Spring 2008

Spring 2008

Betting on the House

Betting on the House

If Gov. Deval Patrick represents the new face of liberalism in the Massachusetts Democratic Party, 14-term Congressman Barney Frank is the unabashed older version. But both men believe that government programs can improve the lives of citizens, and they are not hesitant to say that the government needs more revenue to fund them.

Patrick and Frank also have something in common when it comes to getting that revenue: They want to legalize gambling. Patrick’s high-profile plan would have legalized three casinos in different parts of Massachusetts. Frank has a bill that would, for the first time, legalize Internet gambling in the United States, while charging the Treasury Department with taxing and regulating it.

Patrick failed to convince a skeptical House Speaker Sal DiMasi that casinos make sense, though he had strong support from labor unions and mayors eager for the jobs and the tax revenues the casinos would generate.

Frank faces an even bigger challenge. His bill has only 46 of the 435 House members as co-sponsors, and as of now just three other members of the Massachusetts delegation (Bill Delahunt, Michael Capuano, and Jim McGovern) are backing him.

Where Patrick’s support of gambling was largely pragmatic — he wants the revenues gambling can generate — Frank’s push for expanded gambling also reflects his libertarian streak. Studies have shown that lower-income people tend to spend a disproportionate amount of their income on gambling, but Frank doesn’t believe this justifies a prohibition on the activity.

“If this is what lower-income people want to do with their money, who are we to tell them, ‘That’s stupid?’” he asks. “I believe in personal freedom. It’s as simple as that. I don’t understand how you can tell adults they can’t do this with their own money.”

Both the Bush and Clinton administrations have treated online gambling as illegal ever since the expansion of the Internet in the mid-1990s. The Justice Department cites the 1961 Wire Act, which prevents businesses from using a “wire communication facility” for interstate or international bets.

Even Patrick, when he announced his casino plan for Massachusetts, included a ban on Internet gambling. Kofi Jones — spokeswoman for Daniel O’Connell, the secretary of economic development and the governor’s chief adviser on the gambling issue — did not respond to requests for comment, but many observers speculate that the governor’s opposition comes from the fear that Internet gambling (should Congress authorize it) would drain revenue from casinos.

For his part, Frank supports Patrick’s casino plan, the Internet gambling ban excepted, and says Patrick should also get behind his bill.

Just as Patrick saw dollar signs in his casino plan, Frank estimates that taxing online bets could yield between $3 billion and $15 billion for the US Treasury over five years. Frank could not come up with a more precise estimate because his bill would allow states to ban their own citizens from gambling online and would give sports leagues the option of banning websites from taking bets on their games.

Even so, Congress is on record opposing online betting. In legislation passed two years ago, Congress cracked down on foreign websites that were not covered by the domestic ban on Internet gambling, barring US banks from processing credit card or check transactions for them. Almost every Republican voted for the bill, along with 76 Democrats, including two from Massachusetts (Stephen Lynch and Marty Meehan, who has since left Congress).

frank hasn’t taken much heat at home for his crusade, but he has heard from disgruntled activists elsewhere. Forty-three state attorneys general, for example, wrote to Frank in November to say they had “grave” concerns about his bill and expressed the view that it “would undermine states’ traditional powers to make and enforce their own gambling laws.”

Massachusetts Attorney General Martha Coakley did not sign onto the letter. But one of her predecessors, Scott Harshbarger, says he “understands completely” the position of the letter writers. Harshbarger, who vigorously opposes Patrick’s plan to build casinos in Massachusetts and sees legalized gambling as bad public policy, says Frank has walked into a minefield. “He’s walked not only into the gambling issue but into other areas surrounding the traditional powers of the attorneys general to regulate consumer protection issues within their own jurisdictions,” he says.

Bay State church leaders haven’t joined in the moral condemnation of Internet gambling that’s been common elsewhere. Even the group Casino Free Massachusetts, which was organized to oppose Patrick’s gambling plan, does not take any position on Internet gambling, says Laura Everett, a spokeswoman for the group and the associate director of the Massachusetts Council of Churches. She says the group’s opposition to the Patrick proposal was not based on moral grounds, but rather a differing vision for economic development. “This is about the direction we see our state going in and what sort of vision of Massachusetts we want to have,” she says.

Still, Tom Grey, a Methodist minister and national spokesman for the National Coalition Against Legalized Gambling, says that allowing people to bet online will create more gambling addicts than brick-and-mortar casinos ever could.

“I know Barney Frank says this is about personal freedom, that we should let people do what they want, but I think Congress was right to say we don’t want gambling coming into people’s homes,” he says.

Frank admits that it’s going to take a more vigorous lobbying campaign by supporters of Internet gambling to persuade his colleagues in the House to change their views. So far, his supporters are few, and Frank does not have the backing of the major lobbying group for US casinos, the American Gaming Association. The AGA is wary of any national regulation scheme (on its website, its says that the “the right of states to regulate gambling must be protected”) and prefers a House bill by Nevada Democrat Shelley Berkley that calls for a study of Internet gambling by the National Academy of Sciences.

Frank’s biggest supporters are foreign gambling sites, which have hired U.S. lobbyists to promote the bill, and a group of champion card players calling itself the Poker Players Alliance. That group has hired poker enthusiast and ex-New York GOP Senator Alfonse D’Amato to lobby for the Frank bill.

The congressman has also won backing from Charles Nesson, a poker enthusiast and Harvard law professor. Nesson believes that poker is an effective learning tool and since announcing his support for the Frank bill last year has even appeared on Comedy Central’s Colbert Report to make the point. “I have made it my mission to make poker legitimate,” he said on the show, adding, “It is one of the best tools we have to teach negotiation, risk assessment, strategic thinking, and other essential life skills.”

As Frank mounts his crusade for legalized Internet gambling, he stresses three points. First, he says, barring people from gambling on the Internet is a fruitless task. And in contrast to brick-and-mortar gambling, he argues, the Internet offers greater opportunities to track problem or underage gamblers. He says there is little or no safety net for problem gamblers who make regular visits to casinos, or to the local convenience store for lottery tickets, but regulations could require gambling websites to identify problem gamblers (flagged through accounts that are used too often or lose too much money in a short period), block them from making bets, and direct them to treatment programs. (Gambling opponent Grey, for one, says he doesn’t buy this argument.)

Second, the cost of banning Internet gambling could be enormous. The Bush administration has not yet released the terms of a compensation agreement it reached last December with Japan, Canada, and the European Union after the World Trade Organization ruled that the U.S. Internet gambling ban, because it makes exceptions for horse racing and a few other types of gambling, was a violation of free trade agreements. Some analysts say the compensation agreement with the other nations could stretch into the billions of dollars.

Frank’s third point is about money, and that’s where he and Patrick see eye to eye. Given the political difficulty that accompanies any effort nowadays to raise taxes, gambling revenues could be a godsend to underfunded programs across a wide array of government services, Frank says.

“If there are better ways to raise revenue, I will vote for them,” he says. “But it’s fairly clear in the current political situation that we won’t get much revenue by trying to raise taxes.”

Statistically Significant

Statistically Significant


Passenger fares accounted for only 29 percent of operating expenses on the MBTA during 2006, according to new data from the Federal Transit Administration, or well below the national average of 34 percent. The biggest drain was the bus fleet, which brought in enough revenue to cover just 21 percent of operating costs; that was the ninth worst performance among the nation’s 10 largest bus systems (only Seattle was lower).

The “fare recovery ratios” for other parts of the T system were closer to those in other major cities. The T’s commuter rail brought in enough to pay for 47 percent of operating costs, and fares for the three “heavy rail” subway lines (Blue, Orange, Red) paid for 45 percent of costs, with the “light rail” Green Line at 49 percent. That was a lot better than the lightly traveled Los Angeles subway, where fares accounted for 31 percent of operating expenses, but nowhere near first-place New York, where MetroCards covered 72 percent of the cost of getting you from one station to another.

no one knows more about septic tanks

In the department of somewhat dubious bragging rights, the Census Bureau has taken a few hundred product categories and figured out which state benefited the most from each of them. It turns out that “septic tanks and related services” was one of 24 industries that enjoyed its highest sales per capita ($17.73) right here in Massachusetts during 2002.

