Posts filed under 'Economic Opportunity'
The Commonwealth has a bunch of pots of money lying around in various public and quasi-public entities that are supposed to ‘invest’ in various type of companies — technology start-ups, struggling manufacturers, etc.
No one has ever demonstrated that they make anything more than a tiny marginal impact on our economy and no one, absolutely no one, asks the “but for” question– if the money was spent elsewhere or, g-d forbid, returned to taxpayers, would it have a greater impact.
WBZ’s I-Team reports on the Emerging Technology Fund, a $50 million fund, and finds that it has created very few jobs, is overcounting the few jobs it actually creates, and now claims not to be all that interested in new jobs.
Its not unlike the Mass Technology Development Corporation, a state-backed venture fund , that has made some money (but declined to return its profits to the state). But it makes very few investments — 3 new investments in the last fiscal year — and usually invests with other VCs, which prompts me to ask — why are state funds needed for this purpose?
But they are spending their money on something — lavish parties and massive ‘retention’ bonuses for long-term employees.
April 29th, 2008
1) In response to her comment on my post yesterday, I defer to my learned colleague, Amy Dain. I had not considered that, as public ways, sidewalks can’t be blocked. However, I might argue that, rather than attempt to regulate sidewalk dining, the New Bedford City Council and Mayor Lang could simply pass an ordinance that allows businesses permitted to serve food and/or drink to place tables on sidewalks, within the frame of the storefront, extending from the storefront to the curb and providing for a path through the tables so many feet wide to accommodate passing pedestrians.
I suppose it is the underlying mindset I question, the assumption that if something is unregulated it is therefore prohibited. I believe we should start from the opposite assumption, that, if we wish to prohibit something, then, and only then, do we regulate it.
2) In other news, after weeks of trying to get Hillary Clinton in a clinch so as to better absorb the body blows she’s delivering, Barack Obama has returned to some of the rhetoric that attracted me to him in the first place. Once again, Mr. Obama demonstrated that he is willing to challenge Democratic orthodoxy. This from Slate:
McCain will have trouble beating the Obama who showed up on Fox News Sunday, giving a highly effective interview to Chris Wallace. It included this bait for Hillary:
“I think there are a whole host of areas where Republicans in some cases may have a better idea.”
Obama cited not just “merit pay” but also “experimenting with charter schools,” which he said has gotten him “in trouble with the teachers union.”
April 29th, 2008
Its a House-Administration lovefest over at Blue Mass Group. David Guarino (from the Speaker’s Office) and Doug Rubin (GOV’s Chief of Staff) get all lovey-dovey in the comments section of a post by Guarino on the House Ways & Means budget.
April 18th, 2008
A little-noticed provision in the housing bond bill, inserted by the Senate and supported by the Patrick administration, will require that all affordable housing projects pay ‘prevailing wage’ on construction.
The article in today’s Globe cites a Mass Housing Partnership study that found such provisions increase costs by 34%.
In the words of a leading housing advocate:
“It’s likely to increase the cost of developing affordable housing significantly,” said Aaron Gorstein, executive director of the Citizens Housing and Planning Association, an affordable housing umbrella group. “It could lead to fewer units being available for low- and moderate-income families.”
April 17th, 2008
I can’t shake an uneasy feeling that there is more to this budget crunch than meets the eye.
First, the state went $800m over its $1b borrowing cap. More bluntly, a month after the Treasury and A&F stated they would only need $1.4 billion, they suddenly needed another $400m on short notice. And no one seemed to have any idea why. (I’m working on converting the quarterly cash flows into something more user-friendly which would answer this. I’ll post as soon as I have them.)
My suspicion is that something went wrong with federal reimbursements in January, but I can’t be sure. If its a simple question of timing, not a huge deal. If the money is not coming in, that’s a big problem. Someone has to (or should) know this with certainty. But if they do, they aren’t talking. And isn’t any answer better than none right now?
Now, A&F is putting spending controls in place and collecting $150 million in potential 9C cuts. All this in year where we are $820 million over last year and $320 million over current year estimates. Odd, isn’t it?
