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Gov Charlie Baker

POPULAR NOT POPULIST: GOV BAKER CONTINUES TO POLL WELL WITH PEOPLE HE’S SCREWING

 

July 31, 2018

BY JASON PRAMAS @JASONPRAMAS

 

There is no area of Massachusetts politics where it is more baffling to contemplate Gov. Charlie Baker’s ongoing popularity in the polls than the annual state budget debate. One can only draw two conclusions from such musing: either people don’t get the budget information they need from Bay State press, or a majority of Commonwealth residents simply enjoy watching poor people get kicked to the curb. While corporations are encouraged to line their pockets with public funds in ways that hurt everyone but the wealthy.

 

At no time of year is the contradiction of Baker’s popularity thrown into bold relief more than late July when he issues his line item vetoes and other modifications to the legislature’s final budget.

 

And this year that contradiction is sharper than ever. Because the most visible victims of the governor’s last budget action look to be people on welfare—many of whom are single mothers with children.

 

So last week, Baker refused to agree to a budget policy section that would remove the “family cap” that stops families on welfare from being able to receive extra benefits for children born while they were on welfare. Instead he sent an amended version of the family cap section of the state budget back to the legislature.

 

As reported by MassLive, “That amendment would lift the family cap but also change welfare eligibility laws so that an adult’s Supplemental Security Income is counted when determining if a family is eligible for welfare. SSI is a federal payment given to severely disabled adults.” … “According to state figures as of last year, 5,200 children with a severely disabled parent would lose their welfare benefits entirely under the change, and 2,100 children would lose part of their benefit.”

 

By contrast, MassLive continues, “Lifting the family cap would make approximately 8,700 additional children eligible for welfare assistance.”

 

If the family cap policy section of the budget had simply been vetoed, it could have been overridden by a two-thirds vote of the legislature like any other veto. But since its language was amended and sent back to the legislature for action, they have to vote on it like a new bill. After which, Baker has 10 days to act on it. And since he sent it back to the legislature at the end of its current session, the end of the 10 days after any new bill passes comes after the session is over. So Baker can simply veto it, and supporters will have to wait until next session to go through the entire legislative process again.

 

Advocates from organizations like Mass Law Reform Institute and Greater Boston Legal Services are crying foul, given the heartlessness of the measure and the fact that it has taken years to get the family cap reform through the legislature.

 

As of this writing, the House has reinstated the original family cap language, and the Senate is expected to do the same. But Baker will almost certainly veto it within 10 days of passage as planned. After the legislative session has ended.

 

Which is a total drag, and exemplary of a backwards view of welfare as an “incentive” to “encourage” poor people to work. Language that Baker has used when explaining his position on the family cap debate—a standard conservative view, unfortunately shared by Republicans and many Democrats alike, that poor people are poor because of individual failings like “laziness,” not for any structural reasons beyond their immediate control.

 

But here’s another way to view welfare: People are poor because just as capitalism provides billions of dollars to a vanishingly small number of big winners like Jeff Bezos and the Koch brothers, it creates millions of losers who have to struggle endlessly to make ends meet. Meaning inequality is baked into our economic system. Without strong government regulation, capitalism is incapable of even blunting the brutal impact of such inherent flaws, let alone somehow fixing those flaws.

 

Part of that inequality comes in the form of job provision. Since the drive for people at the commanding heights of the capitalist system is always to maximize profits, their concomitant drive is to do so by slashing labor costs whenever possible. One way they have done this since the 1970s is by changing labor from a fixed cost—as it tended to be under postwar American social democracy when over 30 percent of the workforce was protected by government-backed union contracts and there was a reasonable social safety net (including welfare)—to a variable cost.

 

The result? As was last the case at the turn of the 20th century while a militant labor movement spent decades fighting the “robber baron” billionaires of that era for redress, bosses can hire workers when needed at the worst possible rates and push them out when they don’t need them. Often without even having to officially fire workers—which would allow them to collect unemployment for a few months. And the largely ununionized workforce has almost no say about the conditions of its employment, or job policies in general, outside of insufficient minimum wage laws, easily avoided health and safety laws, and a few increasingly weak civil rights laws that might get a handful of people reinstated on the same bad terms on the rare occasions when open discriminatory practices by employers can be proven.

