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Small steps in the right direction with very little innovation

Christopher Curran
Posted 6/18/15

This week, the Rhode Island General Assembly will complete the legislative process and offer an $8.7 billion state budget for Gov. Gina Riamondo’s signature.

The size of this budget is almost …

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Small steps in the right direction with very little innovation

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This week, the Rhode Island General Assembly will complete the legislative process and offer an $8.7 billion state budget for Gov. Gina Riamondo’s signature.

The size of this budget is almost twice of what it was 15 years ago. There are no new sweeping changes. There is no substantial streamlining of government. There is no great galvanizing economic plan that addresses the extraordinary lack of efficient goods and services comparatively for the taxpayers’ expenditure. There is no reduction in excessive and costly regulation for business, except for an elimination of sales tax on utilities and a token reduction in the minimum corporate tax.

Simply, the budget is for the most part more of the status quo. Some controversial proposals were tabled, some were defeated and some were settled into the final budget much to the dismay of many taxpayers. Yet, there was no real innovation and no real discourse about what the actual chronic, predicate problem is.

Of course, the answer is the oversize, stratification and duplicative expenses of the Rhode Island government itself. No matter how conspicuous the solution is to the Ocean State’s woes, those who hold redundant official positions do not wish to give up their fiefdoms.

Fifteen years ago, Gov. Lincoln Almond signed a $4.8 billion budget into law. During that session of the Rhode Island General Assembly, leading up to the submission of the budget for signature, a major debate within the chamber was how to reduce expenses through efficiencies.

Today, with only a 22 percent difference in the value of American currency, the Rhode Island budget is almost $4 billion more. The sheer enormity of the budget belies any attempted thrift.

The final budget is reflective of a great many of the governor’s wishes. However, her proposals were mild in risk and tepid in dynamism. More succinctly, she offered proposals that the General Assembly would not zealously oppose. Sadly, as a result of this strategy, the budget is nuanced with positive change without actually being much of a catalyst of that change.

Among the slight victories, there remains $60 million in real estate development tax credits over five years. Also, $25 million in incentives to encourage development on the former 195 land made it into the budget. Additionally, about 75 percent of the governor’s $128.8 million of proposed cuts in the ever-ballooning Medicaid expense is included in the final budget draft.

In concert with the stated concerns of Speaker of the House Nicholas Mattiello, other pertinent items made it into the budget as well. Social security retirees will no longer be subjected to Rhode Income tax, provided an individual earns under $80,000 per year, or a couple earns under $100,000 per year. Also, the surcharge on outpatient medical imaging and X-rays has been repealed.

Benefiting businesses somewhat, the minimum corporate tax has been reduced from $500 per year to $450 per year. Further, the sales tax collected on commercial electric, natural gas, and heating fuels has been eliminated. These measures are an infinitesimal effort at reducing the operating burden on businesses. Substantial deregulation is needed to create the fertile field needed for existing businesses to flourish and for new businesses to even consider planting their enterprise here in the Ocean State.

An elimination of the minimum corporate tax would show a real sea change in the business tax environment, which is currently and consistently the worst in the nation. Fifty bucks of tax relief is insignificant.

Adverse to the short-term rental business, those who rent on a week-to-week basis under 30 days will have to endure a new tax. This move is strictly counter-intuitive to the governor’s stated hope of substantially increasing tourism.

Finally, the sunset of the pension reform debacle is soon at an end. Superior Court Judge Sarah Taft-Carter signed off on the pension compromise deal. While the deal retains most of the reforms forged in the 2011 pension reform law, it will cost the Rhode Island taxpayer tens of millions of dollars over the coming years. Yet, most legislators believe that this compromise will prevent many more years in court at the expense of both union interests and the taxpayer. Although the governor has garnered success in her political career in no small part to her championing of the original law, Raimondo is expected to sign on to the compromise.

Immersed in controversy, the issue of firefighter overtime was defeated, while the PawSox stadium and the governor’s truck toll bridge plan were tabled for later. It is possible that the speaker could call a special session of the General Assembly in the fall to address the stadium and the tolling.

The legislators were prudent to preserve the constitutional power of municipal officials to negotiate with firefighters’ union representatives on a local level. The state should not impede the cities and towns, in our current governmental configuration, to seek what is best for that specific community and what their needs might be.

Alas, to the shortsighted or politically myopic, the budget probably seems to be a reasonable document that takes into account the wishes of the executive while not alienating those representatives in the legislature. In other words, business as usual and the preservation of the status quo prevailed once again.

However, this continued paradigm ensures there will never be needed dramatic change, and the taxpayer will continue to receive little bang for their hard-earned buck.

Perhaps the answer lies in a comparison to several United States cities that also have approximately one million in population, just like Rhode Island.

San Jose, Calif.; Jacksonville, Fla.; Dallas, Texas; San Diego, Calif.; and Austin, Texas, are all similar in size to the Ocean State. These cities have a mayor, a city manager, a 10- to 15-member city council, one police department (or are part of a county department), one fire department, and one school department. And that is the government!

We have 39 municipalities, 36 school departments, 40-plus fire districts, 38 senators, 75 representatives, numerous councils, school boards, and a bloated executive branch that includes a totally unneeded lieutenant governor’s office. Our grossly over-stratified government produces so many duplicative expenses that the taxpayer is drowning in taxes and fees.

If we were living in a utopia of well-performing and state-of-the-art schools, well-paved roads, safe bridges, and a well conditioned overall infrastructure, we would find reason in paying the astronomical taxes.

Quite conspicuously, the money to remedy our difficulties resides in regionalization, de-stratification, and streamlining of our government. If we wish to start anew, we must begin to think anew. Do we need 113 senators and representatives when a council of 10 to 15 members has proved they can serve effectively as legislators to a government of a similar size? Do we need all those separate school districts with all those administrators? Do we need all those police departments with all those chiefs? Do we need all those fire districts with all the redundant expenses?

No matter what minor positive tweaking may have been accomplished in this year’s budget process, the efforts miss the most relevant point. To quote William Shakespeare, “the fault is not in our stars, but in ourselves.” The problem is not in what small aspirations were proposed by the governor that has come to fruition. We need to stop acting within the present governmental structure and strike it down with the wrecking ball of reform.

The General Assembly should call for a constitutional convention to be placed on the ballot once again. We cannot wait another decade.

We have only a million people and way too much government, no matter what any final budget presents. So while the circus of self-congratulations commences up on Smith Hill, take heed. What was truly accomplished, and what can be accomplished, in our current governmental form?

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