Entries by Steve Poftak

Stepping Back in Time on the T

One of the joys of living in an ‘old’ city like Boston is when it reveals a hidden, seemingly unknown piece of itself. Having traveled enough to fear the growing homogenization of the American streetscape by chain stores, but having lived in and around Boston for most of my life, I was suprised and thrilled to discover the Mattapan Line. Its a small spur off the terminal point of southbound Ashmont Red Line that runs only three miles, stops at 8 stations, and carries about 4,500 passengers on a given weekday. As careful readers will note, I’ve got a thing for transit and its the railcars on the Mattapan Line that are the real treat. Take a look at the […]

Convention Center Chronicles – Wrap-Up

Expanding the Convention Center and adding a Headquarters hotel are going to be heavy financial lifts for this area. We are talking about an initial cost of $212 million to $361 million (all estimates from here), even before new construction can begin. The Convention Center Authority believes it can ‘self-fund’ this, meaning their existing income streams (hotel taxes, sales taxes, Duck boat and trolley tour surcharges, Boston-based car rental/Zipcar surcharges) have enough excess* to support bond funding of this amount. Then, some public entity will need to come up with a minimum package of $200m to support construction of a 1000 room hotel that will need $310 – $500 million in private funds (much of it debt, to be sure) […]

Convention Center Chronicles — Marginal Impact and Demand

What do we get? And who will come? Those are the questions that have not been properly answered despite reams of powerpoints and consultants reports. In its presentation “Case for Expansion“, The Convention Center Authority makes the case that we “lost” out on a number of conventions because of our small size, availability or cost. (Note that expansion only addresses the first cause.) It is not clearly stated anywhere whether we ‘lost’ these shows (as in the contract would absolutely, positively been signed) or whether we were unable to compete for these shows against other cities. The Authority then extrapolates from these losses a large amount of forgone economic impact, making the case for expanding the BCEC. The problem with […]

Convention Center Chronicles – Chasing Room Nights

Room nights (nights spent at area hotels by convention attendees) are the key gauge of success for a convention center. How do I know this? The Convention Center Authority says so: Hotel room nights are the key gauge for convention business in Massachusetts So a discussion of room nights should be central to a discussion of any convention center expansion. Except when it’s inconvenient. Here’s Convention Center Authority head James Rooney earlier this year: We’ve gotten sucked in…. to measuring the success of this industry strictly on the notion of how many hotel-room nights are generated. That is narrow-minded thinking. The Authority’s on-again, off-again relationship with room nights is evident from their disclosure. One must work hard to figure out […]

Convention Center Chronicles

The Boston Convention Center has long been a topic of interest for this space, dating back to its original construction. To be fair, its done ok, although far less successful than its original projections. Now, the Convention Center Authority has presented the citizens of Massachusetts with an intriguing chicken-and-egg proposition. It needs to expand its size and build a large hotel, as it can’t attract larger conventions without a ‘headquarters’ hotel but it also needs to be larger to attract the largest conventions (which it can’t do without a bigger hotel, got it?). So, what’s the public interest here? A public subsidy (taxes, fees and/or bond funding) will be needed to support the two projects, whose combined price tag may […]

Smaller, Fewer is Not Better

While the rest of the US created jobs after the 2001 recession, Massachusetts shrank. Understanding why is important if we want to avoid a ‘jobless recovery’ from the most recent recession. The above chart shows US jobs (thin black line) versus MA jobs (bold red line) starting in 2001. What you see is both dropping in response to the recession but the US economy comes back by 2005 and creates net new jobs. The Massachusetts economy never comes back far enough to reach early 2001 levels. Two connected factors explain a significant portion of our stagnation – Massachusetts is failing to create new businesses at the same rate it did in the ‘90s and the new businesses we manage to […]

Not Like The Other

In general, good manners are to be respected. But our dear friends in the business community are overdoing it. In the ongoing debate over municipal healthcare costs, there are now three competing proposals on the table, the Governor’s, the House, and the Senate. The Governor’s effort is largely a bunt — signaling a desire to get communities into GIC or give them control over plan design but pushing the details off onto the regulatory process. The House is much clearer — communities can adjust plan design up to the equivalent of the biggest plan for state workers or enter GIC, so long as 10% of first year savings is returned to workers. The Senate takes a different approach — communities […]

