Springfield discovers that bailout comes at a high price
In the drama that was the city of Springfield’s attempt to avoid going broke this spring, the theme on Beacon Hill turned out to be less helping hand than tough love. Charles Ryan, the 76-year-old patriarch of Springfield’s best known political family who won election to the mayor’s office last fall, practically camped out on Beacon Hill in an effort to secure a state-funded bailout for his beleaguered city (“Down But Not Out,” CW, Winter 2004). In early June, Gov. Mitt Romney filed legislation that would have provided Springfield with $20 million to cover its deficit for the fiscal year about to end, extended a $30 million line of credit, and suspended provisions of state law governing municipal collective bargaining rights, freeing the city’s hand to rein in personnel costs.
At first, the battle for Springfield seemed to shape up as a classic clash between Romney and the Legislature over public employees. The move to suspend collective bargaining drew instant opposition from organized labor and Democratic lawmakers, a reaction no doubt compounded by Administration and Finance Secretary Eric Kriss’s outspoken criticism of public-sector unions (see “No more public-sector union monopoly,” Argument). In a PowerPoint presentation to legislators, Kriss made the case for cracking down on overly generous benefits by citing the 60 sick days a year granted Springfield police officers, a number the administration claimed to be three times higher than the national average. Kriss also rejected complaints that the city had been shortchanged on local aid, claiming that Springfield’s net state aid per capita in 2004 was 34 percent higher than the average of 10 other Massachusetts “peer group” cities.
But the standoff took a surprising turn when lawmakers, including some from Springfield, rebelled at the prospect of a bailout, saying it’s time for the city to take its medicine. “It’s a problem that has been self-inflicted,” says state Rep. Thomas Petrolati, a Ludlow Democrat who represents a corner of Springfield. “It’s a fiscal management issue.”
Not only that, but covering Springfield’s bills would send the wrong message to the city about putting its fiscal house in order, Larkin says. “It’s too early to say the city of Springfield can’t manage their way out of this.”
Hopes of a state handout did seem to discourage talk of municipal economizing. In mid-June, according to the Springfield Republican, Ryan complained that two city councilors were jeopardizing the then-pending bailout bill by calling for additional cuts in city spending.
The bill that, at press time, seemed poised to pass the Legislature preserved union rights but limited state financial help to interest-free loans (the House approved $52 million, the Senate $22 million). It would also establish a five-member financial advisory board to oversee city spending. The board will include Ryan, the president of the city council, and three members appointed by Kriss.
That board will have its hands full, according to Michael Widmer, president of the Massachusetts Taxpayers Foundation, a business-funded watchdog group. “The loans may help in the short term, but they don’t change the underlying fundamentals,” says Widmer. Springfield needs to find “new revenue sources or make significant cuts in spending in order to bring things into long-term balance,” he says.
Springfield’s fiscal crisis is the most serious to hit a Massachusetts municipality since the city of Chelsea was forced into state receivership in 1991. James Carlin, a former state transportation secretary, was tapped by Gov. William Weld to serve as receiver for Chelsea, which faced a $10 million deficit on an annual city budget of just $40 million. A $5 million appropriation from Massport, which was termed an extra “mitigation payment” for the impact of the Tobin Bridge, was the closest thing Chelsea got to a bailout.Carlin had his battles, including one with the city’s firefighters, who challenged in court his authority to make work rules (Carlin prevailed). But overall, he says, there was broad support for his efforts, as long as his actions were seen as spreading the budget-tightening burden fairly. “You can do unpopular things, but you cannot do irrational things,” he says.
That “everybody wanted the receivership to succeed,” Carlin says, was his biggest asset. Springfield will need a similar reservoir of good will, he says, and to fill it up, the city will have to make some big moves and show some results—quickly. “It’s like the Red Sox,” says Carlin. “You get some momentum, the fans get behind you.”