Summer 2015

Summer 2015

Instant runoff voting could improve Boston elections

Instant runoff voting could improve Boston elections

New system would democratize municipal contests

ACROSS THE COUNTRY, voter turnout in local elections has steadily dropped. Electorates for local elections are a shell of what they once were — and of what they could be, given the more robust turnout for state and national elections. This fall, voters in Boston will go to the polls to elect members of the City Council. There are 13 seats up for grabs — four elected at-large and nine elected in districts. Yet, like most of the recent off-year elections with no mayor’s race, only 1 in 6 registered voters will likely cast a ballot.

That low turnout amplifies the significant costs associated with running an election. The Boston Election Department estimates that the average cost of running an election in the city is just over $700,000. In low-turnout contests, the cost-per-actual voter is jarring. The last off-year City Council general election, in 2011, saw just 63,009 of roughly 350,000 total registered voters come to the polls, an overall election cost of $11.13 per vote. The preliminary election—held six weeks prior in only three of the nine council districts—cost the city almost a quarter million dollars, or $14.45 for each of the 16,556 voters that showed up at the polls.

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Two years ago, the open race for mayor drew 12 candidates in the preliminary election, while two at-large council openings prompted 19 candidates to vie for one of the four citywide council seats. The race saw a much higher turnout, resulting in an estimated cost of $6.19 per voter in the preliminary election and $4.94 per voter in the final election, the lowest per-voter cost for a city election in many years.

This year, it appears that only five candidates will be on the ballot for the four at-large council seats, far fewer than the nine needed to force a preliminary election that would narrow the field to eight.  Meanwhile, seven of the nine City Council districts will not hold a preliminary election this September due to a lack of more than two candidates. This dearth of candidates will save money for city coffers, but it is hardly good for the health of our electoral democracy.

There are all sorts of reasons for the falloff in local political activity and ideas for what might reverse it. But the dismal state of affairs raises one practical question: Can we hold smarter elections? Instead of lamenting the plummeting voter turnout and the waning interest in local elections, city governments should be experimenting with electoral reforms aimed at stimulating turnout, producing greater voter engagement, and increasing the overall interest in how city government operates. We need a democracy worth paying for.

There will not be a single catch-all reform to cure what ails our cities’ democracies. But there are a number of changes that should be given serious consideration. Expanded early voting, absentee voting, and same-day registration are all long overdue. The city could also consider abandoning off-year elections altogether by establishing four-year City Council terms aligned with mayoral elections. Local elections could also be brought to coincide with even-year state and federal elections.

One more fundamental reform to the actual voting process merits consideration: adoption of an instant runoff voting electoral system — also known as preferential voting or ranked-choice voting. Such a system holds the promise of both cutting costs and producing greater satisfaction with the city’s electoral system. Under our current plurality vote system, the candidate with the most votes in a race for a seat wins, regardless of whether he or she garners a majority. Under an instant runoff voting system, voters rank their preferences within each contest, marking the candidate that is their first choice, second choice, and so on.

For a district City Council race, where a single seat is being filled, the process to count the final vote tally in an instant runoff voting system is very similar to that which is already in use. After the polls close, all of the votes for the candidates that were ranked first on each ballot are counted. If a single candidate has a majority of first-rank votes, they will be elected. If no single candidate has a majority, a second round of counting occurs. This second round of counting begins with the elimination of the candidate that received the fewest first-rank votes. The ballots of the eliminated candidate’s supporters are then reviewed, and their second choice becomes their first choice in the second round. With each subsequent round, the least-favored candidate is eliminated and the next choice of his or her supporters becomes their first choice until a candidate receives a majority. In essence, with each round of counting, each voter casts a ballot for their most preferred candidate still in the contest until a winning candidate emerges.

The process is a bit different for a multi-member contest such as Boston’s at-large council race, in which four seats are at stake. Under the current system, those going to the polls may vote for up to four candidates, and the four candidates winning the most votes are elected. Under an instant runoff approach, a ballot threshold is required to be elected. The threshold is typically calculated by dividing the total number of ballots cast by one more than the total number of seats to be won, and then adding one to that result. For example, in a Boston at-large race in which 50,000 voters turn out, 10,001 votes would be needed to win a seat, rather than the simple majority needed in a single-seat instant runoff election. Once such a threshold is set, ballots are counted in a similar manner as a single-member district election until four candidates meet the threshold for election.

Instant runoff voting would provide the city and its residents many more benefits than our current electoral system provides. First, because it uses a single election rather than the current system of separate preliminary and general elections just weeks apart, instant runoff elections would yield cost savings. Although the actual process of counting votes on election night will become more involved and costly, the city will only need to oversee one election each municipal cycle. Likewise, voters will only need to trek to the polling booth once each election cycle.

But the benefits of instant runoff voting extend beyond just a cost analysis. Allowing voters to rank their candidates is beneficial to the health of our democracy in three notable ways. First, when voters are able to rank their electoral choices, they are empowered to make more thoughtful and well-defined choices about who they want to represent them. Ranked ballots eliminate “vote wasting,” or situations where a vote cast does not end up helping any candidate on the ballot get elected.

By eliminating vote wasting, voter detachment from government is reduced. Even if a voter’s third-ranked candidate is the one eventually elected, that voter still played a role in that candidate’s election. This, in turn, promotes a higher degree of voter satisfaction and negates complaints that one’s vote does not matter. Instant runoff voting also prevents candidates from playing a spoiler role. (Think Ralph Nader’s role in taking votes away from Al Gore in the 2000 presidential race, which was eventually won by George W. Bush. Instant runoff voting in that race would have taken the second-choice votes of Nader supporters and applied them to the tally of the remaining top two candidates.)

