It’s hard to recall when the state of the city had changed so much in a single year.
When Mayor Thomas Menino gave his State of the City address in January, 2008, he said the national economic climate was “uncertain,” while the state of the city was “stronger than ever.” As he told the audience at the Strand Theatre in Dorchester, Boston was “bursting with excitement, investment and potential.”
A year later, Boston is one of many cities confronting an economic crisis. Office rents and the number of active mega-projects are on the way down, while the economy shows signs of struggle everywhere from the financial sector and world-class universities to neighborhood businesses on Bowdoin Street.
In 2009, it was the neighborhoods that the mayor said were stronger than ever, if measured by diversity and population growth. If the state of the city was strong, it was, as the mayor put it, because of being in the hands of Boston residents. In other words, the road to recovery would have to include sacrifices, such as the mayor’s proposal for a one-year wage freeze for city workers with union contracts.
The crowd hadn’t even left Faneuil Hall when the wage freeze started taking some hits. As one member of the audience pointed out, there was no wage freeze for some of the elected officials listening to the speech in the front rows. But supporters of the idea can argue a wage freeze looks much more acceptable to people in the private or non-profit sector who might feel lucky if they still have a job.
By the mayor’s estimate, the wage freeze could shrink an expected budget shortfall of $140 million by $55 million. But union leaders could argue that opening up contracts for one revision could lead to more, and also shave money off workers’ pensions.
City Councilor Michael Flaherty, who would later announce his candidacy for mayor, responded by calling for cuts in unspecified wasteful programs, and for getting rid of all consultants.
“Some people will lose their jobs,” Flaherty said in a statement right after the address on January 13, making his own call for Boston to be a “national leader in lean budgeting.”
The more waste cut from the budget, the smaller the shortfall, and the less need there would be for concessions from unions. Over the past several weeks, the mayor’s administration had been sending signals about possible budget cuts in the Police and School Departments. The signals have been mixed and the message is being challenged. But, outside this year's address at Faneuil Hall, the message was reinforced. Instead of police or firefighters demonstrating over contract demands, there was a show of concern over budget cuts from a group of high school students.
The wage freeze proposal got more support from another councilor said to be considering a run for Mayor, Sam Yoon. He favors a freeze for workers making at least $100,000 a year. City Council President Mike Ross called the wage freeze “a good idea worthy of serious consideration,” but less than a complete solution to the city’s budget gap.
Union leaders can also argue the wage problem is really a revenue problem that can be solved with some help from the state. That was the hint when the president of the Boston Teachers Union, Richard Stutman, responded to the mayor’s speech by issuing a statement pledging support for helping the city get powers to collect more revenue from local option taxes, most likely on rooms or meals.
In the last economic downturn, around 2003, the mayor trimmed the city payroll with the aid of early retirement incentives. These made it possible to avoid layoffs in large numbers, and the incentives could, for example, protect the jobs of young, motivated teachers without tenure—at the expense of more experienced teachers, who also might be more inclined to move on.
But, as the president of the Boston Municipal Research Bureau, Sam Tyler points out, the incentives can take a disproportionate toll on certain departments, along with increasing the city’s pension liability. For those reasons, he says the city “should not even consider” the incentives this time around. But Tyler suggested it might be a good idea to encourage an exit by employees already eligible for retirement.
So, if the unions agreed to a wage freeze, and the city had new sources of revenue, would that close the budget gap?
“I don’t say it would prevent any kind of employee reductions,” said Tyler, “but significant cutbacks this year would not be necessary.”
Local option taxes have support from Governor Deval Patrick, but Tyler notes, even if there were to be agreement from the state legislature, and enactment at the local level, little if any of the money would be available before the new fiscal year at the beginning of July. And, based on the real estate market at the beginning of 2009, it’s expected the burden of any increase in property taxes next year would fall more heavily on homeowners.
One other departure from last year’s state of the city address was the lack of any talk about the potential School Dept. savings from a reduction in busing. Last year, the mayor said busing costs would increase 50% in five years—by $20 million, but this year’s speech came after months of declining gasoline prices.
Last year’s speech also mentioned an expansion of ties between schools, libraries and community centers that could mean less reliance on busing for equal access to quality education. The mayor called the strategy “Community Learning,” and he even referred to it as the “next Boston Miracle.” In the 2009 speech, the mayor mentioned several achievements and improvements, along with the promise of a better future, but there was no miracle.
The Warren Group reports single-family home sales were down last year in Boston by almost 15%. The median price decreased by more than 11%. The largest decreases in sales were in Brighton, South Boston and West Roxbury. The largest price drops were in Mattapan, at almost 31%, and East Boston, at more then 26%.
