Money Bags Menino
Posted on December 12, 2010Money Bags Menino
by David S. Bernstein
Inside Boston’s political back rooms, there is a growing suspicion that Mayor Thomas Menino is sitting on millions of dollars — tens of millions, maybe as much as $400 million — that could be used to save vital city services, such as, among many examples, four branch libraries and eight community centers that are slated to be shuttered.
The firefighters union, Local 718, has been meeting with councilors, influential insiders, and select reporters — including the Phoenix — to explain why it believes the city is misleading the public and is in much better financial shape than it lets on.
Those allegations came just after Menino released his budget proposal axing $60 million worth of staff and services in mid April and a state arbitrator ruled last week that the city must pay those firefighters roughly $40 million in retroactive raises.
That politically unpopular contract sent the mayor and his minions into overdrive, loudly insisting that the city can’t afford it, and calling on the Boston City Council to negate the ruling by voting to deny the funding — a move it can legally make, but never has in its history.
Even some who think the firefighters’ contract is outrageous are finding themselves asking why the city is apparently sitting on money while shutting down services.
To take just one of the firefighters’ examples of squirreled-away cash, the city has $22 million sitting in the Deeds Excise Fund, a relic from an era when the city split fees with Suffolk County. That alone would cover one-third of the cuts Menino announced last month, in his proposed $2.5 billion budget for the 2011 fiscal year (FY ’11). In fact, just a quarter of that $22 million could cover the coming year’s cost of the four branch libraries, the eight community centers the city will no longer staff, the mounted park rangers’ horses also on the chopping block, and the $600,000 cost of the city’s mounted-police unit, disbanded a year ago.
The firefighters are not the first to accuse Menino of overstating the city’s straits. The Boston Teachers Union has uncovered similar results, says its president, Richard Stutman. “As part of our deliberations last year on the wage freeze,” he says, “we hired an independent consultant and found that the city is in much better financial shape than it lets on.” And in his mayoral campaign last year, businessman Kevin McCrea repeatedly insisted that the city was exaggerating its fiscal woes to justify unpopular cuts.
Still others, including some of the city’s state representatives, have taken issue with Menino’s claim that the city cannot afford to keep all of its branch libraries open. They believe Menino is simply using that excuse — “crying poormouth” in the words of one Beacon Hill staffer — to carry out his plan to reorganize the libraries.
“If the [Boston Public Library] Trustees are looking to close libraries, just say so,” says Michael Moran, state representative from Brighton. “But don’t use difficult economic times as the reason, when that’s not the reason.”
Moran and 11 other Boston-based representatives sponsored a budget amendment to call the mayor’s bluff: a carrot-and-stick approach that will provide the $3 million Menino claims the branches cost to run, but only if he keeps them open. (Menino’s active behind-the-scenes attempts to stop that amendment suggest that Moran is right and that Menino has motives beyond cashflow.)
But the people most frustrated with the mayor’s claims of poverty are the folks just across the fifth floor from him. City councilors are privately fuming at what they consider an underhanded, immoral, and possibly illegal PR campaign (he’s obligated to support the arbitrators’ decision) to shift blame for a botched labor negotiation and make the councilors look like the bad guys for approving it.
Money, money everywhere
Menino has also tried the patience of some of his allies at the State House. Since the current economic crisis hit, Menino has relentlessly lobbied for, and ultimately obtained, major legislation to add finances to the city’s coffers. One municipal package gave him the ability to charge new hotel and meals taxes; another let him tax telecommunications poles.
Neither was an easy vote for a legislature and governor acutely sensitive to “tax-and-spend” charges. So, there was some anger this year when Menino seemed to blame state funding for his unpopular decision to close branch libraries.
Still others are asking why, if the city is really in such dire shape, there has been no discussion of a Proposition 2 1/2 override vote — which would allow the city to raise additional property taxes. Used literally thousands of times by municipalities large and small in the commonwealth, it is something Boston has never even attempted, and which city officials provide no strong argument against.
Likewise, many in City Hall finally have had enough with Menino’s constant narrative of budgetary woes. Most have long given credit, despite their frustration, to Menino and his top budget aide, Lisa Signori, for their tight-fingered control of the purse, a stewardship that has kept the city’s bond ratings sky-high and helped Boston to weather economic turbulence better than most big cities.
But, as one former City Hall aide puts it, “If we’ve been saving for a rainy day, it’s pouring now.”
And yet the administration is holding back pockets of money on top of the General Fund used for the budget. That’s above and beyond even the 2.5 percent reserve required by state law (for Boston only, because of its regional importance), which is $27.5 million, and in addition to the “overlay reserves” (to cover potential tax abatements and other obligations) of $207 million.
