Just as bad facts make for bad law, bad laws make for bad behavior and bad administration.  Nowhere are these contradictions more visible than when adjacent jurisdictions that have a shared interest in macroeconomic health think they can get away with boundary exploitation by taxing more on our side of the fence than those on the other side of the fence.

The absurdity of this is brought home when those who make the laws that they expect others to observe flout their own handiwork, as did unlucky Massachusetts state representative Michael J. Rodrigues, who discovered the damning evidentiary power of a cell phone camera, and didn’t like it.  As gleefully reported by the populist Boston Herald:

State Rep. Michael Rodrigues, inset, a Westport pol, was spotted over the [September 1, 2009 – Ed.] weekend piling booze into his car – emblazoned with his ‘House 29’ Mass. license plate – at a tax-free N.H. liquor store.

A Westport lawmaker who voted to hike the state sales and alcohol taxes was spotted brazenly piling booze in his car – adorned with his State House license plate – in the parking lot of a tax-free New Hampshire liquor store, the Herald has learned.

This is not Michael Rodrigues’ car, and any inference to the contrary is unjustified

Savor the scene: a guardian of the public trust smuggling booze into his home state, caught red-handed violating a law he personally helped make more onerous:

Michael J. Rodrigues’ blue Ford Crown Victoria, emblazoned with his “House 29” Massachusetts license plate, was parked outside a Granite State liquor store on Interstate-95 South over the weekend, according to a witness who provided pictures to the Herald.

The witness, who requested anonymity, claimed he approached Rodrigues, noted his State House plate, and asked if he was on personal or official business.  

Fear of retaliation from the apparently powerful is universal.  Good government is about eliminating potential retaliation.  Worse, those in power tend to use intimidation as a shield.

Rodrigues, who was loading booze into his car, snapped “mind your own business,” the witness said.

“Rich, you’re giving smugglers like me a bad name.”

The witness’ account was also posted yesterday on Citizens for Limited Taxation’s Web site.

And it’s a doozy:

As my family and I were driving back from York Beach my wife asked me to pull off at the NH liquor store on 95 south at the Mass border. When I pulled around to get a parking space you can imagine my surprise to see what I could only assume to be a Mass state rep’s car. He also had a Deval Patrick/Tim Murray sticker on his back window – so I assume he’s a democrat who voted in favor of the recent sales tax hike.

Our citizen journalist is right on both counts.  Mr. Rodrigues is a Democrat, and he voted yes on the tax hike.

How Mr. Rodrigues would prefer to be seen

The Westport Democrat, whose family owns a rug business, was among the lawmakers who voted in an unpopular 25% sales tax hike for Bay Staters.

Like any other level of government, states are businesses; they have to make their revenues match their expenditures.  When the economy shb

The increase pushed the sales tax to 6.25% and slapped that same levy on booze – the first time alcohol has been subject to retail sales tax.

So the guy comes out with a couple of cases of booze in his carriage and loads them into his car. I asked him if this was “official” business or personal. He was surprised by my questioning and asked what business is it of mine as to what he’s doing. I told him I was a Mass citizen. He said it was personal – I pointed out the state car with official plates and he said it was “his”.

“That car is mine, not the state’s”

A far cry from Harry Truman, who smacked a stamp onto any personal correspondence he wrote when he was President.

I didn’t ask him why he was in NH purchasing alcohol instead of supporting Mass businesses and the 6.25% tax they just levied on us common folk…

Observe that Mr. Rodrigues’s district is about as far from New Hampshire as it’s possible to be in Massachusetts.

Why didn’t he shop in Rhode Island, which is literally next door?  Perhaps because Rhode Island’s sales tax is 7.00%, even higher than Massachusetts’ recently boosted rate, which was enacted

The state Senate voted last night to increase the sales tax, lift the sales tax exemption on alcohol, and allow cities and towns to raise meals and hotel taxes, brushing aside criticism that higher taxes would hurt Massachusetts businesses by driving consumers over the border, particularly to tax-free New Hampshire.

Place-based taxation is predicated on the assumption that consumers cannot flee the law’s grasping hand.

Lifting the sales tax exemption on alcohol sold at package stores would raise another $80 million for those services, senators said.

Assuming people don’t change their behavior.  But they do:

Mike Cimini, owner of Yankee Spirits liquor stores in Sturbridge, Attleboro and Swansea, said he’s lost about 10% of his business since the booze tax went into effect Aug. 1.