The biggest three industries in which we rank number one are more in keeping with our white-collar image: “wholesale electronic markets and agents and brokers,” portfolio management, and the manufacturing of navigational instruments. Each generated at least $8 billion in total sales, or more than $1,300 per person. But Massachusetts was also tops in “specialty hospitals,” cutlery manufacturing, automotive glass replacement (not really an export business, so apparently we have a lot of broken windshields here), coin-operated laundries, and “diet and weight reducing centers.”

Elsewhere in New England, the biggest industries in which each state finished first were: “petroleum bulk stations and terminals” in Connecticut, paper manufacturing in Maine, retail trade in mall-heavy New Hampshire, “miscellaneous manufacturing” in Rhode Island (always so secretive, that state), and computer manufacturing in Vermont.

two for one on beacon hill

There were 569 registered lobbyists on Beacon Hill as of 2006, according to a new report from the nonprofit Center for Public Integrity, or 2.8 for every member of the state Legislature. That actually means less arm-twisting than in most capitals: The CPI estimated an average of five lobbyists for every state legislator in the nation. New York led the pack by this measure, with 5,117 lobbyists making their pitches to 212 lawmakers, making for a ratio of 24-1. Florida and Illinois, both with ratios of 12-1, were tied for a distant second.

State lawmakers in North Dakota came the closest to outnumbering lobbyists (but still failed, 154 to 141). Among larger states, Pennsylvania is the most lobbyist-free, with 355 of them spread across a legislature of 253 members.

mit tries harder

Charitable contributions to colleges and universities increased by 6.3 percent in 2007, according to the New York–based Council for Aid to Education, but the bump up was mostly due to grants from family foundations. Gifts from alumni were down by 1.5 percent, perhaps a sign of shaky economic times, but still accounted for 28 percent of all contributions.

California’s Stanford University raised the most last year ($832 million, down 9 percent), while Harvard University remained in second place ($614 million, or up 3 percent). But MIT surged from 21st to 11th place. It raised $329 million, for an increase of 40 percent.

a hefty library fine for bridgewater

“As municipal budgets get tighter, many cities and towns are looking for savings in their library departments. After all, why keep the lights on in the stacks when there’s Wikipedia? But in February, the town of Bridgewater found out that there’s a price for shortchanging libraries. After voters there turned down a Proposition 2 1/2 override, town officials slashed the annual library budget from $844,000 to $484,000, according to the Brockton Enterprise. This move may have helped municipal finances, but the Massachusetts Board of Library Commissioners found it a most displeasing plot twist. It stripped the Bridgewater Public Library of its certification, meaning that cardholders can no longer borrow books from other libraries in the region.

The Enterprise reported that 14 communities recently appealed to the library board to keep their certification even though they had cut library hours below the minimum set by the state. Only Bridgewater was denied a second chance. Because of its size, Bridgewater was required to keep its libraries open 63 hours a week, but after the budget cuts, the town kept them open a mere 15 hours a week. So the town saved a few hundred thousand dollars and became an example for the rest of the state.

Or will it be a trendsetter?

no land of enchantment for businesswomen

Massachusetts is often knocked for its low number of women in elected office, but we’re not exactly ahead of the curve in the entrepreneurial sector either. The Census Bureau recently calculated that 29 percent (there’s that leap year number again!) of businesses in the Bay State were owned by women in 2002. That’s about the same as the national average, but we ranked 49th, just ahead of New York, in the percentage of businesses “equally owned” by men and women: 8 percent vs. 12 percent nationally. Businesses with both male and female owners—presumably including a lot of literal mom-and-pop stores — were most prevalent in Idaho, with 21 percent of all firms.

That left Massachusetts as one of only eight states where men, and only men, still owned more than 60 percent of all businesses. The others were Alabama, Connecticut, New Hampshire, New Jersey, Pennsylvania, South Carolina, and Tennessee. (So much for the idea that the Northeast is more enlightened than the Deep South.)

According to the data, women without male co-owners were in charge of more than 30 percent of all businesses in just three states (Hawaii, Maryland, and New Mexico), plus the District of Columbia. New Mexico was the only state where it was even theoretically possible that less than half of all businesses were owned solely by men; a shade under 50 percent were classified as “male-owned,” but the numbers for each state didn’t add up to 100 percent because a small number of businesses are simply “not classifiable by gender.”

What works

What works


It used to be a source of frustration in small towns in western and central Massachusetts that the contract for school milk would go to out-of-town dairies because the cost was lower. But over the past five years, Dining Services at the University of Massachusetts–Amherst (where I teach) has managed to overcome the obstacles and has quietly become a leader in buying locally produced food products. What’s more, it is finding that the costs of local products are competitive.

In 2002, Dining Services inserted a clause in its vendor contract that allows the university to set a goal for the percentage of food that comes from local sources. The department now buys about 22 percent of its produce locally, up from 15 percent in 2005, says director Ken Toong, and he’s shooting for 25 percent next year.

Dining Services, which provides about 5 million meals a year, now injects about $450,000 each year into the local agricultural economy. “This is no small task considering the size of the student population and the growing seasons in New England,” Toong says.

Toong is working with the other four colleges in the region — Smith College, Amherst, Hampshire, and Mount Holyoke — to increase support for local farms.

UMass buys its produce from the Czajkowski farm in nearby Hadley, located one mile from campus. Owner Joe Czajkowski coordinates with about a dozen other farmers to guarantee supply and consistency.

Toong says local food products — such as eggs, milk, jam, and even the beef served at the Faculty Club — are cost-competitive with national distributors, and the food is fresher. Dishes served in the dining commons feature cards that list the meal’s pedigree, and Toong says students appreciate it.

Others are noticing as well: UMass Dining Services received an environmental award from the state in 2006 for its sustainability efforts.


If you have an 18-year-old in your house, then you have probably heard the news: Once you turn 18, you can do whatever you want. But for a young person in the foster care system, that milestone is often the gateway into a life of troubles. About 25,000 people “age out” of foster care each year, and most leave the child welfare system with no family support and few life skills. The Pew Charitable Trusts reports that one in four will be in jail within two years, and one in five will be homeless. Only half of these young people will graduate from high school, and fewer than 3 percent will graduate from college.

The problem is particularly tough in the Bay State because of the high cost of housing. Some kids have ended up in public housing, living next door to seniors, and the resulting culture clash creates its own set of issues.

But in Nashville, Tennessee, two nonprofit agencies combined forces to address the problem. Monroe Harding, which runs programs for at-risk youths, and the Woodbine Community Organization, a housing development organization, built three duplex apartment buildings that now house 14 young people who have a common kitchen and living space. They pay rent according to a sliding income scale, and a Monroe Harding counselor checks in with each resident daily to find out how they’re doing at work or at school.

The combination of secure housing and life-skills support has helped many kids transition successfully into adulthood.

“We’ve had very positive results,” says Melissa Houck, Monroe Harding director of development. “Foster kids are coming in from word of mouth. Other kids in the system tell them: You need to get here, it worked well for me.”


Faced with a lousy record on local recycling, the town of Smithfield, Rhode Island, took a drastic step: The town refused to pick up the trash of residents who weren’t also putting out their recyclables. Many residents complained, but the plan worked, says recycling coordinator Gina Barbeau. “We had 10 to 15 complaints a day the first week,” she says, “but now no one complains because people realized we’re serious about it.”

The recycling rate in the town of 6,300 households has increased from 20 percent to 25 percent since the program started.

Most Massachusetts towns take a different approach, encouraging residents to recycle by charging them a per-bag fee to pick up their non-recyclable trash. But the city of Boston has seen some improvement in recycling participation with a pilot program that allows single-stream recycling, in which residents toss all recyclables into one bin. It’s now working in two neighborhoods and should be citywide within the next two years. Boston pays $80 per ton to get rid of regular waste but only $22 a ton for plastics, and the city sells waste paper for $40 per ton.

