July 04, 2018
We’ve heard the expression “the devil’s in the details” bandied about recently. It’s a cliché that can contain some truth.
But the details can sometimes hide devils.
Take the Massachusetts economy, for example, where statistics show a state firing on all cylinders. The Commonwealth weathered a crippling recession and has experienced an explosion of investment, wealth creation, and employment. With a 3.5 percent unemployment rate, a growing labor force, and even rising wages, Massachusetts is the envy of other states. Construction jobs are flourishing, business profits are up, and the state has shed its antibusiness reputation.
All good news. Yet it would surprise many to know that despite the performance of the private sector in Massachusetts, several independent sources, including US News & World Report, George Mason University, and PwC, rank the state’s public finances among the country’s least fiscally stable and healthy.
The devils, in this case, are four staggering cost drivers (MassHealth/Medicaid, debt service, pension contributions, and retiree health benefits) that consume 60 percent of the state’s $41 billion budget. While the Baker administration has reduced some MassHealth costs, it alone still absorbs 40 percent of the budget.
As spending in these categories propagates, it will choke the state’s capacity to invest in discretionary programs and sabotage business costs and the ability to attract talented workers.
State spending is at one of the highest per capita levels in the country, and annual revenues have spiraled and are $7 billion higher than in 2010. While MassHealth costs have increased by 43 percent, spending on transportation, local aid, education, public infrastructure, housing, and environmental programs has increased at less than half this rate.
Too often, government solutions to fill budget shortfalls focus on a narrow band of taxpayers or employers, choices that are likely to discourage the very investment and growth lawmakers intend to stimulate.
Nevertheless, in 2017 we supported a temporary assessment on employers as a means for interim financial support. The Legislature rejected the idea.
Likewise, we supported Governor Charlie Baker’s plan to shift 140,000 nondisabled adults from MassHealth to other plans, which would have preserved affordable coverage for those individuals while achieving significant savings. Beacon Hill again rejected those reforms, as did the federal Centers for Medicare and Medicaid Services, which also killed the governor’s cost-cutting plan to reduce coverage for some prescription medications.
Our opposition to the so-called millionaires tax was based on the notion that allowing any special interest group — regardless of its objective — to permanently enshrine budgetary decisions and spending priorities in the Constitution is a bad idea.
The breadth and solidarity of the coalition of investors and job creators who supported our position show that we can bring together disparate community, business, and advocacy groups for the greater good of preserving economic stability.
That should be the model going forward. Real solutions lie in coming together to prioritize solutions to fiscal challenges. Working together, we can ensure that Massachusetts has the strength, the strategy, and the resources to invest in our public education system, an improved network of transportation infrastructure, and public-private partnerships that create economic opportunity and improved quality of life for all.
The recent Medicare/Medicaid ruling makes it imperative that the Legislature become a partner in preserving the state’s financial stability.
Every Massachusetts resident, employer, research organization, educational institution, and elected official must come together and take actions now that prevent our economy from becoming another Connecticut, New Jersey, or Illinois. We all have a stake in — and will benefit from — the success we envision.
Ignore the issues and it will be the devil to pay.
Christopher R. Anderson is president of the Massachusetts High Technology Council.