MassDOT: does consolidation save?

BY SOPAN DEB

BOSTON – Last June, Gov. Deval Patrick triumphantly announced the bill he had just signed would deliver “real cost savings” and “radically” reduce the state’s transportation bureaucracy. That bill created MassDOT – an ambitious merging of the state’s transportation agencies, authorities and offices into one superagency.

Legislative leaders joined the bandwagon, claiming the merging of the Registry of Motor Vehicles, the Highway Division, MBTA and Aeronautics Division, along with abolishing the Turnpike Authority, would make transportation more efficient and less costly.

House Speaker Robert DeLeo predicted the consolidation would bring “considerable” savings; Senate President Therese Murray predicted those savings could add up to $6.5 billion dollars over the next 20 years.

The optimism continued when MassDOT opened its doors on Nov. 1 with a contemporary look that included a sleek new website and a Twitter account.

But not everyone shares that optimism. Even some members of the Patrick administration are more circumspect about the potential gains.

“I think that number’s a little high,” said Jeff Mullan, Patrick’s recently appointed transportation secretary. “The numbers that we’ve got are largely in aligning health and welfare benefits. From my perspective, any savings is necessary, so we need to take care of the pennies because we spend a lot of them.”

The watchdogs outside state government agree.

“As a general matter, the virtues of consolidation tend to be overstated,” says Michael Widmer, president of the Massachusetts Taxpayers Foundation. “It’s a noble effort to try and achieve savings and some things can be achieved depending on the particular area of state government. However, because political leaders don’t want to raise revenues or cut services, they tend to overstate the potential savings.”

The cost-savings from transportation consolidation are supposed to come in two primary ways. The most substantial will be in the scaling back pension plans for MBTA workers and retirees, placing their benefits more in-line with other state workers. The second is the elimination of 300 jobs, mostly in administration to reduce redundancy, said MassDOT spokesman Colin Durrant.

Durrant cites other possibilities for savings. One example: Turnpike Authority snow plows can now clear other roads, adding to the effectiveness of the equipment’s use.

“If you have soloed agencies not talking to each other, that’s not efficient,” Durrant says.

Most eyes, however, are focused on cuts in the MBTA healthcare benefits, which could save up to approximately $750 million over 20 years.

Before consolidation MBTA workers got free healthcare after retirement along with sizeable pensions. They also got the benefits earlier, qualifying for them after working 23 years. Starting Nov. 1, newly hired employees will have to hit the same marks as other state employees who must work 25 years and reach age 55 before qualifying to receive benefits.

The new bill requires that all past and present MBTA employees receive healthcare through the less costly state group health insurance system by July. Retirees older than 65 will have to pay monthly Medicare Part B premiums and up to 15 percent of any Medicare supplement plan. While state plans vary, they generally require workers to pay about quarter of insurance costs.

The benefits would be in line with other state workers.

However, MBTA labor unions are suing to get those benefits back, claiming that the new law illegally undercuts collective bargaining rights because it changes benefits without going to the negotiating table.

Widmer says that if this litigation is successful, the savings from MassDOT will be “zilch.”

David Tuerck, executive director of the Beacon Hill Institute, believes consolidation will provide an opportunity to address issues of state largess such as the pensions issue.

Another possible savings will be the higher costs of maintaining the turnpike.

“[There is] the potential of cutting turnpike maintenance costs that have always been greater than highway maintenance of other Massachusetts roads,” he said.

Widmer also lists an improvement in services.

“It’s not just savings for consolidation, but rather, can the state deliver better services because you don’t have different agencies working across purposes?” he says.

But Tuerck remains pessimistic on the hyperbole of consolidation.

“The disadvantage [of government consolidation] could be that we just get the consolidation, eliminate a few positions and do nothing further,” Tuerck says. “If the consolidation occurs and we don’t make any progress on the big ticket items then it will have been a stop in the wrong direction because it will merely create the illusion of progress rather than the reality of progress.”

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