 

So by converting stable decent-paying union jobs to unstable contingent jobs—like temp, part-time, contract, day labor, and independent contractor jobs—over the last 40 years, capitalism and the capitalists who run it have ensured the creation of a growing impoverished underclass. This vast group of poor people acts as a reserve army of labor that, together with vicious union-busting that is on the verge of killing the American labor movement, accelerates the downward pressure on wages. And ensures that the only jobs that most poor people can get are bad contingent jobs.

 

When poor people can’t put together enough of these precarious non-jobs to make ends meet, they turn to welfare. But the old “outdoor relief” programs that provided poor men with jobs, money, food, and other necessities in many parts of the country were eliminated long ago (as were New Deal-era public jobs programs), and the remaining welfare system that largely benefitted poor women and children was hamstrung by the Democratic Clinton administration in 1996. Not coincidentally, its prescriptions were first tested here in Massachusetts in 1995 by our completely Democrat-dominated legislature—presided over by a Republican governor, Bill Weld. A so-called “libertarian” cut from much the same cloth as Charlie Baker.

 

According to a 2008 report (“Following Through on Welfare Reform”) by the Mass Budget and Policy Center, the one-two state-federal punch to poor women and children in the Commonwealth predictably ended up significantly cutting already meager welfare payments by imposing time limits on assistance and by mandating the most cruelly ironic possible change, “work requirements.”

 

Why cruelly ironic? Because the work requirements forced people who were poor because the only jobs available to them were bad contingent jobs to prove they were “working” before getting the reduced welfare benefits still on offer.

 

The new system was in many cases literally run by the very temp agencies that played a key role in making people poor to begin with. The “jobs” forced on people to qualify for much-denuded benefits were often not jobs at all. Welfare applicants were just “employed” by such temp agencies—now recast as privatized social service agencies—and forced to wait for “assignments” that were low-paying and sporadic. But unless they “worked” a certain amount under this system, no benefits. It was a hardline right-winger’s wet dream made flesh. The same capitalist system that made them poor now kept them poor. And state and federal government were no longer in the “business” of helping offset the worst depredations of capitalist inequality in what we still like to call a democracy.

 

So this is what popular Gov. Charlie Baker is up to when he plays games with reforms like the family cap. He’s screwing people who get a few hundred bucks a month in benefits out of an extra hundred a month for another kid born while they’re jumping through every conceivable time-wasting bureaucratic hoop and working the same shit jobs that made them poor to begin with. Meanwhile, he’s finding new and creative ways to dump more millions in public treasure on the undeserving rich with each passing year.

 

And you like this guy, fellow Massholes?! Just remember, in a “race to the bottom” economy presided over by capitalist hatchet men like Baker, once the poor are completely crushed, the working class is next. Followed by the middle class. Maybe think that over next time a pollster asks your opinion of the man.

 

Apparent Horizon—winner of the Association of Alternative Newsmedia’s 2018 Best Political Column award—is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston. Copyright 2018 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

STOP BAKER’S ‘MORE SCHOOL COPS AND SURVEILLANCE’ PLAN

school parody image

Why the Mass budget surplus is better spent on infrastructure needs

 

July 7, 2018

BY JASON PRAMAS @JASONPRAMAS

 

Having just been handed an estimated $1 billion budget surplus for the 2018 fiscal year, Gov. Charlie Baker was quick to make a proposal last week to divide up the unexpected spoils.

 

According to MassLive, “Around half of that will be placed in the state’s reserve account to be available in case of emergency. Gov. Charlie Baker on Friday laid out how he is proposing to spend the rest of that money, introducing a $583 million supplemental budget bill.”

 

And where does the surplus come from, readers might well ask? Well, the details are still a bit fuzzy, but the Trump administration’s drastic changes to the federal tax code months back seem to have resulted in what’s likely to be a very temporary state tax revenue increase.

 

Which explains why the Boston Globe paraphrased Noah Berger of the Mass Budget and Policy Center opining that “it would not be prudent for the state to spend the extra money from last fiscal year in the current one.” His preference being that “it should be spent on one-time capital expenses like roads or schools, or put away in the state’s savings account.”

