James F. Carlin has been an entrepreneur for the last 27 years. Taking risks in business ventures ranging from insurance to publishing, Mr. Carlin says he is "the only person in the United States who has founded or co-founded three companies that have made the Inc. magazine list of the fastest-growing companies."
But Mr. Carlin, who last September was appointed by Gov. William F. Weld of Massachusetts to run the city of Chelsea, is no stranger to the public sector.
Under Gov. Edward J. King, Mr. Carlin served as secretary of commerce from 1979 to 1981, when he was named secretary of transportation. In that role, he also served as chairman of the board of the Massachusetts Bay Transportation Authority.
Today, as receiver, Mr. Carlin's personal bodyguard is an authority policeman. State officials thought he might need the protection because he would probably not be the most popular man in Chelsea, an impoverished city north of Boston that last fall was too poor to open its schools on time.
Some wondered how the reputed millionaire, a resident of affluent Wellesley, could comprehend Chelsea's situation. But by early this year, Mr. Carlin had managed to plug a $10 million gap in its $40 million budget for the current fiscal year. And last month, he submitted a balanced budget for the fiscal year that begins July 1.
In a talk with staff reported Ted Hampton, Mr. Carlin discusses Chelsea, his job as receiver, and the differences between private and public sector management.
Q: You travel with a bodyguard. Is there that much antipathy toward you in Chelsea? Have you ever been physically threatened?
A: I had a lady come up on the street and spit on me one day. And there have been some threatening phone calls. But it hasn't been that big a deal.
It's a tough town. There's clearly a lot of underworld activity in Chelsea as there is in many other towns. We have southeast Asian street gangs in Chelsea. We have all the problems that urban cities have, [including] all the people who for one reason or another were making the politics of the city work for themselves. You've got basically tough people.
Q: When you got here a hardened urban populace wasn't all you faced.
A: Massachusetts did a report in August of 1991 called "a statement of finding on Chelsea," and it basically concluded that the city had a $10.5 million structural deficit.
One of the reasons that Chelsea went into receivership is that the cities and towns in Massachusetts are supposed to have their budgets done by July 1 of each year. Chelsea went through July, no budget for the city; August, couldn't balance the budget, therefore, the schools couldn't open in September because they couldn't contract with the teachers because they didn't have a budget.
We went in the middle of September, and by Nov. 1, which was six weeks later, we had a situation where at that point in time there wasn't any more money going out than was coming in. We had stabilized things.
Q: How did you do it? Ten million is a lot of money.
A: And on a $40 million budget First, the amount of waste and the amount of patronage and the amount of expenditures was beyond any description at all. Paint was being bought for $16 a gallon that we ended up buying for $5. In the treasurer's office, where there were 12 people when we arrived in September, we're operating with six people.
They're functioning better today, I think, with six, and the guy who's running the department assures me he can get it down to four.
Every city employee costs you $50,000. They might be making $20,000, they might be making $25,000. But one of the things the public doesn't have any grasp of at all is how much a public employee costs.
When you take base salary and the pension and the medical insurance, and vacation time and the holidays and, you know, the toilet paper and the pencils, and travel and all the clothing allowances that they had, some of these employees. $50,000 is a fair number.
If you take a department from 12 employees to six, that's $300,000. That's damn close to 1% of your budget, if you've got a $40 million budget.
Q: You only had half a fiscal year in which to realize the savings.
A: But that happened in every single department. Now, additionally, the total overtime, on an annualized running rate of the city of Chelsea, was running $2 million a year, or 5% of the budget.
I went in on a Thursday and on Friday I issued an executive order -- whatever the hell you want to call it -- that there would be no overtime without my personal approval, and then I told everybody, "I'm not going to approve any, so don't bother to ask me for approval."
Now, if there is a major public safety problem, obviously I'm going to allow some overtime. We've probably saved in fiscal year 1992 $1.5 million of overtime. On personnel cuts, I would say that we probably saved $1.5 million.
Just by general economies we probably saved $500,000, on purchasing. So that's $3.5 million. We probably raised fees and improved collections of back taxes and did miscellaneous stuff of another half a million, so that's $4 million.
Then we were able to get from the state of Massachusetts $1 million in unemployment compensation reimbursements resulting from the fact that all the schoolteachers had to be laid off in May or June of last year because they didn't have a budget and they all collected unemployment.
Q: You did have a major one-shot infusion to help balance the budget, right?
A: The Massachusetts Port Authority had been paying Chelsea $310,000 a year in lieu of tax payment, and I went to the port authority and basically said, "Listen, let's take a present value of $300,000 per year through the year 2012 and write us a check for $5 million, and you don't have to give us any more in lieu of tax payments."
So they gave us $5 million and that closed that gap. So now I had fiscal year 1992 fixed, and I'm moving into fiscal year 1993.
Q: How do you find running a municipality compared to running your companies?
A: I'm not sure that working as the chairman of the board of General Motors is much different that being secretary of [the Department of] Health, Education, and Welfare in Washington. You're at the top of a big, slow-moving bureaucracy. But a person who runs a business with 25 to 100 employees really has to move quick and react to markets and personnel. You don't have the luxury of, you know, hiring MacKenzie & Co. to go in and do consulting studies. People who run small businesses have to be very resourceful.
For years they've been trying to close fire stations in Chelsea. We closed two of them, bang. You know, they said, "Well, you should have had a public hearing, you should have had impact bargaining with the union, you should have done this, you should have done that."
We did none of it. We closed the goddamn things. Any fool would have known that you should have closed the fire stations. Chelsea is 1.8 square miles. You don't need four fire stations.
We're basically trying to privatize everything that can be privatized. The cost of government is outrageous. In city hall, okay, city employees work from eight until four, with an hour and a half off for lunch. That's six and a half hours behind the desk a day. That excludes time they might spend to go to the ladies' room or men's room, take a coffee break, or go buy their lottery ticket.