Secondly, instant runoff elections also impact candidates and the types of campaigns they run. With an instant runoff system, candidates are campaigning for more than first-choice votes, thus they need to appeal to a broader voter base and avoid alienating parts of the electorate. Because voting decisions with instant runoff elections are not “all-or-nothing” affairs, candidates within this type of system must run more positive, issue-based campaigns. Additionally, the elimination of a preliminary election ensures that there are more candidates throughout the campaign cycle. This can generate a greater discussion of issues, greater mobilization of voters, and higher turnout. The elimination of preliminary elections with an instant runoff system also lowers the campaign-cost burden for first-time candidates who then have more time to appeal to voters and make the case for why they should be elected.

Finally, the end result of instant runoff voting elections produces a democracy which matches the philosophy of the modern voter. The quality of today’s electoral democracy is measured by its ability to include numerous and diverse voices, to promote inclusiveness — racial, gender, and ideological — within the policymaking process, and to promote both transparency and accountability. Researchers have consistently shown that the electorate in low-turnout elections tends to skew toward wealthier, older, and whiter voters.Instant runoff voting has produced an uptick in voter participation in many American cities. And by lowering some of the barriers to candidacy, instant runoff cities can also create a political environment conducive to the election of those typically outside the realms of political power. Women, ethnic minorities, and members of the LGBTQ community have all seen success in instant runoff cities.

Different forms of instant runoff voting have been approved in cities across the country, from smaller cities such as Portland, Maine; Santa Fe, New Mexico; and Telluride, Colorado, to moderate-sized cities such as Berkeley, California, and larger cities, including San Francisco, Oakland, Memphis, Minneapolis, and St. Paul.

But Boston doesn’t need to look farther than across the Charles River to see the effects of instant runoff voting in practice. Cambridge has used a form of instant runoff voting in its multimember at-large municipal elections since 1941. Any comparison between electoral systems is not perfect, given other differences between the locations, but it’s still worth looking at local elections in Cambridge and Boston. Boston uses a strong-mayor governing system and — like other cities across the country that use this system — experiences an increased turnout when a contested mayoral race is at the top of the ballot.

Since the residents of Cambridge do not directly elect their mayor, it is best to compare their electoral system to Boston’s off-year City Council elections when a mayoral race is not occurring. Over the past 15 years, the average turnout among registered voters in City Council elections has been 50 percent higher in Cambridge (31 percent) than Boston (20 percent). Cambridge also spends less money per vote on its elections. The last two Cambridge City Council elections averaged to about $10 per vote cast. In contrast, the last two Boston City Council elections averaged just over $32 per vote cast.

In part due to its electoral system, the political arena in Cambridge has been more diverse than Boston. The Cambridge City Council has been more successful in incorporating different racial groups than the Boston City Council, even as Boston became a minority-majority city at the turn of the century. The current nine-member at-large Cambridge City Council in essence mirrors the city’s racial makeup.

Until recently, Boston has struggled to elect more than one non-white, at-large city councilor despite its sizeable black, Hispanic, and Asian communities. Because instant runoff voting in multimember districts — like that utilized in Cambridge — uses a ballot threshold, the required number of votes needed to win an election can be lower than what would be required in a traditional first-past-the-post elections.

Critics would argue that this allows for candidates to win an election with a narrow base of support, be it geographic, demographic, or based on some policy interest. Yet at the same time, this perceived flaw has allowed for Cambridge’s council to become more diverse and to serve as a better reflection of various constituencies throughout the city. Across the country, non-white candidates historically have had great difficulty in winning at-large seats where first-past-the-post election systems are in place. That is not the case in Cambridge, where the ballot threshold in instant runoff voting has contributed to a better record of racial diversity.

With another low-turnout election on the horizon this fall, Boston should consider the numerous ways it can benefit from adopting a more modern electoral system based on the principles of ranked-choice voting. Other cities across the country are taking proactive steps to address the falloff in municipal election voter participation. Instant runoff voting is one option in the city’s reform toolbox that would not only reduce the operational cost of running an election by almost half, but could also improve the overall quality of our democracy.

James Sutherland is research director for Boston City Councilor Ayanna Pressley, and an instructor and PhD candidate in the Department of Political Science at Northeastern University. The views expressed here are his alone.

 

 

Field of Dreams

Field of Dreams

Brockton Rox owner Chris English, a former hedge fund manager, wants to turn the team into a winner on the field and a money-maker off the diamond. Sound familiar?

You’ve owned several minor league professional teams in the Northeast. What about owning a team of college players in the Futures League in Brockton interested you when the previous owners, who included high-profile people like Bill Murray, couldn’t make the Rox work with professional players? We have a very disciplined business model. We know how to run professional baseball teams. The former Rox team had a $3 million English36flatbudget. Our annual operating budget is about $500,000 a year so we need only about 1,200 [fans] a night to break even.

What did you see going on in Brockton that made you think you could succeed? Brockton is a city that has had its challenges. We looked at Brockton, we saw a lot of development coming and there was strong leadership in City Hall. We view baseball as a civic trust. But we’re not a nonprofit; we’re in this to make money.

You’re in a baseball hotbed in this region, with the Red Sox and the Cape League. Is there a point of saturation? We don’t compete with the Red Sox, we compete with the movie theater. I’ll go to a couple Red Sox games a year but it’s expensive, let’s face it. A family of four going to a Sox game is like $300. Coming to our game for a family of four is about $50.

A casino is being proposed for across the street. How would that affect your plans? Whether or not the casino gets built — we hope it does — we’re trying to create an entertainment center for the South Shore. When the casino comes to town, we’ll become sort of this destination complex where you can come for all your entertainment needs.