Massachusetts officials estimate that an additional 1.5 million tons of paper could still be removed from the waste stream and sold for more than $30 million. Toward that end, some 160 communities have signed on to the MASS RECYCLES PAPER! campaign, which encourages municipal governments and businesses to recycle more paper. As part of the campaign, 16 communities are planning public “shredding events” this spring, to which residents can bring documents they’d rather not toss into a recycling bin.

Paper recycling has changed a lot in the past decade, says Karen Patterson, who runs the MASS RECYCLES PAPER! program, which operates with donations and a grant from the Massachusetts Department of Environmental Protection. Many more types of paper products are now recyclable, and the market for used paper is booming.

Patterson estimates that the recycling and reuse industry supports more than 1,400 businesses and 19,000 jobs in the Bay State and generates $64 million annually in state tax revenues.

Much of the paper collected in Massachusetts goes to the Newark Group Recycled Fiber Mill in Fitchburg, where it gets converted into hard covers for books (including the most recent Harry Potter tome), and boards for games like Monopoly, which is manufactured by Hasbro, in East Longmeadow.


Just outside the infirmary at that Hasbro plant is a giant mural of the hapless doctor in the popular children’s game Operation. But the doctor isn’t in quite so often at Hasbro these days, in part because of a program aided by state grants in workforce training and safety.

Hasbro’s safety efforts focus on ergonomics, and the company has an industrial engineer whose job is to look at the repetitive motions in the 1.2 million-square-foot facility and recommend improvements. The company also has 12 ergonomic teams made up of management and union workers, who collaborate year-round on solutions to problems on the factory floor. Last year the teams came up with more than 50 proposals, and the program has been lauded by the US Occupational Health and Safety Administration.

Employees have designed and fabricated custom tools, for example, and they have designed and built custom-angled tables in the game assembly area that can be adjusted to the height and build of each worker. Hasbro employees also get their own safety insoles that mitigate hours of walking on the concrete factory floor. The company has teamed up with physical therapy faculty at nearby American International College to develop the shoe inserts and study their effects.

More recently, the company focused on ergonomic and safety training for older workers, since the company has many workers with 30 to 50 years experience who are still on the job.

Jack Popp, vice president for technical services at Hasbro’s East Longmeadow plant, says any savings, no matter how small, could mean the difference between the company remaining in the United States or moving operations overseas.

“If we keep our people safe on the job, we reduce our costs,” Popp says. “Every injury saved does support the bottom line.”

Needs improvement

Needs improvement

Here’s one report card that Massachusetts might want to hide: Governing magazine and the Pew Center on the States gave the state a “C” in their Grading the States report, released in early March. As the map below indicates, only New Hampshire and Rhode Island got lower grades for how well their state governments are managed. And with the notable exception of Connecticut, the Northeast seems to have fallen in the eyes of the Governing management mavens. Five of the six New England states, along with New Jersey and Pennsylvania, received lower grades than in the magazine’s last report card, completed in 2005. (Massachusetts got a “C+” last time.)

In this year’s report, the Bay State got mediocre marks for its budget process, the management of its public workforce, and the setting of performance goals, but it really ended up in a ditch thanks to the condition of the state’s infrastructure. And the report’s authors see no sign that we’ll be patching up our potholes soon: “If Massachusetts did decide to make infrastructure a top priority, it’s hard to know where the money would come from. The state’s total outstanding debt already exceeds $18 billion — the highest in the nation per capita — and the Massachusetts budget for next year already faces a $1 billion shortfall.” The state’s new health care insurance program also gave the authors a slight case of the willies. (“Initial estimates of 140,000 enrollees proved low, which will leave the program an estimated $245 million over budget this year.”)

Utah and Washington got the highest marks, with the latter state praised for its long-term budget planning (at least six years out) and Gov. Christine Gregoire’s town hall meetings on the budget process. As for the lowest-ranked states, the report’s authors derided the “myth” of fiscal conservatism in New Hampshire and charged that “meager cost and performance information and tortuous business processes create an institutional inertia that wastes much of the state’s limited resources.” And Rhode Island lost points for the fact that many state employees there still work on typewriters rather than networked computers.

Your town, USA

Your town, USA

walk into a bookstore almost anywhere in America and you’ll find a shelf full of thin paperback books with distinctive sepia-toned covers. Light on text, heavy on photos, numbingly similar in format and content, they’re volumes in Arcadia Publishing’s Images of America series of local history books.

Since 1994, Arcadia has put out more than 5,000 books for local, sometimes tiny, niche markets. Images of America was Arcadia’s first and remains its most successful series. The series began by covering cities and towns; then it branched out to parks and neighborhoods, and now includes colleges, businesses, individual buildings, and vanished sports teams.

Massachusetts has more Arcadia books devoted to its local history than any other state — nearly 350 titles covering 250 markets, according to Lynn Ruggieri, Arcadia’s public relations coordinator. Another 20 Massachusetts titles will be added this year, including Greater Boston’s Blizzard of 1978, by Alan Earls; Chinese in Boston: 1870-1965, by Wing-kai To; and Aubuchon Hardware, by Bernard Aubuchon Jr.

Whether it’s the Boston Braves or Boston Harbor Islands, Allston-Brighton or Cuttyhunk, when Arcadia’s research determines there’s a market for a topic, an Images of America book is sure to follow. The drawback is the 128-page template they foist on authors, which makes the books so formulaic they might be described as McImages of America.

The photographs themselves are sometimes so prosaic they could be inserted into other books in the series with the very real possibility that nobody would notice. If you’ve seen one photo of a Kiwanis or Lions Club banquet, you’ve seen them all. The same goes for staged shots of Cub Scouts, Girl Scouts, and high school marching bands.

Erin Rocha, acquisitions editor in Arcadia’s Portsmouth, New Hampshire, office, says the cookie-cutter nature of Images of America books is by design: “We don’t in any way claim that these books are a complete history of the area. They’re really kind of a snapshot. We certainly do put the emphasis on photographs because that’s what we want to share, so they’ll appeal to a broader group.”

Needham native Jen Jovin, the author of a new book on Wellesley, says there is a reason for the books’ one-size-fits-all similarity. “To a degree I think we all have a common experience, a shared history,” she says. “I think the books would be missing something if we didn’t include those so-called generic qualities.”

Fair enough, except when generic spills into cliché, like the 1901 photo of Wellesley shopkeeper William McLeod. He wears an apron and stands behind a counter next to a young assistant, with jars of preserves in front of them and shelves of canned goods behind them. It’s nice, but I swear the same shot is in my Images of America book on Dedham. And Westwood. And Cambridge. And Nahant.

Wellesley even has what may be the ultimate Images of America cliché: a long-gone tavern reportedly once visited by George Washington. My guess is there are dozens of Arcadia volumes, from Virginia to New England, with a similar photo and boast to go with it.

it used to be that municipal histories were written only once a century, and the person who penned it, often some crusty old town clerk, was the one person in town qualified — or inclined — to do so. But Arcadia Publishing has made it so that virtually anyone can now write a municipal history.

For example, Arcadia had been looking for 15 years to do a book on Wellesley with no luck. That changed last spring, when Jovin, then 24, received her master’s in history from Northeastern University and sent off a résumé to Arcadia headquarters in Charleston, South Carolina.

Her hope was to land “an editorial assistant job or something,” but when publisher Tiffany Howe saw that Jovin had interned at the Wellesley Historical Society and put together an exhibit called “Your Town,” she decided they had found the person they were looking for. Howe forwarded the resume to Rocha, who contacted Jovin immediately to see if she was interested.

“I was like, ‘Wow!’” Jovin laughs. “The prospect of writing a book was totally unexpected, but I thought about it and said, ‘Yeah, sure.’ It worked really well because I was able to take a lot of research I’d done for the exhibit and transfer that to book form. I had to expand upon it and find more photographs, but my previous research really was the foundation of the book.”

