Dear St. Nick, please get the elves to grant my wish list

View on the News

Christopher Curran
Posted 3/18/15

Like a hopeful child enumerating her wishes for Father Christmas, Gov. Gina Raimondo announced her proposed state budget.

Faced with the dilemma of trying to strike an alliance with Speaker of the …

This item is available in full to subscribers.

Please log in to continue

E-mail
Password
Log in

Dear St. Nick, please get the elves to grant my wish list

View on the News

Posted

Like a hopeful child enumerating her wishes for Father Christmas, Gov. Gina Raimondo announced her proposed state budget.

Faced with the dilemma of trying to strike an alliance with Speaker of the House Nicholas Mattiello or using the podium as a “bully pulpit” aimed at raising a groundswell of grassroots support in order to effectuate needed widespread change, Raimondo chose compliance and subjugation. Perhaps she estimated that the citizens were not fully engaged enough to press their representatives to back more dynamic changes. Or perhaps, she has already surrendered in her mind to the idea that without St. Nick’s full cooperation, she would be relegated to the position of an innocuous figurehead like her immediate predecessor.

Whatever her motivation, the budget she presented was modest in aspiration and absent of any substantive innovation. The speech was nuanced with tired Democrat ideals of increased taxation in order to close a $190 million cyclical budget gap. There was no reduction in the ever-escalating aggregate budget total. Instead of a radical plan to cut our excessively bloated government, Raimondo only offered minor adjustments in state payroll and a token reduction in her own salary.

Essentially, Raimondo’s wish list was constructed in a neutral and non-offensive fashion. She chose not to ruffle the feathers of Speaker Mattiello or Senate President Theresa Paiva Weed while simultaneously offering mild attempts at creating a more friendly business environment. So, the question is, will Gina’s wish list be granted, or will the speaker of the House and the Senate president, along with key legislators, disregard the governor’s intentions and resolve the budget’s final form in some clandestine “Star Chamber” in the waning days of the legislative session?

In response to some disparaging words that the governor had said about the state’s budgetary process at Politico’s fifth annual State Solutions Conference in Washington, D.C., Speaker Mattiello stated that the governor’s remarks were “very disappointing in light of the spirit of cooperation that everyone spoke of on inauguration day,” and that she was “inaccurate.” As a result, Raimondo has presented a budget that mends fences with the speaker while sacrificing the possibility of any substantial change.

The first inescapable observation about the fiscal year 2016 budget is the sheer enormity of it. This upcoming proposed budget is $8.6 billion. When one compares this new proposal to the fiscal 2001 budget of 15 years ago under Gov. Almond, which was $4.8 billion, it raises an obvious question. Why has our state budget ballooned to this astronomical sum of almost double in 15 years?

The answer is stunningly simple, as stated by Monique Chartier of the Rhode Island Taxpayers: “Rhode Island has a spending problem, not a revenue problem, as evidenced by some of the highest taxes in the country, and it is surprising that the governor with her financial background does not recognize this.”

Raimondo’s proposal may have tentatively bridged a $190 million cyclical budget shortfall. However, reducing overall spending in a dramatic manner is absent. There was no suggestion of the cost-saving privatization of state services. Also, there was no recommendation of consolidation, which would save millions. Perhaps addressing this insatiable elephant in the room was not worth the risk of alienating the speaker. So, Gina decided not to bring out her whip and stool of drastic cost reductions and chose to let the pachyderm of excessive spending continue to gobble up everything in sight.

Equally daunting is contending with the medical sector expenses in the Ocean State. With Medicaid costs to the state rising wildly in recent years, the governor has proposed approximately $90 million in cuts to state Medicaid spending. Reimbursement rates to hospitals and nursing homes for Medicaid services will be cut. As Medicaid costs to the state have increased over $1 billion in the last three years, these possible savings seem too small. A more dramatic cut in state contributions would seem warranted.