10% dispirited since August 1

That’s the problem with static taxation; if you squeeze too hard, you get a bigger slice of a much smaller pie. 

Actually, Massachusetts takes only half that 1/8 slice

Discontinuous laws, such as variations across state lines, always create edge effects – people gain a macro benefit for a microscopic shift in their actions. 

The hike has been blasted by business owners, especially those on the New Hampshire border, who say the increase has driven business north.

Not only do such edge effects or borderline behaviors cut into taxation, they shrink the state’s economy in favor of its low-tax neighbors.

At 6.25%, Massachusetts would have the second highest sales tax rate of the six New England states plus New York. Only eight states nationwide have a higher rate.

So Mr. Rodrigues, instead of buying his liquor at the new 6.25% tax rate he imposed on us as well as himself, took advantage of his New Hampshire jaunt to load up tax-free:

At least live sales-tax free

In an online interview with The Standard-Times in New Bedford, he acknowledged buying the booze during a bathroom stop while he and his wife were on a weekend getaway in New Hampshire.

Aside from the potential hypocrisy, Mr. Rodrigues might have violated Massachusetts law:

State law prohibits transporting more than 20 gallons of malt beverages [Beer – Ed.] or three gallons of any other alcoholic beverage.

It’s unknown how much Rodrigues purchased at the New Hampshire store.

Pity the scofflaw?

That’s a government-legal parking space

Poorly designed laws inspire even more poorly-designed enforcement remedies.  (My favorite example of belligerent process-fixated legislation are laws making it illegal to have a radar detector in your car – or even more absurd, to use it.)

Prohibiting people from transporting beer or alcohol has no public purpose except to compel people to pay a gratuitous ‘captive-resident’ tax.  Aside from being parochial mercantilism, it criminalizes rational behavior.

Police have the authority to detain and charge anyone illegally importing booze into the state.

Poorly-designed enforcement remedies inspire intrusive administrative laws.  Under the Fourth Amendment, police may not conduct unreasonable search and seizure, legislation that has its roots in colonial America, particularly Massachusetts. 

In questing for more taxes, the Commonwealth of Massachusetts drives its citizens to shop out of state, makes smugglers of vacationers, and turns the Staties into the temperance police.

Keg-smuggler!

Authorities have also cracked down at the border, targeting Bay Staters seeking to avoid paying state taxes by crossing into New Hampshire to shop.

Doesn’t this sound like a banana republic?

Back to our citizen journalist:

He had his wife with him. I left ahead of him and as I was driving down 95 into Mass doing the speed limit, he blew by me doing about 75 in the left lane.

I guess those who pass the laws need not abide by them. You would think that hours of testimony from Mass businesses, saying how the increased tax and the alcohol tax would hurt them by causing people go to NH, would have had an effect on these weasels. But, alas, it’s proof again that they have no conscience and only serve their own interests and themselves.

So, who was this guy?  I didn’t even want to make him feel good or important by asking.

Mr. Rodrigues fell back on a well-known defense.  When caught red-handed, blame the witness.

He also blamed the brouhaha on “Republican demagoguery.”

Such demagoguery: his license plate says, Expect the best.

“Unfortunately, I think that’s why the Republican Party is in such bad shape in Massachusetts,” Rodrigues is quoted as saying. “The electorate here is smart enough to figure out what they’re up to.”

The late great Leona Helmsley may have expressed this attitude best:

“We don’t pay taxes.  Only the little people pay taxes.“

Is that what the people are smart enough to figure out?

You tax take my New Hampshire booze when you pry it from my cold, dead hands.

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[Continued from yesterday’s Part 1].

Yesterday’s post examined the hypothetical of raising property taxes while exempting a particular class of elderly homeowners from the increased costs they would vote to impose.  As shown in a fascinating quantitative analysis, Massachusetts Proposition 2½, Simulating Overrides with Low-Income Elderly Exemptions, published in the Federal Reserve Bank of Boston article in its summer issue of Communities and Banking.

Looks like a Venetian blind, and for the same reason:

The Boston Federal Reserve Bank building

Having chosen three representative Massachusetts mid-size cities – Cambridge, Worcester, and Springfield – the authors were then able to calculate highly interesting granular data on the impact to each community:

To analyze the effects of a property tax increase with the proposed exemption for low-income elderly households, the override simulation froze the property tax bill of low-income elderly households currently paying more than 10% of their total income in property taxes at its current level.  If any such household reached a 10% property tax burden as a result of the override, the property tax burden was capped at that level.