The casino plan includes convention space, which could undercut the Shaw Center [part of the baseball stadium complex]. What would that do to your business model? There is a highest and best use for that facility. It might very well make sense to tear that down and build a smaller boutique hotel. The Shaw Center is an underutilized asset. We view it as a very valuable appendage.

 

Your season goes from June to August. What’s the plan for cashing in the rest of the year? One of the things we did here that nobody has done was we looked at our demographics and saw we had a big Haitian and Cape Verdean population and none of them are ever coming here. So we asked why not? We put together a couple of really fun events. We’re going to turn our baseball field into two six-on-six soccer fields, have a tournament and a championship, then hold a Caribbean festival.

You were a hedge fund manager, like [Red Sox owner] John Henry. You talk about applying analytics from that field to the game, much like he has. Is there a parallel? There’s absolutely a parallel, on a microscopic scale. What they do is light years ahead of where we’re at. We’re only in the second-inning of moneyball. Having a hedge fund background where you think analytically is really a commodity.

Do you get involved in day-to-day baseball decisions? Absolutely. But let me give you the caveat. We have an operating philosophy that is based on analytics. We don’t steal, we don’t bunt, we have an eight-man rotation, we employ shifts, then the lineup card is [head coach Jason Szafarski’s.] I second guess after the game.

A rookie on Pelosi’s team

A rookie on Pelosi’s team

Clark is raising money for Democrats and most (but not all) of the time blasting the GOP

WHEN SENATORS AND REPRESENTATIVES gathered in the House chamber in January to hear President Obama’s State of the Union address, Katherine Clark, the Melrose representative who is now serving her first full term, strode up to Mitch McConnell, grabbed his hand, and wouldn’t let go.

Her aim was to convince the Kentucky Republican, who is the Senate majority leader, to work with her on legislation to combat heroin addiction in infants. Though the tactic may have been presumptuous, it worked. McConnell, whose state has a big problem with heroin, agreed. “I literally grabbed him on his way down the center aisle,” says Clark, who won a special election in December 2013 to take Ed Markey’s 5th District seat. “I did the famous politician double-grip, where you kind of grab the forearm, and I just wouldn’t let go of him.”

Clark’s other priority bill, to provide federal grants to allow victims of domestic violence to bring their pets with them to temporary housing, has more than a dozen Republican co-sponsors. She met the lead GOP sponsor, Florida’s Ileana Ros-Lehtinen, by going out for the House’s softball team last year. Clark says she’s not even particularly good at softball. “I really joined it for that opportunity — to be able to meet people,” she says.

In a Congress riven by partisanship, Clark is trying to find common ground with Republicans on issues that few would regard as controversial. At the same time, she’s trying to rise in the Democratic ranks, which means raising money for Democrats and blasting Republicans with regularity for their stingy funding of the social safety net and for policies she believes hurt women.

In the last few months, she’s criticized House Republicans for passing a law to ban abortions after 20 weeks of gestation and for trying to reverse a District of Columbia law barring employers from firing women for having abortions. She has also been a leading critic of the Republican plan for reauthorizing the No Child Left Behind Act, which would lock in cuts from the 2011 budget sequestration.

Her strategy seems to be working. In a Massachusetts delegation diminished by the losses of Ted Kennedy, John Kerry, and Barney Frank, Clark has begun to climb the leadership ladder. House Democratic Leader Nancy Pelosi named her to the Democrats’ Steering and Policy Committee, giving her a say in the party’s policy goals and input on which representatives sit on which committees. She also landed an assistant’s spot on Maryland Democrat Steny Hoyer’s whip team, a job that requires her to ask fellow Democrats how they plan to vote on key bills and to lobby them to support the party leadership’s position.

Clark Katherine

Other than two first-term representatives assigned to fill slots set aside for the freshman class, Clark is the most junior member on the steering committee. She is among those picked for the job by Pelosi, with whom Clark has struck up a friendship. Pelosi campaigned for her after she won a competitive Democratic primary in 2013, even though Clark had no real challenger in the general election. When Clark arrived in Washington, Pelosi showed her around. They snapped pictures together and shared stories about Massachusetts political legends Thomas P. “Tip” O’Neill Jr. and John F. Kennedy.

Their rapport is notable, given the critical comments about Pelosi that Clark’s fellow Massachusetts US Reps. Stephen Lynch and Michael Capuano made to WGBH’s Jim Braude earlier this year. Lynch and Capuano said they thought the Democrats needed new leadership to get them back to the majority. Clark says she doesn’t think Pelosi is to blame for the Democrats’ woes. Pelosi “brings her ‘A’ game every day,” she says. “I don’t see Nancy Pelosi as the reason the Democrats are in the minority.”

Fundraising skills are crucial in leadership and Clark proved herself capable, raising more than $2.4 million for her special election and 2014 re-election campaign —nearly 40 percent more than the average House member over the same period. In a safe Democratic district, Clark’s in a good position to share with other Democrats and win friends across the country. And her district offers plenty of opportunity. It includes wealthy Boston suburbs such as Lexington and Weston.

When Pelosi came to Massachusetts in May for a fundraiser for high rollers at the home of Alan Solomont, dean of the College of Citizenship and Public Service at Tufts University and an elite Democratic Party fundraiser, Clark helped round up donors. In so doing, she helped raise big bucks for the Democratic Congressional Campaign Committee, the House Democrats’ fundraising arm.

Clark and Pelosi are in step on women’s issues and both are committed to winning more seats for women in Congress. Clark is part of a growing cadre of powerful women politicians in Massachusetts, including Sen. Elizabeth Warren and Attorney General Maura Healey. She’s also tight with the former attorney general, Martha Coakley, for whom she worked for a time as policy director.

