Entries by Greg Sullivan

The Federal Tax Reform Act’s cap on deductions of state income taxes has turned Proposition 80 into an economic time bomb for Massachusetts

This report finds that recent passage of the federal tax overhaul legislation will exacerbate the negative economic impact of Proposition 80, the proposed constitutional amendment scheduled to appear on Massachusetts’ November ballot that would add a 4 percent surtax on annual taxable income over $1 million.

Op-ed: Connecticut example argues against millionaires’ tax

This op-ed appeared in The Boston Business Journal on February 7, 2018 It all sounds so simple. Just slap a four-percentage-point surcharge on all annual income over $1 million and use the supposed $1.9 billion windfall to fund education and transportation. It sounds irresistible … until you look at the results just to our south in Connecticut, where the same policies have essentially been in place for years. Over the last quarter-century, Connecticut has endured a series of budget crises. To cover ballooning costs, the state enacted sharp tax hikes, including four income tax hikes in the last 14 years that caused the top rate to jump by 77 percent. In recent years, Connecticut has increasingly turned to high earners and large […]

Back to Taxachusetts? Lessons from Connecticut

This report urges proponents of a 2018 statewide ballot initiative that would add a surcharge on the state taxes of those earning over $1 million annually to look at the experience of Connecticut, where multiple rounds of tax hikes aimed at high earners triggered an exodus of large employers and high-earning individuals that resulted in declining tax revenue.

Understanding the Downgrade

S&P Global Ratings (S&P) recently downgraded Commonwealth and certain other Massachusetts agency bond ratings one notch from AA+ to AA. The AA rating is still considered a high mark in terms of the investment grade of the bonds, meaning S&P believes the state will meet its debt obligations.  While it is fair to say that the downgrade is not a calamity, it is certainly a warning signal as to what could happen should the state continue practices that do not lead to long-term fiscal health.  It’s a reality check to which we should pay close attention. As shown in Figure 1, the state’s S&P rating on Massachusetts bonds is still well above 2001 levels and is now at the same […]

The Bombshell Cheiron Report: The MBTA Just Got A $1.485 Billion Pension Bill That It Can’t Possibly Pay

This report asserts that with the current MBTA pension agreement set to expire in June 2018 and a new evaluation projecting a $1.485 billion increase in retirement costs over the next 18 years under terms of the current agreement, the T’s Fiscal and Management Control Board (FMCB) should take immediate action to protect the authority’s precarious finances.

Op-ed: UMass leaders fail Boston campus

By Greg Sullivan Friday, April 14, 2017 The University of Massachusetts at Boston faces seemingly intractable financial difficulties, but it’s wrong to pin the blame on outgoing Chancellor Keith Motley. Many of the problems flow from decisions made by the UMass board of trustees’ and president’s offices. At the direction of the trustees, UMass Boston has grown its enrollment and expanded capital facilities at an historic rate over the past decade, despite projected declines in the number of Massachusetts high school graduates. A 2011 UMass Boston financial task force forecast that the campus would face a $58.5 million shortfall by fiscal 2015 unless new sources of revenue could be identified to pay for additional expenses related to expanded enrollment and new […]

Op-ed: Justification For 40% Legislative Leadership Raises Is Political Voodoo

When doing the people’s will is secondary to legislators’ self-interest, how strong is our democracy? The state Legislature is on the verge of overriding the Governor’s veto of legislation that includes sizable pay raises for state and legislative leaders. Their actions on this front will answer the democracy question. Since legislators can’t raise their base pay, the hikes are limited to leadership positions in the form of increased legislative stipends. Base pay increases are formulaic and tied to the state’s median household income. The Boston Globe reported on several questionable aspects of the bill. It contains an “emergency preamble,” which means the raises would take effect immediately. The legislation also includes pay hikes for the judiciary, which, due to a clause in the state Constitution, makes it challenging at best to reverse via initiative petition. And because committee chairs and other leadership positions have not yet been officially selected, legislators don’t need to worry about violating conflict of interest laws for voting on their own financial interests. […]

Recommendation to the FMCB: Retain an Independent Auditor and Actuary to Review the MBTARF

The present policy paper argues that FMCB must conduct an independent audit and actuarial valuation of the fund, because of specific failures and omissions even in the limited work that FTI did. In doing so, we find that in opposition to the claims of FTI, the claims of potential malfeasance and poor management by the MBTARF Board, which came from noted whistleblower Harry Markopolos and Boston University Professor Mark Williams, were likely accurate.

Fixing the MBTA Retirement Fund: Reforming a Pension Fund in Crisis

This report examines the MBTA Retirement Fund’s unfunded liability and compares MBTA and state employee and employer retirement contributions. It recommends that the MBTA assess the feasibility of moving its employees out of the Social Security system and transfer investment management responsibility for its pension fund to the commonwealth’s Pension Reserves Investment Management board as initial steps toward terminating the MBTA Retirement Fund (MBTARF).

Aim High on MBTA Ridership: A big-picture take on the T’s strategic plan

This report focuses on setting a strategic target for substantial increases in MBTA ridership. The author examines ridership trends from 2002 through the most recent available data for 20162, tracking annual growth in ridership from September through August for each year on the following six transit modes: heavy rail (the Blue, Orange and Red Lines), light rail (Green Line), commuter rail, bus, trolley bus and ferry service. The report offers projections of potential revenue the MBTA could generate in a range of scenarios.