Further, it isn’t just a redistribution of real estate taxes, it’s also an increase:

Clearly, since overrides increase the community’s total tax levy by a specified amount, taxes are higher on taxpayers not receiving the exemption.

The pain will depend on how big an increase:

So NEPPC asked the question, What is the potential impact of a 6% property-tax increase for each municipality?

Cui bono?  The effects of boosting taxes just on some

If the local real estate taxes go up 6% in the aggregate, then the average tax burden has to rise more on the non-exempt, and in all three cities, only a few households are exempt: 5.6% in Springfield, 8.3% in Worcester, and 9.6% in richer, older Cambridge.

According to the analysis, 9.6% of all owner-occupied households and 35.4% of elderly owner-occupied households in Cambridge would benefit from the exemption. That is, their taxes would be lower with the exemption than if the override passed without the exemption. (See “Simulation Results.”)

At least the benefits would be targeted, with just under one in ten homeowners gaining a benefit – and yet, somewhat surprisingly, only one-third of the elderly homeowners would qualify.  (In Cambridge, remember, elderly homes are quite a bit more valuable than even Cambridge’s high average.)  Perhaps that’s because the other two-thirds have incomes above the $60,000 eligibility ceiling.

The median property tax burden of a qualifying household is 23.9%.

That is a big chunk of their budget – one quarter of the spending goes to pay real estate taxes on their expensive homes.

Tails you lose?  For Cambridge’s elderly homeowners, one-quarter of their budget is real estate taxes

Meanwhile, those not advantaged are disadvantaged:

The average nonexempt household in the lowest- income quintile would see its property tax burden increase by 1.06 percentage points, a $170 increase. (See “Distributional Effects on Select Nonexempt Groups,” page 24.)

Who pays more taxes?  Non-elderly poor!

Most striking in the large table above is the non-elderly lower-income (below $60,000) group, where they who are already socked with taxes would see their taxes boosted by $253, while identical homeowners next door, if they have an elderly head of household, would pay no increase whatsoever.  What’s the public policy justification for advantaging an elderly homeowner over an otherwise-equally-ppoor non-elderly neighbor?

The same disjuncture arises in the other two things:

An override exemption would benefit 8.3% of all owner-occupied households in Worcester and 41% of elderly owner-occupied households.

Whereas in Cambridge, only one in three elderly homeowners was poor enough to qualify, in Worcester three out of seven would be eligible.

We’re eligible

We’re not

The median property tax burden of a qualifying owner-occupied household is 18.2 percent.  Of all the households that would not qualify for the exemption, the largest increase in property tax burden—0.49 percentage points, an additional $147—would occur for those in the lowest-income quintile.  The burden of households in the highest income quintile would increase by 0.12 percentage points, or $200.

Once again the non-elderly poor get socked, their taxes rising $206 per household:

Thank you sir, may I have another?

Of the nonexempt non-elderly owner-occupied households, about 6.6% have incomes less than $60,000 and would experience a property tax burden of 10% or higher in the event an override.

As a policy matter, do we really want to give tax-increase waivers to elderly people who own valuable homes? 

Proposals for exemptions protecting vulnerable groups may help municipalities successfully pass overrides.

While I understand the political imperative to relieve elderly distress, we could be confusing cash-flow limitations – fixed or slowly-rising incomes – with actual poverty.  If the house has that much value, the owner could sell the house and move to something smaller, or failing that take out a reverse mortgage. 

A reversal of my fortune?  Would be monstrous!

Don’t forget, the elderly more than likely have reduced mortgage payments.  They are no longer paying for children’s food, clothing, and education.  A larger portion of their annual income can go for shelter because smaller portions go for other things.

In other words, by granting cash-flow relief at no cost, we will be subsidizing the asset-rich cash-poor elderly in the manner to which they have become accustomed – at the expense of families who probably have higher household expenses (such as raising children).

However, other groups vulnerable to overrides—say, non-elderly low-income households with severe property tax burdens—may be motivated to vote against such proposals.

