Tuesday, December 09, 2008

Optionally Assured Destruction...

With economic calamity still flummoxing the state's finances, State House officials have announced that a cut in local aid may be on the horizon. Although legislators will try to avoid it, cities and towns must now face the budgetary reality of cuts. This could prove particularly disastrous in communities, whose citizens are already reeling from property taxes that go up while home values plummet.

Notably on the table is a measure that would enable communities to join the state-run employee health insurance pool without union approval. According to the Boston Globe, seventy percent of union members much approve such a move before a community may act in such a way. House Speaker Sal DiMasi proposes that this could lessen the blow to communities and it would.

Presently, communities with their own insurance pool pay higher administrative costs and, being a smaller pool, higher insurance costs. The community maintains the same control over what co-pays are and what they choose to cover for employees/what is negotiated in contracts. Union Leaders claim that joining it leaves employees open to copay increases outside the union agreement. However, this does not ring true, because again communities control what the copay is. Cynically, Municipal Employee Unions use this as a negotiating tactic for higher raises.

What startled this blog most was DiMasi's weakening his position on local option taxes. Although not saying that they may be as good as law now, with communities bracing for local aid reductions everybody's looking for more money. However are additional taxes on consumption so critical to the economy the way to go?

Local options, as defined by Gov. Patrick, who originally pushed them when he got into office, are higher hotel taxes and higher meal taxes. Restrictions would be made by the Legislature on how much extra could be charged by communities. The blog finds no real fault with the hotel taxes. If constrained by the legislature, they pose no real harm to the commonwealth's biggest cities and the hotels therein. Surely the hospitality industry might disagree, but that is not our concern.

The meals tax is very disturbing, however. It will hurt employees, it will hurt restaurants, and it will hurt communities. It will hurt servers, first and foremost because a higher tax may discourage patrons from tipping as much. The best and most generous patrons may not be discouraged and certainly current and former service employees will not be discourage. However, John Q. Tipper might. It hurts restaurants for a similar reason. If you're an independent establishment in a city like Springfield, which may need the extra cash who competes with a similar establishment in West Springfield which can afford not to add the tax, where will patrons go? Sure Bay Staters eating in Enfield may weaken this argument, but how many times have people said, let's go to the 99 or Ruby Tuesday in Springfield rather than the one in Enfield to save the penny on the dollar. Lame? Yes. True? Also yes. It is important to note that this is also not a WMASS only issue. The meals tax in New Hampshire is 2% higher than it is in Mass. Finally, it hurt communities by putting the weaker ones in competition once again with the wealthier suburbs. We may all be in this together, but we do not act like it ALL the time.

If this "extra" meals tax be implemented it must be done carefully. Giving the control to communities however democratic may be handing communities their death warrants. If local interest intent on preserving their share of the budget strong arm the City Council or Town meeting to pay the options tax, they will automatically put their community at a disadvantage to any town to chooses not to or chooses a lower tax. Rather, a statewide meals increase that will give the percent above the current 5% will go to the community the meal was made in. Sunset clauses must be added, possibly going out five years and any extensions should be permitted by referendum only.

We are in crisis, nationally and locally. We must approach it thoughtfully and in the spirit of sacrifice on all levels. If the pain is unavoidable, it must first come in the form of cuts as experienced on the state and inevitably the municipal level. It should not come in the form a tax that attacks one industry and hurts some of the least protected workers in the economy. And if even then we cannot hold back that tide, we must do it in such a way that the Commonwealth is not poised to divide itself from within, but prepared to take it all on TOGETHER!!

No comments: