Pioneer Institute » Better Government http://pioneerinstitute.org Wed, 22 May 2013 19:14:13 +0000 en-US hourly 1 http://wordpress.org/?v=3.5.1 ‘Runaway’ costs on rail & T http://pioneerinstitute.org/transparency/runaway-costs-on-rail-t/ http://pioneerinstitute.org/transparency/runaway-costs-on-rail-t/#comments Fri, 12 Apr 2013 14:25:32 +0000 theresa_terrible http://pioneerinstitute.org/?p=16208 http://bostonherald.com/news_opinion/local_coverage/2013/04/runaway_costs_on_rail_t

http://boston.cbslocal.com/2013/04/12/report-mbta-spending-out-of-control-on-employee-pay/

http://www.myfoxboston.com/story/21951093/2013/04/12/report-mbta-salaries-far-above-other-state-agencies

The state’s taxpayer-funded commuter rail service is lavishing extravagant raises, “signing” bonuses and other plum perks on its engineers and conductors, according to a scathing new report that also slams the debt-ridden MBTA for its own “excessive” labor costs that far outpace other state agencies.

The report — compiled by the Pioneer Institute, a conservative fiscal watchdog, and obtained by the Herald — called on Gov. Deval Patrick and Beacon Hill Democrats to rein in Massachusetts Bay Commuter Rail and MBTA salaries and benefits before raising taxes to bail out the cash-strapped transit agency.

Among the report’s eye-popping highlights:

• 13.7 percent boost in salaries doled out by the MBCR to commuter rail engineers and trainmen in the current contract (from 2009 to June);

• $1,000 lump-sum signing bonus to each engineer and conductor when the latest contract was ratified in 2011;

• $100 monthly fee for full-scale family health insurance coverage; and

• MBTA pay disparity when compared to state workers — including T painters who earn an average annual salary of $79,279 vs. $46,742 for state painters and T customer service reps who top out at $61,110, while their counterparts for the state earn no more than $45,117 at the RMV.

“While everybody is struggling to find the money to fund the huge transportation deficit, very little attention is being paid to what is causing it,” said former state Inspector General Greg Sullivan, now the Pioneer Institute’s research director and author of the brief. “Salaries, overtime and benefits to MBTA and commuter rail employees far outstrip what people in state government are making.”

The report, titled “Runaway Transportation Costs,” comes as the operating costs of the commuter rail service continue to rise, from $208 million in 2003 to a budgeted $287.3 million for this fiscal year — a 38 percent jump, according to T and MBCR officials.

Scott Farmelant, an MBCR spokesman, said the increases in commuter rail pay were negotiated “based on rail industry standards.” In regard to health care costs, he said it marked the first time it was based on cost-sharing, as “previously health care costs were borne by the operator.

“Going back to at least 2005, MBCR has consistently reported one of the lowest, if not the lowest, operating costs of any of the large commuter rail systems in the country,” Farmelant said.

T spokesman Joe Pesaturo defended T employee wages as “consistent with those of other major U.S. transit systems.”

The Pioneer report also decries the lack of competition for the MBTA’s $1 billion commuter rail contract, which only has two bidders: MBCR and Keolis America Inc., which last week threatened to bow out after it complained it wasn’t receiving important information on labor costs that make up 70 percent of the contract.

Alan Eisner, spokesman for Keolis, said the company has since backed off its ultimatum after the MBTA “stepped up its demands requiring the current contract holder (MBCR) to provide us with more useful information,” much of which it received last week.

Pesaturo said yesterday that the MBTA “is strongly committed to ensuring a fair and robust competition.” Final bids are due July 10.

Seen in the Boston Herald, CBS Boston and Fox News Boston.

Read our White Paper here:

Runaway Transportation Costs

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]]> http://pioneerinstitute.org/transparency/runaway-costs-on-rail-t/feed/ 0 Open the Boston taxicab “market” to competition http://pioneerinstitute.org/news/open-the-boston-taxicab-market-to-competition/ http://pioneerinstitute.org/news/open-the-boston-taxicab-market-to-competition/#comments Thu, 11 Apr 2013 16:19:33 +0000 Jim Stergios http://pioneerinstitute.org/?p=16198 The Boston Globe‘s Spotlight team has done a great job uncovering the Kafka-esque maze of half-million-dollar medallions, bribes, and indentured servitude that we call the Boston taxicab “market.”  Oddly, little has been said in that paper’s pages on how to fix things, with the exception of a good letter, noting,

INSTEAD OF tinkering with the medallion system of taxi regulation, Boston should junk it and create entirely new regulations that foster highly competitive, innovative, state-of-the-art taxi services

and Jeff Jacoby’s wonderful piece that opened with

SO THE mayor of Boston, channeling his inner Captain Renault, is shocked — shocked! — to find that Boston’s taxi industry is a rigged and pitiless racket.