[We could also detour into an exploration of 'who benefits from municipal services'.  Families with school-age children obviously benefit more than do the childless; conversely, since they have more to protect, the rich benefit more than the poor from services such as police and fire.  That would take us far afield, so we won't. – Ed.]

Don’t go there so late in a blog post

I don’t mind subsidies.  I mind invisible subsidies, and I mind surcharges concealing themselves in the absence of subsidy.

You can look at it two ways, can’t you?

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Once we have accepted the principle that tax burdens should vary by taxpayer group – and everyone except a few economists have so accepted, at least in the world of political reality – we must choose who gains the more favored treatment – and how we package it.

Long ago, when I matriculated to Our Fair City, I was ecstatic to be awarded financial aid, and being young and capital-short, I made no mental distinction among its three forms: scholarship aid, on-campus employment opportunities, and student loans at generous interest rates. Many, many years later, long after I’d repaid the (government-funded) loans, I realized that if the university was trumpeting its delivery of financial aid to a high percentage of its students, what the typical student paid must more or less represent the education’s cost.

Which ones stand out?

Seeing the economics in a reverse light, what had seemed a generous discount for my benefit could also be viewed as a surcharge on other parents richer than mine were.

How ’bout now? Who’s got the advantage?

This didn’t bother me at the time – after all, I was the beneficiary – though it increased my cynicism regarding college administration. And then when I started thinking about those ‘legacy’ admissions, and realizing they probably came from richer families and hence were paying full boat, I came full circle. The surcharge being invisibly imposed on those richer if less quick-witted students were funding the scholarship for poorer smart kids like me.

When you turn it upside down, who’s advantaging whom?

So it is with local real estate taxes. To balance its basic budget algebra, the municipality needs to raise a totality of taxes from all its taxpayers. For a host of reasons that seem like a good idea at the time, some groups will be charged less (per dollar of property value) – meaning that others will be charged more. It gets especially tricky when, as in Massachusetts, the votes in their infinite wisdom have enacted a hard cap on real estate taxes (Proposition 2½), which can be increased only by a town override, as explored in an interesting Federal Reserve Bank of Boston article, Massachusetts Proposition 2½, Simulating Overrides with Low-Income Elderly Exemptions, in its summer issue of Communities and Banking:

In 1980, Massachusetts instituted Proposition 2½, a law limiting increases in local property taxes. Nevertheless, municipalities facing revenue shortfalls have repeatedly sought overrides—votes by community residents to approve levy increases higher than 2.5 percent. Of the approximately 1,180 override attempts since 2000, nearly 51% have passed.

After all, if you don’t tax people more, services have to be cut:

Proposition 2 ½ overrides offer a tempting solution for Massachusetts cities and towns searching for new revenues. When override ballot questions fail to pass, however, municipalities are left with budget shortfalls causing cuts in public services, school programs, public workers, and the like.

[Whether in good times we took on new municipal services as luxuries that we should now rethink is a discussion beyond the bounds of this humble blog post. – Ed.]

Overrides being hard to enact – they represent people voluntarily taxing themselves more – localities have devised means of buying votes by exempting some groups, particularly those with high voting rates, such as the elderly:

Now legislation has been introduced to exempt low-income elderly homeowners from property tax increases authorized by overrides.

Give people a discount and every will want one, so the proposed legislation carves a precise keyhole:

Let’s be precise about whom we let in

Three criteria must be met:

[0] The household must own a home.

I’ve added condition zero as a reminder: we are talking only about households that own a home – which is not insignificant since the home is a huge financial asset, and that asset is the sole cause of the tax burden for which this legislation proposes relief.

[1] The head of the household must be 65 years of age or older

[2] The total household income must be $60,000 or less

The first two criteria are easily comprehensible: you need an oldster at home, and the oldster must have limited income (although many people would consider $60,000 family income fairly decent, especially for elderly homeowners who probably have little or no mortgage remaining on their homes). The third is trickier:

Not that tricky at all

[3] The ratio of the household’s property tax to income (the property tax burden) must be 10% or greater.

Word can obscure arithmetic, so let us pause to calculate.

We’re going to make it perfectly clear

The household’s maximum income is $60,000; say $50,000 for the typical beneficiary. 10% of income is $5,000, and under Proposition 2½, that cannot exceed 2.5% of property value; since the legislation is aimed only at overrides, we can safely use the 2.5% ceiling, meaning that $5,000 in annual real estate taxes will be paid if your home is worth $200,000 or more ($5,000 / 0.025). With the Massachusetts median home price well above that – it was $300,000 back in 2005, and is likely higher than that now – just about every elderly homeowner will be eligible.

