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Tough times ahead
Tom Menino and Mitt Romney get ready for the fiscal crunch. Plus, media conglomeration doesn’t work.

BOSTON MAYOR Tom Menino has essentially been a feel-good mayor with a reputation for tough behind-the-scenes political infighting. He enjoyed nine straight years of increased growth and spending during the last decade of unprecedented prosperity. With his state-of-the-city address Tuesday night, though, he’s shown himself to be a tough realist as well. This address was perhaps more understated and plain-spoken than past state-of-the-city speeches. He’s readying Boston for hard times ahead. " Economic conditions have changed for the worse, " Menino said. " The national recession is crushing tax revenues. Cuts in local aid mean programs in every city and town are at risk. This year, the wolf is at every municipal door. "

For all the right notes he hit in the address, however, Menino made no mention of the arts. This has been one of the mayor's consistent blind spots. He’s undertaking a study to look at what the arts give to the city, but we could tell him now what they give: spiritual, as well as economic, nourishment. The arts are good for the city’s soul and good for the city’s pocketbook.

Nevertheless, the mayor struck the right tone with the address: a sober assessment for sober times. Unlike Governor Mitt Romney, he didn’t have to backtrack on promises or commitments — as Romney did this week when he said that the size of the budget deficit came as a " bit of a surprise, " according to the Boston Herald.

We’re going to take Romney at his word that the budget deficit is much worse than he’d anticipated. Maybe he really is so much of an " outsider " that he actually believed his own campaign rhetoric — that the budget could be balanced without raising taxes or cutting services — even as everyone else remotely connected with state government was warning of terrible fiscal times ahead. This means that, as Romney said this week, he’s going to have to break one-half of his campaign pledge: the governor is seeking expanded authority from the state legislature to cut local aid to cities and towns, which will almost certainly result in cuts to police and firefighters as well as to public education.

Let’s be clear about one thing: Romney can’t be blamed for the budget deficit’s Big Dig–like growth. This problem was waiting for whomever won the gubernatorial election. But Romney’s private-sector approach to solving the problem leaves much to be desired. Threatening to force cities and towns to balance their budgets this year with funding cuts of 10 or 20 percent this late in the budget cycle is madness. It’s one thing to do this to a private business. It’s quite another to take this approach with the Commonwealth’s 351 municipalities. Or, put another way, it’s one thing to do this to a company that makes staples. It’s another to do it to the public trust: police and fire protection and educating children.

A 10 percent cut in local aid to Boston would mean a loss of about $50 million, or nearly three percent of the city’s budget. Given that nearly 70 percent of the city’s budget goes to labor costs, the mayor will almost certainly be forced to make layoffs. Menino has already cancelled this year’s class of police recruits, who were to fill 60 jobs throughout the Boston Police Department. Cities like Somerville and Cambridge face the same problem. Adding insult to injury is the fact that such cuts cannot be spread out over the course of the year; they will be made in the closing quarter of the fiscal year. The result will be chaos.

If the state legislature grants Romney the additional authority he seeks (as of press time, the House had voted to go along with Romney’s request, but the Senate had yet to take action), he’s almost certain to make these sweeping cuts. If the public wants the government to continue providing police and fire protection, education, and health care for the most needy, and building and maintaining the state’s infrastructure, it must be willing to pay for it. That means higher taxes or new sources of revenue from enterprises such as casino gambling. When politicians like Romney promise to deliver it all without raising taxes — and then fail to deliver — that’s what makes the public truly mad.

IT’S IRONIC that the Federal Communications Commission is set to loosen media-ownership rules, which would allow for more-concentrated ownership of media companies, even as a slew of high-profile departures from such companies show just how difficult it is to make media conglomeration profitable.

This week, AOL Time Warner chair Steve Case announced he would leave the company, and CNN News Group chair Walter Isaacson announced he is leaving the broadcast station to head up a Washington, DC–based think tank. These are just the latest defections from the world of media conglomerates. Tommy Mottola, head of Sony Corporation’s music division, was recently forced out. Other big-name media executives who’ve been sent packing in recent months include Robert Pittman and Gerald Levin of AOL Time Warner (which encompasses CNN, America Online, HBO, New Line Cinema, Time magazine, Warner Brothers, etc.). Levin, of course, joined Case in forging the merger between Time Warner and AOL Online. Jean-Marie Messier of Vivendi Universal (Universal Music Group, Universal Studios, the Law & Order franchise,, Houghton Mifflin, etc.) and Thomas Middelhoff of Bertelsmann (Random House, Knopf, Ballantine, Fast Company magazine, BMG music, etc.) have also been let go.

The executive merry-go-round at media conglomerates shows just how difficult it is to make gigantic companies with divergent interests (cable programmers and operators working under the same roof, for instance) work. Even as these departures reveal a fault line in media mergers, the FCC has signaled its willingness to relax media-consolidation rules even further. Current rules are supposed to ensure that our airwaves are filled with many viewpoints and to guard against the dangers of one interest controlling too many broadcast and media outlets.

It’s probably lost on the free-market-or-bust types who are making economic policy in the Bush White House, but the FCC has been operating with laissez faire as its motto for years now. But the notion of media consolidation, as we’re now seeing, wasn’t just bad for consumers, it’s bad for business.

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Issue Date: January 16 - 23, 2003
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