Capital gains taxes may be the ultimate fiscal narcotic, producing soaring revenue highs in flush times, followed by crashing budget lows when the economy tanks.

A new report finds that states that boosted their spending in part by relying of spikes in capital gains taxes – taxes on the profits from sales of assets like stocks and bonds – are now dealing with budget hangovers after years of pulling in big revenues.

A timely new report has exposed one of Beacon Hill’s poorly-kept secrets – each year our state budget is balanced in too great a measure on revenue from capital gains, a term that, in a year of catastrophic real estate and investment losses, can seem a bit of an oxymoron.  According to a report released by the Massachusetts Institute for a New Commonwealth, Massachusetts now ranks third in the nation in reliance on capital gains revenues – leaving the Bay State balance sheet more vulnerable than almost any other to economic highs and lows.  This year, wrote study author Cameron Huff, roughly $1.5 billion of state budget is supported by capital gains receipts – receipts that are frankly going up in smoke.

CommonWealth magazine

Like the Big Dig that gave birth to it, there’s nothing low-budget about the Rose Kennedy Greenway. The park, which snakes for more than a mile through the center of downtown Boston, cost more than $50 million to build and will probably take tens of millions more to fully complete. The annual tab for upkeep is expected to be $3.2 million, which, on a cost-per-square-foot-basis, would make the Greenway one of the most expensive parks to maintain in the nation.

The hefty price tag reflects the high ambitions for the park. The expectation is that the Greenway will be a signature feature of the city and state, a common ground for Boston residents and a destination point for tourists from all over the world.

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A law designed to shine a bright light on the inner workings of state and local government in Massachusetts is instead leaving much of the bureaucracy in shadows, if not total darkness.

A seven-month investigation by CommonWealth revealed that public officials at all levels of government frequently game the Massachusetts Public Records Law, the state’s counterpart to the federal Freedom of Information Act. The law is one of those “small-d” democratic initiatives meant to level the playing field between everyday citizens and the government that serves them. While some agencies routinely comply with the Public Records Law and turn over records, the deck is often stacked against citizens trying to use the law to gain access to government documents.

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the boston convention & exhibition center edges toward Summer Street, hovering like a giant spaceship looking for a place to park. Nearly five years after its opening, the sprawling facility on the South Boston Waterfront is still seeking the right fit, both physical and economic. Convention center officials say it may be time to expand the facility, even as the national convention industry faces challenges ranging from a glut of meeting space to sharply increasing costs for air travel. But talk of “supersizing” assumes the convention center has met its original goals. And on that, the record isn’t so clear.

We need to join forces on Gateway Cities

Earlier this month, a historic gathering of state and local officials in Fall River showcased an issue that could affect the state’s economy for generations to come.  Urban economic renewal in “Gateway” communities like Springfield was the topic of the first-ever “Gateways Cities Conference” – an impressive assembly of people and perspectives from throughout the state who came together to understand how to prime the economies of urban areas outside of Greater Boston.

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For a picture-perfect view of the Boston skyline on a bright, cloudless day, looking from the Longfellow Bridge to the other side of the Charles River is as good as it gets. For scenery of a different sort, amble down the stairway near Storrow Drive and walk underneath the span that links Beacon Hill to Kendall Square. Take a look at the severely corroded steel supports and the black netting affixed to catch pieces of crumbling sidewalk. Not exactly Kodak moments.

CommonWealth magazine

Secretary of State William Galvin is running a $50 million-a-year state tax credit program like a personal fiefdom. He decides which developers receive historic rehabilitation tax credits from the state and how much they get, using a selection process that creates uncertainty for developers and maximizes his political clout.

What’s most startling is that Galvin, whose office oversees the state public records law and is supposed to promote transparency in government, has resisted attempts by lawmakers and developers to find out who is getting the tax credits. In other states with similar programs, the information is readily available. But here in Massachusetts, Galvin acts as if millions of dollars in state tax credits are no one’s business but his own.