In effect, seniors who own their homes and have a fixed or moderate level of income are generally granted an exemption.

Try ‘every income-eligible elderly homeowner.’

Everybody’s eligible to be liked, anyway

To study the implications, the New England Public Policy Center [An arm of the FRB Boston -- Ed] developed a circuit-breaker analysis. The analysis was based on publicly available data from the 2006 American Community Survey, published by the U.S. Census Bureau. With its up-to-date demographic and economic data, including total household income and total property taxes paid, the ACS enabled the NEPPC to analyze the number of households that could benefit from the exemption and the potential effect on the property tax burdens of nonexempt households.

Thus the clever fellows at FRB Boston wanted to figure out how many people get real-estate tax scholarships, and conversely how many others pay how much surcharge.

So for purposes of simulating potential override effects, the NEPPC chose three municipalities that lie within their own PUMA—Cambridge, Springfield, and Worcester. (Although these three are not among those that regularly propose or pass overrides, they are useful for demonstrating the simulation tool.)

For Cambridge, just find Boston J

The three cities are a good choice, since they’re all large (Cambridge 100,000 people, Worcester 175,000, Springfield 150,000), scattered across the state, and in property markets that are great (Cambridge), weakening (Worcester), and downright awful (Springfield).

Average home $400,000

The authors find some interesting facts:

A tale of three cities: who pays what?

In Cambridge, elderly owner-occupied households have a much larger median income, are less burdened by property taxes than their counterparts statewide, and have more than double the median property tax burden of the city’s median owner-occupied households. Cambridge also has a larger percentage of owner-occupied households headed by elderly residents.

In Our Fair City, the elderly are rich, own big houses (double the tax burden), and numerous. (Cambridge is also a predominantly rental city, with only 39% owner-occupancy, compared with 48% in Worcester and 52% in Springfield.) Not the people for whom one would ordinarily wish to targeting subsidies, would one?

Average home $140,000

Property values rise and fall faster than changes in municipal budgets, so rich towns tax their homeowners less (percent of value) than do middle-income or poor ones. At least that’s the case contrasting Cambridge and Worcester, where Worcester’s lower-value markets, even with Worcester’s lower municipal budget, impose on property owners a higher tax burden, both in percentage of income and even in absolute dollars.

In Worcester, elderly owner-occupied households are more severely burdened then their statewide counterparts. Compared with the median owner-occupied household, the median elderly owner-occupied household in Worcester has exactly double the property tax burden.

Average home $100,000

Springfield’s got a lower budget – taxes are only $2,150 per house, instead of $2,650 in Cambridge and $2,750 in Worcester – but the highest tax burde4n because values are so low.

In Springfield, elderly owner-occupied households have a lower median property tax burden, lower median income, and a slightly higher percentage of all owner-occupied houses.

In Cambridge, the elderly pay higher taxes than average ($4,050 versus $2,650) because they’re richer in terms of assets: they own 50% more valuable homes. In Worcester, they’re poorer – $2,450 in taxes versus $2,750 average. In Springfield, they’re about the same ($2,050 for elderly homeowners, $2,150 for the average).

With all that data, the researchers were then in a position to do what legislatures should do more often: to quantify who gains and who loses from their proposal, and in each case by how much.

Pick a direction

[Continued tomorrow in Part 2].

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Women, children, and credited cast members first

You have lifeboats in the water.

But you have fewer lifeboats than passengers.

We thought they were enough, for the ship could never sink

What do you do?

Get away from the wreck as quickly as possible?

As reported in the Boston Globe, that dilemma confronts Julia Kehoe:

Julia E. Kehoe, the commissioner of the Department of Transitional Assistance, which oversees state shelters, said the system is “overburdened” and must change to provide services more equitably.

Trying to provide services equitably: Julia Kehoe

[Full disclosure; I worked with Julia when she was executive director of the Metropolitan Boston Housing Partnership.  MBHP does great work, and Julia's good people, so I'm biased. – Ed.]

Key to these programs is the department’s name, Transitional Assistance.  As the Web site says:

At DTA, we provide individuals and families with food assistance, job assistance, cash assistance and emergency shelter.

