© David Burton 2013

     In Massachusetts: Democratic, Unionized and Very Expensive [1], I discussed the high costs of transportation in Massachusetts, in particular the high cost and poor performance of the Massachusetts Bay Transportation Authority (MBTA) or the T. Contributing to these high costs “is the stranglehold on state and local government by Massachusetts Democrats. In this state, Democratic means liberal and liberal means government largesse at the expense of all state residents. Another reason is the fact that {public employee} unions and the Democratic Party in Massachusetts are joined at the hip. Democratic politicians in the state make sure that their union supporters are taken care of legislatively, while the unions funnel their financial support back to the Democratic politicians, campaign for them, and get out the vote for them. Everyone makes out, everyone, that is except the poor slobs who end up paying the bills - the citizens of Massachusetts who pay . . . higher than necessary public transportation costs . . .” (Ref. 1)

     Most recently, another reason for the high cost of operating the T emerged into public view – the cost of early retirement coupled with generous retirement payouts along with the cost of nepotism and political favoritism in the system. These abuses are described in what follows.

Bloated T Retirement Benefits

     “The Massachusetts Bay Transportation Authority on Thursday {8 August 2013} released a list of nearly 6,400 names, many of whom are receiving pensions as a vestige of a program that allowed employees to start collecting pensions after 23 years of service, no matter their age. [Emphasis mine] That long-criticized system has {only recently} been abolished and replaced by a program that allows employees to retire with a pension at age 55 with 25 years of service.
     “The T's $1.77 billion retirement fund has long resisted making the information public, saying it is a private trust, but a transportation finance bill passed in July {of 2013} required that the information be released. [Emphasis mine]
     “Calls for release of the information increased as taxpayers have been forced provide more to cover T pensions.” (Ref. 2)

     It turns out that the “MBTA Retirement Fund has more pensioners scooping up payouts than active workers paying into it.” (Ref. 3)

     In addition, “more than half of the 6,300-plus people receiving pensions from the T retired before the age of 60, and 35 percent – or 2,240 – left before 55. . . . By comparison, the T has {only} roughly 6,200 active employees.
      - - -
     “Meanwhile, taxpayer payments to the fund have soared in recent years, topping out at $56.3 million last fiscal year, up from $30 million in fiscal 2007.
      - - -
     “With more people living to 85, or 90, they’re going to get a benefit twice as long as they worked. . . . There’s no question that this exceedingly generous benefit is one of the factors in the T’s financial problems.” (Ref. 3)

     So, what’s wrong with powerful public employee unions being in bed with liberal politicians and with the lavish retirement benefits they obtain as a result? Consider the following.

     “Out in California, the city governments of Stockton and San Bernardino entered bankruptcy proceedings in 2012. - - -” Why? “Public employee unions, legalized by Jerry Brown in his first stint as governor 40 years ago, are strong in California, and in these two cities, as in Vallejo, which went bankrupt in 2008, succeeded in getting lavish salaries, health plans and pensions before the housing bust. - - - The California cities are {in bankruptcy} primarily because of overbearing public employee unions.
     “They’re probably not the last cities to go bankrupt for these reasons.” (Ref. 4)

     Could what is happening in Stockton and San Bernardino happen in Boston or in Massachusetts?

Cronyism on the T

     In addition to providing generous pensions to retirees well before normal retirement age, the T is also a haven for friends and relatives of well-positioned politicians. William "Billy" Bulger was the Democratic President of the Massachusetts Senate. He later served as president of the University of Massachusetts. Patrick Bulger, one of William Bulger’s sons, “retired from the T in 2007 at age 43 – remember, they only had to work 23 years to go out with the full boat. He now collects $55,546.42 a year.
     “- - - 43 is a little early to quit ‘working,’ so he immediately began working on another kiss in the mail, at the Probation Department {another haven for recipients of political favor}. It was a nationwide search – his brother Chris {Bulger} . . . was already there making $100,000.
     “- - - {Jackie Bulger, one of William Bulger’s brothers}, was the clerk of the Boston Juvenile Court and lost his pension after a conviction for obstruction of Justice.
      - - -
     “- - - Before he got to the courthouse, Jackie ‘worked’ at the T, and his son {a nephew of William Bulger} followed him there. Mark Bulger retired in 2008 at the age of 43 with a pension of $34,732.44.
     “Jackie has a daughter named Beth Zodda. She makes $65,000 on the Senate payroll, where she’s been employed . . . ever since {her uncle} was president. She has a husband, and until his retirement he toiled at {the T}.
     “Robert Zodda went out at age 55 in 2010 with $42,822.24 a year. - - -
      - - -
     “{Double dipping is common among many of the T’s retirees.} Jim Rooney . . . took a small pay cut at the MCCA (Massachusetts Convention Center Authority} from his $357,000 salary. Of course, he had a little something extra to keep him warm – his T pension of $62,541.24.
     “He started collecting it in 1991, at age 41.
     “This is the tip of the iceberg. - - - “ (Ref. 5)

     Imagine being able to retire in one’s 40’s with full retirement benefits. I retired “early” at age 65. Your children and mine will likely not be able to retire until they are 70 or 75. Even Social Security has raised its payout age from 65 and it is likely to raise it still more to 70 or 72 in the near future. But, remember that this is Massachusetts: Democratic, Unionized and Very Expensive. It’s expensive only if you don’t have politically connected friends or relatives or you don’t work for the state.