She signed a contract in June, with a manuscript due December 18. Arcadia sent along detailed guidelines, including a template on how to sort photographs into subjects, which became chapters like “Faces around Town,” “Local Enterprise,” and “Wellesley’s Dedication to Education.”

Choosing 200 photographs, writing the captions, and compiling a 1,200-word introduction took the better part of six months.

“I was going to Wellesley about once a week and spending probably seven or eight hours at the historical society,” Jovin says. “I did so pretty faithfully, right up until I had to submit the book.”

Arcadia writers don’t get advances against royalties and Ruggieri declines to say how much Jovin will be paid, but previously published reports list author royalties in the Images of America series at approximately 8 percent. With the typical volume retailing for $19.99 and sales not likely to exceed a few thousand copies, an Images book is more a labor of love than a ticket to fame and fortune. “I knew I wasn’t going to become a millionaire from it,” Jovin says.

But Arcadia authors can also purchase books wholesale and find nontraditional venues to market them. In Wellesley, that could mean setting up a table at the town dump on Saturdays, or working the crowd at the high school football game between Needham and Wellesley on Thanksgiving.

“Their contract says that they cannot sell to retailers,” Ruggieri says, “but we encourage authors to sell to individuals at book signings, lectures, etc.”

Another perk sometimes offered by major publishers is the fancy book launch party, something that Arcadia contributors have learned to do without.

Ruggieri says historical societies often throw parties themselves, but Jovin’s not expecting one. “It would be great,” she says. “I’d be very much in favor of having an opening, but the Wellesley Historical Society is actually a very small organization. They don’t have a large staff and nobody’s mentioned anything to me about it.”

Laura and Katie Taronas, authors of Paxton: Then & Now, had an experience with local officials that proved to be far different than Jovin’s. Initially, Rocha says, the historical commission was cooperative with the Taronas sisters, but then it changed its mind. No reason was given. With Paxton’s 250th birthday coming up in 2015, Laura Taronas wonders if the commission has plans to publish a book of its own.

“I thought they would be excited that two teenagers were interested in the history of the town,” says the 17-year-old, who wrote the introduction and captions. “It was a little odd, but I guess I understand.”

Luckily for them, about 20 years ago their grandfather found a cache of old Paxton photos at a yard sale. Absent official support from the town, those images comprise the majority of the book’s “then” photos, which are juxtaposed with “now” shots taken by Laura’s older sister Katie, 19. Together, the Taronas sisters make up Arcadia’s youngest writing team.

Although some Arcadia authors, in gratitude for the support they receive, donate their royalties back to the local historical society, the Taronas sisters are offering the book’s proceeds to Moore State Park and the Richards Memorial Library, both located in Paxton. To further make their point, they dedicated the book to the people of Paxton, “past, present and future,” taking care to note that “history belongs to all of us.”

Your blog of blogs

Your blog of blogs

Illustration by Nick Galifianakis

HERE’S WHAT Adam Gaffin finds frustrating. He’s in his car, heading for a meeting in Framingham, where he works in tech publishing. He’s got the radio tuned to WBZ. And news is breaking — a fire, a shooting, a derailment on the MBTA, whatever.

What he’d like to do is park himself in front of his computer and start searching for posts from the hundreds of local blogs he tracks. Is there an eyewitness account? A few photos? A video that someone uploaded to YouTube? If so, he’ll round them up and link to them on Universal Hub, the website he launched in 2004. Instant citizen journalism, all gathered in one place.

Except he’s got that meeting he has to go to. Universal Hub will have to wait.

At 49, the bearded, soft-spoken Gaffin may be the most influential editor you’ve never heard of. Or perhaps you have. Maybe you’re one of the 3,000 or so people who visit Universal Hub (www.universalhub.com) every weekday. Maybe you read about him in the Boston Phoenix in early March. Or maybe you caught a reference to Universal Hub while checking out a new local blog you’d heard about. An obscure Internet media activist for more than a decade, Gaffin is becoming less and less obscure all the time.

The idea behind Universal Hub is pretty simple. Every day — during breaks at work, while he’s on his exercise bike at home, or sitting in front of the television with a laptop — Gaffin tries to stay current with some 600 to 700 blogs in Greater Boston, looking for items that are unusually newsworthy, quirky, or poignant. He links to the best of them, along with an excerpt, some commentary, and a headline. He cites mainstream news sources as well, offering words of praise or disparagement.

What emerges from all this is something approaching a community-wide conversation. It’s like talk radio, only better, richer, more diverse, with people able to talk not just with the host but with each other through the comments they post. Universal Hub isn’t exactly an alternative to the Boston Globe and the Boston Herald, but it’s become an essential supplement — a source for hyperlocal and offbeat news you won’t find elsewhere, and a place to hash out the big stories of the day.

“It gives you a place to have a discussion with folks who you might not otherwise be talking to,” says Gaffin in the living room of his Roslindale home, where he lives with his wife and his daughter, a fourth-grader in the Boston public schools.

Adds Lisa Pollack, an account director at the Boston public affairs firm Denterlein Worldwide: “Every day, at least once or twice a day, I check in just to see what’s going on in people’s heads. What he has done so successfully in my mind is to give a sense of community. There are people who love this city as much as I do, and care as much about this city as I do, and they’re funny and they’re smart and they’re out there.”

(Now for the obligatory disclosure. My own blog, Media Nation, is frequently featured on Universal Hub. Media Nation is also part of the Boston Blogs advertising network, another Gaffin project, which offsets my Internet access fees by about $20 a month.)

Local bloggers say that a link from Universal Hub — sometimes referred to as “getting Hubbed” — guarantees a jump in traffic to their site. Paul Levy, president and CEO of Beth Israel Deaconess Medical Center and the author of the Running a Hospital blog, estimates that a mention is good for a 10 percent jump. The anonymous former journalist who blogs as the Outraged Liberal says he’s seen his own daily readership jump from 50 to 200 page views whenever he gets Hubbed.

“It comes to the point where I try to think about whether I write something that will attract Adam’s interest and attention,” says Mr. Liberal. “Because I know that if I do, I’m going to see my numbers go up.”

if you were checking in with Universal Hub on a mid-afternoon in early March, here are a few of the stories you would have found: A construction worker in Charlestown who shot himself in the head with a nail gun while trying to outrun a meter maid. (Police later reported it was only a BB.) Photos of an arrest in Somerville. A South Boston blogger known as Queen Dee ruminating on local pronunciation quirks. An “alleged dumbass,” in Gaffin’s felicitous phrase, involved in a car accident in West Roxbury. Mentions of new community websites. A woman attacked on the T in Brookline. And some striking photos of the city, a regular feature.

To invoke the old cliché, such homely fare makes up a whole that’s greater than the sum of its parts. From these pieces a picture of the city begins to emerge. And it’s a very different picture from the suburban-mom/urban-slickster duopoly you often find in the Globe, or the seamy underbelly portrayed by the Herald. Rather, the Boston of Universal Hub has none of the artificial coherence the traditional media try to impose on it. It’s just people talking.

Gaffin, a Brooklyn transplant who stayed after graduating from Brandeis University, is one of Boston’s online-media pioneers. He launched a site called New England Online in the early 1990s, at a time when, he recalls, he could track down every website in New England in an afternoon. A couple of years later it morphed into Boston Online (www.boston-online.com), a still-thriving directory and search engine for all things local.

Universal Hub began life as Boston Common in 2004, when Gaffin and Steve Garfield, a Boston–based video blogger, decided to try to capture the flavor of some of the local blogs they were reading.

“I was seeing a lot of interesting blogs in the Boston area, and I thought, hey, if I think they’re interesting, someone else might think they’re interesting, too,” Gaffin says. “So I started aggregating the interesting posts. I also wanted to see if we could play with more of a group blog, where you get more people involved than just me. Get the community involved. Because there are so many people out there who are blogging or who just want to participate and talk about the day’s news, or the interesting stuff that they’ve read online.”