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The Community Preservation Act arose from the noble desire to give municipalities more tools to fight urban sprawl and to make housing affordable so residents could continue to live where they grew up. But over the last several years the focus in many communities has begun to shift to more parochial concerns. Cities and towns, many of them among the wealthiest in the state, are building sidewalks, sprucing up parks, and installing synthetic turf athletic fields—and using the Community Preservation Act to stick the state with half the tab.

Maybe it is the pure exuberance of youth or maybe those ages 25 to 39 are wiser than everyone else, but that group of young adults is still bullish on the American Dream.

Despite a souring economy, worsening inflation and the high cost of living in Massachusetts, many of them believe they have a bright future. 

Those were the findings of a statewide survey done for the non-profit MassINC by Princeton Survey Research Associates.  It was based on interviews with more than 800 people ages 25 to 39 from across Massachusetts.

When it comes to financial stress, younger adults in Massachusetts don’t have to look far to find it.  Record-high gas prices, a dearth of affordable housing, the relatively slow pace of job growth, and a sputtering national economy all paint a gloomy picture for people between the ages of 25 and 39. 

A study released today, though, suggests younger adults aren’t buying it.  Conducted by economic research group MassINC, the report, entitled “Great Expectations: A Survey of Young Adults in Massachusetts,” reveals a surprisingly upbeat attitude among younger adults.

Survey: Young adults bolt to save ca$h

One in five young adults expects to bolt Massachusetts during the next five years amid frustrations with the high cost of living and state government’s response to their concerns, according to a new survey.

MassINC, a Boston think tank, said its survey of about 801 adults, ranging in age from 25 to 39, shows general satisfaction among young workers with their jobs and private-sector employers. 

A clear majority are optimistic about achieving the “American Dream” and seeing higher salaries in the future.

Most young Bay Staters say future’s bright

A majority of state residents ages 25 to 39 – seen as holding the key to the state’s economic competitiveness – feel upwardly mobile and believe that the future looks bright for their children in Massachusetts, despite current strains on their pocketbooks, a new survey suggests.

The wide-ranging survey of 801 people released today by MassINC, a nonpartisan public policy think tank, offers policy makers a window into the thinking of a key pool of citizens – the same group considered pure gold by marketers – whose success will largely determine the state’s economic future.

Halfway through the year in which the oldest baby boomers turn 62 – the age of eligibility for many retirement benefits – the next generation of workers has had an opportunity to come out of the shadows and express what’s important to them. 

Today, MassINC released “Great Expectations: A Survey of Young Adults in Massachusetts” and the first report that asks those 25 to 39 year olds about personal finances, jobs, economic growth, the vitality of the middle class and their ability to attain the “American dream,” defined as the ideals of equality of opportunity, personal responsibility and a strong commonwealth.

LOWELL – John Schneider spent his summers growing up playing pickup baseball in the Pittsfield city parks and evenings at the minor league baseball stadium watching future stars of the game. He remembers “a terrific mix of blue-and white-collar” families, who like his father depended on General Electric for employment. “It was a time when Pittsfield was really at its peak,” Schneider said, recalling a prosperous downturn and vibrant civic community.

Youth civic group talking ’bout their generation

Cara Sullivan lives in the West End, works at State Street Corp., and is happily immersed in the civic life of Boston.  None of this makes her unusual.  But Sullivan’s age – 24 – does.

Rightly or wrongly, some people in their 20s and 30s do not feel entirely welcome in the graying, boomer-centric circles where Boston’s movers and shakers cluster.  It’s one of the reasons, some say, that many young professionals eventually choose to depart the Hub.

Roughly 120 people in their 20s and 30s, some of them sipping wine, attended “It’s Not Easy Being Green: Why Our Generation Can Change That,” the latest in the RealTalk series.  The idea is to lure younger Bostonians to take part in forums with leaders in areas of public policy in which they have a sizable stake.