With women voting now at greater rates than men and leaning increasingly Democratic, they are a crucial constituency for the party. Democrats’ effort to paint Republican leadership officials in Washington as being at war with women was a major campaign theme in 2014.

Clark, only the fifth woman to represent Massachusetts in the House, has done her part to push the theme. She’s spoken on the House floor for the Paycheck Fairness Act, a bill to require equal pay for women workers that has no chance of passing in the GOP House. “It was the very first bill that I cosponsored,” she said on the House floor this spring. “We shouldn’t have to wait until our children are ready to retire before women are finally paid what they are worth.”

She has also advocated for more federal funding for childcare and is pressuring the Justice Department to direct more attention to cyberstalking. Hoyer says Clark’s attention to women’s issues is the reason she’s on the whip team. She’s “a champion for women and families,” he says.

Clark has seats on the Education and Workforce Committee, which authorizes funding for the Education and Labor departments, and the Science, Space and Technology Committee, which oversees federal grant-making agencies, including NASA and the National Science Foundation.

The former assignment gives her a say in the No Child law’s future. A former Melrose School Committee member, Clark is well briefed on the issues. One of her main priorities is to promote an idea that President Obama has proposed—universal public preschool. At a committee markup of the No Child law this winter, she offered an amendment to establish a new federal-state partnership to provide 4-year-old children from families with income less than twice the poverty level access to pre-kindergarten. It was voted down, but it’s not a hopeless cause. A number of Republican states across the South are ramping up pre-K programs.

Last year Congress reauthorized, with little dissent, a $5.2 billion block grant program to help states pay for daycare for poor families. Clark authored provisions in the reauthorization law that allow states to spend some of the money on training and technical assistance to improve the quality of the care.
“As a working mom of three, I understand that parents want nothing more than when their children are in child care, they are happy, learning, safe, and healthy,” she said on the House floor.

Her Science Committee seat, not normally considered a plum post, is more appealing when you’re from Massachusetts. Clark has used it to defend federal funding for basic research and for science, technology, engineering, and mathematics education.

Clark grew up in Connecticut and acquired the political bug at her maternal grandmother’s table, where the family would gather on Sundays to discuss politics. Her mother and grandmother shared a concern for women’s rights and issues affecting the working class. Clark’s father was a diehard Republican, but his views changed when her brother came out of the closet, and George W. Bush waged war in Iraq. The elder Clark switched his voter registration.

Still, Clark learned from her father how to talk the language of Republicans. In lining up Republican sponsors for her heroin bill, for instance, she notes that babies exposed to opiates in utero are prone to birth complications. “This bill will save us money,” she says, noting that such births are five times more expensive than those of healthy babies and that Medicaid is paying for them in three out of four cases.

“She’s part of a new generation in Democratic Party politics,” says Peter Ubertaccio, a political science professor at Stonehill College. “Massachusetts has a reputation for having a hard-charging partisan liberal political culture. But she is really trying to work across the aisle, and to do that you are going to start with smaller, more pragmatic bills.”

Region's cap and trade program draws interest

Region’s cap and trade program draws interest

EPA's power plant emission plan boosts Regional Greenhouse Gas Initiative

The Environmental Protection Agency’s proposed Clean Power Plan is drawing a lot of attention to the carbon cap-and-trade program run by nine Northeast and mid-Atlantic states, including Massachusetts.

The Clean Power Plan, if it survives legal challenges, will require each state to reduce its power plant carbon-dioxide emissions to a target level set by the EPA. The goal for the country as a whole is a 30 percent reduction by 2030 compared to 2005 levels. Power plants are the focus of the plan because they account for the largest share of the nation’s carbon dioxide emissions — 31 percent as of 2013, according to the EPA.

Ken Kimmell, president of the Union of Concerned Scientists and an environmental official in the administration of former governor Deval Patrick, says he expects many states to either join the Northeast’s cap-and-trade program, called the Regional Greenhouse Gas Initiative (RGGI), or set up their own because such initiatives make it easier to comply with the EPA plan.

“RGGI is an excellent fit for compliance with the Clean Power Plan,” Kimmell says. “Cap and trade is also starting to spring back to life, not just in the US but across the world.”

Kimmell says the RGGI is attractive because it targets the same power plant emissions that are the focus of the EPA plan and because the program is regional, transparent, and enforceable. He said a regional approach is more cost-effective from a regulatory standpoint because electricity tends to cross state lines. He said the hard cap on carbon emissions makes it easy to demonstrate compliance. And he said a cap-and-trade program offers states some flexibility on what they do to meet the EPA’s goal while putting the onus of compliance on power generators, which are already tightly regulated.

The whole push to rein in carbon dioxide emissions by the EPA is rekindling interest in cap and trade, a mechanism that most observers had written off after the US Senate defeated a nationwide emissions trading plan in 2009. The Canadian province of Ontario announced in April it intended to join a cap-and-trade system on greenhouse gas emissions with Quebec and California. China is also testing a cap-and-trade program in seven different cities. Both of those initiatives extend beyond emissions from power plants.

Coal states and coal producers in the United States are trying to block the EPA rules from taking effect, with many of them predicting the goals for carbon dioxide reduction at power plants will drive up electricity costs dramatically. But that hasn’t happened yet with the Regional Greenhouse Gas Initiative, perhaps because the region has never been as dependent on coal-fired power as other parts of the country.

Here’s how RGGI works: Power plants in the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont are required to purchase allowances for every ton of carbon dioxide they emit. Allowances are sold at auction every three months. The total number of allowances put up for sale each year is capped and the cap is reduced annually by 2.5 percent. Money raised from the sale of allowances is funneled back to the states, which tend to use the funds for energy efficiency or renewable energy programs.