Garfield says he continues to provide advice and ideas, although Universal Hub has clearly emerged as Gaffin’s project. Indeed, though it’s possible for anyone to set up a blog on Universal Hub, the vast majority of the posts you’ll find are Gaffin’s.

Though much of the content on Universal Hub is more slice-of-life than it is earth-shattering news, the site has had its moments.

After the massive Danversport explosion of Thanksgiving 2006, Gaffin rounded up a voluminous amount of material from local bloggers, including photos and videos shot, in some cases, before news photographers could reach the scene. Gaffin points to Danversport as an example of both the strengths and shortcomings of citizen journalism.

Amateurs, he says, can and frequently do beat the professionals on the first day of a story. But when the second day rolls around, it’s the traditional news organizations that are going to dig in and find out exactly why the neighborhood blew up in the first place. “I’m not one of those people who thinks you can replace a news organization,” says Gaffin, who began his career as a reporter for the Middlesex News (now the MetroWest Daily News) in Framingham.

Sometimes, though, the news media are clueless, giving citizen journalists an opportunity for a little one-upmanship. Consider the Mooninite scare of January 2007, when a couple of local artists were paid to plaster the city with electronic cartoon characters to promote an upcoming movie. City and state officials at first thought the blinking circuit boards were bombs, and the media went into meltdown. But local bloggers quickly figured it out—and, as Gaffin put it in a headline, “Was the city paralyzed today by ads for a stupid cartoon?

“That was just old media really not getting it,” Gaffin says now, adding Universal Hub set a record of 20,000 visitors that day.

It’s not all snark at Universal Hub. Just a click away from the “French Toast Alert” — a difficult-to-explain, easy-to-grok system in which the predicted severity of a winter storm is measured by how aggressively shoppers will buy out all the milk, eggs, and bread from their local supermarket — is a Google map plotting every murder in Boston for the past several years, along with comments and tributes from the families and friends of victims.

Gaffin takes crime and its effects on city life seriously, often highlighting posts from the Boston Police Department’s blog and from a blog written by John Daley, a Boston police officer and photographer.

“I think Adam does a couple of things that are important in reporting crime,” says Daley by e-mail. “First, he often covers things that the larger outlets only barely mention, and, second, he puts those stories into perspective, often personalizing them. There’s a tone of ‘This is what happened near where I live and this is what I think about that…and this is what happened near where you live, and I can’t imagine that you would be very pleased about it.’ It’s an antidote for apathy.”

Daley adds that in contrast to mainstream coverage of crime, which he characterizes as “humorless and sometimes overly careful,” Gaffin emphasizes what is “funny, bizarre, weird, or just sad.”

Gaffin’s relationship with the local media might be described as mixed. Universal Hub is dependent on the media for much of its news. Yet it galls Gaffin that the media — and especially the Globe — would rather run stories about urban professionals turned Vermont cheesemakers (a front page story that still galls him several months after it was published) than delve into the life of the city’s neighborhoods.

“The Globe increasingly drives me nuts,” says Gaffin, who, for a time, wrote a column for the paper’s City Weekly section consisting of highlights from Universal Hub. He gives the Herald credit for being more on top of crime and certain types of city stories, but adds, “The Herald is the Herald. They have limited resources.”

Yet David Beard, the editor of the Globe’s Boston.com site — and, thus, something of a competitor with Universal Hub — has nothing but good things to say about Gaffin. “I think he’s an essential stop for people,” Beard says. “It’s not just the aggregation, but it’s the smart tone and his selection of topics. I think the site covers the funny, tough, love/hate thing that we have in Boston, depending on the weather or the fortunes of our sports teams.”

As for Gaffin’s criticism of the Globe, Beard says, “If I were him, I’d make the same critique. In a sense he’s right, but in a sense he’s wrong because of the selection process. There’s always going to be room for more. If a couple of Globe reporters use him as a bit of a tip sheet, then he’s contributed to broader news dissemination.”

Oh, yes. The tip-sheet thing. With the exception of a tiny handful of online superstars, most bloggers have exceedingly small audiences. The aim of many is to attain influence by reaching the right handful. Some years back the proto-blogger Dave Weinberger twisted the old Andy Warhol maxim by saying, “In the future, everyone will be famous for 15 people.” The idea is to target the right 15 people.

“It’s no secret that reporters and editors read Universal Hub every day. There have been plenty of times when something interesting pops up at Adam’s site and journalists scramble to follow up,” e-mails Herald business reporter Jay Fitzgerald, who writes the popular Hub Blog.

Former Globe reporter Sasha Talcott, now at Harvard’s Kennedy School, says by e-mail that she regularly monitored Universal Hub to “add to my sense of what was going on in the various neighborhoods all around the city,” and that she got several story ideas from reading it.

But can Universal Hub be more? Should it be more? This spring, the Globe is going through another painful round of downsizing. The Herald is already a bare-bones operation. Is it possible for a volunteer or mostly volunteer community news site such as Universal Hub to take over some of the traditional functions of a daily newspaper? Perhaps. But that would be quite a leap.

A daily newspaper is a theory of what’s important. On its pages (or on its website) is the news that its editors think is most worth knowing, reported in a fair and neutral manner, and corrected when there’s a mistake. If it’s not in the paper, it’s not important — or, at least, you hope that it’s less important than what is in the paper. By contrast, bloggers write what they feel like writing about, and if they miss the most important part of a story, or distort it beyond recognition, well, you get what you pay for.

“One of the things that you get out of a newspaper, or you hope you get, is coherence. I’m not going to read the New York Times and miss Katrina, whereas bloggers don’t really have the sense that they must produce a complete whole,” says longtime Universal Hub devotee Lisa Williams, founder of the groundbreaking community blog H2otown (see “Watertown’s Net Gain,” Mass.Media, CW, Winter ’06), who also tracks local blogs from around the world at Placeblogger.com.

There are some community news sites that are more pro-actively journalistic than Universal Hub. One is LA Observed, founded by Los Angeles Times refugee Kevin Roderick, which keeps a close eye on all things LA — especially the long, sad decline of the Times. Another is the New Haven Independent, which isn’t really a blog, but, rather, a nonprofit news site begun several years ago by Paul Bass, former editor of the alternative New Haven Advocate.

Bass draws a distinction between the Independent, which he sees as more of a traditional news organization, and Universal Hub, which pulls together other sites’ content. “The value of the aggregator is someone who is going to have trust and help people navigate the Web,” Bass says of sites like Universal Hub.

Adds Bill Densmore, director of the New England News Forum (see “Full Disclosure,” Mass.Media, CW, Summer ’07), via e-mail: “Universal Hub is a placeholder for what community media will become. The challenge is finding a technology and organizational structure which combines the best of professional journalism and info-tech with the wisdom and passion of the public.”

Gaffin is intrigued by the idea of doing more. He says he’d like to take on Universal Hub as a full-time job if there were enough revenue coming in. Down the line, if he could, he’d hire an editor, a photo/video editor, and a general-assignment reporter. The idea would be to combine professional and citizen journalism into some sort of coherent whole — into a theory of what’s important, rather than a round-up of the best of what comes in over his RSS reader.

Like any editor — or, for that matter, any blogger — Gaffin has his obsessions and his turn-offs. He follows the MBTA in all its dysfunctional glory, even though he rarely takes the T, because he sees it as an essential element of living in the city. As for sports, well, he admits he has an agenda.

“I happen to be a Red Sox fan, so I cover that a lot,” he says. “But you know, there’s this basketball team that’s doing pretty well this year, I hear.” Not that you’d know it from reading Universal Hub.

And he offers something of a mission statement: “There’s a lot more stuff happening out there than you might see in the daily papers. Here’s a place not only where you can read about it but you can talk about it, how are you affected by it.”

Not exactly All the News That’s Fit to Print. But in an age when media institutions are crumbling and journalism seems to have lost its way, the conversational, decentralized community that has formed around Universal Hub looks like a vital, vibrant part of whatever it is that’s next for the media.