And for those with long memories, Candidate Patrick felt that being $320 million over estimates in FY07 was reason enough to reverse then-Governor Romney’s 9C cuts, saying “these broad-based cuts, especially coming mid-year, have a serious negative impact on thousands of Massachusetts residents who have planned for the relief and relied upon the services these programs provide.”
Stay tuned.
April 7th, 2008
Immediate Savings
· Adopt Gov. Patrick’s proposal to increase the share of health insurance premiums borne by state employees. This would bring public employee contributions more in line with the private sector.
· Consolidate transportation operations — A merger between MHD and MTA would save at least $20 million and including other agencies could capture additional efficiencies.
· Eliminate the Board of Library Commissioners - Municipalities run libraries, with few exceptions. These funds should either be incorporated into local aid, if warranted, or removed from the budget altogether. It is an unnecessary and duplicative layer of bureaucracy.
· Replace State House Park Rangers - 50 DCR Park Rangers guard the State House while 5 rangers oversee 400,000 acres of state parks and forests. Meanwhile, the Ashburton State Office Building across the street uses private security guards.
· Rollback Funding for the Commonwealth Museum — This almost unknown museum, located at the Massachusetts Archives facility (which receives multiple streams of budgetary and capital funds), has seen its budget quadruple in less than two years.
· Consolidate the State House Library. The library utilizes thousands of square feet of the State House but is lightly utilized.
· Studies and task forces. All studies should be performed by in-house resources without additional expenditures.
· Eliminate Item Pricing Requirements - Our archaic item pricing law puts Home Depot in violation every time it fails to tag each individual washer and bolt. Repeal this law and eliminate this line item at the Division of Standards.
· Reform State Police Overtime Practices - Overtime costs are inflated by restrictive work rules that prevent lower ranking officers from being assigned to these duties.
Conditional Savings
· Sell surplus state property. The state spends millions maintaining and securing abandoned public properties. A standard process is needed to allow the sale of these properties.
· Consider privatizing the management of the Lottery. The goal of privatization would not be to maximize an upfront payment, but to smooth out the funding stream of the lottery, minimize administrative costs, and provide a predictable yearly payment to cities and towns for a 30 - 40 year period.
· Eliminate additional assistance. Any rational additional assistance formula has long been abandoned. Necessary aid should be provided on the basis of a merit and any remainder should not be spent.
· Replace police details with flagmen. Massachusetts is currently the only state that requires that police – often at overtime rates – patrol roadway construction sites.
· Outsource the management of state office buildings: A number of state-office buildings, including the Mass Information Technology Center, are already administered by private management companies. BSB’s $6.86 million budget could be more efficiently spent with a private operator.
· Lease the Ponkapoag and Martin Golf Courses and the former MDC skating rinks: These facilities could be leased to private operators, resulting in income to the state, improved maintenance of the golf courses, and increased availability.
· Amend the “Pacheco Laws” to allow greater competition by the private sector to provide public services.
Long-Term Savings
· Empower the courts to manage themselves: The state-level judiciary in Massachusetts is beholden to the Legislature which micromanages their budgets and even sets most salaries by statute. Courts should be funded at the department level and required to manage their own allocation of resources.
· Rationalize the pension system: The current defined benefits system provides a generous set of benefits for a single set of employees (those with 20+ consecutive years of service) at the expense of taxpayers and those employees who might work at several jobs in their career. The system should be dramatically reformed to provide for the needs of our future workforce.
· Hold down debt levels: Current debt payments total almost $2 billion. By not radically expanding our debt levels (and eventually working through the bulge in debt from the Big Dig) we can save money in this area.
· Cap Quinn Bill Payouts -This $50 million program has resulted in massive cost inflation at the municipal level and increased pension and healthcare liabilities. The program should be amended to contain a flat bonus payment, rather than a lifetime percentage increase.
· Reform of prisoner management: The Commonwealth currently spends over a $1 billion on the Sheriffs and the Department of Correction, operating a two-tiered structure of facilities and management that is highly duplicative and unnecessarily decentralized.
