Receivership: Trouble for the City — and the State

When asked recently about the fiscal health of the Commonwealth’s cities and towns — or, in many cases, the lack thereof — Gov. Mitt Romney hinted strongly that many communities are in trouble simply because they spent too much money, especially on municipal employees.

Hearing those remarks, Springfield Mayor Charles Ryan replied, "the governor must be talking about someone else — I haven’t spent a dime since I got here."

The two sets of comments show exactly where the city’s at with its finances — a current mayor having to cope with the mistakes of his predecessor, and a governor talking in generalities about municipal workers making too much money and unions holding cities and towns hostage.

Soon, we hope both sides can come together and find some real solutions for Springfield and avoid receivership, a situation that would be regretful for the city, its business community, the state, Romney, and everyone else. In other words, it’s time to stop focusing on how Springfield got into this mess — the many indulgencies of the Albano administration — and to turn our attention on how it is going to get out.

At issue is the matter of a $14 million to $22 million shortfall projected in the budget for the fiscal year that will begin July 1. This is a big number, one that will not be made up through collecting overdue property taxes, tightening the proverbial belt, or putting consultants from MassMutual to work on ways to create more efficiencies in how the city operates. Making up that deficit will involve pain, lots of it, and quite possibly require receivership.

That step, which essentially strips city officials of their decision-making authority when it comes to the community’s finances, is now being talked about more as a probability, rather than a possibility, as it was during last fall’s election, during which Ryan was criticized for using the word and accused of trying to scare residents. Now, receivership is very real because the city is showing visible signs of not being able to meet some of its financial obligations, most notably the raises that have been owed to city workers for two years now.

That word receivership scares people, and it should, because it is never good when the people who have been elected to make fiscal decisions for a community lose that responsibility. In reality, though, few will actually notice any difference in day-to-day life if it does happen. Those most affected will be city employees who will have to live with a wage freeze for the foreseeable future — and thus may be tempted to explore other employment options — and individual departments that won’t have the money to take on new programs or continue some existing ones.

Instead, much of the damage that will be done by receiv-ership will be psychological. This city’s reputation has already been heavily scarred by the scandals of the Albano administration and recent convictions of several city officials, including the managers of a city-operated entrepreneurial fund. Add the stigma of receivership to the equation, and it will be even more difficult for economic development leaders to attract new businesses to the area.

This is why the state must step to the plate and work with the city to steer it out of the current whitewater. A $20 million bailout would be a nice gesture, but it is not likely to materialize. Doing so would be tantamount to rewarding fiscal irresponsibility, and Gov. Romney isn’t about to do that.

There are things the state can do, however. It can further adjust its aid formulas to assist cities like Springfield, Lowell, Lawrence, and others that have high percentages of lower-income individuals. The state could also provide oversight that assists the city with the process of moving forward, but without the trauma of actual receivership.

The bottom line here is that the city doesn’t need receivership, and the state doesn’t need to have its third-largest city humbled in this way. On the campaign trail in 2002, Romney talked about an economic development strategy grounded in making each of the Commonwealth’s regions more competitive. He was talking in terms of education, health care, workforce, and entrepreneurialism when he used that word, but fiscal health is also an important consideration, and Springfield will be far less competitive if it is burdened with the humiliation of receivership.

There are no easy solutions to Springfield’s fiscal woes, and it is clear to us that the city and state will have to work together fix the problem and, as we said, focus not on the past, but on the future.