RGGI allowance proceeds by state

The goal of the program is two-fold: Put a price on carbon dioxide emitted from power plants, spurring plant owners to invest in cleaner technologies, and use the proceeds from the sale of allowances to fund measures that reduce energy demand.

RGGI allowance prices

RGGI says carbon dioxide power plant emissions in the nine-state region have already been cut 40 percent from 2005 levels and are projected to decline 50 percent by 2020. Those numbers don’t mean RGGI is already in compliance with the EPA’s plan because RGGI and the EPA calculate carbon reductions differently. RGGI measures overall power plant carbon dioxide emissions, while the EPA measures carbon emissions per unit of energy generated.

The regional cap-and-trade program is regarded as a success because it has demonstrated that a price can be established for carbon without crippling the economy or driving electricity prices sky-high. Since 2008, when RGGI was launched, electricity prices across the nine states have fallen an average of 8 percent and the state economies have grown faster than the nation as a whole, according to the Acadia Center, a clean energy advocacy group. A total of 28 carbon allowance auctions have been held since September 2008, generating more than $2 billion in revenue for the participating states. Massachusetts’s share of the total is $345 million.

But the cap-and-trade program hasn’t worked exactly the way it was drawn up on paper. It works — auctions are held, allowances are sold, and the proceeds are invested — but the cap-and-trade program has not been the driving force behind efforts to address climate change. It’s been just one tool in the tool box, and a very quiet one at that. “This is the biggest success you’ve never heard of,” says Peter Shattuck, Massachusetts director of the Acadia Center.

In 2008, when the program was launched, the cap was set at 165 million tons. But the launch of the program coincided with the shale gas boom, which drove down the price of natural gas and prompted power plants to drop oil and coal as their fuels and shift to gas. Demand for electricity also ebbed because of state energy efficiency efforts, the development of renewable energy, and a downturn in the economy.
During RGGI’s first five years, the region’s power plants were emitting about 91 million tons of carbon dioxide a year, about 55 percent of the cap. At the carbon allowance auctions, demand never exceeded supply, so prices stayed below $2 per ton until 2013, when the states began laying plans to tighten up the market.

In February 2013, the states agreed to set a new cap of 91 million tons starting in 2014 and pledged to reduce the cap by 2.5 percent a year. Programs were also put in place to begin retiring allowances purchased in previous years when they were plentiful. The auction price of carbon dioxide allowances responded, rising initially to $4, then $5, and to $5.50 at the most recent auction on June 3. At the more recent auctions, every allowance has sold out.

“That’s simply supply and demand. The trend right now is within the range we projected in our model,” says David Littell, a commissioner of the Department of Public Utilities in Maine who sits on the RGGI board. He said the impact on electricity bills remains small, an estimated .5 to 1 percent of the typical bill.

Littell says auction prices shouldn’t spike, because of safeguards that put more allowances up for sale if auction prices rise too quickly. He predicts allowance prices should remain below $10 a ton in 2020.

Market pressures are also likely to keep allowance prices in check. Even with the cap reduction in 2014, the actual emissions in 2013 were nearly 5 percent lower than 2014’s 91 million-ton cap. That trend may continue as the shift toward cleaner energy continues. The coal-fired Brayton Point power plant in Somerset, one of the largest carbon dioxide emitters in the nine-state region at 2.7 million tons a year, is expected to shut down in 2017.

Luck’s run out

Luck’s run out

Lottery game fills states’ coffers but reaps few winners

WHEN THE SIX New England state lotteries started the Lucky for Life game, with the grand prize of $1,000 a day for the rest of your life, good fortune didn’t exactly fill  government coffers. In the first four months, five people picked the right combination to win the jackpot, which is a minimum of $7.2 million over 20 years or a one-time cash payout of $5.75 million. The high number of winners meant the big-stakes game lost $5 million region-wide.

But after that early rough stretch the odds started working in favor of the lottery commissions and Lucky for Life became a cash cow. No one has hit the top prize in two years. Over that period, the state lottery commissions have paid out in prize money less than half of what they have taken in in sales. The typical cash prize payout percentage for other games is 70 percent or higher. And unlike MegaMillions and Powerball, which have unclaimed jackpots that roll over from week to week, the top prize in the Lucky for Life game remains the same regardless of how long there is no winner. No wonder 12 more state lottery commissions have joined the game.

The lotteries tweaked the Lucky for Life game in January, making it statistically easier to win the grand prize but doubling the odds for winning the second prize of $25,000 a year for life. Since then, there have been no grand prize winners (the odds of winning are still 31-million-to-1) while the number of second-prize winners has fallen. In 2014, there were 15 second-prize winners in Massachusetts alone. Through the first six months of this year, there have been three. The house always wins.

Kennedy fights federal data breach law

Kennedy fights federal data breach law

Says proposal not as strong as many states' regulations

AFTER HACKERS STOLE data from Target, Home Depot, and other companies in recent years, President Obama called on Congress to enact legislation setting a national standard governing what companies must do if their networks are breached.

Both Republicans and Democrats in the capital want to do something to improve cybersecurity, but getting to a final product is proving difficult. A federal law would probably preempt state laws to avoid making companies have to comply with a patchwork of rules, but for Massachusetts and other states that would mean reducing consumer protections.

Forty-seven states, including Massachusetts, already have laws on the books governing data breaches and the Massachusetts statute is one of the strongest.