Yesterday’s Boston Herald included a smart piece by Con Chapman, which underscored the runaway, no more like “drive-away,” inflation in the medallion market.  In 1995

a medallion cost $95,000 on the open market. Eighteen years later the price is $625,000. Had the price of entering the Boston taxi market merely kept pace with inflation over that time, a medallion would today cost $155,157.

Obviously, something went wrong as the barrier to enter what has traditionally been a doorway to the middle class is now closed tighter than before.

What happened? In 1995 this paper editorialized in favor of a plan by John Kramer and William Mellor to open up urban tax markets that won an award in the Pioneer Institute’s Better Government Competition. Their proposal provided for taxi licenses to be issued for a reasonable fee to anyone with a safe vehicle, insurance and a clean driving and police record.

Indianapolis, Cincinnati, Philadelphia and Denver adopted the free market plan, but Boston did not. Instead, Boston held two traditional auctions of medallions in 1999 and 2000, the first since 1934. Proceeds of the first went into city coffers, and money raised by the second was used to help finance the local share of the Boston Convention & Exhibition Center in the Seaport District.

Today, all four of those cities have fares that are much lower than Boston’s, which are fourth highest in the nation.

So the net effect of failing to follow free-market principles is an oligopoly that has become further entrenched over time, while those who must use cabs are worse off than before.

Chapman is absolutely right.  The system costs users more, closes out entrepreneurs, turns our citizens to be supplicants and lawbreakers, and all the while, as Jacoby so aptly put it, our great and good feign shock.  If you happen to be a member of the ever-more-teeming team of people running for Mayor of Boston, you have my vote if you will break up the oligopoly — and double the number of charter schools in Boston.

Follow me on twitter at @jimstergios

 

]]> http://pioneerinstitute.org/news/open-the-boston-taxicab-market-to-competition/feed/ 1 Driving Reform: New Study on Real Solutions to Our Transportation Challenges http://pioneerinstitute.org/news/driving-reform-new-study-on-real-solutions-to-our-transportation-challenges/ http://pioneerinstitute.org/news/driving-reform-new-study-on-real-solutions-to-our-transportation-challenges/#comments Wed, 27 Mar 2013 14:28:32 +0000 Editorial Staff http://pioneerinstitute.org/?p=16050 STUDY: TIE NEW FUNDING TO PERFORMANCE, IMPLEMENTATION OF TRANSPORTATION REFORM

Phasing in additional money based on MassDOT performance will improve service

Massachusetts’ aging transportation infrastructure needs about $2.6 billion in new investment over six years that would come in stages based on the Massachusetts Department of Transportation’s (MassDOT’s) performance on a series of publicly accessible metrics and implementation of reforms included in a 2009 state transportation law and earlier legislation, according to a new Policy Brief published by Pioneer Institute.

In “Driving Reform: Real Solutions to Our Transportation Challenges,” Pioneer Senior Fellow Charles Chieppo and Executive Director James Stergios recommend that the new funding be evenly split between gas tax hikes and fare increases on one hand, and money freed up by the implementation of 2009 and other reforms and recapturing transportation revenue currently being used for other purposes.

Driving Reform: Real Solutions to Our Transportation Challenges

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“The wisest use of the new money is to phase it in over time, as we did with the 1993 Education Reform Act,” said Stergios. “That way, we can hold the agencies accountable for delivering on promised reforms, learn from successes and failures, and adjust as we move ahead. It’s far more important to do transportation reform right than to do it fast.”

Under the plan, the state gas tax would immediately rise by three cents and would rise an additional three cents in 2016 if MassDOT meets a benchmark based on publicly available customer service metrics and implementation of the 2009 and other reforms.

New revenue would be generated by MBTA fare hikes that are part of a strategy to increase the percentage of operating costs covered by fare revenue from 40 to 45 percent. Even once the 45 percent goal is achieved, the T’s farebox recovery ratio would still be below those of the Bay Area Rapid Transit system, Washington. D.C. and New York City. No environmental or legislative approval would be required for fare increases aimed at achieving the 45 percent revenue recovery goal.

Pioneer calls for all new transportation-based tax, fee and fare revenue be used exclusively for transportation purposes.

The 2009 transportation reform law was passed amid promises that it would save $6.5 billion over 20 years, but actual savings have thus far been a tiny fraction of that amount because much of the law is yet to be implemented. Provisions that should be implemented include development of performance and asset management systems, modeling the cost of a project over its lifecycle and ending the practice of paying operating employees out of the capital budget.

The Pioneer proposal would reduce the number of MassDOT employees paid out of capital by 75 percent over five years, which would mean moving about 285 employees to the operating budget each year. Over 20 years, the annual cost of paying an employee earning $75,000 out of the capital budget is about $150,000.

In return for the initial three-cent gas tax hike, MassDOT will have to focus on re-establishing management rights such as the ability to outsource and control employee assignments, which in the 1990s saved the MBTA about $50 million annually before many of them were eliminated.

