On September 11, two airplanes that took off from Logan Airport brought down the World Trade Center and our nation’s sense of security. In Massachusetts, the events of that day also rattled a seemingly impregnable structure of independent agencies that supplement state government. Just as the nation continues to recover from the shock of September 11, we in the Bay State struggle to understand whether the agencies created to carry out essential functions at a step removed from the rough-and-tumble of politics are failing to do so because they are too subordinate to the elected officials who created them, or because they’re not subordinate enough.
The security breaches that allowed suicidal terrorists to commandeer Boston-based airliners triggered Boston Globe exposés of patronage appointments at Massport. Executive director Virginia Buckingham, herself a transplant from the governor’s office, resigned, but on the terms of a hefty severance package that became a scandal in and of itself. Shortly, but coincidentally, thereafter, two renegade members of the Massachusetts Turnpike Authority, Jordan Levy and Christy Mihos, voted to delay a long scheduled toll increase that had been earmarked to pay for the Big Dig project. Acting Gov. Jane Swift decided to fire them, charging that they had flouted their fiscal responsibility, but succeeded in doing so only after a protracted series of hearings, court appeals, and embarrassing press accounts.
The Port and Pike fiascoes of the past six months have drawn unflattering attention to this parallel universe of state government. Is the mischief so often associated with these quasi-autonomous bureaucracies a function of political influence, or of rogue-elephant independence that allows them to operate unchecked by duly elected officials?
The answer, if there is one, is both. From the start, agencies like Massport and the turnpike authority have existed to do the duty of government without being under the direct control of elected officials. Relying on sources of revenue that make them independent‹though only partly so, in many cases–of the state budget, these stolid but shadowy entities have been given jobs that were judged too dicey for elected politicians or too important to be entrusted to them. But, as the tragedies and charades of the last five months have demonstrated, they are capable of causing plenty of trouble on their own. At once aloof and subservient, arrogant and craven, the state’s independent authorities perform vital functions, often with a competence and professionalism that the line agencies of the executive branch find hard to match. But they have never been quite as independent as advertised.
Declarations of independence
According to the Massachusetts Taxpayers Foundation, there are 27 state authorities and five major regional authorities. They employ an estimated 12,000 people and spend more than $2 billion annually. In addition, there are 477 local authorities for which there are no aggregate employment or spending records available. Most of the local and regional authorities are involved in housing, development (or redevelopment), and water, sewer, and fire protection services. In countless ways, both great and small, they carry out essential public functions. They operate the subways, commuter trains, ferry steamships, turnpikes, bridges, tunnels, airports, seaport terminals, and convention centers; they arrange financing for housing, health, educational, and industrial facilities; they deliver water and electricity to homes and businesses.
Patterned after private business corporations, authorities are allowed to raise revenue and to spend it at their own discretion. They receive most of their income from rents, tolls, and other user fees, rather than taxes. They also raise money for their activities by issuing tax-exempt bonds, which are backed by the authority’s own revenue-generating capabilities, not the “full faith and credit” of the Commonwealth. Although these agencies are subject to open-meeting laws, they are exempt from civil service rules, contract bidding procedures, and the state’s borrowing cap. While they are not funded principally through the state budget, many receive substantial state subsidies.
Perhaps the two most famous organizations of this type in the United States are the Port Authority of New York and the Tennessee Valley Authority. Created by interstate compact in 1921, the New York Port Authority has jurisdiction in both New York and New Jersey. This bi-state agency has been responsible for creating and maintaining much of the transportation infrastructure in the New York metropolitan area. In 1933, President Franklin D. Roosevelt, who was interested in regional planning, believed that a government corporation should develop the Tennessee River and conserve the forests and soil of the valley, an area that extends into seven states. He proposed the Tennessee Valley Authority, which built a series of dams that provided the region with flood control, an extensive inland waterway, electric power for industrial development, and a program of soil conservation.
Public authorities did not appear in Massachusetts until shortly after World War II. Finding solutions to the long festering problems of crumbling bridges, poor public roads, and an antiquated mass transit system (all of which had been neglected during World War II) became a top priority for three consecutive governors: Robert Bradford, Paul Dever, and Christian Herter. Their push resulted in creation of the Metropolitan Transit Authority in 1947, the Massachusetts Turnpike Authority in 1952, the Massachusetts Port Authority in 1956, the Massachusetts Parking Authority in 1958, and the Woods Hole-Martha’s Vineyard-Nantucket Steamship Authority in 1960.