Cost-cutting and Bill-paying for Massachusetts Transportation

     Transportation costs in Massachusetts are astronomically high and growing at an alarming rate. The state is struggling to find additional revenue sources to meet these rising costs. Some claim that a large part of the reason for these high transportation costs in Massachusetts is a result of the high costs of operating the greater Boston MBTA public transit system. That may be true. It’s a fact that “spending on the MBTA has risen twice as fast as the rate of inflation, and MBTA employees earn far more for the same work than their counterparts in the private sector.” (Ref. 6)

     Another reason given for the state’s runaway public transportation costs is “the state’s transit-related debt—largely because of borrowing undertaken for the Central Artery Tunnel (Big Dig) Project”. (Ref. 6)

     For whatever reason, and, realistically, there are several reasons for the state’s problems, there has been a major push-back to the ongoing clamor for more and more money being thrown at the problem without a serious attempt to address the underlying causes. This has even led to an open conflict between the Democratic leadership in Massachusetts’ House and Senate with the state’s Democratic governor. Public revulsion at the prospects of still more taxes to pay for the state’s increasing transportation costs was expressed in a Boston newspaper as follows:

     “We spend more than almost anyone else, we raise spending year after year and the only solution Massachusetts Democrats can come up with is ‘more taxes, more spending?’” (Ref. 7)

     Over the years, there has been lip service paid to coming up with reforms to control the high transportation costs. “Transportation reform . . . sought to address {one} of the transportation system’s major cost drivers: labor costs, including expenses from health care and other employee benefits, especially at the MBTA. Despite some results, such as moving MBTA workers into the insurance plan covering state employees, wages and benefits remain the transit system’s biggest cost. However, collective bargaining rules and a process by which arbitration often reverses MBTA efforts to reduce costs limit the agency’s ability to further control health care and pension costs.” [Emphasis mine] (Ref. 8) Such is the result of the unholy alliance between the public employees’ unions and the state’s Democratic politicians

     With reference to the most recent attempts to increase taxes, we have the following: “Here in Massachusetts, Beacon Hill Democrats want to stick us with a massive half-billion-dollar (per year) tax hike, including a gas tax that will go up automatically.
     “The good news is that {the state’s Democratic governor, Deval} Patrick is outraged!
     “The bad news? He’s outraged that it’s not higher. He’s demanding a minimum annual tax hike that grows to $800 million per year because – he says – our woefully underfunded transportation system needs it. - - -
      - - -
     “- - - {Yet} without the Legislature’s tax increase or Patrick’s turbo tax – we’re already the third-highest spender in the country. [Emphasis mine]
      - - -
     “Using figures from 2009, the most current available for this level of analysis, . . . our state Department of Transportation system’s costs are ‘well above the national average.’
     “’Massachusetts ranks {3rd highest} in administrative costs per mile, spending six times more than the national average. [Emphasis mine] And it ranks {2nd highest} in total disbursements per mile, spending 4.4 times the national average.’ [Emphasis mine]
      - - -
     “{For comparison, our neighboring state of} New Hampshire spends about $149,849 per mile of state road. That’s maintenance, administration, everything.
     “Massachusetts? We spend $642,834 for that same mile of road – half a million dollars more per mile.” (Ref. 7)

     So we here in the Bay State spend more than 4 times what our neighbor to the north does. And do Massachusetts drivers get better roads for the extra money being spent? I seriously doubt it. In years past, I commuted on a daily basis to my work in southern New Hampshire. I always knew when I crossed the border from Massachusetts into New Hampshire - the ride suddenly became much smoother as a result of the better quality of the road surface and better maintenance in New Hampshire. During our New England winters, the roads were always plowed better in New Hampshire than in Massachusetts.

     Politicians play at the game of reform when it comes to fixing the transportation fiscal problems. But true reform is still a vain hope here in the Bay State. The establishment - Democratic politicians and their public employee union co-conspirators – are too firmly ensconced in power. Typical of the collusion between the public employee unions and the state’s politicians is the charade of no longer requiring police details to act as flagmen on road construction and repair in the state.