(Almost) Everything You Wanted to Know About the MBTA

[WARNING: Hard-core transportation nerdiness ahead. Consider yourself warned.] As a user of the MBTA and a fan of transit (no, really), there’s no better place to learn about the minutiae of the system than the T’s Blue Book. It tells you everything (well, almost) you could want to know about the system. Within its pages, you find stuff like: • Most heavily used subway line? Red Line at 74.45m trips per year, which narrowly edges out the Green Line. And the Blue Line lags way behind at 17.88m trips per year. • Most popular station? Downtown Crossing, with 22,880 entries and transfers on a typical weekday. Least popular? Suffolk Downs, with only 794. • Who’s on the bus? The T […]

Tuesday Quick Hits

– Holub out? I haven’t followed it closely but the Globe suggests that UMASS-Amherst Chancellor Holub is on his way out after just three years. One of the data points the article refers to is a survey of professors that shows dissatisfaction with the Chancellor. Its not entirely clear but the survey appears to be one of those on-line, opt-in surveys, not a scientific sampling. So that means approximately 100 (self-selected?) respondents (out of 1000+ faculty members) are responsible for the failing grade given to Holub. – Referee Needed. The Patrick Administration is claiming big $$$ savings from the opening of the automobile insurance market to competition. (A view I agree with and a stance for which the Governor does […]

The Soft Cost of Doing Business In Massachusetts?

If you talk with business leaders, you hear stories about the hidden costs of doing business in Massachusetts – huge building projects idled by recalcitrant local building inspectors, regulators blithely ignoring legitimate concerns raised by companies, and a general lack of understanding of how businesses work. I’ve always wanted to quantify these ‘soft costs’ to see if they amounted to much, or were just so much complaining. As I compiled information for my last post on business rankings, one pattern in the data caught my eye. If you look at Massachusetts strictly by the taxation and business cost numbers, we come out in the mid-30s. This year, we were ranked 32nd for tax climate by the Tax Foundation and 39th […]

We’re #5! No wait, we’re #43!

During last year’s gubernatorial campaign, CNBC ranked Massachusetts #5 as one of the best places to do business. The ranking (and some of the subindexes that weren’t quite so positive) got bandied around by the campaigns as evidence and counterevidence of the state of our business climate. (Even some of my fellow bloggers have referenced it.) If you look at the subindexes for that ranking, you can quickly figure out our strengths and weaknesses – on productivity/quality of life measures, we are very strong; and on business cost/tax policy issues, we are pretty weak. And that gets replicated in lots of similar surveys – depending on which measures are chosen, Massachusetts does very well or quite poorly. So what matters? […]

Flawed Foundation of the Pacheco Law

Those seeking more competition in government have opposed the so-called Pacheco Law (see here, here, here, and here) for years. The foundation of the law puts the State Auditor in the position of prosecutor, judge, and jury for anyone seeking to allow private competition for a state-provided service. In the conceptual sense, it made little sense to have one position play such conflicting roles in a supposedly objective process. In the real world, the ideological bias of the then-auditor Joe DeNucci was well-known, a steady favorite of the unions who benefited from avoiding competition. Now, our worst fears have been confirmed. Following DeNucci’s retirement, a new Auditor, Suzanne Bump, brought in the National State Auditors Association to review the operations […]

Another Department of Public Safety Issue

This space has raised questions in the past about the staffing levels and performance at the Department of Public Safety. Several years ago, then Auditor DeNucci found that 30% of elevators in the state had expired inspection stickers. Following the death of a child at a mall due to an accident on an escalator, there has been increased scrutiny of the department. Now, after a review of escalators across the state, there comes news that the two inspectors who certified that mall escalator are to be fired, six will be suspended for five days, and 26 will be reprimanded. Depending on whose numbers you believe, there are either 51 or 57 inspectors in the department. That means that between 60% […]

Do You Believe in Medicaid Miracles?