 

But that’s not what Baker is proposing.

 

To be sure, there is money allotted for roads and the like. But only two items seem clearly earmarked for infrastructure expenditures: $50 million for cities and towns to fund local road and bridge maintenance and improvement projects, and $30 million for municipal clean water projects. Both worthy candidates for what is likely to be a one-time windfall.

 

The rest of the proposal is more problematic, however. Especially in its stated focus.

 

According to a July 13 press release from the governor’s office, “The administration is proposing a wide-ranging $72 million package to make school security upgrades in the Commonwealth’s schools and provide resources to students, staff, and first responders to better respond to threats within schools.”

 

Which is probably just red meat for Baker’s right-wing supporters. Massachusetts is definitely in dire need of more funding for K-12 and higher education. But it needs that funding on an ongoing basis.

 

What it doesn’t need is a supplemental budget better dubbed the “More School Cops and Surveillance Plan.”

 

Yet that’s exactly what Commonwealth students will get from the following proposed items that are part of the aforementioned $72 million section of the governor’s larger supplemental budget proposal:

 

  • $20 million in matching grants for security and communications upgrades in K-12 schools and at public colleges and universities

 

  • $4 million to provide training to school resource officers

 

  • $2.4 million to create a tip line to provide public safety and school personnel with timely information on potential risks

 

  • $2 million for a statewide “Say Something” campaign

 

It’s true that the proposed $40 million in additional aid to school districts in that same section to hire more social workers, mental health counselors, and psychologists is a good idea in general terms. But such an effort can’t amount to much if the funding evaporates next year. Something also true of most of the line items outside the ed-targeted package in the supplemental budget proposal that would provide funding for a variety of decent-sounding programs for K-12 and higher education, and “substance use prevention, education, and screening.” Plus a grab bag of other one-offs of varying importance like “$35.4 million for snow and ice removal costs in FY18” or wastefulness like “$8 million for multi-year municipal police training needs” (in a state that already spends vast sums on cops).

 

And, sure, we don’t want students (or school staff and faculty) to be vulnerable to killers with automatic weapons. But then we don’t want them to be vulnerable to asteroid strikes either, and most of what we could conceivably fund in the way of preparedness on that front would be about as useless as what the governor is proposing to fund for “school security.” Worse than useless, since the main result of such measures will inevitably be to increase official harassment of students of color and poor and immigrant students in their own schools. And the concomitant danger of their being shot for no reason. As the militarization of police proceeds apace. And their well-documented trigger-happiness is validated by the likes of Weymouth police Chief Richard Grimes in shockingly opportunist remarks at yesterday’s memorial for Weymouth Officer Michael Chesna—who was felled by a rock before being disarmed and executed by a random criminal over the weekend. Even as the K-12 school districts and the state colleges that serve those populations remain starved for funds with or without the FY18 surplus.

 

Regardless, there’s already a general decades-long trend toward stationing armed police on campuses nationwide, but that hasn’t stopped mass shooters from slaughtering students. There’s a veritable panopticon of surveillance measures from all levels of government on the population in general and on students in particular. Which also hasn’t prevented mass shooters from slaughtering students nationwide.

 

The things that might actually stop mass shooters from appearing in the Commonwealth—like stronger welfare and public jobs programs and more stringent gun control measures—are not in the cards in the current political climate. Even here in a supposedly left-leaning state that is unable to provide the first of those two needed reforms because it’s constitutionally prohibited from having a progressive income tax. The second, naturally, being blocked by a powerful and triumphalist gun lobby in this Age of Trump.

 

Fortunately, the legislature hasn’t weighed in on the FY18 supplemental budget yet—having failed to send the regular FY19 budget to the governor’s desk for his signature as of this writing either. So there’s still time for constituents to weigh in on how the surplus funds get spent.

 

And my suggestion would be to push your state reps and senators to fight for spending whatever part of the supplemental budget is not put into the “rainy day fund” on key capital projects. Like fixing public transportation infrastructure that stubbornly continues to disintegrate no matter how much Gov. Baker’s hand-picked MBTA flacks claim they don’t need any more money—as they had the temerity to do yesterday.

