Boston's muddle: fiscal or political?

Is Boston facing an unprecedented financial crisis? Or is it merely engaged in politics as usual? The city whose government is said to be the second-most complex in the country -- exceeded only by Chicago -- has been filled with confusion over those questions for the past week.

On May 15, City Treasurer Lowell L. Richards III astonished the community with his announcement that Boston would, after all, have enough cash on hand to finish its fiscal year.

Earlier, nationwide attention had been focused on talk of pending municipal bankruptcy here, caused by the triple threat of school overspending, court-ordered tax abatements, and Proposition 2 1/2, the voter-mandated measure to cut property taxes.

His announcement took many by surprise. Both by its content and its timing, it raised questions about the validity of earlier suggestions that the city was in desperate fiscal straits.

Mr. Richards's affidavit was filed in compliance with a Superior Court decision requiring the city to keep its overspent school system open through the end of term June 19. It noted that the consequences of spending cash on hand would lead to "the shutdown of all municipal services" after the end of the fiscal year July 1.

And because Boston has had its bond rating suspended due to uncertainties surrounding Proposition 2 1/2, the city may find it difficult to borrow money to fund these services.

The problem is widely seen as less financial than political -- the result of the inability of Mayor Kevin H. White and the nine-member City Council to reach a compromise. The mayor is taking increasing heat for his handling of the crisis and for reportedly raising the specter of bankruptcy in discussions with New York bankers earlier this year. His critics charge that he has overblown the threat of municipal receivership.

His motives, they say, were twofold: to pressure his antagonists on the City Council into passing an ordinance allowing him to borrow up to $75 million, and to persuade state legislators that Boston needed more state aid.

But last week the legislature, in a vote widely seen as anti-White, scuttled a bill that would have helped bail out the city.

Responding to critics of the administration, City Treasurer Richards told the Monitor that "I never presented the crisis in terms of bankruptcy and to my knowledge the city never did." He attributed the surprise surrounding his affidavit to a confusion in the public mind between budgetary and cash-flow terms.

On the day he filed his statement, the school system already had overrun its to spend another $24 million to $32 million before the end of term. "People translated 'no more budgetary authorizations' into 'no more money,'" he said.

And City Auditor Newell Cook, anxious to dispel the charge that the city had been merely saber rattling, told the Monitor that "the crisis is real and continuing."

"I think the administration must receive high marks for having avoided the crisis," said Mr. Cook, adding that "we certainly aren't going to go into bankruptcy just in order to prove that there is a crisis."

Both he and Richards see their role as one of forestalling default for as long as possible. Many observers were earlier predicting that the city might go "belly up" in June. Now that date, if it comes at all, is seen as falling somewhere beyond mid-August.

City Councilor John Sears, however, notes that "the premise of the affidavit is defective." All it does, he contends, is plan to "do again this year what we've done for the last six to seven years: shovel obligations over into next year."

And Jeff Conley of the Boston Finance Commission -- a state-mandated organization that monitors the city's finances -- remains skeptical of Richard's figures. "There is not enough money to run things," Mr. Conley contends -- unless, he adds, information has been withheld from his group.

At the heart of the issue is this question of how open the administration has been with its figures. Some observers wonder why the treasurer did not forecast an adequate cash flow earlier, thereby avoiding a good deal of handwringing. Waiting to make the announcement until forced by the court, says Councilor Lawrence DiCara, has "damaged the credibility of the administration."

Others, however, note that lower-than-expected tax abatement payments, the early receipt of $9.4 million owed by the state for school construction, and the recent trimming of city manpower by 1,463 employees (10.2 percent of the work force) have changed the cash-flow picture significantly.

The administration's financial troubles have splashed over into the neighborhoods. An election in the low- to middle-income district of Dorchester May 19, held to fill a vacant seat in the state legislature, almost did not take place. The Boston Election Commission, pleading lack of funds, tried to postpone it into the next fiscal year -- until all the candidates, in a rare move of unity, demanded that the election proceed as scheduled.

And at the crucial tunnels linking the downtown area to Logan Airport, protesters carrying signs reading "Honk if you hate Kevin" continue to block traffic. They are demanding that police service in East Boston, cut in response to Proposition 2 1/2, be restored.