April 3rd, 2008
On the LA Times blog today there is a distressing bit of news about the distressed California housing market. Home prices in the state, the blog notes, fell 26 percent (three times the national average) between February 07 and February 08!
–Statewide, median sales prices fell by a stunning 26% in February, with home prices dropping at a rate of nearly $3,000 a week, the California Association of Realtors reports. Further, the CAR says the Fed’s interest rate-cutting campaign “will have little near-term direct effect on the housing market.”
–In the San Fernando Valley, losing a home to foreclosure is now almost as common for families as buying a home. The L.A. Daily News: “During January and February, there were 1,084 foreclosures and 1,335 sales of houses and condos in Valley communities from Glendale to Calabasas, according to the San Fernando Valley Economic Research Center at California State University, Northridge.”
“It’s bad. It’s really bad,” market analyst Nima Nattagh told the Daily News.
We’re lucky. We don’t build houses anymore in Massachusetts (1980s production was around 40,000 units, from 2000-2006 around 20,000-23,000, and currently we are building at an annual rate of about 12,000 to 14,000). Very small increases in supply means that in a recession our housing prices should decline much less than elsewhere. But also expect a sharp upturn in already high prices as soon as consumer confidence comes back.
March 26th, 2008
One could sum up a report from the Tax Foundation as saying the equivalent of - the French are eating our lunch. And you know that is not good. We, for many reasons, including avoidance of indigestion, should be eating theirs. The latest report from the Foundation shows that
nearly half of U.S. states tax job providers at a higher rate than any other country in the developed world. Counting the federal rate alone, the U.S. has the world’s highest corporate tax rate, but including average sub-national rates (federal plus state in the U.S.), Japan edges out the U.S. for the highest-tax location.
This study breaks the tax down by state, adding each state’s corporate tax rate to the federal corporate tax rate. The results show that 24 states impose, when combined with the federal rate, a higher corporate tax rate than in any other nation. In fact:
· 24 states have a combined corporate tax rate higher than top-ranked Japan.
· 32 states have a combined corporate tax rate higher than third-ranked Germany.
· 46 states have a combined corporate tax rate higher than fourth-ranked Canada.
· All 50 states have a combined corporate tax rate higher than fifth-ranked France.
The study of the author, Scott Hodge, sums it up:
The high federal corporate tax rate is literally crushing states’ competitive abilities. That means fewer jobs for American workers. If federal lawmakers are serious about making the U.S. corporate tax system more competitive globally, they will have to partner with state officials to lower the nation’s overall corporate tax burden.
Even corporations in the three states that do not impose a major state-level corporate tax—Nevada, South Dakota, and Wyoming—still shoulder a higher corporate tax rate than France, and 25 other major countries, because of the 35 percent federal corporate rate.
March 24th, 2008
It has been the conventional wisdom that small businesses are getting killed on healthcare costs and we’ve heard anecdotal evidence to support this when we’ve presented our research on the various costs associated with doing business in Massachusetts.
But Charlie Baker at Harvard Pilgrim begs to differ, and he’s even got internal Harvard Pilgrim data to prove it. He notes:
Small businesses, on average, had lower medical claims expenses per member than larger businesses, and lower health insurance premiums(!). In fact, much lower. On average, per member premiums for small businesses were 10 percent lower than the premiums paid by larger businesses, consistent with claims costs that were also about 10 percent lower.
Why? Mr. Baker explains:
I think it comes from the pricing rules for small businesses. Small group rates are regulated at the state level, and the highest price can’t be any more than a defined percent of the lowest price, and the group needs to be priced and managed “in toto.” Put more simply, if the highest price is $100, then the lowest price can’t be below $50 — no matter what the demographic or medical expense variance might be across all small businesses.
On the other hand, larger company premiums are priced more directly on the calculated medical expenses of each group, meaning there is no ceiling and no floor for large groups overall. If one group pays $100 per person, another can pay $50, or $25, or $200 — depending on their own medical expenses.
March 20th, 2008
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