 

Once that’s done, then start agitating for the progressive tax system that would better fund state education, transportation, and social safety net programs for the foreseeable future. Because we badly need such reforms, and because—for those of you worried about a mass shooting at a Bay State school—families that have a stable income are less likely to produce violent misogynists and racists and nazis (oh my!), since they won’t need to find scapegoats for economic instability anymore.

 

Progressive taxation will be a very hard reform to win in the Commonwealth, as I’ve written many times in the past. But then so will better gun control legislation. Yet both are needed if we are going to have a more just, stable, and safer society.

 

We’ve got our work cut out for us. So let’s get cracking.

 

Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston. Copyright 2018 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

GRAND SCHEME

workers protesting

 

Mass legislature helps, harms workers in “deal” with labor and business lobbies

 

June 26, 2018

BY JASON PRAMAS @JASONPRAMAS

 

No sooner did the Supreme Judicial Court shoot down the “millionaires’ tax” referendum question last week than the Mass legislature rammed a so-called grand bargain bill (H 4640) through both chambers. A move aimed at shoring up tax revenue threatened by the Retailers Association of Massachusetts referendum question that is virtually certain to lower the state sales tax from 6.25 percent to 5 percent if it should go before voters in November.

 

The house and senate did this by rapidly completing the brokering of a deal that had been in the works between pro-labor and pro-business forces on those issues for months. Giving each side something it wanted in exchange for encouraging the Raise Up Mass coalition to take its remaining two referendum questions—paid family and medical leave, and the $15 an hour minimum wage—off the table, and the retailers association to do the same with its sales tax cut question. Both organizations have not yet made the decision to do so.

 

If passed, the so-called grand bargain bill will give labor watered-down versions of its paid family and medical leave and $15 an hour minimum wage ballot questions, and give business something that’s explicitly anti-labor: the end of time-and-a-half wages for people working Sundays and holidays, and their ability to legally refuse to work Sunday and holiday shifts.

 

While Gov. Charlie Baker still has to sign the bill, as of this writing it’s looking like he will do so. Soon.

 

Which is a pity because it’s not such a great deal for working people as written. True, the grand bargain does ensure that the state minimum wage will raise to $15 an hour for many workers. But it moves up to that rate from the current $11 an hour over five years, instead of the four years it would take with the referendum version. Plus it betrays tipped employees, whose wage floor will only rise from a pathetic $3.75 an hour now to a still pathetic $6.75 an hour by 2023. Keeping all the cards in the bosses’ hands in the biggest tipped sector, the restaurant industry. Although it’s worth mentioning that even the referendum version of the $15 an hour wage plan would have only raised tipped employees to $9 an hour. When what’s needed is a single minimum wage for all workers.

 

It also makes Massachusetts one of the first states in the nation to institute paid family and medical leave for many workers. Which is truly a noteworthy advance. Yet again, the referendum version is better for workers than the grand bargain version.

 

But legislators gave away another noteworthy advance from 20 years ago in the process: time-and-a-half wages for many employees who work on Sundays and holidays. Which will hurt some of the same people who the new minimum wage and paid and family medical leave will help.

 

Thus far, the labor-led Raise Up Massachusetts coalition has had mostly positive things to say about the deal. However, the main union representing supermarket workers—many of whom currently take Sunday and holiday shifts—is already vowing to torpedo the grand bargain. Even though their union contracts also mandate time-and-a-half pay for working Sundays and holidays. And they’ve resolved to take down legislators who backed it over their protest.

 

Jeff Bollen, president of United Food and Commercial Workers Local 1445, minced no words on the subject in a recent video message to his members:

 

“I am really pissed off at our state legislature for stabbing retail workers in the back by taking away time and a half on Sundays and holidays for all retail workers in Massachusetts.


“Remember, it was this local union in 1994 with big business and the retail association wanting to get rid of the blue laws; so they could open up their supermarkets, their big box stores, and their liquor stores and make money on Sundays that we fought hard to get a law passed to protect you, the retail worker. And we did.”

 

The supermarket union leader went on to explain that state lawmakers “panicked” when the millionaires’ tax was derailed and pushed through the grand bargain to avoid losing any more revenue from the referendum question to lower the sales tax. He swore the union was “going to remove those individuals that voted against you. We’re going to get them removed and replaced with pro-labor legislators who are going to fight for the rights of working people.” And defiantly concluded: “We’re going to continue to fight. We’re going to continue to try to get this whole thing repealed.”

