Deficit, Dukakis defeat take some wind out of Massachusetts sails
BAY State officials have much to be grateful for in this season of Thanksgiving. Except for Gov. Michael Dukakis and his failed presidential candidacy, most Massachusetts officials seeking reelection or higher office were successful, and many with little effort.
Long-nagging challenge of auto insurance reform has finally been addressed.
Plans for the costly but essential Boston Harbor cleanup are fast taking shape.
Massachusetts unemployment remains among the lowest in the nation.
State revenues continue to grow, although more slowly than projected.
Despite cash-flow problems since midsummer, bond rating houses like Standard & Poor's and Moody's Investor Service have not lowered the commonwealth's sound credit standing.
But the latter could be in jeopardy in coming months unless the fiscal 1989 Massachusetts budget is brought into balance, either through substantial trims, increased taxes, or a combination of both.
The heavy borrowing from one pocket to fill another and the continuing short-term loans to make ends meet during the past four months must concern the New York-based professional financial watchdogs whose responsibilities are to investors in the bond market.
Particularly disquieting to some would-be lenders was the late-October disclosure that to deal with a September cash-flow crisis the state overdrew its account with the Bank of Boston. That decision to spend money it did not have cost Massachusetts, and thus its taxpayers, $383,000 in fines.
The overdraft may have temporarily covered a serious state money need at a time that Governor Dukakis was in the crucial weeks of his presidential campaign. But it hardly sets a good example for Bay Staters, many of whom, like the commonwealth, have fallen behind in paying their bills.
As eager as State Treasurer Robert Q. Crane was to do what he could to help fellow-Democrat Dukakis avoid the embarrassment of yet another short-term state loan, what was done casts serious doubts on his judgment as custodian of the commonwealth's coffers.
Regardless of whether it was cheaper to overdraw the bank account than to borrow the money for a few weeks in the market, it amounts to tapping money that did not belong to the state but to other depositors with the Bank of Boston. Few would be allowed to get away with overdrawing their accounts.
Certainly there is a lot the state might have done with funds it had to pay out in penalties to the Bank of Boston.
Treasurer Crane and others in the Massachusetts fiscal high command must have seen the cash-flow problem developing long before it hit. They should have taken steps to deal with it.
As much of a Democratic loyalist as Treasurer Crane is, clearly his first responsibility was and is to the taxpayers - to run a sound state financial operation. Spending money the commonwealth did not have whether it was his idea or that of someone in the Dukakis administration, is surely nothing to be proud of.
The overdraft, when it came to light in the closing weeks of the presidential campaign, drew at least some national attention when a Boston newspaper headline about the situation was flashed by then Republican presidential candidate George Bush.
To help shore up the confidence of the public, and the investment community, in the soundness of Massachusetts financial management, perhaps a law should be passed requiring disclosure when state or municipal accounts are overdrawn.
That, if nothing else, would surely force an explanation of why it was done from the public official responsible. No matter how much money the state may have invested, only what it can get its hands on should be spent, even if a few bills go unpaid for a while.
While it is too early to gauge what long-range effects the overdraft may have on the state's fiscal reputation, it could become an issue in the 1990 campaign for state treasurer.
In light of this and other criticisms over the years directed to Mr. Crane and his considerable political clout, the man who has been state treasurer for nearly a quarter century could face stiffer than usual ballot opposition, should he run for another four-year term.
Several Democrats and maybe even a Republican or two are already considering a Crane challenge.