Globe Editorial

Candidates must back changes to municipal health, pensions

August 29, 2010

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MASSACHUSETTS CITIES and towns need to get a firmer grip on their costs. Candidates for the Legislature can help by endorsing a slate of reforms proposed by the Massachusetts Taxpayers’ Foundation: clear, simple ways to curb excesses in municipal pensions and health care, thereby saving enough money to withstand flat property-tax revenues and cuts in state aid.

At any time, these would be sensible reforms — preserving promises to today’s workers while imposing some commonsense limitations on future benefits. But with the strains on the state budget, of which unrestricted local aid is roughly a $900 million line item, municipal reform is essential.

Massachusetts has a deeply inefficient network of local governments. Split into 351 cities and towns, the Commonwealth replicates services from town to town that could be performed much more cheaply on a regional basis. Meanwhile, local officials are sometimes too beholden to those whom they manage. As a result, benefits for some jobs are out of whack not only with the private sector but with state employees as well.

In many cases, it’s not the size of the benefit that’s wasteful but the manner in which it’s provided. For example, in many towns Massachusetts taxpayers subsidize medical services that are available to all retirees under Medicare. Yet feckless local boards, under the thumbs of unions, refuse to enact even basic economies.

This year, voters must see past the usual obfuscations. Almost every candidate claims to favor reform, but many shun the difficult choices. That’s why the Taxpayers Foundation has provided a useful service in asking candidates to endorse a slate of changes drawn from proposals already made by various gubernatorial contenders.

They include two long-sought changes to health plans — giving local officials the power to design insurance coverage outside of collective bargaining, and requiring cities and towns to shift eligible retirees onto Medicare. These former workers wouldn’t lose any services; cities and towns would simply take advantage of Medicare savings and provide “wraparound’’ coverage to make sure retirees get the full benefits they were promised.

Most of the pension changes wouldn’t affect current workers, just new hires. Proposals include increasing the minimum retirement age from 55 to 60, and raising full retirement from 65 to 67, among other tweaks to the system.

The health care changes would generate $100 million in the first year; the pension changes, which would be phased in for new retirees, would save $2 billion over 30 years. That’s not enough to offset the serious shortfalls that are visible on the horizon. But it would go a long way toward keeping cities and towns solvent in the near term. It’s a necessary start.

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