 

How much support the UFCW can expect to get from the rest of the labor movement remains to be seen. But the fact is that some Bay State working families are going to suffer nearly as much pain as gain from the grand bargain.

 

Worse still, there’s a deeper problem with the bill. It potentially stops the retailers’ referendum drive to lower the sales tax—which they’ve definitely put on the ballot to ensure that big businesses make more profits. But it must not be forgotten that the sales tax is a regressive tax that disproportionately harms working families. And even though the state desperately needs money for many programs that help the 99 percent, it remains a bad way to raise funds compared to a progressive tax system that would force the rich to pay higher tax rates than everyone else. Like the federal government has done for over a hundred years.

 

Yet since the rich and their corporations continue to rule the roost in state politics, and since a state constitutional amendment would be required to allow a progressive tax system in Massachusetts, there is no way that is going to happen anytime soon. As I wrote last week, the millionaires’ tax would have at least increased the amount of progressivity in the tax system had it been allowed on the ballot (where it was projected to win handily). But business lobbies got the SJC to stop that move.

 

Given that, the revenue lost from a sales tax cut would really hurt in a period when many major state social programs are already being starved for funds.

 

Nevertheless, many working families will take a big hit from the grand bargain bill as written: They’ll see the full introduction of the $15 minimum wage delayed by an extra year, they’ll get a worse version of paid family and medical leave, they’ll lose time-and-a-half wages on Sundays and holidays, they’ll see the sales tax remain at 6.25 percent… and if they’re tipped employees, they’ll still be made to accept a lower minimum wage than the relevant ballot question would get them and still have to rely on customers to tip them decently and their bosses to refrain from skimming those tips.

 

So, it would behoove Raise Up Massachusetts and its constituent labor, community, and religious organizations to stay the course with the paid family and medical leave and $15 an hour minimum wage referendum questions that are still slated to appear on the November ballot. And pro-labor forces should also be ready to lobby harder for a better deal should Gov. Baker refuse to sign the grand bargain bill.

 

Of course, it could very well be that the bill will be signed into law before this article hits the stands, and that labor and their allies will throw in the towel on their ballot questions. And that would be a shame.

 

Here’s hoping for a better outcome for Massachusetts workers. Even at this late date.

 

Note: Raise Up Massachusetts announced that it had accepted the “grand bargain” bill shortly before this article went to press on Tuesday evening (6.26), according to the Boston Business Journal.

 

Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston. Copyright 2018 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

TOWNIE: WHAT GOES AROUND COMES AROUND

former GM Framingham plant

 

Or how tax breaks for fat cats relate to a defeat for Harvard management rats

 

April 26, 2018

BY JASON PRAMAS @JASONPRAMAS

 

“Opportunity” for the few

Gov. Charlie Baker submitted paperwork to the US Department of Treasury last week, according to the Republican, asking the federal government to consider 138 tracts in dozens of Massachusetts communities for inclusion in the new “Opportunity Zones” program—passed in December as part of the Trump administration’s sweeping tax reform legislation.

 

As the name implies, each opportunity zone is a low-income area of an American city or town. According to Next City, acceptance to the program makes such areas eligible to receive investment from “Opportunity Funds”—which are to be certified by the treasury department. The funds “will be required to invest at least 90 percent of their investment dollars into businesses or properties located in designated Opportunity Zones,” and the initiative “allows investors to defer some of their taxes on capital gains in exchange for investing some of their accumulated wealth into the opportunity zones.”

 

This week, MetroWest Daily News looked at tracts chosen for the program in Framingham and Marlborough. In Framingham, “City officials nominated a pair of contiguous neighborhoods on the southeast side of the city, which has struggled to rebound from the decline of manufacturing and the legacy of environmental contamination in the area.”

 

One of those tracts is particularly interesting because it contains “a significant amount of industrial land, including the state prison and the former General Motors plant, which is now the site of Adesa, the vehicle auction house.” And thus encapsulates everything that’s wrong with neoliberalism—the return to 19th-century dog-eat-dog capitalism in which private interest must always outweigh any possible public good.