     Massachusetts was the last state in the nation to approve the use of civilian flaggers on its roads in 2008. But, the state regulation allowing the use of civilian flagmen on road jobs is stacked in favor of police. “Currently only a handful of Bay State communities, some of them with small police departments that don’t have enough officers to do details, use civilian flaggers on local street projects, according to a survey by The New England Center for Investigative Reporting (NECIR). Four loopholes in the state regulation have undercut the effort to replace police details with flagmen . . . . One is the provision that requires police details on all roads where the speed limit is 45 mph {or higher} which ends up being most major roads in the state. A second loophole—each city and town police department can insist that police details be used on road jobs for ‘public safety’ reasons. Critics say, when that happens, the Massachusetts Department of Transportation (MassDOT) representative on the job often gives police the final say. A third loophole allows cities and towns to bypass the requirement to use flagmen on local road projects including work done by utility companies. A fourth loophole pertains to police union contracts. If the contract requires police details on all road jobs —which most of the state’s big city police union contracts do—flagmen are not allowed if the city or town is paying for the project. . . . ‘The hype surrounding this reform has always been much greater than the reform itself'.
      - - -
     “Because the state regulation doesn’t specifically require cities and towns to use flagmen, the loopholes in the regulation have spawned an entitlement mindset among officers who look to detail work as a way to increase their salaries. . . . ‘There are some real horror stories out there’. . . . police officers stop trucks for inspection and run checks on loads and employees while working on jobs where flaggers, rather than detail officers, are used. ‘They know how to get their point across’. . . . the concept of police details is so engrained in cop culture, one Massachusetts police chief even torpedoed a state contract because flaggers would be used in place of police details. This year alone {2011}, . . .{one} Salem, NH firm bid on about 100 flagging jobs in Massachusetts but hasn’t won a single job yet.” (Ref. 10)

     Another reason for the transportation system woes in Massachusetts is that the state has borrowed beyond its means to fund its transportation system infrastructure. This is compounded by the fact that Massachusetts has “the highest business costs in the nation”—mostly driven by higher labor and energy costs, not taxes—and an economy that is a “below-average” performer compared to the nation as a whole. Because debt service is taking 45 percent of the budget that could be used for transportation, the outlook for the transportation system is likely to continue to deteriorate.[9]
     It has been reported that the state agencies responsible for public transportation “are running structural deficits forcing quick fixes that do not address the real problems. The systems are a wreck and the $15 billion to $19 billion funding gap is real.
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• Operating costs are not controlled, and the MBTA has not come close to meeting the 2000 Finance Plan goal of limiting growth of operating costs to 2.5% per year. Actual growth has been 5% per year. The main culprits? MBTA retirement benefits (pensions and health care). Retirees account for about one-half of the MBTA's health care costs, and two-thirds of the retirees are under 65 (not eligible for Medicare).
• Sales tax revenue is inadequate: the 2000 Finance Plan assumed a conservative growth in sales tax—3% per year—but this has not happened. Since 20% of sales tax revenue goes to the MBTA, this lack of growth is a problem.
• Debt burden is 25% of MBTA expenses. At $328 million (FY06), this is more than the MBTA took in in fares in 2006.
• State of Good Repair—defined as capital assets functioning at intended capacity within their design life—cannot be achieved because the MBTA has not generated a surplus (est. $67 million in FY07) to fund improvements.
• The 15 Regional Transit Authorities routinely borrow to pay operating expenses.

• Staffing is inadequate, down from 3,000 to 1,740. The Federal Highway Administration declared this "well below the minimum needed to fulfill the necessary construction... functions."
• 82% of staff and 65% of MassHighway operations are paid from the capital, not operating, budget (2006).
• 44% of Massachusetts' highway funds go to paying debt service, the highest in the nation.
• 25% of money expected from the Federal government for highway spending between FY07–09 will go to repay notes issued for the Central Artery/Tunnel project (CA/T).

• MassPike's problems started when the state went to MassPike to cover a big part of the CA/T. MassPike is paying $1.8 billion of CA/T cost, about $1.4 billion funded through debt.
• The state committed existing funding—a portion of license and Registry fees—but no new sources.
• The CA/T operating and maintenance costs over time will exceed the $25 million per year given to MassPike by the state.
• Toll discounts exacerbate MassPike's problems. FAST LANE alone costs $12 million per year.” (Ref. 11)

1. Massachusetts: Democratic, Unionized and Very Expensive, David Burton, Sonofeliyahu.com; Article 168, 2 July 2013.
2. MBTA releases long-closed pension data, wxvb.com, 9 August 2013.
3. More T pensioners collecting than paying, Matt Stout, Boston Herald, Page 2, 10 August 2013.
4. Detroit won’t be last city to go belly up, Michael Barone, Boston Herald, Page 21, 13 August 2013.
5. T pension list a map of Bulger fam’s free rides, Howie Carr,Boston Herald, Page 4, 9 August 2013.
6. Transportation in Massachusetts: The Cost of Doing Nothing, The Boston Foundation, 11 April 2012.
7. Mass. Tax-and-spend road $how, Michael Graham, Boston Herald, Page 15, 5 July 2013.
8. MAXED OUT: MASSACHUSETTS TRANSPORTATION AT A FINANCING CROSSROAD, Transportation for Massachusetts (T4MA), October 2011.
9. Transportation in Massachusetts: The Cost of Doing Nothing, tBf: The Boston Foundation, 11 April 2012.
10. Flagmen Vs. Police Details: Taxpayers Footing the Bill, Beverly Ford, New England Center for Investigative Reporting, 25 September 2011.
11. The State of Transportation in Massachusetts, http://www.macponline.org/PDF/Boston%20Informer%20TransReform.pdf, Accessed 13 August 2013.