MassDOT must also develop and post a clear set of customer-focused metrics that will provide the basis for decisions about funding future transportation needs. Data for these metrics are already collected by MassDOT because of federal requirements.

Other sources of new revenue include redirecting $30-$50 million in annual savings achieved by moving to automated toll collection, recapturing about $40 million in gas tax revenue dedicated to underground storage tank removal, which is currently being diverted to non-transportation purposes. Finally, the plan recommends seeking $10 million in new revenue from new electronic tolling mechanisms.

Finally, Pioneer recommends that no major transportation expansion projects be undertaken beyond those already required by law until road, bridge and transit maintenance backlogs have been eliminated.

And the Institute calls for all transportation infrastructure funding decisions to be based on a project’s lifecycle costs, including operating and maintenance expenses, rather than just construction costs. To ensure statewide consensus on the strategic value of major investments, projects with lifecycle costs of $1 billion or more must be approved by both houses of the state Legislature.

The Pioneer Plan seeks to correct many shortcomings of Governor Patrick’s transportation proposal, such as its overstatement of the economic benefits of proposed expansions, its failure to consider the negative multiplier effects of new taxes, its understatement of construction expenses and its lack of accounting for the cost of operating and maintaining new projects. But it also seeks a way to make constructive progress toward a transportation system that supports the needs of people and future economic development.

“I applaud Governor Patrick’s focus on transportation,” Chieppo said. “But his proposal is eerily reminiscent of the policies that got us into the mess we’re in today. Pioneer’s plan is a responsible, substantial and logical next step after the 2009 transportation reform law.”

Pioneer Institute is an independent, non-partisan, privately funded research organization that seeks to improve the quality of life in Massachusetts through civic discourse and intellectually rigorous, data-driven public policy solutions based on free market principles, individual liberty and responsibility, and the ideal of effective, limited and accountable government.

]]> http://pioneerinstitute.org/news/driving-reform-new-study-on-real-solutions-to-our-transportation-challenges/feed/ 0 The state’s economic strategy is selling us short http://pioneerinstitute.org/better_government/the-states-economic-strategy-is-selling-us-short/ http://pioneerinstitute.org/better_government/the-states-economic-strategy-is-selling-us-short/#comments Tue, 26 Mar 2013 19:42:00 +0000 Jim Stergios http://pioneerinstitute.org/?p=16053 job opportunities classifiedMegan Woolhouse’s piece entitled “Shut Out” in the Boston Globe told the story of several long-term unemployed Massachusetts residents.  It was powerful in part because of the writing and the reality of people who are doing their best to keep looking for work, but also because the story so often goes untold in the press.

Even after many announcements about how well we are doing as a state, we have to keep in mind that Massachusetts is still 100,000 jobs short of even our 2001 employment levels.  If the Commonwealth had grown at the same pace as the rest of the US since 1990, we would have 450,000 more jobs in the state; we’re currently above 3 million total, so it’s a huge opportunity lost.  The opportunities lost have directly impacted John McLaughlin, Lee Bodzioch, and many others like them, who cannot find jobs.  Who still want a job, but are left in a limbo that affects their finances, their ability to retire in some level of comfort, and their immediate and long-term wellbeing.

Into that debate comes a new report “set to be released Tuesday by the Boston Foundation” and highlighted in the Globe business pages, which says that the state’s billion-dollar biotech incentive program

has helped stimulate a key sector of the state’s economy, creating more than 8,000 jobs through capital grants, tax incentives, and business loans.

The report claims that the $300 million in state investments has “spurred” a billion dollars in private investment, meaning that the state is paying almost $40,000 per job created.  That’s certainly one problem with the strategy.  How many $40,000 jobs can we afford to pay for?  And “8,000 jobs = success”?  Folks, that is a limited-value proposition — and one that is not going to get us to the place with John and Lee are again employable.

Frankly, the billion dollars in private investment is likely to have come through anyway.

It is worth recalling that the governor and the legislature’s announcement of the biotech initiative came with much fanfare, with the city’s great and good cheering.  The number of jobs the billion-dollar initiative was to create was not 8,000.  It was not 18,000, nor even 80,000.  It was 250,000 jobs.

So halfway through the initiative’s decade-long life, with 8,000 jobs created and over tens of thousands of people out of work, can we please all be grown-ups and question whether this is the right strategy?

Our “Measuring Up?” study provides a better foundation for economic development strategy, demonstrating that business costs of various kinds are impacting profit margins here in Massachusetts.

A number of our other studies have demonstrated precisely why these boutique (“sweet-spot”) state incentives are not effective.  After all, there is a huge economy out there, and there are larger trends in our economy over the past 20 years:

Kind of shaking my head at this one.  The authors of the report, Barry Bluestone and Alan Clayton-Matthews, fine gentlemen though they are, have in this case sold our economic future short.

Follow me on twitter at @jimstergios, or visit Pioneer’s website.

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