Springfield allies with 10 fellow Gateway Cities

Springfield was represented at an event today in Boston, at the Old State House (pictured) and hosted by MassINC, signaling a new allegiance of cities across the state.  At the gathering, also attended by Lieutenant Governor Tim Murray, 11 municipal representatives in Massachusetts signed a Gateway Cities Compact (see below).  The agreement is said to provide a foundation to “redefine economic development” in the state with a greater emphasis on urban population centers.

The Massachusetts budget faces a structural imbalance, with on-going spending exceeding revenues.  This is an unsustainable situation that endangers the state’s ability to meet basic commitments and key budgetary priorities, including the new universal health care law.  At its core, there s a mismatch between growth and the growth in spending required to maintain current programs and honor existing financial commitments.  Based on historical performance, the growth in revenues in 2009 would be between $750 million and $1 billion, and the estimated growth in spending needed to sustain existing programs between $1.3 and $1.6 billion before any new programs or initiatives are included.

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Shortly after he took office last year, Gov. Deval Patrick was asked whether his proposal to close corporate tax loopholes would hurt efforts to bring more jobs to Massachusetts.

“In my experience,” the governor told the Greater Boston Chamber of Commerce, “companies don’t make their investment decisions on the basis of the tax code. They make their decisions on the basis of whether there is an available, secure, sensible, broad-based labor pool and other conditions.”

More than a year later, Patrick has discovered he was wrong: Companies do pay attention to a region’s labor supply and its education and transportation infrastructure, but they do indeed make their investment decisions on the basis of the tax code.

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A decade is a long time. But advocates for senior citizens have been trying to drum up support on Beacon Hill for guardianship reform for at least that long. Seniors without relatives or close companions can end up, and hundreds do, under the care of court-appointed guardians who get carte blanche over their medical and legal decisions. Judges often issue snap judgments on these cases, usually without a detailed review of the status of these “unbefriended elders.”

So when a recent Boston Sunday Globe Page One investigation described this little-known controversy, the story struck a real nerve. “The writers did an excellent job describing the challenges of the guardian system,” read one Brookline woman’s letter to the editor. Elder Affairs Secretary Michael Festa called the article an “exclamation point” on a systemic problem. Most important, a hearing held by the Legislature’s Joint Committee on the Judiciary on bills addressing guardianship concerns drew a far larger turnout of judges, registrars of probate, and lawyers than in past years. “There was definitely a big ripple,” says Wynn Gerhard, managing attorney for the Greater Boston Legal Services’ elder law unit.

Here’s a thought that might console you as you grit your teeth and wait for the Commonwealth of Massachusetts to deposit that income tax check: Come November, you’ll be able to cast a vote to make the state income tax vanish. 

But if it passes, you might want to start planning a move to some other state, because an ugly situation here in Massachusetts will get far uglier.

Budgeting through a recession

The casino gambling debate has dominated discussion on Beacon Hill, while the state’s real house of cards – its budget – stands vulnerable to the winds of recession.  Revenue growth, one-time expenditures and the rainy-day reserve fund have papered over the budget’s structural imbalance for years.  These sources and stop-gap measures will prove inadequate in the face of dramatically falling revenues.

It’s time again for reform.

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thunderstorms have raged over the Tobin Bridge, pelting the narrow streets and closely packed tenements of Chelsea, driving everyone indoors. It’s a warm night in July 2007, and Chelsea police detective Scott Conley and FBI Special Agent Darwin Suelen are cruising the 1.6 square miles of the city. A head taller than his colleague, Conley refers to the cheerful, energetic Suelen as a “secret kung fu master” and teases him relentlessly about his enthusiastic approach to the job. Conley and Suelen are members of the North Shore Gang Task Force, a multi-jurisdictional group made up of federal, state, and local law enforcement officers charged with “identifying, infiltrating, disrupting, and destroying” violent gangs across the region—from East Boston, Lynn, and Chelsea up to Lawrence and Haverhill.