A few years later, Gov. Endicott Peabody recommended a restructuring of the deficit-ridden MTA, creating the Massachusetts Bay Transportation Authority in 1964. The MBTA’s service area covered the MTA’s original 14 cities and towns and 64 additional communities. In 1966, both the Massachusetts Housing Finance Agency and the Massachusetts Health and Education Facilities Authority were established.
Over time, these public agencies continued to proliferate, ultimately emerging as almost a fourth branch of government. The Massachusetts Municipal Wholesale Electric Company was created in 1975, followed by the Massachusetts Industrial Finance Agency in 1978 and the Massachusetts Convention Center Authority in 1982. To fend off a judicial takeover, the Legislature created the Massachusetts Water Resources Authority in 1984 to clean up the pollution in Boston Harbor and to repair antiquated water delivery and sewage treatment systems. Its predecessor, the Metropolitan District Commission, a state line agency, had failed miserably in performing this same mission.
A recent survey of the so-called Big Five authorities–the Turnpike, Massport, Convention Center, MBTA, and MWRA–shows that their payrolls have grown modestly during the past decade, but their indebtedness for infrastructure projects has mushroomed. Between 1990 and 2000, their outstanding debt has soared from $2.83 billion to $12.12 billion–a staggering 328 percent hike. During this same period, their annual revenues have increased only 72 percent. A new $750 million convention center in South Boston will be financed by tax and fee increases aimed at tourists and conventioneers. Most of these authorities receive at least some annual revenue stream from taxpayers. The MBTA is heavily subsidized, to the tune of about $645 million each year.
Brokers of power and patronage
Not entirely above politics, public authorities have never been instruments of direct gubernatorial control, either. Though most are ruled by boards whose members are appointed by the governor, staggered terms ensure that no governor is able to replace them all at once, and even when a governor has appointed all of a board’s members, their accountability is diffuse (as Gov. Swift discovered, much to her chagrin).
Even as they proliferated over the years, most authorities adopted a nonpartisan and “businesslike” demeanor at the outset. But before long they became sources of patronage for politicians on Beacon Hill. At the same time, savvy agency heads learned how to make the most of both the jobs at their disposal and their relative freedom from executive authority to make themselves power brokers in their own right.
master road builder.
The legendary William F. Callahan was a master road builder comparable in stature to New York’s Robert Moses. Callahan was responsible for building the Central Artery in Boston in the early 1950s. Serving for years as both state commissioner of public works and chairman of the turnpike authority, he oversaw construction of the 135-mile-long turnpike that spans Massachusetts from West Stockbridge to I-93 in downtown Boston. The project cost over $200 million and required land-takings along a strip more than 300 feet wide from the New York border to a stone’s throw from Boston Harbor.
Callahan possessed extraordinary leadership ability and management skills, and few men in public life exercised as much influence with the Legislature for so long a period of time. His political clout was attributable to his indomitable personality and the extensive patronage that he controlled. Despite his great influence, Callahan lost two important battles to Gov. John Volpe in 1962. One involved a proposal to lease air rights over the turnpike for up to 99 years, and the other called for an annual audit of the authority’s books by the state auditor.
In the early period of their development, most authorities remained relatively free from corruption and scandal, even though opportunities for payoffs and other personal benefits were always present in agencies that gave out lucrative contracts. A notable exception was the parking authority, which was established to build a parking garage under the Boston Common. Its chairman, consulting engineer, and two lawyers were later indicted and convicted of a bribery conspiracy in the award of the garage contract. Chairman George L. Brady vanished for several years after his conviction, though he was eventually found hiding in New Jersey and sent to prison. (Of course, patronage and corruption were rampant in Massachusetts in the 1960s and the early 1970s. That era of government graft came to an end with the MBM scandal–state senators Ronald MacKenzie, a Burlington Republican, and Joseph DiCarlo, a Revere Democrat, were convicted of accepting bribes from the construction company that built the University of Massachusetts campus in Boston–and the Ward Commission, which produced the blueprint for reform.)
But governors were often faced with the choice of battling these agencies or leaving them alone until they were able to gain control by board appointments. Gov. Frank Sargent, for instance, avoided taking on Massport because he was well aware of its clout on Beacon Hill. The authority’s lobbyists even convinced the Legislature to exempt Massport from complying with air pollution controls until the federal EPA threatened to cut off funding for the state’s program. “Although it infringed increasingly on his management of transportation policy, Sargent did not go to war with the Massachusetts Port Authority because of its power and its political support,” says Martha Weinberg in her book Managing the State. As vacancies occurred on the Massport board, however, the governor appointed people who were favorably disposed toward his policies and programs. Not until near the end of his administration, in 1972, was Sargent able to gain majority control of the board.