For starters, the city has transferred to the FY ’11 General Fund only about one-third of its $139 million in “free cash” — the amount of usable funds, after accounting for statutory obligations. That leaves $94 million unused.
There is also the previously mentioned $22 million Deeds Excise Fund, which sits essentially dormant. Another $58 million has been built up in the Parking Meter Fund; the city will transfer only $15 million of that to use in the FY ’11 budget, leaving $45 million. The Convention Center Fund has another unused $14 million. The firefighters also point to $24 million in a Surplus Property Disposition Fund, which the city says will be reduced to $18 million after the coming year.
That’s close to $200 million being held back from the General Fund, at a time when schools are cutting sports programs and the city is cutting back on youth summer jobs.
The firefighters union also makes a much more incendiary accusation: that the city has far more free cash than it claims — as much as $200 million more.
City officials strongly dispute that, and correctly note that free cash is certified by the state, not the city.
But the state’s calculations rely on a base number provided by the city, and the union’s accountant insists that the numbers don’t add up — that the city is providing a starting number far below reality.
That’s a tough charge to prove. The administration does subtract a variety of city obligations from its audited cash figure, legitimately, to arrive at the figure it provides to the state. But without a detailed accounting, it’s hard to determine whether someone is padding those calculations.
No more trust
Aside from the free-cash-undercounting allegation, city officials don’t dispute the existence of most of these funds. They do argue that some of the money is restricted to certain uses — the Parking Meter Fund is designated for traffic-related expenses, for example — and that fiscal prudence calls for reserving other amounts, such as the $94 million in free cash.
“Given the catastrophes that are happening around the country,” Signori tells the Phoenix, “including municipal bankruptcies, these are sound practices that prevent the government from getting overextended.”
Sam Tyler, president of the Boston Municipal Research Bureau, notes that none of these funds are exactly secrets to those who look closely. In fact, there are other funds the firefighters did not include, such as the $6.5 million in the Cemetery Trust Fund.
But, until now, nobody has tried to push that money into the public conversation — in part because, in better times, those spare funds seemed less important, and in part because those aware of the funds, like city councilors on the Ways and Means Committee, have not wanted to anger Menino.
Things have changed. Mike Ross, City Council president, has brought in Thomas Kochan, a labor-relations expert at MIT’s Sloan School of Management, to review the arbitrator’s award and determine the true cost to the city — an implicit slap at Menino’s credibility, and one seldom seen during the so-called Mayor for Life’s 16-year reign.
To be blunt, there are city councilors who are pissed off at the position in which Menino has placed them. By leaking the firefighters award prior to its release, in an apparent violation of an arbitration agreement and perhaps of state labor law, the administration spun the public on an exaggerated, if not outright deceptive, interpretation of the award.
The administration has consistently claimed that the contract will cost the city $74 million, strongly implying that the city will need to cut a check in that amount for retroactive pay to the firefighters for the four years covered by the contract, which ends this June. That is not true. That figure includes projected costs for FY ’11, which is not part of the contract; it also does not subtract several million dollars of cost savings, such as the union’s higher share of health-care-insurance premiums.
Those familiar with the city budget also deny that the award is significantly larger than the administration expected — quite the opposite. They say, and the budget appears to show, that the funds had already been accounted for almost entirely, even through the 2011 projections.
In fact, briefs and arguments from the arbitration process show that the city was not claiming an inability to pay up — even with regards to the higher, 21 percent raise sought by the union. Menino officials, speaking on background, likewise do not dispute that the city has the money to pay the firefighters’ contract.
The city does, however, have legitimate concerns about the long-term effect of this award on other city labor contracts. (The first negotiation meeting for the next Boston Police Patrolman’s Association is scheduled for next week.) But that argument, and others, failed to persuade the arbitrators, in a process Menino not only agreed to, but requested, rather than continuing negotiations.
Any burdens posed by the contract represent a failure of five years worth of negotiations, which Menino is trying to lay at the feet of the City Council. As more than one observer notes, Menino’s current belief in the importance of Council review and possible rejection of contracts is at odds with his attitude when the firefighter contract was signed in 2004. That time, he called the Council in over a weekend to rubber-stamp it, to prevent the union from picketing that coming week’s Democratic National Convention events.
Today, it appears that councilors, like others, are no longer willing to jump at Menino’s command. They seem ready to not only approve the contract, but to use the hearings to fight back against Menino’s claims that it will blow a huge hole in the budget. Menino’s cries of poormouth are sounding more and more like crying wolf.
To read the “Talking Politics” blog, go to thePhoenix.com/talkingpolitics. David S. Bernstein can be reached at dbernstein@phx.com.