Dan Kennedy is an assistant professor at Northeastern University’s School of Journalism. His blog, Media Nation, is at medianation.blogspot.com, and he can be reached at da.kennedy@neu.edu.

Out of favor

Out of favor

in 2007, massachusetts Insurance Commissioner Nonnie S. Burnes announced the end of the auto insurance regulatory regime that had been in place for decades. Burnes proclaimed that the time had come for the state’s “fix-and-establish” method of auto insurance regulation to be replaced by “managed competition.” And she predicted consumers would see greater choice and lower rates from more competition.

Consumer groups and Massachusetts Attorney General Martha Coakley denounced the decision and warned that consumers would on average see higher auto insurance rates than they would under the fix-and-establish system and that insurers would introduce new and unfair rating factors (the characteristics used to determine a policyholder’s premium). Coakley eventually challenged the rate filings of five insurers, demanding that the commissioner reject the proposed rates. The attorney general hired me to review the filings and testify as to the fairness of the proposed rates. Although the commissioner had kind words to say about me personally, she decided my testimony was not relevant to her review of the filings and refused to let me testify. Too bad, because my testimony went to the heart of the problems with “managed competition.”

For most consumers, auto insurance is a necessary evil. You have to buy it and it costs a lot. Some consumers have a vague idea that state officials have set the rates in the past and that those rates have been coming down in recent years, but that’s often the extent of their knowledge.

In almost every state other than Massachusetts, auto insurance regulations require each insurance company to file its own rates and policy forms. The policy form is the actual insurance product, the contract that transfers the financial responsibility for an auto accident from the consumer to the insurance company. The rates are contained in a rate manual that spells out how the premium for any individual driver and vehicle combination is determined. While the regulatory review of these rate and policy form filings varies by state, individual insurance companies decide what products and what rates to use.

In Massachusetts, under the fix-and-establish regime, policy forms and rates were established by the insurance commissioner and, consequently, any insurance company operating in the state was required to use those forms and rates. Insurers were able to offer a few discounts — typically, a reduction of 5 percent to 10 percent for membership in a particular group — in addition to the discounts mandated in the rates set by the commissioner.

When insurers set their own rates, they start by figuring out how much overall premium (income) they need to cover claim costs, expenses, and profit. The result is a statewide base rate. The insurers then decide which rating factors they will use to set how much particular types of consumers will pay in premiums.

Rating factors are the characteristics of the consumer or vehicle that modify the base rate. Some of the rating factors seem obvious and logical. If you drive your car a lot of miles, you run a greater risk of being in an accident. Where you live makes a difference: The frequency of auto accidents is greater in a more densely populated area than in a sparsely populated area. If you have had driving violations or accidents in the past, you are more likely to have an accident in the future. Other rating factors include the type of vehicle — more expensive cars cost more to repair or replace than inexpensive ones — and whether the car has anti-theft devices or the driver has taken safety training.

Using these types of rating factors not only makes sense and seems fair to consumers, but also provides clear incentives for less risky behavior. With these types of rating factors, consumers have some control over their auto insurance premiums.

In states other than Massachusetts, there has been a revolution in the nature of insurance rating factors over the last 10 to 15 years. Insurers have introduced many new rating factors that focus on the socioeconomic characteristics of the consumer, with the result that traditional factors like one’s driving record have lost importance — and factors often outside of the consumer’s control have become the primary determinant of insurance premiums. The new factors include credit scores based on a consumer’s credit history, educational achievement, occupation, household structure, and prior liability limits.

At this point, your eyes are glazing over and you are thinking, what are these rating factors and why haven’t I heard of them? Well, you haven’t heard of them because they have not been permitted in Massachusetts. In other states, the most important factors for determining auto insurance premiums are credit history and prior liability limits. These two, like others mentioned above, are largely proxies for race and income. It turns out that insurers’ use of consumer credit information discriminates against low-income and minority consumers. The Missouri Department of Insurance conducted a detailed study of insurance scoring and found the single best predictor of a consumer’s insurance score was the consumer’s race.

“Liability limits” refer to the amount of coverage on the policy and can be broken down into “minimum limits,” the least amount of coverage mandated by a state, and “excess limits,” or coverage greater than the minimum. With prior liability limits as a rating factor, a consumer who previously had a minimum limits policy will pay more than a consumer who previously had an excess limits policy — even if both consumers are otherwise identical. It doesn’t take an economist to see that a rating factor using prior liability limits leads to higher rates for low-income consumers.


When Commissioner Burnes decided to let insurers develop their own filings, she set out some ground rules. To her credit, she prohibited insurers from using certain socioeconomic rating factors, including credit scoring, education, occupation and prior liability limits. She required insurers to maintain the existing limits of differences in rates by geographic area, meaning that rates in certain parts of Boston or Worcester should not jump up just because of geographic location. She also said no consumer could experience an initial premium increase of 10 percent or more.

It is important to put the 10 percent cap on premium increases due to new rating factors in perspective. Had the commissioner maintained the fix-and-establish system, and set the rates using the same input values as her predecessors, rates would have gone down about 10 percent. So, by capping the premium increase to 10 percent over current rates, and assuming a 10 percent rate cut if fix and establish had continued, the commissioner was actually allowing premium increases of 22 percent over what the premium charges would have been under the old system.

Attorney General Coakley challenged five of the 19 insurers who made initial filings last year for rates to be effective in April of this year. Massachusetts law, like the laws in every other state, sets out three standards for auto insurance rates. The rates must not be inadequate, must not be excessive, and must not be unfairly discriminatory. Inadequate rates are rates that are so low that the insurer’s financial solvency is threatened. Excessive rates are rates that produce an unreasonably high profit. Finally, the unfair discrimination standard goes to rating factors: Rates are unfairly discriminatory if they result in different premium charges for consumers who pose the same risk of a claim.

When the attorney general challenged the filings of the five insurers, she argued that their rates were excessive. Commissioner Burnes rejected the attorney general’s challenge. This was not surprising to anyone watching the course of events over the past year. The commissioner wants the new system to be successful, which means attracting national insurers to enter the Massachusetts market. For that to happen, she must demonstrate that rate filings will be reviewed quickly, that insurers will be able to earn the profit they want, and that the attorney general will not cause delay. The commissioner was clear that she, and not the attorney general, is the insurance regulator in Massachusetts. In addition, it would be a bit contradictory for the commissioner to declare the auto insurance market competitive and then agree with the attorney general that some filed rates were excessive.

Coakley hired me to review the rate filings for unfair discrimination. But when it came time to testify on the rate filing of the biggest insurer, Commerce Insurance of Webster, the company claimed that the attorney general had not included anything about unfair discrimination in the petition challenging the rates. Burnes refused to let me testify, saying my comments would not help her decide whether the challenged rate filing met the statutory standards. That was unfortunate because the issue of new rating factors is the dominant problem in the move to managed competition.

Had I testified, I would have pointed out that two of the five insurance company filings I reviewed penalized senior drivers and violated the state law requiring drivers 65 years and older to get a minimum 25 percent discount on their insurance premiums. Here’s how. Two insurers, Commerce and Arbella Mutual Insurance of Quincy, introduced a new rating factor: years licensed. The two companies proposed that drivers licensed for 51 years or more would receive a 10 percent surcharge on their premiums. It is pretty clear that anyone licensed 51 years or more is at least 65 years old. By adding the years-licensed surcharge and not increasing the senior discount, Commerce and Arbella are effectively reducing the senior discount to less than 25 percent.

Suppose that the senior consumer’s premium was $1,000 before the 25 percent discount and before the years-licensed surcharge. That senior should be paying no more than $750, or 25 percent less than $1,000. But with the years-licensed rating factor, the senior driver is now paying $825, or 10 percent more than the maximum the senior should have been charged.