The 1980 Miracle on Ice actually happened. For all our sake, the Medicaid Miracle that is embedded in both the Governor’s Budget and the House Budget better come true as well. For years, Medicaid costs have advanced robustly, at roughly 7% per year which is a big number given that it’s building on a base of billions. So, what do the budget forecasters in the Governor’s office and the House project for next year? Growth of only $100m in Medicaid — growth of 1% or less. That will require the state to drive down its per Medicaid enrollee costs by 3.5% next year. How have we done at that recently? On average, per enroll costs have gone up by 5% […]

A Solid Step to Muni Healthcare Reform

Pioneer has long been part of a broader chorus calling for reform to municipal healthcare costs. We’ve examined how GIC’s cost increases have been far below those of our Middle Cities, and repeatedly (here, here, and here) called for reform. We even went so far as to build an on-line decision support tool for several communities that would allow individual employees to determine how switching to the GIC would impact them personally. Last night, the House convincingly passed a reform amendment that would allow municipal managers greater control over plan design and also easier entry into the GIC (the state employees’ insurance pool) if need be. Big Labor has reacted (once again) with what is seemingly its single bargaining tactic: […]

Permitted to Succeed? Part Three

My last two blog posts (here and here) have provided some ideas about some key aspects of the Mayor’s initiative to reform the permitting process. If we can get the physical layout right, the organizational structure right, and the culture right, the last step is to build in accountability measures. Right now, its noteworthy that the City’s performance measurement program is silent on the topic of permitting times. It measures the number of permits issued and complaints responded to, but not how long it takes. (And while we are at it – can we get BAR performance reports to show historical results that are comparable to current year results. Right now, we get year-to-date results for the current year and […]

Permitted to Succeed? Part Two

In response to Mayor Menino’s pledge to create a “one-stop shop” for permitting, we’ll be examining what factors need to be addressed in order to spur job creation in Boston. On Day One, we looked at the leadership issues that would need to be resolved. Day Two – changing an organizational culture of highly personalized, uneven customer service – is harder. To make the permitting process easier for entrepreneurs, the culture of the bureaucracy that’s involved has to change from a process orientation to results. That means viewing business owners as customers, not obstacles. Talk to people trying to start businesses in Boston and you quickly hear about uneven experiences with the staff at the Inspectional Services Division at 1010 […]

Permitted to Succeed? Part One

Mayor Menino’s new budget proposal included the intriguing commitment to create a “one-stop shop” for small business permitting. The state has long strived to create these kind of permitting shops, prompting one state official to muse that it might be worth putting together a guide to all the “one stop shops” in state government. To some extent, the city has consolidated some of those functions at 1010 Mass Ave., but a quick review of the city’s permitting literature reveals that there is significant consolidation to be done. With different agencies located at 1010 Mass Ave., City Hall, 26 Court St., and other locations, a true one-stop shop will require a lot of consolidation. Physical co-location is a great first step, […]

Municipal Healthcare Endgame?

I would never underestimate the negotiating guile of the major labor unions, but it does appear we are reaching the endgame stage of the municipal healthcare debate. After a negotiated consensus reform several years ago to put municipal workers into the GIC failed to get a strong level of acceptance, it was clear that something more had to be done. A number of Mayors (including Menino) advocated for control over plan design, even threatening a ballot referendum (hope Denise Provost can stop them!) The Governor’s budget (see Section 6, here) put in place a somewhat vague process to (eventually) force workers into the GIC. The House Ways and Means Budget was much more explicit (see section 46, here), providing clear […]

Siblings and the Boston School Lottery

If you’ve got young kids in the city, the Boston Public Schools lottery is on your mind.  Boston Magazine’s Amy Traverso detailed multiple strategies for dealing with it in last month’s issue.  And the Boston Globe has given the process the full ‘package’ treatment in print and on the web. This year’s first round of assignments went out two weeks ago and participants have been mulling their options ever since. It’s a damnably complex process (how many other lotteries have extensive econometric literature on them?) as is the range of outcomes – a dizzying mix of  acceptance at desired schools, acceptance at marginally acceptable schools, outright rejection, and varying levels of waitlist purgatory. For some, it’s the final straw before […]

Heres Comes the House Ways & Means Budget

The Legislature gets its first cut at a response to the Governor’s budget tomorrow, when the House Ways & Means Committee releases its budget. We’ll be carefully watching how they address two of the major ‘plugs’ in the Governor’s budget. First, with a few paragraphs on procurement reform and other cost-sharing, the Governor’s budget sidesteps the potential for a huge increase in Medicaid spending. All well and good, except the budget depends on a dramatic reversal in Medicaid per enrollee costs — from an average rate of 5% growth over the past five years to a reduction of 3.5%. Anyone who can turn around the rate of healthcare cost growth has accomplished a great deal. I’m skeptical it can be […]

A Defense of the Evergreen Solar Deal?