Outsourcing bus services is—by now—conventional wisdom

Outsourcing bus services is—by now—conventional wisdom As the Finance and Management Control Board (FMCB) considers further action to address its operating deficit, deferred maintenance backlog, and the demands from riders for higher quality performance, once again privatization of services has come center stage.  During the coming weeks, there will be ample debate on the merits of proposals to outsource ancillary services; there has also been greater focus on whether some core services of the Massachusetts Bay Transit Authority (MBTA) should be competitively bid to ensure higher quality service and lower costs. In situations when there is heated discussion due to the potential impact on the interests of labor, as evidenced by the hundreds of MBTA union members who attended a […]

Op-ed: Time for UMass system to implement needed fiscal reforms

As University of Massachusetts President Marty Meehan considers raising tuitions yet again, his institution is at a crossroads. On the one hand, the University of Massachusetts has many achievements of which to be proud. Under the leadership of Meehan and his predecessors over a quarter century, the average grade point average of entering UMass Amherst freshmen shot up from around 2.9 to 3.8. In just the last five years, the flagship Amherst campus rose more than 20 spots in U.S. News & World Report rankings. While impressive, the strategies that produced such advances have compromised the university’s financial health and its mission of serving Massachusetts students. Read the rest of this op-ed in the Worcester Telegram & Gazette, Salem News, […]

Inconsistencies in UMass’ Reporting of Deferred Maintenance

In assembling the data for Pioneer’s UMass at a Crossroads series, which covers the improving academic profile of UMass students, the strategy of recruiting more out-of-state and international students to generate additional revenue, and the fiscal implications of UMass’ ambitious capital expansion, Pioneer identified inconsistencies in UMass’ reporting of deferred maintenance. Below is a brief overview of the disparate deferred maintenance numbers UMass has provided over the last several years, accompanied by discussion of the implications of these inconsistencies. (Note: endnotes/citations can be found in the papers, available here.) Disparities in UMass’ reporting of deferred maintenance Deferred maintenance refers to the postponement of maintenance of capital assets that are in need of replacement or renewal. It includes delayed repairs on […]

UMass At A Crossroads

This paper is the first in Pioneer Institute’s UMass at a Crossroads series. In this study, Pioneer focuses on UMass’ significant growth in two areas, academic competitiveness and student enrollment, compared to other New England state universities, MA private universities, national private universities and national public universities. Pioneer raises the question of whether the continued expansion of UMass, based largely on increased enrollment of out-of-state students, is in the best interest of the commonwealth.

The Real Source of UMass R&D Spending

UMass issued a report and a press release Tuesday citing a record level of research and development spending at UMass in fiscal year 2015. “Despite the tightening of the funding environment, the University of Massachusetts saw sponsored research increase by 4.3 percent during the past year, reaching a record $629 million, President Marty Meehan announced today.” What might not be immediately evident from the UMass announcement is that all of the 4.3 percent increase in UMass R&D spending in FY2015 was attributable to funding provided by the state and UMass itself, which amounted to an increase of $26.5 million, a 14 percent increase from 2014 to 2015.  Externally-funded research, from federal, business, nonprofit, other sources, actually declined by $670,000 from […]

Driving Critical Reforms at DCF: Ideas for a Direction Forward in Massachusetts’ Child and Family Services

This report dissects other studies and their recommendations, with additional suggestions for a direction forward for DCF in the context of a broader discussion of the agency’s recent history and issues with mission ambiguity. The first and most important recommendation is to overhaul the current two-tiered child intake system, which should be the central focus of any changes at the agency.

How to Save the MBTA Over $100 Million a Year

The first step in reforming the MBTA has been taken by the Legislature and the Governor. It included the establishment of a Finance and Management Control Board focused on the Authority’s operations as well as the new power to contract out services over a limited period of time. The second step for the MBTA has to be addressing the issues of immediate and short-term concern such as transit safety and the maintenance, upgrade and repair of assets that will allow the MBTA to function throughout even a difficult winter. Even as the work is underway, in order to ensure that the MBTA can address operational finance issues and make further investments and progress in addressing its multi-billion maintenance backlog, the […]

How to Save the MBTA More Than $100 million a year

This policy brief identifies three immediate measures the MBTA should be taking right now to take that third step. The suggestions are not meant to be exhaustive, but rather are suggestions to get that effort started. Cumulatively, the MBTA could garner $103 to $122 million a year in savings through these actions, even as it improves the quality of transit services. Download Report:

Guest Opinion: Reinstate the SNAP work requirement

Massachusetts, once a national leader in welfare reform, needs to reinvigorate its commitment to helping recipients succeed in the workforce. A good first step would be for Governor Charlie Baker to instruct the Department of Transitional Assistance (DTA) to reinstate the work component of the Supplemental Nutrition Assistance Program (SNAP), formerly known as the food stamp program. Under federal rules, SNAP recipients between 18 and 50 without dependent children can get benefits for only three months within a three-year period if they do not work or participate in a workfare or employment and training program. With some exceptions, able-bodied adults between 16 and 60 must register for work, accept suitable employment, and take part in an employment and training program […]

Welcome News from the New Team at the MBTA: Getting Serious About Savings

The Boston Globe reports today that MBTA officials briefed MBTA union officials last week about their forthcoming plan to request information from outside companies on running about 30 of the T’s 170 current bus routes, representing approximately 17 percent of its total routes. This should be welcomed news to state taxpayers and local property taxpayers in the cities and towns of the MBTA district. MBTA employees unions have held a virtual monopoly on T bus operations and bus maintenance services since passage of legislation adopted in 1993 that effectively handcuffed T management from outsourcing these and other services.  The protectionist Pacheco Law was adopted five months after then-Governor William Weld proposed privatizing some of the MBTA’s bus operations and maintenance […]