In addition, many of the company rate filings suffered from two other problems. First, for many or all of the new rating factors, the insurers provided no data or other demonstration that the rating factor had any relationship to expected claims, or that the amount of the surcharge or discount for the rating factor was reasonable. As I reviewed the filings, it became clear to me that insurers were picking rating factors and values for those factors because they wanted to market to a particular clientele.

The problem with this approach is that the favored consumers get discounts that must be paid for with higher premiums by disfavored consumers, who are predominantly low-income consumers. The result is a back-door approach to using socioeconomic status as the main basis for setting insurance premiums.

With the new rating factors, consumers who insure multiple vehicles and buy additional policies from the same insurer might see big rate cuts from both current rates and rates that would have been in effect under the fix-and-establish system, while consumers insuring only a single auto might see a 10 percent premium increase over current rates and a 22 percent increase over rates they would have paid under the fix and establish system.

The biggest problem with the new rate filings is the incredible complexity of many new rating factors. To take one example, consider the “rating group” factor in Travelers’ Premier Insurance Co. filing. The factor is an amalgam of a dozen other factors, including single versus multiple vehicles insured, type of vehicle, vehicle age and type of coverages purchased, among others. And the combination of all these rating factors produces a value which is translated into yet another factor used to determine the premium.

There is clearly no need for this monster combination factor — each rating characteristic could be its own rating factor, which would provide some transparency to the consumer as to which factor caused the premium to increase. Rather than clarifying the impact of rating factors on the development of a consumer’s premium, the rating group approach obscures the role of rating factors and allows individual rating factors to have far more weight in determining premium than is otherwise indicated by actuarial analysis.

At best, this approach is unnecessarily complicated and renders the impact of various rating factors opaque to consumers. The consumer can never find out what characteristic was the cause for a premium increase. This defeats the goal of promoting competition by weakening the understanding of rating factors, and, subsequently, the market position, of consumers relative to insurers. The multiple uses of the same risk characteristic also lead to unfairly discriminatory rates because that characteristic is given too much weight in the rating process.

Under managed competition, an auto insurer might raise or lower overall rates by 5 percent, but, because of new or changed rating factors, could increase some consumers’ rates by multiples of the overall rate change. With the first round of rate filings, the disparity between the rates paid by favored and disfavored consumers grew. Next year that disparity is likely to grow even more because managed competition has opened the door to abusive auto insurance rating schemes.

Birny Birnbaum is the executive director of the Center for Economic Justice in Austin, Texas. A former Texas insurance regulator who oversaw rate filings, Birnbaum was hired by Attorney General Martha Coakley to analyze the rate filings of five companies in Massachusetts as part of the move to “managed competition.”

Job seekers

Job seekers

UPDATE: The Bay State’s unemployment rate over the 2009 calendar year was 8.4 percent, far above the 4.5 percent that we found worrying in 2007. See the map below for 2009 town-by-town figures, or get the 2007 and 2009 data as an Excel spreadsheet or PDF. The highest unemployment rates in 2009 were in Provincetown (21 percent), Lawrence (16 percent), Monroe and Fall River (15 percent each), and New Bedford (14 percent). The lowest rates were in Hancock, Gosnold, and Mount Washington (3 percent each); the biggest communities to stay under 6 percent were Brookline, Cambridge, and Newton. For current monthly figures, go to the state’s Executive Office of Labor and Workforce Development.

Massachusetts logged a 4.5 percent unemployment rate over the 2007 calendar year, just one tenth of a percentage point below the national average. This was progress of a sort, since the unemployment rate was 4.8 percent in 2006 and went as high as 5.8 percent in 2003. But we’re still far above the 2.7 percent of 2000, our best showing in the past couple of decades.

The map below shows unemployment levels for almost every city and town, with communities far above the state average in red and those far below the state average in white. The state’s largest city doesn’t stand out here; Boston’s 4.4 percent unemployment rate last year and its 3.0 rate in 2000 were pretty close to the Massachusetts total. Instead, last year’s outliers tended to be in resort areas with seasonal fluctuations (Provincetown was up to 31.9 percent in January 2007 but dropped to 2.7 percent in August) and “gateway cities” with stubborn unemployment problems. The jobless rate stayed above 5 percent every single month last year in Lawrence, Fall River, New Bedford, Springfield, and Holyoke.

In 2006, the last year for which such detailed data is available, Lawrence saw a slight uptick in manufacturing jobs (to 4,895, still below 2004’s number), but the other four cities all continued to lose blue-collar positions. Brookline, by contrast, consistently has one of the lowest jobless rates in the state and has been helped by a steady rise in “accommodations and food services” jobs since the beginning of the decade (up to 1,979 by 2006).

Several towns between Worcester and Springfield had a better employment picture than the state as a whole in 2000 but ended up in worse-than-average shape last year — again, mostly due to the loss of manufacturing jobs. The western city of Pittsfield, however, has taken a different course, going from an above-average unemployment rate of 3.2 percent in 2000 to a 4.5 percent rate in 2007, which is in line with the state average. Manufacturing jobs have sharply declined in Pittsfield, but the city has partly compensated for that with growth in the health care, “professional and technical,” and tourism sectors.

Beyond the box

Beyond the box

government often uses task forces and special commissions in a somewhat dubious fashion — either as a graveyard for an initiative by burying it in endless analysis, or as a rubber stamp for the initiative by stacking the commission with allies who will provide ostensibly objective third-party support.

So it was with some initial skepticism that the members of the state’s Study Commission on Corporate Taxation began our meetings in May 2007. House Speaker Salvatore DiMasi and Gov. Deval Patrick were in sharp public disagreement on the governor’s “loophole-closing” legislation, and we had seen no indication that attitudes were softening. The commission seemed like it might be a waste of time, but it turns out to have been a shrewd political move that may well have an enduring impact on state tax policy.

There were 15 of us on the commission, and perhaps our first clue that it might be a little different was the fact that many members didn’t know whether the governor, the speaker, or Senate President Therese Murray had appointed them. The press release announcing the commission members was issued by all three leaders, and it’s tough to “stack the deck” if the members are not exactly sure who put them there. Still, the group was fairly evenly split between members open to the governor’s legislation and members either opposed or skeptical.

The early meetings gave no indication that we would ever be able to reach consensus on any of the issues under consideration. There were two immediate challenges. First, the mandate of the commission was incredibly broad. We were asked to review and make recommendations on the loophole-closing legislation filed by the governor (House 3756) and study the modernization and simplification of the current business tax laws of the Commonwealth. Second, time was short. The commission was charged with filing an interim report with legislative recommendations for providing revenue for the next fiscal year by June 15, 2007, and a final report on long-term changes to corporate tax laws by January 1.

The early meetings involved presentations by Department of Revenue officials explaining the initiatives in the governor’s bill, plus general discussion by commission members. It was immediately clear that the commission was not going to support any significant changes to current law in the interim report. Most of the members, even those who were supportive of provisions in the governor’s bill, felt strongly that these issues needed to be studied, and there was simply not enough time to do so in advance of the June 15 deadline.

In addition, the early meetings were somewhat politically charged, with presentations from many members, both pro and con, taking relatively hard-line positions. As a result, the only initiative voted on by the commission for the interim report was the proposal to require businesses to file using the same corporate status in Massachusetts as they do on their federal and other state returns—the “check the box” rules.

Of all the initiatives contained in the governor’s legislation, the check-the-box proposal should have been the most uncontroversial. At this time, Massachusetts is the only state in the country that allows companies to call themselves a corporation at the federal level and then identify themselves differently at the state level. This mismatch between the rules in Massachusetts and other states has, not surprisingly, created “planning” opportunities that have allowed taxpayers to reduce their Massachusetts taxes.

There is absolutely no policy justification for this situation—and we heard no justification offered in our commission meetings—and the move to bring Massachusetts into conformity with federal and other state systems should have been done years ago. However, given the political tensions that were so evident in the early meetings of the commission and a reluctance to take any action without further study, the issue was only approved by an 8-7 vote.