US Rep. Joe Kennedy of Brookline is among those in Congress fighting to slow down or kill the federal legislation. When the House Energy and Commerce Committee voted to approve a bill by Texas Republican Michael Burgess aimed at addressing the problem in April, Kennedy voted no. Kennedy’s protest has slowed the bill’s progress and raised questions about whether it can get through the Senate and be signed into law.

At the subcommittee markup of the bill, Kennedy took a leading role in criticizing it. “I understand why some want to create a single national standard for breach notification. Reducing the burdens on businesses, particularly businesses that were the victims of criminal breaches, is a sensible and laudable goal,” he says. “But we must also ensure that consumers, who are also the victims of breaches, do not lose protections that they currently have in place.”

inquiries

As is the case across the country, Massachusetts companies are regular victims of hackers. According to the state attorney general’s office, Massachusetts firms reported 8,665 breaches between January 2008 and July 2014 in which consumer data belonging to nearly 5 million people were stolen. Hackers typically want the data so they can steal identities, take out credit lines, or raid bank accounts.

The federal bill would require companies to have reasonable security measures in place and to investigate breaches of their networks. If they determine that consumer data that puts customers at risk of financial fraud was stolen, they must inform those customers within 30 days of stopping the breach.
The consumer notice would have to include a description of the information that was stolen and the approximate date of the breach. The notice would also include telephone numbers to obtain more information on the breach, to reach a credit reporting agency, and to contact the Federal Trade Commission where consumers could get more information about identity theft.

The bill would task the Federal Trade Commission with enforcing violations of the law under its authority to police unfair or deceptive business practices. State attorneys general could also enforce the federal law.

Most Democrats in Congress think the bill is too weak because it doesn’t require companies to do anything if non-financial information, such as health records, is stolen, and denies the FTC the power to update the rules going forward.

Kennedy followed up his critique at markup by offering two amendments aimed at limiting the bill’s preemption of state laws, so that state consumer protection laws and common laws enforced by the courts remain in force. Both were defeated on party-line votes. He tried again before the full committee. Again, defeat.

Most of the incursions that have occurred in Massachusetts are small—affecting on average 77 people—and as such the Burgess bill would not require companies to report them to federal law enforcement agencies. A breach would have to affect 10,000 consumers in order to trigger that provision. The bill, theoretically, gives state attorneys general the authority to seek civil fines against companies that don’t abide by the federal rules, but it would require them to step aside if the Federal Trade Commission wanted to handle the case. The bill does not require companies to report breaches to state attorneys general, leaving them a step behind the FTC.

That prompted Sara Cable, an assistant attorney general in the consumer protection division under Attorney General Maura Healey, to write to Burgess earlier this year. “The absence of a requirement to provide notice to state attorneys general of data breaches, even for those breaches that impact a significant number of their residents, frustrates their ability to protect their residents,” she wrote.
The federal bill also would deny consumers a right to seek restitution on their own from a company that lost control of their personal information. The Massachusetts law allows them to sue.

Cable, who testified before Burgess’s committee in March, said that one of her biggest concerns is the preemption of state rules governing what companies must do to protect consumer data. The federal bill sets an ambiguous standard—reasonable security measures and practices—that would leave the courts to decide if a company had done enough.

The Massachusetts law, in place since 2010, is more prescriptive. It requires companies to restrict the access of their own employees to consumer data while blocking former employees’ passwords. It also requires standard security protocols such as firewalls, antivirus protection, and software patches.

Cable also notes that the penalties Burgess would impose aren’t that onerous for big firms. The FTC and state attorneys general could levy fines up to $11,000 per stolen record, with a cap of $2.5 million. First time offenders would pay a maximum of $1,000 per record. That, she told Burgess’s committee, could be treated as a “cost of doing business,” rather than a deterrent.

Mass. 1 of 11 states without ticket tax

Mass. 1 of 11 states without ticket tax

Levy brings in millions elsewhere

LAST YEAR, nearly 3 million people walked through the gates of Fenway Park to watch the Red Sox, as bad as they were. More than 720,000 fans spun the turnstiles at TD Garden to watch in frustration as the Bruins failed to make the playoffs, while about the same number cheered the Celtics on to a seventh-place finish. Down in Foxborough, 550,000 spectators jammed Gillette Stadium for the Patriots’ eight home games for the 2014 season, and that doesn’t include preseason or postseason.

The Boston area has some of the country’s most loyal sports fans. It is the only region in the nation that played last year to 95 percent or higher capacity in all four major sports. Over the years, the fans’ faith in their teams is often taxed, but never their tickets. According to the Federation of Tax Administrators, Massachusetts is one of 11 states that does not levy a tax or surcharge on sporting events. In fact, a special exemption is written into state law barring taxes on tickets for sporting events, theater showings, and other amusements.

Some states subject sporting events to the sales tax, others have a separate amusement tax, and a handful levy a flat surcharge ranging from $1 to $3.50 per ticket.

If professional sports tickets in Massachusetts were subject to the state’s 6.25 percent sales tax, the state could reap more than $21 million a year from the nearly 5 million fans who went to major professional games during the last season, based on average ticket price.

The ticket tax exemption has been part of the law for decades. A spokeswoman for the Department of Revenue confirmed the agency has repeatedly affirmed the exemption for sporting events in rulings dating back as far as 1981.

Even tax-averse states such as Texas, Arizona, and Florida hit ticket-buyers with a tax. Delaware, which has no major sports franchise, levies a .384 percent tax on gross ticket receipts of $50,000 or more a month. The highest ticket tax is in Maryland, which hits fans with a 10 percent tax on the ticket price, though much of the revenue is dedicated to paying the debt service on the Baltimore Orioles stadium at Camden Yards. Nevada also has a 10 percent tax, but that applies to venues that seat up to 7,500 people; it drops to 5 percent for larger venues and there is an exemption for NASCAR events and minor league baseball games played in a stadium.

