Editorial: Crunch Time At City Hall
Public officials have been feeling the heat on spending like no other time in recent history. While the deficit debate rages on in Washington, state and municipal leaders are grappling with large projected budget deficits of their own with few tools left in the toolkit to make ends meet.
Whether in Washington, Wisconsin or Worcester, things are clearly coming to a head. The cupboard of quick fixes and band aids has been emptied and what is left staring us in the face is the need to find long-term solutions that make most politicians' skin crawl.
Prolonging The Pain
In private industry the economic crisis that crested in the fall of 2008 led to significant restructuring and reductions in spending. While some in the private sector felt the pain of layoffs, nearly all employees experienced reduced earnings or increases in their benefits' costs.
In contrast, the federal government's stimulus spending gave needed cover and perhaps a false sense of security to the states. Today, all the air has gone out it that balloon and reality is uncomfortably setting in. Thankfully the economy is getting better, but not nearly at a pace that will cover the sins of current spending trends.
The picture at the municipal level is grim, and Worcester is a good example of what many cities face. The direct state subsidy for the city of Worcester is projected to be down from a 2008 high of $59 million to around $37 million â a sizeable reduction of $22 million. The total municipal employee count, not including the school side of the house, has dropped from more than 1,900 in 2001 to around 1,450 in 2011. Without significant reforms in health care cost sharing, that figure may drop by as many as another 150 in the coming year according to Worcester City Manager Michael O'Brien.
Efficiency and productivity increases should be demanded and expected by all our municipalities, but cut too deep, there will just not be enough bodies to get the job done at the expected service level. Worcester and many other cities and towns are certainly approaching that line in the sand.
What is the solution? It clearly involves taking action on a lot of different fronts, but central to the issue is a need to significantly reform public employee benefit plans.
Time For Compromise
To cope with these pressures, City Manager O'Brien is campaigning to get the city and school employees to move to a new health insurance plan that is modeled after the state's Group Insurance Commission. The GIC, as it is known, manages benefits for state employees.
Moving to a GIC-like plan would significantly help the cash-strapped city. On the city side, the savings could total $5 million for the coming fiscal year. On the school side, the savings could exceed $6 million.
The manager needs to submit a balanced budget by the end of April, and unless a compromise is worked out with its unions on further cost sharing on the health care front, layoffs are promised to follow.
What O'Brien is proposing is to get out ahead of the state Legislature, which is actively considering reforms for municipal health care, including mandating that all municipalities join the GIC or granting municipalities more power to modify plan designs and co-pays without entering into contract negotiations.
What is at stake in this debate is more layoffs, a dramatic reduction in city services, and the continuation of a chronic problem of unchecked rising costs with little additional income. That is a recipe for disaster, and no citizen or public official should stand by and let that happen. Only a meaningful, structural fix to the sharing of health care costs with municipal employees will provide the right fix, and it's high time that reality set in for all the parties involved.
O'Brien's proposal deserves the support of the business community and the unions. It will require sacrifices, but it will help maintain core services. It will also position Worcester well when and if the state acts on the issue of municipal health reform.
Change is coming, and it will be driven either at the municipal level or by a state mandate. It's the choice of each city and town as to whether they act, or be acted upon.
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