Michael Dukakis came to the governor’s office in 1975 as a “good government” reformer. He found patronage distasteful and debilitating, at least during his first term, and came to embrace the authorities as vehicles for professional public management. During his years in the corner office–12 of the next 16–he increased the number of authorities, which experienced spurts of vigorous leadership. Eight of the state’s 25 authorities were created during his tenure, most of them devoted to the financing of economic growth and development. He put capable managers in charge (like David Davis at Massport and Paul Levy at MWRA) and worked mostly in harmony with them.
But this alignment of the stars between the governor and these governmental offshoots did not quell suspicion regarding the means and motives of the semi-autonomous agencies. “There is a streak of elitism in these authorities–they think they are above government and the people,” state Sen. Patricia McGovern, who was then chairman of the Senate Ways and Means Committee, told The Boston Globe in 1989, near the end of Dukakis’s third and final term. “They are not overseen by the Legislature, by the public, or by the media. In the end, if we don’t scrutinize them, the public loses.” Frank Keefe, Dukakis’s secretary of administration and finance, defended the agencies’ independence. “To tear authorities asunder and make them the creatures of the hurly-burly of everyday politics would be a large mistake,” said Keefe.
The Potentates of Massport
By any measure–revenue, employment, capital assets–the Massachusetts Port Authority is by far the biggest and most important semi-independent authority. Today, it has a $350 million operating budget with 1,207 employees, 44 of them earning more than $100,000 a year. This agency, much like its New York role model, is responsible for creating and maintaining much of Boston’s transportation infrastructure. It operates the Tobin Bridge, the shipping terminals in the Port of Boston, and three airports: Logan International Airport, Hanscom Field in Bedford, and Worcester Airport. Revered and reviled since its inception, Massport has long been the agency everybody loves to hate. Despite its image as an uncaring behemoth, it has been very successful financially, with Logan the agency’s big revenue generator. Of the Big Five authorities, it is the only one that does not receive any state subsidy.
Although Massport was created in 1956, it did not become operational until three years later because of a dispute between Gov. Foster Furcolo and the port authority board. But the man who really got the agency off the ground was Edward J. King, who served as executive director from 1961 to 1974. A hard-nosed administrator with a bulldozer personality, King took the agency from rags to riches. He did so by aggressively expanding Logan Airport from a small regional facility into the world’s eighth busiest airport. In so doing, King ran roughshod over the concerns of residents in nearby neighborhoods. People living in the surrounding communities of East Boston, Winthrop, and Revere complained vociferously about the air and noise pollution at Logan, but their pleas were largely ignored. To offset their protests and sit-in demonstrations, King could count on support from a powerful coalition of bankers, state legislators, union officials, and contractors. Those allies came to his aid time and time again. But they couldn’t bail him out forever.
wanted him to lead Massport.
Out of the resentment generated by airport expansion and the growing rancor over air and noise pollution came the fight to get rid of King. By 1973, as he started to rack up appointments to the Massport board (favoring community activists rather than the usual business leaders), Gov. Sargent began to attack him publicly. King was finally ousted in 1974 in a wrenching battle that involved two governors–Sargent and Dukakis–in the midst of their transition.
Though ready to fire him earlier, the board’s anti-King majority waited until after Sargent’s unsuccessful campaign for re-election. When the dismissal letter was delivered, King refused to clear out of his office. Instead, he filed suit against the board and continued showing up for work. At that point, Frank Meaney, who chaired the Dukakis transition team, brokered a compromise. King dropped his lawsuit and resigned in return for a letter of commendation from the board–and a huge severance payment.
King got his revenge, however temporarily, in 1978, when he unseated Dukakis in the Democratic primary, and then went on to win the governorship in his own right. But his abrasive style and arrogant manner did not go over well on Beacon Hill. The political establishment distrusted him, liberal editorialists were openly antagonistic, and King seemed to go from debacle to debacle right from the start. His administration stumbled to an end in 1982, when Dukakis took back the Democratic nomination and the governor’s office. In his final days in office, King tried to take back control of Massport. He appointed former state representative Louis Nickinello to head the authority and, on his last day in office, named two new members to the board. Dukakis, acting under an obscure 1964 law that allowed a governor 15 days to rescind a major appointment, rejected Nickinello and nullified the board appointments. Dukakis may have found patronage distasteful, but he was not above the occasional power play.