 

Which is germane to this discussion because the opportunity zone scheme was cooked up by a “bipartisan” (read “neoliberal”) think tank called the Economic Innovation Group—led by a who’s who of Silicon Valley movers and shakers, according to the Los Angeles Times. Napster founder Sean Parker, former Facebook general counsel Ted Ullyot, and a rogue’s gallery of major West Coast venture capital investment house leaders are all part of the organization’s “founders circle.”

 

So it’s absolutely no surprise that the program is essentially yet another tax break for the rich. In a federal tax regime that’s now replete with them—especially after Trump’s ungentle ministrations. More problematic, however, is the fact that the so-called opportunity zones give the rich and powerful even more control over economic development in areas already impoverished by the rich and powerful.

 

Which brings us back to the Framingham tract in question. It houses MCI-Framingham, a medium-security women’s prison with a population that includes a majority of nonviolent offenders. Most of whom are from working-class families, and most of whom would not be there if the state and federal government put less money into the “prison-industrial complex” and more money into guaranteeing economic opportunity for those families.

 

It is also home to the former General Motors plant. Which once employed as many as 5,000 workers in high-paying jobs unionized with the United Auto Workers. Just the kind of jobs that increasingly downwardly mobile working-class families need, if they want to avoid turning to crime to make ends meet.

 

According to the New York Times, the last 2,100 workers were laid off from the GM plant in 1989. And the working families of Framingham and environs have never really recovered since then. Because pols and CEOs and policy wonks can talk all they want about Massachusetts having recovered from the Great Recession of 10 years back. They can claim we’ve achieved “full employment.” But the jobs that working people have been able to get since the destruction of the Bay State’s largely unionized industrial base between the 1950s and the 1990s are not nearly as good as the ones that were lost.

 

Gone also is the social—and therefore political—solidarity that once enabled the local working class to defend and maintain the improvements they won on the job for decades.

 

In its place, we have programs like the “opportunity zones” that help the rich find new and exciting ways to get richer. But that don’t mandate the creation of good jobs for working families, or provide for the democratic control of new enterprises that are created by the people that work in them.

 

Furthermore, as Next City points out, “Opportunity funds could end up raising too much capital without enough deals in the designated census tracts, blunting the impact per tax dollar lost, or they could end up without enough capital raised to make a discernible difference.”

 

Seems likely that the new program will go the way of a similar neoliberal program from the Clinton era: “Empowerment Zones.” Which never produced gains for poor communities that could be tied to the program. Instead lining the pockets of legions of contractors and investors along the way.

 

Harvard University grad union victory

In light of the loss of 5,000 good jobs unionized with the UAW at GM Framingham decades back, it’s extremely ironic that 5,000 graduate assistants at Harvard University just successfully unionized with—you guessed it—the UAW. Big congrats to all concerned.

 

The labor campaign was absolutely necessary because the same neoliberal system that purposely depresses working-class wages and benefits worldwide to increase corporate profits also hurts grad assistants. Harvard is a large employer, and—nonprofit or not—like most large employers it always strives to save money on staffing costs. So it makes perfect sense that a union that was decimated by decades of assaults from auto industry tycoons should get vengeance of a sort by unionizing grad assistants at a ruling-class university that continues to help spearhead the corporate drive to crush global labor power. Grad assistants that—together with various kinds of adjunct faculty—get overused by fully corporatized university management to avoid increasing the ranks of more expensive (and far more powerful) tenured faculty.

 

Naturally, being a teaching or research assistant for a few years is not the same kind of job as the ones lost at GM Framingham. And the fortunes of people with advanced degrees from an elite school are typically much different than those of auto workers that often only had high school degrees. But beyond the improvements that grad assistants will see in their working lives during their short time at Harvard, and the bump that the labor movement will get from their very public victory, here’s hoping that the students will learn to feel genuine solidarity with working families the world over. And move into their professional lives with the determination to help undo the grievous damage that too many of their predecessors did, and continue to do, to the billions of people who don’t control the commanding heights of politics and the economy.