Several states permit counties or municipalities to levy a ticket tax, often to pay for bonds that were issued to build a stadium. In Arlington, Texas, for instance, voters approved a 10 percent ticket tax on baseball and football games to pay for the city’s $325 million portion of the $1.2 billion Cowboys stadium. That tax was on top of the statewide 6.25 percent sales tax that has no exemption for tickets and which goes to the general fund.

Most states have an exemption for sporting events put on by nonprofits. Florida has an exemption on Super Bowl tickets if the game is held in the state.

Of the other states that exempt sporting events, only two—Maine and Rhode Island—do not have major sports franchises. States that do not tax tickets include New York, California, Illinois, Indiana, Colorado, Michigan, Pennsylvania, and Ohio.

Full disclosure

Full disclosure

Editor's note, summer 2015

OUR SUMMER ISSUE includes stories and analysis on a wide variety of topics, everything from criminal justice reform and climate change to Uber and the incomprehensible medical bills we receive in the mail. Some of these stories deal with subjects and individuals with connections to our parent organization, MassINC—a relationship worth exploring in a bit more detail.

MassINC was established nearly 20 years ago as a nonpartisan think tank focused on research, events, and journalism to explore a broad range of issues affecting life in Massachusetts. In recent years, MassINC has added new elements to the mix, creating a polling group subsidiary and a Gateway Cities Innovation Institute. MassINC also helped form the Criminal Justice Reform Initiative, which is pushing for a number of changes in the state’s criminal justice system.

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CommonWealth strives to be an independent voice, but that doesn’t mean we don’t interact with other employees at MassINC or share an interest in the issues with which they are involved. Indeed, the founders of MassINC envisioned a think tank that would examine many of the same issues through the different prisms of research, events, and journalism.

The magazine is also a forum for ideas of all types, and MassINC employees occasionally participate. Pollster Steve Koczela often writes about polling and data issues for CommonWealth. MassINC research director Ben Forman is a frequent contributor on Gateway Cities issues. Indeed, Forman’s piece on Gateway Cities in this issue came about because I heard him give a presentation on the dreary economic data emanating from Gateway Cities at a MassINC board meeting.

Our cover story by Michael Jonas is focused on criminal justice reform, particularly the debate over mandatory minimum sentences. Michael’s story includes the voices of people on all sides of the issue, including those who served time in prison under a mandatory minimum sentence and those who lost their driver’s license because of a drug conviction. The story captures the high-stakes debate raging on Beacon Hill in all of its personal and political dimensions.

I have two stories in this issue that have connections to MassINC. One is a conversation with John Grossman of Third Sector Capital, a company developing pay-for-success projects for government agencies here in Massachusetts and across the country. With pay-for-success, private groups put up the money for a program to address a specific social ill and get paid back (plus a profit) if the initiative is a verifiable success. I’ve always been fascinated with the concept, but never fully understood it because it’s so complicated. The conversation allowed me (and hopefully you, too) to learn more. Yet it’s worth noting that Grossman serves on the Criminal Justice Reform Coalition and his big project in Massachusetts centers on Roca, a Chelsea nonprofit that is trying to help those released from prison stay on the outside. MassINC’s president, Greg Torres, previously served as chairman of the Roca board.

I also wrote a feature story on Lawrence Mayor Dan Rivera, and his handling of a problematic School Department office lease. What I found fascinating is that Rivera is trying to address problems in Lawrence that his predecessors ignored, but his sometimes heavy-handed approach utilizes some questionable tactics that his predecessors might have employed.

Rivera is a co-chair of the Gateway Cities Institute and MassDevelopment, a state authority that figures in the story, has been a MassINC sponsor. Neither Rivera nor MassDevelopment used their connections to MassINC to attempt to influence the story, nor did I pull any punches because of their involvement.

Enjoy the magazine.

Moving beyond Boston

Moving beyond Boston

Other states have many successful regions within their borders. Why doesn’t Massachusetts?

SPRINGFIELD WAS ONCE synonymous with innovation. Today the city that produced the first tire, the first car, the first motorcycle, and the first commercial radio station is counting on a casino to drive growth. Springfield’s lost industrial prowess comes at a cost to the entire Pioneer Valley economy. Gateway Cities in other parts of the state have much the same story to tell, with similar consequences for their regions. Some of them are also competing for casinos, the most enticing hand-up the state has offered. Until a better economic development policy is found, the neglect and subsequent collapse of these historic urban centers will continue to feed a pattern of slower, geographically unbalanced, and more inequitable growth for Massachusetts.

The clearest indicator of this challenge is metro area per capita GDP, a region’s economic output divided by its population. On this basic measure of regional competitiveness, Massachusetts can hold up Greater Boston, the fifth-most-productive region in the nation excluding a pair of oil-boom towns. But beyond Boston, the state has very little to show. The Bureau of Economic Analysis provides data for three other Bay State regions: Pittsfield ranks 167th and Worcester comes in at 211th; Springfield falls well below the middle of the pack, 225th out of 381 US metro areas.

This in-state disparity is not necessarily the norm. Many of the states with whom we compete have highly productive regions scattered within their borders. Virginia, for instance, claims a large chunk of the tenth-ranked DC metro, but it still manages to place Harrisonburg, Richmond, Virginia Beach, Charlottesville, and Roanoke well ahead of our second-tier regions. Indiana and Wisconsin, two states similar in size to Massachusetts, have six and seven metro areas in the top 100, respectively.