DTA administers benefits such as Food Stamp Benefits, Transitional Aid to Families with Dependent Children (TAFDC), Emergency Aid to the Elderly, Disabled and Children (EAEDC) and Emergency Assistance (EA).   Because DTA emphasizes transitional assistance, recipients are encouraged to participate in education, training and job search activities to assist in obtaining employment, which helps us all achieve our potential and maximizes our independence.  With our support, our clients are given the tools to improve their lives. 

Basically, you have two choices:

Fill the lifeboats with the first in, and then repel all boarders.

Have a rotation, some in and some out of the boat.

Leo, you’ll have to understand, I’m in the lifeboat

If you’re going to choose a rotation, what rules might you select?

Less than two years after vowing to end homelessness in Massachusetts, the Patrick administration has proposed new regulations that it acknowledges could force hundreds of homeless families back on the street.

Consider me exasperated by the sophist false dichotomy set up in the opening sentence.  Supply is not being cut.  Rather, in forcing ‘hundreds of homeless families back on the street,’ as the Globe puts it, the Patrick Administration is proposing to bring hundreds of other deserving families off the streets. 

The regulations, scheduled to take effect April 1, would deny shelter to families who:

1. In the last three years, had been evicted from public or subsidized housing, or ‘had abandoned such housing’ without good cause. 

2. Fail (a) to meet a new 30-hour per week work requirement or (b) to save 30% of their income. 

[Both sentences rewritten for clarity. – Ed.]

So we have two tests. 

1. Were you in affordable housing and then left it, either because you were kicked out or because you walked away without a good reason?

2. If we have been giving you free housing, have you put the time to use (the work requirement) and put aside the money you’d otherwise have had to spend on housing?

Do either of them seem unachievable to you?  Unreasonable?

I take some convincing

What about these rules?

They also would:

3. Reduce from six months to three months the period families can remain in shelters after their incomes rise above state limits.  [Emphasis added.]

4. Force out families absent from shelters for at least two consecutive nights as well as those who reject one offer of housing without good reason.

5. Deny benefits for families whose members have outstanding default or arrest warrants.

6. [Deny benefits to] those whose only child is between ages 18 and 21, unless the child has a disability or is in high school.  [In our society, 18 and above is a child no longer. – Ed.]

Do any of those seem unduly draconian to you? 

Thought not

Some thought so:

Advocates for the homeless decried the proposal, which comes at a time when more homeless families are seeking beds in state shelters and remaining there longer. This month, the state is providing shelter for a record of nearly 2,700 families – one-quarter of them cramming for weeks at a time in expensive, often unsuitable motel rooms.

Whatever the choices, it’s not easy

“This is not the time to change the safety net,” said Robyn Frost, executive director of the Massachusetts Coalition for the Homeless. “The number of people in need of shelter is like nothing we’ve ever seen. There’s never been such a desperate need for housing, and these changes could be devastating. They couldn’t come at a worse time.”

Don’t mess with my safety net when I’m falling on it

While I understand Ms. Frost’s concern for her constituents, the issue isn’t whether we need more homeless housing – we do – but whether, given the finite supply, we give it to those where it will make the most difference.  Hence, I’m with Ms. Kehoe:

“It is certainly not our intent to be punitive, and we understand the difficulties families are facing,” Kehoe said. “But we are responsible for transforming the system, and particularly at a challenging time, it is absolutely critical that all stakeholders need to work together to make sure that families have the greatest chance of moving out of shelter and poverty.”

And she has the evidence on her side:

While hundreds of families will likely lose their shelter beds, she said the changes would open space for qualifying families, many of whom the state is now paying an average of $85 a night to stay in motels. Last week, more than 630 families, including about 1,000 children, were staying at motels, waiting an average 22 days for a spot at the state’s 59 shelters.

Thus we have families staying in motel rooms – at the state’s expense (average $85 a night, or a whopping $2,550 per month) – because there is no room in the homeless-shelter lifeboats. 

Sometimes the choice is living in a car

By reducing those eligible for shelter, Kehoe said the new regulations would save the state $520,000 this fiscal year and more than $11 million in fiscal 2010. “Given our limited resources, we wanted to encourage people to find housing or stay where they are, rather than encouraging them to come into the system,” she said.