 

 

Townie (a worm’s eye view of the Mass power structure) is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston. Copyright 2018 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

GENERAL ELECTRIC FAIL

 

Conglomerate’s woes throw Boston HQ deal contradictions into bold relief

 

November 15, 2017

BY JASON PRAMAS @JASONPRAMAS

 

What a surprise. General Electric is tanking, and the scheme to bring the multinational’s headquarters to Boston is looking worse by the day. And whom shall the public blame if that once-secret deal cut by Gov. Charlie Baker and Mayor Marty Walsh in January 2016 goes south? Potentially tossing away millions in tax breaks and direct aid to a company that has already done massive damage to the Bay State over the past few decades? Readers of the dozen columns I’ve written criticizing the boondoggle will already know the answer to that question. But for those of you who have made the mistake of believing all the massive amounts of PR bullshit that the Boston Globe and other area press have been tossing around about the affair since that time, here’s a bit of a recap.

 

Where to begin? So, the governments of Boston and Massachusetts agreed to shovel tens of millions of dollars at GE in “exchange” for “800 jobs” in a new corporate headquarters campus in the Fort Point district of the Hub. Many of which would simply be transferred from the old headquarters, and most of which would be executive level jobs that will not help Boston’s struggling, underemployed working class.

 

Now there’s a problem. GE’s been losing money all year. According to the New York Times, its stock price had already dropped by 35 percent since January. Then, according to CNBC, the company’s share value dropped another 13 percent this week as of this writing after new CEO John Flannery announced a restructuring initiative—including the one thing investors hate most of all: dividend cuts. Only the second for GE since the Great Depression. So the knives are coming out around the beleaguered behemoth, and it remains to be seen whether some internal reorganization (doubtless costing legions of employees their jobs) and some belt-tightening by its execs will be enough to stop investors from moving to carve the conglomerate up like a Thanksgiving turkey. But let’s not assume the worst just yet.

 

Funny thing about that belt-tightening, though. According to the Boston Herald, cuts are now in store for GE’s still-small local workforce, and construction of the new Fort Point headquarters building was already pushed back two years from 2019 to 2021 in August. The plan is to make do with the two old Necco buildings already being refurbished on the site at first. The PILOT (payment in lieu of taxes) agreement signed by the Boston Planning and Development Agency (formerly the Boston Redevelopment Authority) and the city of Boston guarantees up to $25 million in tax breaks to GE if it provides the much-ballyhooed 800 full-time jobs. But by what date?

 

The discussion around GE moving its HQ to Boston has focused on the corporation creating those jobs by 2024. Herein, then, lies the rub about the PILOT deal: The agreement is framed around GE hiring “approximately 800 employees at the Headquarters Building and the Necco Buildings within eight years of the Occupancy Date.” But that occupancy date is explicitly defined as “the date upon which the Company initially occupies the Headquarters Building.” Which has now been pushed back from 2019 to 2021, according to the Boston Business Journal. So 2024 cannot be the year that GE will need to have 800 employees on its new campus. 2027 would have been the earliest it had to meet that target. And now that’s been pushed back to 2029, given the delay with the headquarters building.

 

Yet it turns out that the PILOT agreement doesn’t actually require 800 jobs to be created. Remember, it starts by stating GE will employ “approximately” 800 people on the Fort Point campus. But further down in the document, in a table explaining the specific tax break the city will actually give the company during each year of the deal, it allows for the creation of as few as 400 jobs in a chart with five tax break tiers between “Job Figure is between 400 and 499” and “Job Figure meets or exceeds 800.” Keeping in mind that the agreement also specifies a “stabilization” period of seven years between 2018 and 2024, during which GE gets $5.5 million in tax breaks no matter what and isn’t required to provide any jobs at all for the first six years. GE is then only required to provide between 400 and 800 jobs from 2024 until the agreement ends in 2037.

 

Job figure table from the GE Boston PILOT agreement
Job figure table from the GE Boston PILOT agreement

 

What’s super puzzling is that agreement first requires the company to start providing annual job figures “from and after” the aforementioned occupancy date. But the agreement already established that it only really has to start meeting any job targets as far out as eight years from the date it occupies its headquarters building. Making the job target requirement trigger as late as 2029, according to current plans. Despite the tax break table in the PILOT agreement using job targets to calculate tax breaks beginning in 2025 based on the 2024 job count.