A strong core city is not the defining feature contributing to the productivity of these regions in every instance, but it is certainly an important differentiator. A region with a competitive urban core tends to have healthier institutions (i.e., local banks, hospitals, and universities), more effective chambers of commerce and economic development organizations, and amenities that attract visitors and young professionals. Outside of Massachusetts, there are many examples of midsize cities such as Harrisonburg, Virginia, capitalizing on their small- town quality of life and cost of living, proximity to major markets, local universities, and attractive urban fabric to power regional economic development.

A key difference between Massachusetts and these other states is the amount of power given to local cities to raise revenues. Massachusetts, with its limited home rule, basically tied the hands of Gateway Cities as disinvestment took hold. In Virginia and many other states, counties and incorporated cities were given the power to raise revenue and shape their own destiny.

While Massachusetts doesn’t offer its cities and towns revenue tools to make economic development investments, it does provide more generous assistance in the form of transfer payments for poverty alleviation than most other states. These transfers support thousands of jobs that would not otherwise exist and partially obscure the extent to which the economies of Gateway Cities are in decline. In Brockton, for example, approximately $430 million in Medicaid spending equates to roughly a third of total payroll for private employers in the city.

Take out the growth in health and human service employment financed by state funding to support high poverty populations and Gateway City job growth over the last decade disappears. Instead of holding steady, Worcester sheds 5 percent of its jobs, Brockton and New Bedford drop 7 percent, and Springfield falls 10 percent. Fall River’s difficult 10 percent job loss becomes a much more severe 18 percent pounding.

With the Massachusetts economy increasingly centered around human capital, prospects for the future in Gateway Cities are tempered by the economic struggles of their residents. The number of Gateway City residents living in concentrated poverty (areas with poverty rates over 40 percent) has grown by 140 percent, from about 50,000 in 2000 to 127,000 in the latest Census figures. New research by Harvard economist Raj Chetty provides powerful confirmation that growing up in these circumstances is damaging; children randomly moved out of high-poverty neighborhoods as part of a federal study in the 1990s are already earning incomes 30 percent higher than their peers who stayed behind.

In a similar way, social science research indicates that attending a high poverty school has a deleterious effect on an individual’s future economic wellbeing. With the percentage of students in Gateway Cities who are low-income rising from less than half in 1994 to over two-thirds in 2014, nearly all students in these communities are now in schools where poor students make up more than 40 percent of enrollment.

The damage that concentrated disadvantage is inflicting on human potential is particularly problematic because Gateway City youth make up a very significant percentage of the future workforce in regions outside of Boston. Currently, fewer than one in five Gateway City students graduate high school and go on to complete a post-secondary degree. This low yield is especially disconcerting for Western Massachusetts, where well-educated workers are aging. Between now and 2030, forecasts suggest the number of working-age residents with college degrees will slip by nearly 10 percent in the Berkshires and more than 25 percent in the Pioneer Valley.

Gateway City leaders are putting considerable effort into initiatives to better prepare students for the demands of today’s workforce, but these models call for a higher dose of learning, which comes with a price tag that is increasingly out of reach. Gateway City fiscal challenges put them $45 million below the minimum education spending floor under the state’s local Foundation Budget formula in FY 2014. And fiscal conditions are likely to get more difficult as aging municipal workers enter retirement.

Gateway Cities are already spending a sizeable share of their limited revenues trying to meet obligations to municipal workers, according to the Massachusetts Taxpayers Foundation. Covering municipal retiree health insurance, for instance, takes one out of every four dollars that Fall River generates locally. With pension balances hovering around 40 percent of obligations (well below the 70 percent average for Massachusetts municipalities), Gateway Cities are also on the hook for very significant unfunded pension liabilities.

Driving regional growth across the state will require the resolution of two complex puzzles simultaneously. We will need to shake up public education systems so that successful models for educating disadvantaged students can be brought to scale. At the same time, we must devote a larger share of the state’s capital budget to repair the physical fabric of Gateway Cities with the aim of drawing private investment back into the downtowns and residential neighborhoods, building up the tax base of these urban centers.

Leaders have a mandate to pursue this agenda. Recent surveys conducted by the MassINC Polling Group indicate the majority of Massachusetts residents favor efforts to produce more balanced economic growth even if it means slower economic development overall. MassINC polling also suggests Gateway City voters are eager to see more transformative change to their local public education systems.
With Boston’s high-flying economy hungry for state resources, public support may not be the deciding factor. Whether it is hosting a Boston-based Olympics, transferring MBTA debt to the state, or expanding the Boston Convention Center, well-healed interests are pushing every day for state commitments that could crowd out investments in Gateway Cities.

Fortunately, Gateway Cities have a powerful response to this political challenge: the energy of a growing stable of dynamic leaders with the vision to address unmet needs and unlock untapped potential. These leaders include up-and-coming mayors such as Dan Rivera in Lawrence and Kim Driscoll in Salem and innovative educators such as Monty Tech’s award-winning principal Sheila Harrity and Northern Essex Community College President Lane Glenn.

These leaders have access to a growing reservoir of outside support. Concerned by unbalanced regional growth, Eastern Bank, MassMutual, and other private companies are engaging in a big way, with assistance from the Federal Reserve Bank of Boston and the Massachusetts Competitive Partnership. Philanthropic leaders with a traditional focus on Boston are also beginning to look beyond Route 128. From Springfield’s freshman senator Eric Lesser to Lynn’s freshman representative Brendan Creighton, there is new energy in both branches of the Legislature. And Secretary Ash has built a talented team of economic development leaders with strong ties to regions across the state.

Working together, this impressive array of state and local leaders can take Gateway Cities from a conceptual problem to an effective strategy for more balanced regional growth throughout our Commonwealth.

Benjamin Forman is the research director of MassINC, the publisher of CommonWealth magazine.