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On a Friday afternoon in early November 2006, I went to the office of Michael Dukakis, deep in the political science warren at Northeastern University, to talk about the job he held for 12 years, longer than anyone before or since, as governor of the Commonwealth. It was his birthday, I soon discovered, and he was in good spirits. His wife, Kitty, had congratulated him at breakfast, saying, “Well, you made the Herald.” The Boston tabloid had put his photo on the front page to illustrate a Howie Carr column suggesting the election of Deval Patrick would mean a return of the Dukakis era—“Duke Redux,” in Herald-speak.

The election of Patrick was still four days away, but by this time it was clear that Massachusetts was ready, for the first time in the 16 years since Dukakis left, to try a Democrat again. What would it be like? Republicans had been warning voters off this path for years, winning four gubernatorial elections largely on the claim that the state needed a night watchman to keep the Democratic Legislature from raiding the treasury. Now we were on the verge of returning to one-party control. Thus, it seemed to me, the governorship was about to become powerful again. The new governor would have a chance to really lead—not just to play defense against the Legislature, but to propose and dispose. We were about to see a new study in power and positive leadership.

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as a candidate for governor, Deval Patrick sounded a cautionary note about the perennial calls to bring casino gambling to Massachusetts. While not morally opposed to slot machines or blackjack tables, Patrick said, he was concerned about the social costs of expanded gambling, as well as its possible threat to the Massachusetts Lottery. In April 2006, he told The Boston Globe that he wondered “if the person at the slot machine can afford to be there,” adding that what he’d learned so far made him “uncomfortable with slots in racetracks and casinos in Massachusetts.”

But as governor, Patrick signaled a clear willingness to put the casino question on the table. He said he would initiate a formal process to weigh the pros and cons of the issue, and he established a five-person “Gambling/Gaming Internal Study Group,” chaired by his economic development secretary, Daniel O’Connell, and asked it to gather information to help inform his decision making.

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as new england prepared to cheer on the Boston Red Sox starting nine at Fenway Park in late October, another starting nine basked in their own standing “O” a few miles away at Faneuil Hall. The Little Rock Nine hailed from Arkansas. They integrated the all-white Central High School in 1957, three years after a unanimous US Supreme Court declared the “separate but equal” doctrine in public education unconstitutional in the landmark Brown v. Board of Education case.

In their quest for educational equity, the six young women and three men braved the worst abuses that whites in the small Southern city could conjure up. At the 50th-anniversary celebration of the civil rights milestone, attended by seven of the nine students, Harvard Law Professor Charles Ogletree Jr. called them “national treasures.” Ernest Green, one of the Little Rock Nine, was more modest. He said simply, “We had a vision about connecting education and opportunity.”

Patrick faults absent ex-gov for Mass. job rut

With the New Hampshire primary just weeks away, Gov. Deval Patrick yesterday slammed Mitt Romney for allowing Bay State job numbers to slump to national lows his last year in office while he plotted his run for president.

“The rating (for job creation) when Mitt Romney was in office was 49th in the nation,” said Patrick, citing a recent study by MassINC, a public policy group.

The niche economy

Every beginning investor is told how important it is to diversify.  Yet Massachusetts is in danger of concentrating job growth in highly specialized “boutique” economic sectors that leave out too many workers.  That’s one conclusion of a major new study by MassINC and the Center for Labor Market Studies at Northeastern University.  Business and political leaders need to pursue strategies that will diversify the job market, both to broaden opportunity and to protect the state from a downturn in any one industry.

Massachusetts trailed behind nearly every state in the nation in job creation over the last six years, even as its workers became much more productive, according to a new analysis released today.

The shifts are molding a specialized “boutique economy” in Massachusetts that rewards people with education and skills but offers shrinking opportunities to others, and that does not bode well for a state government that needs to finance services, said Andrew M. Sum, an author of the report and director of the Center for Labor Market Studies at Northeastern University.

Massachusetts is near the bottom of the barrel when it comes to creating jobs, according to a report scheduled to be issued later today. 

The state ranked 49th in job creation over the last six years, and registered a loss in its share of the nation’s payroll jobs, according to the report, which is to be issued jointly by the Massachusetts Institute for a New Commonwealth (MassINC) and Northeastern University’s Center for Labor Market Studies.