The Boston Globe led today with Property tax bills soar as services fall. According to the story’s author, Matt Carroll, the average annual property tax bill for a single-family home in Massachusetts has climbed 50% in just the last seven years. To make it worse, the increases are not used to expand services, but go instead toward fixed costs – pension and other post-employment benefits for retired and retiring public workers, particularly healthcare, whose costs are quickly escalating beyond the ability of cities and towns to pay for them. Is it any wonder that voters, already facing such large increases on their tax bills, are casting an increasingly jaundiced eye on Prop 2 1/2 overrides? (See my post on Dartmouth’s budget struggles.)
The terrible irony of all this is that the fiscal trainwreck that now looms in the windshield has been sitting out there on the horizon for quite some time. As Pioneer pointed out in a series of studies released last year (Public Employee Benefits Series), the Commonwealth faces pension and public employee healthcare liabilities that together add up to more than the state budget just passed.
The governor pushed to require underperforming local pensions to join the state’s Pension Reserve Investment Trust – a move that should close some of the liability – and to allow cities and towns, with the approval of 70% of their unions, to buy their health insurance through the Group Insurance Commission. Though I think he should allow cities and towns to join the GIC even if the unions object, these are good first steps. They are also, however, just first steps. Yes, the GIC, which purchases health insurance for all state employees, has been able to contain cost increases over the past six years to 63% (as opposed to municipal increases of 92%), but that size growth is still unsustainable. The GIC is, therefore, stopgap and not solution.
The problem is that the there doesn’t appear to be a solution to the problem, to the real problem anyway, which is the generally escalating cost of healthcare in this country. And until it is solved, cities and towns will continue to max out the revenue they can raise through 2 1/2 and to ask for even more through 2 1/2 overrides. Property tax increases will become as certain as, well, as death and taxes.