 

The state, for its part, committed a total of about $120 million to the project. Late last year, GE spent $25.6 million to buy 2.5 acres on the Fort Point Channel that includes the land the existing buildings sit on and the land the new headquarters building will (perhaps) one day occupy from Procter & Gamble. MassDevelopment, part of the Commonwealth’s economic development apparatus, took out a $90 million loan from Citizens Bank—an interesting maneuver worth looking into—using $57.4 million to purchase the two old Necco buildings on the site from P&G, and the rest to refurbish the buildings. The remainder of the state’s “investment” is slated to go to fixing up the area around the site.

 

So, GE is getting basically free rent on the Necco buildings plus free upgrades on abutting public land courtesy of the state. And a big chunk of the taxes it would normally pay over the next 20 years is coming free from the city. Without any real requirement that it actually provide any jobs in Boston for many years, and then only (maybe) 400 jobs by 2029—assuming the headquarters building is built in 2021.

 

Which is the problem with all such erstwhile “economic development” deals in the Bay State. From their origin as a way to help encourage investment in areas of the state that were down on their luck precisely because GE and companies like it moved their manufacturing operations away from cities like Pittsfield, Lynn, and Fitchburg to places without the decent labor and environmental regulation that was in place by the 1970s, they have become yet another way for rich and powerful corporations to get richer and more powerful. Worst of all, such corporations hold all the cards in the deals. If they don’t get lavished with free public money, they can refuse to move their operations here or can leave if they’re already operating in the area. Once they get the cash they’re looking for, they can basically pull out at any time. Or as is the case with GE, they can “alter” the deal Darth Vader-style, leaving our local “Lando Calrissians” like Baker and Walsh to “pray” the deal is not altered “any further.”

 

The Boston Business Journal was correct to point out that GE will get $2.1 million in tax breaks on the Fort Point Complex by 2021—the year that the company now claims it’ll be completing its new 12-story headquarters building on the site. But what if it doesn’t build the new structure at all? It’s not clear. Because the PILOT agreement is pegged to job creation starting as far out as eight years after the headquarters building is built, and then allows for the company providing as few as 400 jobs between 2024 and 2037 rather than the 800 everyone’s been assuming. While not actually demanding any job creation until as late as 2029, making it unclear how the tax break will be calculated between 2025 and 2029 should GE drag its feet for the full eight years. The conditions for the company defaulting on the agreement are also pegged to job creation. Not to the construction of the headquarters building. Oh, and by the way, the PILOT deal only covers the headquarters building and the land the company purchased under and just around it (which the agreement calls the “Headquarters Project”). Not the Necco buildings, now owned by the state. Also, there’s no word about what happens if the company has less than 400 workers in Boston at any point from 2024 to 2037. Do these curious contradictions amount to loopholes for GE to bag the whole deal? It certainly looks that way.

 

The minimum GE will get in tax breaks from the city of Boston over 20 years is $5.5 million by 2024 plus whatever breaks it qualifies for between 2025 and 2037. However, the amount the company actually puts out in annual PILOT payments after 2024 is calculated by a complicated formula based on the taxes that would have been assessed without the PILOT agreement. And the assessed value of the relevant property could change from current projections. So it’s hard to know what the total value of the PILOT deal will ultimately be to GE, other than that it will be a bunch of money… however many jobs it actually creates.

 

But why exactly are Boston and Massachusetts giving a huge company that’s still profitable any money at all? And what happens if GE bails on the scheme by hook (simply running and fighting its PILOT default in court with its vast legal department) or by crook (not building the headquarters building at Fort Point and possibly getting away with delaying the job creation target trigger until the deal ends in 2037)? And what happens if worse comes to worst for GE, and the company actually does collapse?

 

These remain my central questions. And I continue to encourage all of you to ask those and related questions to every Boston and Massachusetts politician you can find. And ask the Globe while you’re at it. They’ve got a loooot of ’splaining to do about their cheap boosterism… which they’ve become awfully quiet about of late. Preferring, it seems, to focus on the next giant company that’s demanding public bribes to come to town, Amazon.

 

A shorter version of this column appears in this week’s DigBoston print edition.

 

Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston. Copyright 2017 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.