The Ed King tradition of empire building returned to Massport under the Weld administration. The Republican was elected governor in 1990 but did not gain control of the seven-member Massport board until late 1993. At that time, the Weld-appointed board handed the keys to the state’s largest independent authority to one of the governor’s most trusted aides, Stephen P. Tocco, a cabinet secretary who had been a key player in grappling with the state’s fiscal crisis. As a public manager, Tocco was ambitious, territorially acquisitive, and determined to extend the agency’s reach. His three years at Massport’s helm were marked by a series of bold and controversial initiatives to broaden the port authority’s mission, taking on the duty of promoting tourism and trade in Massachusetts.
Under his leadership, the payroll at Massport increased by 30 percent as he added new departments of foreign trade and tourism. These operations extended to Mexico, Singapore, Taiwan, Korea, Israel, Japan, Ireland, and China. Meanwhile, Tocco and his aides traveled first-class to many foreign countries and spent lavishly on overseas promotions of tourism and trade. On one occasion, they spent more than $100,000 to wine and dine French travel agents. At home, Massport financed all sorts of projects, some of dubious merit. It gave $288,000 to the National Music Foundation, which was supposed to build a museum and retirement home for musicians in Lenox. This plan never materialized, and the agency did not recover the money. Massport launched a $7.2 million restoration of the old New England Fish Exchange that was soon mockingly referred to as “Tocco’s Taj Mahal.” The elegantly decorated conference center, which a state audit found was used mostly for social events, turned out to be a money-loser.
But if Massport’s wealth and power made it a natural vehicle for the outsized ambitions of an Ed King or Steve Tocco, after 1996 the authority became a symbol of political patronage and, ultimately, personal shenanigans. Tocco was succeeded as executive director by former Republican congressman Peter I. Blute, who was given the job shortly after he lost his re-election bid. Blute attended to the business of trade, tourism, and renovation of Logan Airport until the summer of 1999, when an enterprising Boston Herald photographer caught him hosting a lunchtime party cruise on Boston Harbor–on Massport’s dime. Blute was summarily fired (formally by the agency’s board, but at Gov. Paul Cellucci’s direction) for his indiscretion.
snowplowers at Logan Airport.
To clean up the Massport public relations mess, Gov. Cellucci turned to his chief of staff, Virginia Buckingham. But this appointment of a 33-year-old political aide with little administrative experience, and none in transportation, only reinforced Massport’s growing image as a bastion of politics rather than professionalism–an image exposed to the public in the painful aftermath of September 11.
In the wake of Massport’s tragedies and embarrassments, Gov. Swift appointed a task force, chaired by retired State Street Bank chief executive Marshall Carter, to draw up a blueprint for reform. The Carter Commission found that Massport suffered from “a certain degree of mission creep, poor leadership, and a lack of accountability to the public.” The commission report called patronage a “four-headed monster” that eroded public confidence, created morale problems for qualified and dedicated employees, and contributed to the inefficiency of the organization. At the top of the list of personnel reforms recommended by the commission and accepted by Swift and the Massport board was creation of “sunshine reports” that would identify all job applicants with political connections. But no promise was made that those referred by Beacon Hill politicians would not be hired.
A game of turnpike chicken
Autonomy, accountability, and “mission creep” were central to the pitched battle that erupted, almost simultaneously, at the Massachusetts Turnpike Authority. In 1997, management of the ever-growing Central Artery Project had been transferred from the executive branch to the turnpike authority, a move that was intended to provide for sound management that would be buffered from politics, as well as the ability to tap turnpike tolls to pay for construction. The law that put the authority in charge of the Big Dig made its board “subject to certain supervision and control of executive branch officers, as well as the governor.”
In fact, the Big Dig was managed single-handedly by the turnpike’s chairman, James Kerasiotes, an empire-builder in the Callahan-King mold. The cost overruns that came to light at the end of 1999 forced Kerasiotes to resign, but also embarrassed board members Jordan Levy and Christy Mihos, who had previously deferred to Kerasiotes’s authority. Levy, a conservative Democrat (the authority’s enabling statute dictates that the board be bipartisan) with a populist streak nurtured on the Worcester City Council and on the talk-radio show he currently hosts, and Mihos, a convenience-store tycoon and major Republican donor, became much more assertive, frequently clashing with chairman Andrew Natsios, Gov. Cellucci’s Big Dig turnaround artist (who served for less than a year). The “turnpike twins,” as some came to call them, virtually steamrolled Natsios’s successor, David Forsberg, a mild-mannered former cabinet secretary under Weld who, in a governance shift, chaired the board but was not turnpike chief executive.
