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The Download: Killer bees, space aliens, and the invasion of the bankrupt states

Posted in: Current Affairs   Health care   Taxes   Massachusetts Legislature
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The national news media has finally discovered that most states are bleeding a lot of red ink. Washington has so far rebuffed calls for bailouts. But California state treasurer Bill Lockyer isn’t worried about the Golden State or any other state going bankrupt.

He’s scoffed at the idea of giving states the same ability to declare bankruptcy that individuals have, an idea that some federal lawmakers and presidential aspirants like Newt Gingrich are pushing. Lockyer sees the fear of state bankruptcies as a “phony crisis.” As far as he’s concerned, state bankruptcies are as likely as, well, invasions of killer bees and space aliens.

The problem is that all the talk about state bankruptcies has created panic in the municipal bond market over the past several months, leading to a furious sell off by investors convinced that some state and local governments might be headed toward default.

State fiscal meltdowns have raised a number of questions. Should you worry about your state going bankrupt? Not really, argues Slate’s Annie Lowrey, who gives a nod to Lockyer.  Right now, states cannot declare bankruptcy and attempting to do so would be “so legally messy as to be unworkable,” she says.  

How much will those problems drag down the economy? A Moody’s Analytics economist tells The Christian Science Monitor that though states’ fiscal problems will have some impact on the country’s gross domestic product, they won’t stall the recovery.

Will politicians have the intestinal fortitude to cut services and raise taxes, the political equivalents of hari-kiri? That depends. Though fears about the “invasion of the bankrupt states” may be greatly exaggerated, their fiscal problems are very real.

California’s mammoth budget woes and voters’ decision to fire up the wayback machine with Gov. Jerry Brown hog the headlines, so other states’ shortfalls have flown under the radar until very recently.

Facing a $15 billion budget gap, Illinois lawmakers raised the corporate tax rate from 4.8 percent to 7 percent, a 45 percent jump. The personal income tax rate took a bigger leap from 3 to 5 percent, a 66 percent hike. Those moves gave Illinois the dubious distinction of being the only state in the country to raise taxes to balance its 2011 budget in response to shortfalls.

In Texas, Gov. Rick Perry, a Republican who has been a strident critic of the federal stimulus package, took the money anyway. Turns out the state used 97 percent of those funds to plug a FY 10 budget shortfall and left its $9 billion rainy day fund for another day, presumably to plug the $12 billion fiscal 2012 deficit.

No one has uttered the “b” word in Massachusetts, but fiscal affairs aren’t exactly rosy here either.  Beacon Hill lawmakers summoned up the courage the raise the sales tax and levy a tax on alcohol, only to have voters nix the alcohol tax which cost the state about $100 million.

That means that lawmakers will have to come up with even more more cuts. With the pressures of the election season behind them, Gov. Deval Patrick and House Speaker Robert DeLeo are in full “let’s make a deal” mode and have public employee union health care benefits in their sights.

Both the governor and the speaker seem to be united to end the ability of the unions to “veto” plan design changes by municipalities desperate to cut their health care costs by joining the Group Insurance Commission. As long as the governor sticks to his plan to return to private life in 2015, he can effectively tell union leaders to go fish. Then again, the unions are probably better off trying to salvage their collective bargaining prerogatives on Beacon Hill since they might not fare as well if plan design goes before the voters in 2012.

But cities and towns will have to take a hit as well. Patrick proposes $65 million in cuts to local aid and wants to see eligible municipal retirees going into Medicare. Patrick also wants to remove a sales tax exemption on telecommunications equipment.

                                                                                                                                                                    --GABRIELLLE GURLEY

CHUCK TURNER

Chuck Turner had the proverbial book thrown at him, as US District Judge Douglas Woodlock sentenced the former Boston city councilor to three years in prison for accepting a $1,000 bribe. Woodlock's devastating sentencing line: “Someone like Mr. Turner who undertakes to speak truth to power must face the truth about himself.” The Globe account is here; the Herald’s is here.  

Meanwhile, Globe columnist Brian McGrory channels what nearly all serious Turner-case watchers have been thinking: Had Turner taken responsibility for his actions and described them as a horrible aberration to a life marked in no way by a quest for self-enrichment, he would likely have walked out of court with no jail time. Herald columnist Peter Gelzinis has the same take. at the fact that he could have dodged almost all that time, but refused. US Attorney Carmen Ortiz said Turner was “no Rosa Parks,” according to a story on WBUR

SAL DIMASI

Sal DiMasi, who could have found no comfort in the outcome of yesterday's proceedings in federal court, will nonetheless make a play today in his own corruption case to get everyone to just forget about the whole thing. He and his codefendants will seek to have their corruption charges dismissed on various grounds in advance of a scheduled April trial.

