pensions completely, like most private companies. If they don't like it, they can find new jobs. 7/3/2009 12:41 AM EDT Recommend (24) Report abuse Permalink
	Jane53 wrote: Oh give me a break!! These folks should try living like the rest of us for a change !! What they were doing was STEALING from tax payers!!! I have no sympathy for these people at all! 7/3/2009 12:42 AM EDT Recommend (25) Report abuse Permalink
	devilsadvocate wrote: No group in power in MA has any shame, nor (based on past performance) do they need to. Imagine that, people on the public dole might not get to pad their pensions! Imagine this - most people I know don't have pensions and have their 401K's suspended until further notice. But no, the legislators and public employees would rather go to court (another cost to taxpayers to litigate) and incur legal fees on both sides just to prove a point. Shameless. The more they cry poor, the less anyone who isn't on the state dole cares for what might be other legitimate concerns. Here's hoping the judiciary sits this one out.

Changes from Conference to Enacted

I thought that it might interesting to take a look at the question of what differences there are in the FY 2010 Conference Report and Enacted Budget with respect to the line-items, including the inside language. Basically, I was curious to see how House Counsel might have changed any of the inside language, and if any other things were added or dropped.

The table below sets forth all the changes that I found. These include:

• A few instances where quotes were added;
• Differences in whether "Internet" was capitalized (it should be);
• Differences in whether an "em" dash or "en" dash was used, and whether there were spaces around the dashes.

I'm happy to report that I did not find any other differences. In short, nothing nefarious was snuck in.

FY 2010 Budget has appeared on State Website

In an unusual show of efficiency and dexterity, the state website has already published the FY 2010 budget (Chapter 27 of the Acts of 2009). Of course, the published act does not include the Governor's vetoes. This document will have to be updated with those and, once they happen, the veto overrides.

Patrick hints at an Increase in the Gas Tax

Governor Patrick is indicating this morning that after signing a budget with $1 billion in tax increases, he still thinks there may need to be an increase in the Gas tax to put the state financial system on "sounder financial footing." See Matt Viser's story in the Boston Globe.

While I applaud Patrick's desire to put the transportation system on a sounder financial footing, I fear this might very well raise the spectre of "Taxachusetts" once again. If you've just finished wiht a significant increase to the sales tax -- an increase that I predict may become even more unpopular than previous increases to the income tax -- then suggesting that a gas tax increase needs to be piled on top of that will, I believe, generate significant political opposition.

Continued Budget Sleight-of-Hand

I keep being amazed that this budget is referred to as a $27 billion budget, and that it's allegedly $400 million less than the House or Senate budgets. See, for example, Matt Viser's piece in the Boston Globe today, relative to Gov. Patrick signing the budget. Unfortunately, those numbers are simply not correct.

Let's review: this is a $27.4 billion budget if you count only the direct appropriations and retained revenue and leave out chargebacks and federal grants. In other words, if you only count section 2, and not sections 2B and 2D. Unfortunately for the spin-meisters, sections 2B and 2D are part of the budget.

So why are they engaging in this sleight of hand? They don't want people to know how much they're really spending. Here are the real numbers:

Direct Appropriations.......$26,907,008,724

Retained Revenue...............$499,891,667

Chargebacks....................$391,745,702

Federal Grants...............$2,484,750,685

Grand Total.................$30,283,396,778

So, how does this compare with the previous budgets. It turns out that the legislature is proposing to spend more in FY10 then they spent in FY09. Here are the real numbers, incuding direct appropriations, retained revenue, chargebacks AND federal grants:

FY09 Enacted................$29,729,332,117

FY09 after 9c Cuts..........$27,604,356,138

FY10 Governor...............$30,870,923,459

FY10 House..................$29,826,460,083

FY10 Senate.................$30,021,874,638

FY10 Conference.............$30,283,396,778

So in effect, with the increase to a 6.25% sales tax, the legislature is really proposing to increase the spending for FY09 from $27.6 billion to almost $30.3 billion.

Now, I'm not unsympathetic to the Legislature's desire stabilize spending on the budget and restore some of last year's 9C cuts. The voters tied their hands pretty good with their repeated insistence that the income tax rate should be only 5%, and previously, with their approval of Proposition 2½. Consequently, the Legislature turned to the one broad-based tax that they thought was still available to them, the sales tax. In addition, they enacted pension reform, transportation reform and ethics reform, in part to blunt Governor Patrick's threat to veto the sales tax and in part, one hopes, because it was the right thing to do.

But now they should do the right thing on budget transparency. They should admit that this is not a $27.4 billion budget but a $32.3 billion budget, and that is an increase over the FY09 budget. That increase is driven, at least in large measure, by the unexpected success of the Universal Health Law, and the continued increase in overall health care costs (an issue that most private businesses are intimatley familiar with.)

Turnpoke rescinds Toll Increase

Well, there's one piece of good news out there, which is that the Turnpike did finally rescind the manifestly unfair toll increase that they had proposed earlier this year. With Patrick signing the budget that basically diverts a portion of sales tax revenue to bail out the Turnpike for the next three months, the toll increase is obviouly not needed. See Noah Bierman's story on the Turnpike Tolls in the Boston Globe.

There were some snippy remarks by readers relative to the Turnpike toll rescissions -- my favorite was, "Shouldn't the headline read 'Soon-to-be private citizens at soon-to-be defunct authority make gratuitous gesture'" -- but I don't think it's a gratuitous gesture. The elimination of the Turnpike doesn't necessarily mean the elimination of Turnpike tolls, as their are still oodles of Turnpike bonds that need to be reissued in some way.

