Chafee plans to hike taxes, further cuts in 'year of cities and towns'
“It was the best of times, it was the worst of times.”
These words may have originally been penned in 1859 by Charles Dickens in his French Revolution-era novel, “The Tale of Two Cities,” but Governor Lincoln Chafee resurrected them to describe the State of the State on Tuesday evening.
Chafee’s speech was peppered with Dickens’ quotes but mainly centered around the governor’s “ABC’s” of Rhode Island’s economic revival: Assets, Budget and Corruption. (The governor did add an additional “C” for civility.)
His references to the “Tale of Two Cities” were especially apropos, as the governor called this year “the year of cities and towns,” an idea that piqued the interest of municipal officials present at the address.
“My budget devotes nearly $40 million in additional education funding to cities and towns,” said Chafee.
“I’m pleased to hear it’s the year of cities and towns,” said Johnston Mayor Joseph Polisena. “Governors in the previous years destroyed the cities and towns.”
Polisena is hopeful that the state government will let municipalities govern themselves.
“Government mandates are choking the cities and towns,” he said. “Where funding is getting scarce, we’ll survive by making the right decisions.”
Polisena referenced the Department of Environmental Management (DEM) and mandates regarding dams in Johnston.
“We don’t have the money [to oversee them], so we want to pull the plug and drain them,” said Polisena, whose proposal has been combated by DEM regulations.
“Are we worried about taxpayers or the three-eyed speckled frog?” he asked.
Polisena said he hopes the General Assembly will get behind the governor in his efforts to focus on municipalities.
Warwick Mayor Scott Avedisian is also grateful for the governor’s attention.
“It is positive to see the governor publicly state that this is going to be the year for cities and towns,” said Avedisian. “We are lucky to have an ally in the governor’s office.”
“It’s good to hear his commitment to cities and towns,” said Cranston Mayor Allan Fung. “But the devil is going to be in the details.”
The details of the $7.9 billion budget include a proposed 2-percent meal and beverage tax hike, a 4-cent increase on cigarette packs, a $30-increase on driver’s license and registration fees and an extension of the 7-percent sales tax to things like taxi cab rides and clothing items greater than $175.
“This budget proposes a clear way to pay for … substantial and necessary education funding and help for our local communities: it will be supported by a 2-percentage-point increase in the meal and beverage tax,” said Chafee. “I know that this will be controversial, but the money we raise will go to the most important investments we can make: educating our young people and helping the property tax payer.”
Mayor Fung said he worries for small to medium businesses in the food industry.
“I’m concerned about the impact to overall business,” he said.
Representative Joseph Trillo (R-Dist. 24, Warwick), who anticipated Chafee’s speech to be a “theatrical event,” said he was “very disappointed” with Chafee’s remarks.
“I saw a lesson in ‘let’s get along and talk nice,’” said Trillo, who thought Chafee skirted around major issues and didn’t address them head on. He, like others, was also bothered by Chafee’s proposed tax hike.
“That will have a very negative effect on restaurants,” said Trillo. “Less people are going out to eat, the last thing we need to do is make it more expensive.”
Trillo said the $40 million figure is not realistic based on the tax increases Chafee proposed. He said Chafee has not factored in the business lost due to the tax hikes.
“If he really wanted to help business in the state, the last thing he should do is increase taxes,” he said. “Someone should tell the governor we’re in a recession.”
Dale Venturini, president and CEO of the Rhode Island Hospitality Association, said the meal tax hike would have a negative effect on restaurants and employees.
“The governor’s proposal to raise the meals and beverage tax will not only place Rhode Island at a competitive disadvantage, but it will place an unnecessary burden on Rhode Island workers already struggling to make ends meet. Raising this tax will cause many, many families to rethink their decision to dine out,” she said. “This will have a direct impact on the earnings of the countless tipped employees at our restaurants. Those who do continue to dine out will absolutely change their habits to offset the additional cost. A new trend we are already seeing is that more guests are tipping on the pre-tax total instead of the post-tax total. This may not seem like a big difference, but over the course of a week, month, or year the amount of money a server will lose out on can really leave them struggling financially.”
In addition to the increased taxes, Chafee proposed further budget cuts to the tune of $44.2 million that hone in on human services.
“The budget I present to you tonight contains painful cuts. Cuts that, in more prosperous times, I would never choose to make,” said Chafee. “The cost of health and human service programs has climbed far more rapidly in recent years than any other sector of state government. Unavoidably and unfortunately, this is where many of our cuts must occur.”
“I would give him a B-plus to an A,” said Polisena. “Because he’s going to get behind [municipalities], but no one wants to see any increase in tax … or painful budget cuts.”
“Motivational, focused and bringing people together,” were the words Community College President and Commissioner of Higher Education Ray Di Pasquale used to describe Chafee’s speech. He said the governor addressed what needs to be done and recognized the importance education plays in developing a workforce that will make Rhode Island competitive.