Massachusetts Reforms Echo Widespread US Sentiment
It’s the same story almost everywhere; government pension and benefits are being scaled back from coast to coast. This trend may have started last year in New Jersey, when Governor Christie successfully challenged built-in 9% annual wage increases in union contracts, at a time of widespread layoffs and pay cuts throughout the state. His actions drew nationwide attention to the massive unfunded future retiree pensions and health benefits that drain resources from state, county and local government services. Unable to pass along annual increases to a population that is under or un-employed, lawmakers now have to own up to the problem. Unlike the Feds, state and local governments are not allowed to carry forward deficits, year after year. Backed up to the wall, their options are pretty much limited to negotiating new contracts with public employees, service reductions, or layoffs.
This country and our fragile economic recovery can’t take another round of layoffs.
I like the way the Commonwealth of Massachusetts (State) is beginning to address some of its own economic concerns. Aid may be on way from State government, due to improved revenue streams; meanwhile, cities and towns will be able to take advantage of new legislation that provides flexibility for negotiating benefits with labor unions.
Help From the State
On the other hand, it may seem like a classic case of forecasting doom, then announcing that things aren’t so bad after all. For sure, it looks like Massachusetts is on a journey of economic recovery. Jobs are up, and so too are tax collections. Although there is still a budget gap of $1.9 billion, there’s an air of confidence in the legislature, enough to begin restoring local aid that was severely cut in FY 2011.
It’s a good start. It feels good. They’re on their way back, but not quite celebrating.
Local Government Self Help Remedy
The Massachusetts House calls it a “health reform plan…a meaningful reform initiative.” It would save local taxpayers $100 million or more and protect education and other public services. Now here’s the New Jersey effect. They will allow the locals to go after some of the rich benefits enjoyed by employees and retirees, principally in the area of health benefits, related co-pays, deductibles, and other features. $100 million in savings, much reallocated to education and services, isn’t bad, and helps builds confidence those nasty unfunded benefits may someday get covered.
To quote Robert Frost, the great New Hampshire poet, we have “miles to go before we sleep, miles to go…”