As the commission adjourned for the summer, there was a palpable sense that we would never reach consensus on any of the important issues under review. I remember fellow member Robert Tannenwald, vice president and economist from the Federal Reserve Bank of Boston, remarking, “Is this going to be just another task force report gathering dust on the shelves of state government?”


Over the summer, we broke up into subcommittees, each charged with reviewing a specific issue and reporting back to the full commission. The decision to establish subcommittees was incredibly important because they could meet separately, outside of the glare of the large public meetings of the full commission, and focus on policy rather than politics.

I served as the chair of the Subcommittee on Combined Reporting, which was the initiative carrying the biggest revenue impact and an issue that has been at the forefront of state tax policy debates for over 20 years. I vividly remember the debate in the 1980s when Massachusetts first proposed to adopt combined reporting, or unitary taxation. At that time, we would have been one of the first states to adopt the idea, and critics argued vigorously that such a move would send a message to the corporate community that Massachusetts was a hostile place in which to do business.

The concept is relatively straightforward. Combined reporting is a method of allocating the income of multi-state businesses to the different states in which they operate. It requires affiliated corporations to file as a group and to determine the portion of the combined income of the group that is attributable to a state based on the overall apportionment factors — typically property, payroll, and sales — of the group. The principal argument in support of combined reporting is that it restricts the ability of a multi-state business to shift income away from the state where the income was earned to low-tax or no-tax states.

For example, under current state law, a Massachusetts company with valuable trademarks could transfer them to a subsidiary in a low-tax or no-tax state and then pay that subsidiary for the right to use them. The arrangement would allow the Massachusetts company to claim a tax deduction for the trademark licensing payments while shielding the income earned by the subsidiary from Massachusetts taxation.

Since the mid-1980s, when Massachusetts first considered adopting combined reporting, the national landscape on the issue has changed dramatically. The charge in the 1980s that Massachusetts would be “way out front” if it adopted combined reporting was accurate, even if many would point out that being out front is often a good thing. Now, however, 22 states use combined reporting, and many of the technical issues involved — including the definition of a unitary business and the distinction between business and non-business income — have been clarified by case law and regulatory decisions from other states.

In addition, the sophistication of state tax planning for businesses has evolved dramatically in the last 20 years. As a result, businesses are now able to avoid paying taxes in separate entity states, such as Massachusetts, through a variety of schemes that would be thwarted by combined reporting. A study by the state Revenue Department showed that over the last 10 years corporate profits in Massachusetts had grown by more than 70 percent, but the corresponding business tax collections had increased by only 49 percent.

Speaking as only one member of the Subcommittee on Combined Reporting (and as someone who actually enjoys discussions on tax policy), I found our meetings and discussions extremely interesting and informative. The other members of the group included two expert tax practitioners, Jane Steinmetz from Price Waterhouse Coopers and Karl Fryzel from Edwards, Angell, Palmer & Dodge, and two experts on state tax and fiscal policies, Michael Widmer, president of the Massachusetts Taxpayers Foundation, and Tannenwald of the Fed.

Our discussions covered a wide range of issues, but the initial focus was on the question of which system of taxation, separate entity or combined reporting, would produce a fairer, more accurate accounting of the Massachusetts income of a multi-state business. On that issue, I was surprised at the lack of intellectual challenge to the fairness of combined reporting. The main criticisms were that combined reporting introduces complexities that increase the costs of compliance for businesses and that they complicate the audit process — resulting in cases that, for example, dragged on in California for as many as 20 years. These criticisms seemed dated, and, in fact, more than balanced by the fact that as more and more states have adopted combined reporting systems, the familiarity of taxpayers and administrators with the details and requirements of combined reporting has increased dramatically.

Supporters of combined reporting emphasized that combined reporting fairly allocates the income of a multi-state business to the state in which it is operating and is the best way to restrict the ability of multi-state businesses to shift income to low-tax or no-tax states. Keith Davis, executive director of the North Carolina Tax Commission, told the subcommittee that the decision to recommend his state adopt combined reporting was “not a close call.”

The Subcommittee on Combined Reporting took two votes. The first was whether the subcommittee would support a recommendation to adopt combined reporting in Massachusetts. Widmer asked to amend the proposal to require that adoption of combined reporting be based on a reduction in the corporate tax rate so that the proposal would be “revenue neutral.” With that amendment, Widmer voted in support of the recommendation, which passed on a 4-1 vote, with Steinmetz the only dissenter. The subcommittee then voted on a recommendation to support combined reporting with no requirement that it be revenue neutral and the vote in favor was 3-2, with Widmer now voting against.


The full commission met again in early December, and there was a notable change in tone. The Patrick administration had correctly recognized that many of the initiatives in the governor’s bill had opposition on the commission and did not produce enough revenue to be worth the fight. For example, the proposal to tax non-insurance businesses run by insurance companies had generated strong opposition and would only have produced $23 million in annual revenues. So the administration decided to drop these minor initiatives and to support combined reporting with a “substantial” reduction in the corporate tax rate of 9.5 percent. Given that the Revenue Department estimates combined reporting would yield more than $300 million annually for the state, it was clear that both a revenue increase and a cut in the corporate tax rate could be achieved.

While a number of commission members continued to push for revenue neutrality, a key moment in the meeting came when commission member Rep. John Binienda, House chairman of the Legislature’s Committee on Revenue, expressed support for combined reporting and stopped short of insisting on revenue neutrality. Binienda’s support was the first public indication that the House’s sharp opposition to the centerpiece of the Patrick Administration’s loophole-closing proposals — combined reporting — might be softening.

The final meeting of the commission took place on December 18. Secretary of Administration and Finance Leslie Kirwan, the chair of the commission, set the agenda by asking each member to state whether they were in favor of check-the-box and combined reporting and whether such support was contingent on a “meaningful” reduction in the corporate tax rate or on achieving revenue neutrality. With all issues lumped into one vote, commission members were allowed to express their views on combined reporting and a tax rate reduction.

The tentative vote at the meeting was 10-5 in support of a recommendation that included three parts: combined reporting, check-the-box, and a “meaningful” rate reduction but not a requirement that the rate reduction achieve revenue neutrality. Upon issuance of the final commission report, the vote dropped to 9-6 because one member, Steinmetz, felt that the corporate tax rate reduction needed to be specific.

The commission’s final report was issued on December 28. Subsequently, on January 22, Gov. Patrick submitted legislation to implement the commission’s recommendations, including adoption of combined reporting and check-the-box. The governor’s bill calls for a reduction over several years in the corporate tax rate from 9.5 to 8.3 percent. The governor’s initiative was followed by an announcement from Speaker DiMasi that he would propose legislation adopting the main commission recommendation of combined reporting and check-the-box, but also calling for a specific corporate tax rate cut to 7 percent. The speaker’s statement was a dramatic indication that the commission’s work would not be in vain. In fact, it now appears that the commission’s work may serve as the blueprint for the most significant change in corporate tax policy in Massachusetts in several decades.

Stephen W. Kidder is managing partner at Hemenway & Barnes in Boston. He served as the Massachusetts commissioner of revenue from September 1987 to January 1991.

Editors Note

Sometimes you get lucky. I bumped into photographer Bill Brett walking through Downtown Crossing in January. He told me about his latest book project, which led to an interesting conversation with him about Boston and the chance to run a number of his new photos, including the cover shot of Morgan Freeman.

Having a movie star on the cover of CommonWealth is a bit like Britney Spears on the cover of the Atlantic, but it shows you can have fun and deal with serious issues at the same time. Meanwhile, Gabrielle Gurley highlights the changing face of investigative journalism in Boston and around the country.

What Works debuts in this issue. The new feature offers the chance to learn from what folks are doing elsewhere. Stephen Kidder provides a look inside the commission on corporate taxation, and Birny Birnbaum writes what Insurance Commissioner Nonnie S. Burnes wouldn’t let him say at hearings on auto insurance rates. All this, plus provocative contributions from our regular contributors, including Dan Kennedy, Shawn Zeller, and Robert David Sullivan. Let me know what you think.