Now are you more willing to push out into the market those who have been evicted from affordable housing, who haven’t used their time in the shelter to work or save a little money, who are staying in the shelter even though their income has risen, and so on?

I haven’t finished using it

There’s also the Law of the Observant Herd: forcing out those who aren’t diligent or who disrespect the benefits they are receiving sends the best possible signal to all those who are wondering which behavior to adopt.

But those who work with the state’s neediest residents said the new “harsh restrictions” will only make it harder for the homeless to find a way out of poverty.

They will make it harder for some homeless; they will make it easier for some other homeless.  A rotation policy isn’t anti-poor.

They said many of the regulations are open to interpretation and risk being applied unfairly if a shelter director doesn’t consider an explanation reasonable.

Keep thinking!

That’s always true of any regulations.  The alternative is to save everybody, which the state can’t afford.

But Kehoe insisted the regulations will be applied fairly and noted they provide exceptions for:

Families trying to pay down their debt

Those who hold jobs that might make them reluctant to accept a housing opportunity too far away

Others who can’t find affordable housing after their income rises above welfare limits.

Hard to argue with any of that.

You think it’s hard to argue?  I’ll show you hard to argue!

She and other state officials said the regulations are part of the administration’s effort to overhaul the shelter system by more quickly moving the homeless into more permanent housing. In 2007, state officials moved the last homeless family out of a motel and heralded it as part of their new strategy to help all of the state’s homeless find permanent housing.

So the state was making progress — then the recession hit, and the demand has spiked.  (Rents are down a little, not enough to make a difference in housing consumption.)  That spike has spurred the state to innovate in pursuit of efficiency:

As part of that plan, the state recently merged the welfare agency’s emergency shelter programs with housing programs run by the Department of Housing and Community Development and is now planning eight regional networks to better coordinate homeless services and housing.

Homeless shelters aren’t affordable housing, although they can overlap in customers and purposes. 

And this month, the state revised the way it pays shelters, holding back thousands of dollars in payments until homeless families are housed.

‘Pay for performance’ should work for shelters as much as it works for the sheltered. 

The state now withholds its final payments for a year after the family leaves the system, as part of an incentive for shelters to extend their services to help keep the families housed.

Our goal, remember, is to get people out of shelters and into self-sufficiency.

“We know the severity of the problem, and we’re trying to provide a comprehensive approach,” said Bob Pulster, executive director of the state’s Interagency Council on Housing and Homelessness.

Pulster (on the left), seeking a comprehensive approach

He and others said they expect to receive millions of dollars from the federal stimulus package, which they hope will ease the state’s growing burden.

But they said federal money won’t stop the new regulations from taking effect – and the imminent changes have Grace Monteiro worried.

The 28-year-old mother of a toddler has been in and out of shelters and apartments for several years. In the fall of 2007, six months after landing a $15-an-hour job as an administrative assistant, she was forced to move out of a shelter because she exceeded the income requirements, which is now an income of $1,578 a month for a family of two.

Ms. Monteiro and her son appear to be the archetypal customer we are trying to help – someone who is teetering on the cusp of self-sufficiency. 

”It’s a catch-22,” Grace Monteiro, with her son Keegan, said of housing regulations for the city’s homeless. Monteiro, 28, has been in and out of shelters and apartments for several years.

So she moved into an expensive studio apartment – she couldn’t find affordable housing in time – but she had trouble balancing the rent with her other expenses.  Within a few months, Monteiro lost her job [What reason? – Ed.] and she and her son moved into a state-subsidized motel room and then back into the shelter system.

She says three months isn’t long enough for many families to find affordable apartments, which are increasingly scarce.

Certainly, there’s no doubt that affordable apartments are hard to come by here.  Ms. Monteiro needs roommates or a sharing arrangement.

As a result, she thinks the new regulations will just encourage more parents to avoid working.

“It’s a catch-22,” she said. “I want to get a job, but I’m afraid to get a job. I don’t want to repeat what happened last time.”

Although I’ve never been homeless, I’m convinced that you are what you live in – and if you’re homeless, you cannot possibly be as effective in your life and your work as if you have some stable housing.

“Because if I don’t have housing after three months, then what? This just makes it harder to do the right thing.”

The right thing is to find a way out of the poverty trap within three months, or manage the lifeboats to give someone else a try to do so. 

Kate, honey, don’t you think it’s my turn in the lifeboat?

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