In short, I think it's good news, and worth celebrating as a modest victory. (Click here to see a PDF of the vote and the Turnpike's current budget.)

Three Reform Bills

In a remarkable flurry of productive activity, the House and Senate have each passed transportation, pension and ethics reform. It looks like the Governor is going to get what he wants -- he won't have to veto the sales tax increase after all -- which may or may not be good news for the Governor. In any case, here is what we now have:

• HB 4133 - Ethics Reform (47 pages)
• SB 2079 - Pension Reform (8 pages)
• SB 2087 - Transportation Reform (175 pages)

In the succeeding weeks, we will look in a little more detail at what these bills actually do. In the meantime, we have to make do with the section-by-section summaries posted on the legislative home page, which have provided us with the following:

• Ethics Reform section-by-section
• Transportation Reform section-by-section (House version)

It's now Clear how they got to $27.4 Billion

I don't why it took me so long to grasp this, but what's now apparent that the way the legislature got to the "$27.4" billion budget is by only counting the direct appropriations and retained revenues, but not the chargebacks or federal grants. In other words, they only counted what was in section 2, and not what was in section 2B and 2D. That, however is -- and how do we put this? -- "disingenuous." The chargebacks and federal grants, whether they like it or not, are part of the budget. So, wouldn't be better to be honest about the true costs here?

Title                                  House          Senate         Conference   Sec
========================================================================================
Total for Direct Appropriations
          and Retained Revenue  $28,126,227,842  $27,326,828,832   $27,414,241,896   2  
Totals for Chargebacks             $401,402,034     $398,991,853      $390,982,830   2B 
Total Federal Grants             $2,366,949,242   $2,286,543,697    $2,485,936,271   2D 
Totals for All Types            $30,894,579,118  $30,012,364,382   $30,291,160,997   All 

More Proof this is no $27.4 Billion Budget

A couple of days ago I reported that this budget is actually more like a $30.3 billion budget than the $27.4 billion budget reported in the media. Now I have more proof from the Governor himself. The Governor has been updating his own website with not only his revised budget -- revised in light of the declining revenues -- but has also been keeping up a spreadsheet that compares the appropriation amounts from the various versions of the budget. This spreadsheet -- "fy10compare" -- documents the fact that even without the federal grants, the Conference report is actually $27.8 billion and not $27.4 billion. If you add in the 447 federal grants, the budget total, as previously reported, is actually just shy of $30.3 billion.

Click here to see a list of the 447 federal grants included in the Conference Report.

Conference Committee Report, Take 2

In case you hadn't noticed, the House and Senate have posted a new version of the Conference Committee Budget, since the version that they had originally posted on Friday morning had so many formatting errors in the revenue and local aid tables. As far as I can tell they have not revised any of the numbers or language -- that would be truly feckless, even for the Legislature -- but they have cleaned up the tables and the formatting.

• Click here for the first version of the Conference Committee report, released on Friday morning, June 19.
• Click here for the second version of the Conference Committee report, released on Monday, June 22.

Comparison of House, Senate, Conference Appropriations

We've completed our analysis of the House, Senate and Conference budgets, and the numbers don't add up to what was reported in the news with respect to how much the budget actually costs. Below is our spreadsheet that compares the House, Senate and Conference numbers:

The press reported that this is a $27.4 billion budget, but our numbers indicate that it's a $27.8 billion budget, and then only if you don't include the federal grants. However, the problem with that is that the federal grants are appropriated for, and they are part of the regular budget. Our numbers indicate that the conference committee actually approved a $30.3 billion budget (as can be seen below).

     Type                       House           Senate          Conference
     =======================================================================
     Direct Appropriation  $26,564,903,856  $26,827,416,172  $26,907,008,724
     Chargeback               $400,189,124     $391,745,702     $391,745,702
     Retained Revenue         $467,318,771     $503,056,162     $499,891,667
     Subotal               $27,432,411,751  $27,722,218,036  $27,798,646,093
     Federal Grants         $2,394,648,332   $2,300,842,188   $2,485,936,271
     =======================================================================
     Grand Total           $29,827,060,083  $30,023,060,224  $30,284,582,364

Click here to see a spreadsheet that compares all the House, Senate and Conference Report Appropriations.

Am I wrong? Show me where. I'm using the numbers that the House and Senate reported in their respective budgets and in the Conference committee reports.

Joint Rule 11A Conference Reports

Under the requirements of Joint Rule 11A, the Conference Committee has also put out several reports that note the resolution of the various items in conference. There are three of these reports posted on the State, dealing consecutively with:

• Differences in Section 2 (direct appropriations) between House and Senate engrossed budgets.
• Differences in Section 2B (chargebacks) between House and Senate engrossed budgets.
• Differences in Outside Sections between the House and Senate engrossed budgets.

Budget Conference Report Released

The House and Senate have released their conference report on the Budget. The Conference Bill number is House 4129, and this behemoth was printed at 1:25 a.m. last night and released to the web at 6:15 a.m. this morning (notwithstanding that the budget was allegedly "released" last night). It appears that the printing was a bit of a rush job as the tables for revenues and local aid are basically . . . how does one put this politely? . . . all screwed up.

Budget Monitor Review of new House Budget

The Massachusetts Budget and Policy Center has compiled a new Budget Monitor report, which looks at the Governor's revised budget and compares it to the budgets engrossed by the House and Senate. This is a detailed 26 report that divides the budget up into the various topica parts of government, such as educaiton, health care, human services, transportation, public safety, etc.