Our friends at Commonwealth Magazine have put out an intriguing ‘Back Story’ regarding Evergreen Solar. But their article rests on a few shaky assumptions. First, they try to frame the discussion as a ‘Romney invested’ versus ‘Patrick invested’ story. To be sure, both were Governor when investments were made in Evergreen Solar and both bear some responsibility as leaders. But there’s a material difference between a $2.5m commitment by a single quasi-public entity controlled by a board (with a majority appointed by the Governor, although its not clear if Romney controlled those appointments when the investment was made) and a $50m+ series of commitments across six state agencies and quasi-publics that was quarterbacked by the Secretary of Economic Development. I’m […]

We’re #43!

Those with long memories will recall the days of the campaign when CNBC’s ranking of Massachusetts as the 5th best state to do business in was widely touted. To be sure, all these rankings are highly dependent on the underlying methodology — CNBC emphasized education and quality of life strongly, so Massachusetts did well. Well, another ranking has come down the pike, from the Small Business and Entrepreneurship Council. They emphasize tax policy and regulation heavily. And Massachusetts does not do so well — ranking 43rd out of 51 states (and DC). Roll that in with the CEO magazine ranking (47th!) and the Tax Foundation ranking (32nd), and there may be a message there.

Relearning the Lesson

Its been painful to watch the situation with Transportation Secretary Mullan play out over the past two weeks. As an observer of transportation in this state, I have had the opportunity to interact with him and he’s been gracious enough to appear at one of our events. I’ve found him to be smart, knowledgeable, and dedicated. Further, given two false starts at the position and the importance of managing major structural reforms, the administration could ill-afford another transition at the Secretary level. So its been painful to watch as we review the same painful lesson once again: its not the ‘crime’, its the coverup. The inability to get a story straight on a hot button issue related to the Big […]

Finding Money for the Convention Center

The Convention Center Authority convened a panel of the city’s great and the good some months ago to determine if it should go forward with an expansion plan that included a publicly subsidized 1,000 room hotel. It floated a trial balloon over the weekend regarding that hotel and the response has not been great. The BBJ’s Craig Douglas does a back-of-the-envelope calculation and comes up with 1,350 privately-supplied hotel rooms in various states of planning and development. He notes that these projects, all under the leadership of various well-connected developers, are experiencing some sort of delay and questions how an additional 1,000 rooms (all benefiting from a public subsidy) improves the situation. I take a different tack in examining the […]

Boston School Lottery and the Globe

The Globe is doing a full ‘package’ on the Boston school lottery (a subject near and dear to my heart, see here and here). They’ve done a nice job explaining the very complex lottery and selecting a number of different families to profile (although the West Roxbury family seems like a reach — the pastor of a start-up Evangelical church?). It appears that this series will continue over the next two weeks as lottery results go out to each of the families. A few observations: 1) How many receive their top 3 choices? The introductory Globe piece has graphic (apparently unavailable on-line) that emphasizes the how the vast majority of applicants get one of their choices (but those who don’t […]

Bill Gates is Wrong!

UPDATE: His TED talk just went up. Well done overall and worth watching. But its not really his fault. Mr. Gates is getting a lot of press for some recent comments about state spending at TED. In conjunction with the presentation, his foundation has set up a nifty budget analysis tool. If you look at MA, we look pretty bad – 47th in nation on K-12 spending, etc. But our poor showing is driven by the underlying data source, NASBO’s state expenditure guide. In it, we’ve got a $47b state budget (versus a roughly $30b operating budget) while other states’ are reporting numbers much closer to their operating budget numbers. I think we reported a gross number while other state’s […]

Two Things to Ponder About Quasi-Public Salaries

As the Governor continues his march through the quasi-publics (many of which have taken him a full term to gain control over), it is worth mentioning two key points that were raised in the compensation review done by UMASS’ Steve Crosby. First, the report emphasizes that, for all the kerfluffle raised by the various quasi-public boards about independent studies and ‘market compensation’ rates, a troubling number of these hires came from the local market. In the words of the study: “..with almost no exceptions, the individuals hired to run these agencies are hired locally and not from a national pool. Does it make sense to use national standards and then hire locally?” Next is a point that I made in […]