Additionally, in order to keep HealthSource RI – an agency spawned from the Affordable Care Act, or Obamacare – open, the governor has added a tax of up to 3.8 percent on all policyholders. However, the easiest answer to this problem is less burdensome to business. Rhode Island should turn the 30,000 policyholders over to the federal government’s exchange. Small businesses are already dealing with less choice in care, higher premiums and higher deductibles in this ill-conceived system. At least with the federal exchange, the businessperson would have an extensive number of carriers to choose from as opposed to the severely limited choices from HealthSource RI. Apparently, the governor had trepidation about losing support from those connected few who benefit from keeping the local exchange running. This suggestion falls in place with many legislators who believe in keeping HealthSource as an ongoing concern despite the adverse ramifications to small business.

Along with those increased costs, we can expect hospital rates to rise. The proposed budget would re-institute the hospital-licensing fee of 5.7 percent. This may raise $156.1 million in revenue, but it will also raise medical consumer costs, as the added expense will be hoisted upon the patient. Also, considering the fact that because of the Hill-Burton law, hospitals are burdened with many unpaid bills from emergency care which depending on volume can force hospitals to fail, the added expense could be pivotal in a particular institution’s survival.

Also, pleasing the speaker is the proposed elimination of low-income Social Security recipients paying Rhode Island income tax. It is proposed that single filers with a federal adjusted income less than $50,000 and married filers with a federal adjusted income less than $60,000 would be saved from state tax. This was one of Mattiello’s stated priorities. Thus, this gesture might possibly endear the governor to the speaker.

Contrarily, the annual practice of adding more taxes was also a component of the budget. Smokers will pay more taxes per pack. Second-home owners will pay more taxes too, most likely. Also, unlicensed rentals of lodging will now be subject to state lodging taxes, thus making your hostel more hostile, at least in terms of rate cost.

Possibly on the plus side for Rhode Island’s future, the governor wants to galvanize tourism. However, one would assume that the predicate to a tourism initiative would be to repair the Ocean State’s pathetic infrastructure. The governor’s idea is hinged upon coordinated marketing. This direction could pay dividends, but first we have to make getting to our prime destinations viable. Simply put, extensive road repair must come before marketing our state. Despite that conspicuous stumbling block, the governor is hopeful about her tourism aspirations. She stated: “To provide sufficient resources for this initiative, the governor’s budget establishes new revenue sources dedicated to tourism promotion.” This is an example of putting cart before the horse.

Of course, the common Democrat practice of creating more government was thematic in her proposal. This notion sits well with the speaker’s past stated paradigms. Raimondo seeks to establish a School Building Authority within the Rhode Island Department of Education. She wants to yield $20 million from state debt refinancing to create a capital fund and lift the school construction moratorium. Furthermore, Raimondo wants to secure an Annual Construction Aid Appropriation of $80 million by fiscal 2017. This intercession of government into the building industry should be greeted well by the overwhelmingly Democrat General Assembly. According to the governor, this initiative “creates fiscal stability with predicate funding and allows projects to be prioritized.”

However, most improbable was her proposal regarding state worker costs. Besides cutting her own salary by $7,000 to approximately $133,000, she wants to save $22 million related to personnel reduction and reducing employee benefits. Although laudable in intention, this initiative will be met with avarice-driven disdain in the General Assembly.

If the ultimate goal of Raimondo’s budget proposal was to curry favor with Speaker Mattiello, she may have accomplished her objective. The speaker stated the following after the speech: “This is a pro-economy, pro-jobs budget that reduces the structural deficit in the out-years, which has been my consistent message since becoming speaker a year ago.”

So, St. Nick will likely corral the elves on Smith Hill in order to grant most of Gina’s wish list. Simply because her list is apparently reflective of his list, we will continue with the status quo of our state of stagnancy. Politicians will continue to claim bold leadership, while in actuality their production is more of the same. Alas, both the governor and the speaker will continue to perpetuate the myth of progress!

(Editor's note: This column previously incorrectly referred to the re-institution of the hospital licensing fee as having been a proposal of the state's Department of Human Services. Hospitals in Rhode Island obtain licensing through the Department of Health.)

Comments

No comments on this item Please log in to comment by clicking here