With the cost of the Big Dig mushrooming from $5 billion in 1991 to $14.6 billion today, Levy and Mihos pressed Bechtel/Parsons Brinckerhoff, the Big Dig’s management consultant, to reclaim money wasted when design firms and contractors made mistakes. Last summer, the two voted to take responsibility for cost recovery away from the consulting firm, giving it to the turnpike’s legal division, and demanded reimbursement from Bechtel. But it was a toll increase scheduled for last January–it had been planned since 1997–that brought the turnpike revolt to a head. In October, Levy and Mihos voted, over Forsberg’s strenuous objection, to delay those hikes, which were to raise $30 million for the Big Dig, for six months. In place of the toll hike, they proposed to defer maintenance and capital expenditures and restore tolls in western Massachusetts and at Exit 16 in Newton.
Swift, who blasted their decision as fiscally irresponsible, suspended the two on November 16 and began a process to remove Levy and Mihos from the turnpike board “for cause” that has not yet reached a conclusion (still pending is a lawsuit by Mihos claiming his civil rights were violated in the firing). The embattled board members fought their removal tooth and nail, mounting a vigorous public campaign that defended their actions and attacked Swift, who was then planning a run for governor in her own right, as motivated by election-year politics. In a letter responding to a Boston Globe editorial that sided with Swift, they charged that “a postponementŠwould move the toll hike too close to the fall elections for the acting governor’s comfort. This is just the kind of blatant political interference that independent authorities were designed to eliminate, and it makes bond markets very nervous.”
A life of their own
More than anything else, these episodes at the Port and the Pike illustrate how difficult it is to balance autonomy and accountability in public authorities. Their distinctive virtue is that they are suited to solving particular problems or carrying out specific duties without the encumbrances of day-to-day politics. Their major weakness is that they contribute to the piecemeal character of governing, separating political authority from democratic accountability. Major choices shaping the future development of the Boston metropolitan area remain in the hands of officials who are not elected, but are still subject to political pressure and influence.
Ideally, authorities ought to exist only as long as necessary for them to carry out their assigned missions. Yet most take on a life of their own. For example, the Dukakis-appointed Massachusetts Turnpike Authority could have put itself out of business early in the first Weld administration, but chose instead to issue a new set of bonds that had to be paid off by continued tolls–and a continuing turnpike authority to collect them. (At the time, this infuriated newly elected Republicans Weld and Treasurer Joe Malone, who railed against this exercise in self-perpetuation. But when the Big Dig’s costs spun out of control, Weld and his successors were all too happy to have the turnpike still around and dunning drivers.) In addition to carrying out functions that are necessary but unpopular–such as charging tolls and raising water and sewer bills–these semi-independent agencies are cash machines, which provide revenue that’s much needed and patronage that’s much appreciated by the state’s elected leaders.
And where independence is incomplete and accountability indirect, conflict can only be endemic. In the public realm, the entrepreneurial model conflicts with democratic theory. Critics maintain that government corporations are beyond the reach of the people’s representatives, unresponsive, and in some cases totally irresponsible,” writes Annmarie Walsh, author of The Public’s Business. “Public authorities have invited such charges by stressing their own autonomy. In fact, the term ‘autonomy’ is misleading since it implies the absence of external influence. The literally ‘autonomous’ authority is as mythical as the unicorn.”
In Massachusetts, autonomy and accountability have frequently collided, in part because it is difficult to run anything in the public sphere without resorting to patronage and deal-making. But the Bay State is not unique in this regard. Jameson Doig, in his book Empire on the Hudson, points out that even the New York-New Jersey Port Authority, which had steadfastly safeguarded its independence, eventually succumbed to patronage appointments and political interference. Perhaps the problem here is that Massachusetts political culture is hostile to the whole idea of truly independent authorities. They are destined to become politicized, whether we like it or not.
The ultimate irony is that the reform movement in Massachusetts has come full circle. In the name of independence and efficiency, authorities have gotten hamstrung by political intrusion and patronage. So now the cry for reform is once again falling on receptive ears. Whether the result is honest and efficient public management or scandals we can now only imagine remains to be seen.
Richard A. Hogarty is a senior fellow at the McCormack Institute of Public Affairs at the University of Massachusetts-Boston.