STATE OF THE UNION

President Obama played to the middle and challenged the country to “win the future” in last night's State of the Union address, reports the Globe. 

But his talk about jobs, sets up an ideological clash. The conservative media was either gleefully dismissive or apoplectic over the speech. The National Review found where the president wasn’t vague, he was just wrong.

The American Conservative got out the pom poms for Rep. Paul Ryan of Wisconsin, the telegenic anti-Obama, labeling him the “great right hope.” The old-line GOP and Tea Party responses weren't all that different on substance, just on rhetoric. Guess which one dialed it up? Jon Keller applies the spin-o-meter to Obama’s speech and finds that while some of his message was borrowed from traditionally Republican ideas, some other parts were not quite true.

The state of State of the Union metaphors: The Atlantic's Megan McArdle says Obama's speech reminds her of a conference call with a floundering CEO putting the best face on a very bad situation, while Joshua Green thinks the best comparison is to some hokey guy who just got out of a day-long motivational speech conference. At Slate, John Dickerson sees corporate-speak fingerprints all over the place, while William Saletan sees jingoism aplenty. 

ELSEWHERE IN WASHINGTON

After one year on the job, US Sen. Scott Brown surprises everyone but himself, WBUR reports.

BEACON HILL

Legislative leaders shrug off Gov. Deval Patrick's bid to combine the embattled probation and parole agencies. 

The Lowell Sun, in an editorial, slams the Legislature for refusing to post online the results of votes taken in legislative committees.

State Sen. Stanley Rosenberg wants to raise taxes on high earners and plans to file a bill to create a graduated income tax to replace the state’s flat tax.

HEALTH CARE

Leaders of Harvard Pilgrim Health Care and Tufts Health Plan say a merger of their companies would improve health care and lower costs.  But the Boston Business Journal argues that the Tufts-Harvard Pilgrim merger won't do anything to reduce health care costs unless it also reduces the numbers of plan choices available to businesses and consumers.  WBUR’s Curt Nickisch reports that national health care reform is the driving force behind the proposed merger.

Soda pot? Time reports that medical marijuana dispensaries in Colorado will soon start selling soft drinks containing 35 to 65 milligrams of THC, the main psychoactive ingredient in cannabis. The drinks will cost $10 to $15.

MUNICIPAL AFFAIRS

When allegations surfaced about his police chief, Salisbury Town Manager Neil Harrington said he turned to Robert St. Pierre, the retired chief in Salem, to investigate. Pierre’s report says Salisbury chief David L’Esperance exchanged money and drugs for sex, according to a story in the Salem News. An Eagle-Tribune report says Harrington is very disappointed in L’Esperance, whom he hired.

Deputy Fire Chief Jack Bergeron takes control of the Lawrence Fire Department, replacing Brian Murphy, who stepped down in a dispute with Mayor William Lantigua. Lantigua is moving to remove the chief’s position from civil service so he can appoint whom he wants, the Eagle-Tribune reports.

Lynn’s City Council votes to take legal action against the Salem Planning Board for approving a retail project that includes a Lowe’s and a Wal-Mart superstore, the Item reports.

A contractor was sentenced to six months in jail after pleading guilty to inflating bills on a project at Beverly Hospital and using the excess money to pay kickbacks to a vice president at the hospital, the Salem News reports.

ECONOMY/BUSINESS

Home sales data for 2010 are out, and the figures aren’t pretty.

Developers are hoping Vertex Pharmaceuticals' move to South Boston can lift up long-delayed construction projects across the waterfront.

It’s a little hard to remember when we’re knee deep in snow, but this past summer’s scorching temperatures destroyed crops in these parts, especially cranberries, and now farmers can apply for federal assistance after counties around southeast Massachusetts were declared disaster areas.

The owner of Edaville Railroad in Carver says he may have several potential buyers for the kid-pleasing theme park, saving the one-time cranberry harvest railway from development.

Greedy bankers and ineffectual bureaucrats ruined America in 2008, a new report says.

EDUCATION

An outside audit of the Hamilton-Wenham schools recommends 124 ways to save a total of $16.3 million over five years, the Salem News reports.

Andover voters approved a debt-exclusion override that will allow the town to build a new elementary school, the Eagle-Tribune reports.

MCAS results from the Goddard School of Science and Technology in Worcester were thrown out after teachers allegedly coached students during the testing, NECN reports.

Our children isn't learning

OUT IN THE COLD WITH THE MBTA

While T riders froze, MBTA General Manager Rich Davey continued to find himself in the hot seat.  Adam Gaffin on Universal Hub offers his own experience in waiting more than 45 minutes for a MBTA bus with scores of other frozen commuters.

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