House plan exempts T from Pacheco Law

5-year reprieve may make it easier to hire private contractors

THE HOUSE BUDGET COMMITTEE unveiled on Wednesday a $38 billion spending plan for the coming fiscal year that tracks fairly closely to Gov. Charlie Baker’s proposal and even gives the MBTA a five-year break from the so-called Pacheco Law.

The Pacheco Law, named for its 1993 sponsor, Sen. Marc Pacheco of Taunton, requires state agencies to jump through a series of hoops to contract services out to private contractors. Critics say the hurdles have restricted innovation and driven up costs, while supporters say the measure merely requires state managers to prove that private contracting will save the state money with no dip in quality.

Rep. Brian Dempsey, the chairman of the House Ways and Means Committee, said the panel’s budget proposal authorizes several MBTA reforms. The budget plan calls for two, $250,000 audits of the MBTA’s maintenance protocols and its debt obligations and pension liabilities. The Haverhill Democrat said the spending plan also exempts the T from the Pacheco Law for five years.

Dempsey said the Pacheco Law makes the contracting process with private vendors very cumbersome and, as a result, such contracts are almost never negotiated. He said the Pacheco Law exemption is “a tool they need” at the MBTA.

Asked why other agencies aren’t being exempted from the Pacheco Law if its requirements are so cumbersome, Dempsey said: “The T cries out for a change in the status quo.”

Overall, the House Ways and Means budget plan calls for a 2.8 percent increase in spending over the current year, about $100 million less than what Baker proposed. The House plan embraces Baker’s approach to slowing the growth in the Medicaid budget by pushing off $457 million in bill payments into the next fiscal year and reducing the number of people served by the health insurance program through an eligibility verification process. Medicaid spending accounts for about 40 percent of the budget.

The House plan provides some additional funding for local aid, housing and homelessness, early education and child care, substance abuse, and mental and behavioral health services. It also provides $17.3 million more than Baker for the state Trial Court to avoid about 500 layoffs, and it holds the state employee share of health care expenses at 20 percent, rather than increasing it to 25 percent as Baker proposed.

At a press conference in a room off the House chamber, Dempsey said his budget provides less funding  than Baker’s for public defenders, sheriffs, and higher education. Told by a reporter that the state’s universities were already grumbling that the House spending plan will cause them to hike student fees, Dempsey said that wasn’t the response he was looking for. “I’d like to hear them occasionally say they’ll look at their expenditures,” he said.

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Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

Dempsey pointed out that the fiscal 2016 budget proposal relies on no new taxes and for the first time since fiscal 2007 draws no money from the state’s stabilization fund. Yet the budget does divert about $400 million that was supposed to go into the rainy day fund and uses the money to support state spending.

Noah Berger of the Massachusetts Budget and Policy Center said in a statement that the rainy day fund diversions and the decision to pay a large chunk of fiscal year 2016 Medicaid bills in fiscal 2017 means the state’s structural budget gap remains. He said budget officials have struggled to close that gap ever since steep income tax cuts were enacted in the late 1990s.