Left In Lowell

The two-part series in yesterday’s and today’s Boston Globe on municipal budget and “runaway health care costs” is a must read for everyone who is concerned about the future of our City in particular and the State’s in general.

I was aware of some of the issues but when you read the Sean P. Murphy article, which the Globe took six months to research, the doomsday scenario is not an exaggeration but a reality. It is depressing; and I do not know how we are going to come out of this without some major changes in the relationship between municipal unions and local government.

As medical costs across the board rose over the past decade, municipal health care expenses exploded, draining local budgets and forcing major cuts in services, higher property tax bills, and billions in new debt…the cost of municipal health care as doubled from fiscal 2001 to fiscal 2008.

If you look at this graph, the line for Lowell is the fourth one from the top. The total amount in the municipal budget spent on healthcare in 1999 was 9.7%; ten years later in 2009, it is 17.6%. And that is after CM Bernie Lynch, as one of his first moves when he came in to the job, eliminated healthcare benefits for members who sit voluntary on city boards.

The Globe incorrectly states that Lowell has not adopted the law allowing municipalities to make its employees participate in contributing to Medicare. But as we know, the City Council adopted this measure last week, after it was introduced by CM Lynch. The law does not apply to current retirees.

It may have made sense once upon a time to give these types of benefit but the financial and healthcare worlds have turned upside down. What was negotiated years ago, does not make sense for today, never mind for the future.

According to the Globe municipal employees, elected officials and government retirees have a better deal than the private sector. They pay less in their premiums, less in co-pay and here is the killer, anyone who has worked for 10 years is eligible not only for a pension but healthcare when they retire. Ouch!! More from the Globe articles:

The Legislature decades ago also linked health care and pension benefits. Anyone who qualifies for a pension qualifies for health care coverage. But there is one key difference: With pensions, employees have to work decades to earn full retirement benefits; with health care, municipal employees, the moment they reach 10 years of service, are entitled under state law to full benefits when they retire, from age 55. This has made even relatively low-paying jobs, such as teacher’s aides and school cafeteria workers, highly coveted.

And why have don’t we have a system in place to prevent this potential catastrophe? The Globe reporter writes, “So far, with powerful labor unions resistant to giving away hard-won benefits and a lack of political will in the state Legislature to force changes, effort to overhaul the system have fallen short. “

The Legislature did pass a law allowing the cities and towns to “shift their employees and retirees from locally managed health care plans to the state’s much larger, more flexible one,” GIC. According to estimates this shift would save the municipalities over $1 billion. Sounds good, right? However, the Massachusetts Legislature decided that 70% of the City’s union representative would have to agree. As the Globe states, “effectively giving teachers union, typically the largest, a veto.” The cities and towns should have said to the Legislature, thanks but no thanks. It is like giving someone a car but no wheels.

So now I know, Paul Georges (President of the LTO) runs this City. Nothing against teachers or other municipal employees but there has to be a major shift in the paradigm. We all need to work together to figure out what we can do. There really is no other option. Our collective future is bleak if nothing changes.

By the way, today’s Lowell Sun editorial is also on this subject: It asks the Legislature to remove the handcuffs it has put on the municipalities.

And as far as the Lowell City Council is concerned, tomorrow they will discuss the City Stat and at a future date debate the pros and cons of the local meals’ tax. Taking a stand against these items may be politically beneficial with some in this City but real leadership will come when this body addresses how we are going to pay pension and healthcare costs, which in FY 2010 are $16M and $22M respectively.

In a budget of $300M, it may not seem like much but the portion of the budget that is funded directly by City taxpayers is about $100M; and Healthcare and Pension funds come from that amount. So in effect for every $100 you pay in real estate taxes, $38 goes towards paying pension and healthcare costs. And the City Council wants to do me a favor by saving me $0.75 on every $100 I spent when I go out to eat. Thank-you, but can you do something about the $38 which next year will turn into $40-42?