The top 3 issue areas being heard by the Rhode Island General Assembly deserve their own post…
1A. H5704: Allows Rhode Islanders to buy insurance policies provided by out-of-state insurers, “provided that the insurer conforms to requirements imposed upon insurers licensed to do business in this state”. (H Corporations; Tue, Mar 31)
1B. Bud. Art. 28: Allows the secretary of Health and Human Services to directly impose taxes on the sale of small employer and individual health plans without General Assembly approval, with revenues earmarked for the Rhode Island health benefits exchange. (S Finance; Wed, Apr 1)
1C. H5597: Government takeover of the siting and management of health provider networks in Rhode Island, giving the state health commissioner authority in such areas as hours of operation, staffing placement, criteria for evaluating doctor performance, approval of contract terms between health insurers and providers, etc. (H Corporations; Tue, Mar 31)
2A. H5845: Requires that Rhode Island students be able to opt-out of “the Partnership for the Assessment of Readiness for Colleges and Careers (‘PARCC’) assessment”. (H Health, Education and Welfare; Wed, Apr 1) Given that there is no time-limit on this bill, it basically assumes that a standardized test will never be a graduation requirement for Rhode Island public schools.
2B. Meanwhile, H5814 asks (via a non-binding resolution) for the Department of Education “to require all Rhode Island school districts to submit each district’s minimum high school graduation requirements” . (H Health, Education and Welfare; Wed, Apr 1). The resolution begins by saying “in 1999, in his State of the Union Address, former President Clinton stated ‘No child should graduate from high school with a diploma he or she can’t read'” — but will this General Assembly ever allow the state to make a direct assessment of whether students can read a part of earning their diplomas?
3. H5688: Requires that assigning students to Mayoral Academies be done by a random lottery involving all students in a participating district, with selected students able to opt out if they so choose. (H Health, Education and Welfare; Wed, Apr 1) I’m not sure what’s worse about this bill: the conscious lengths that progressive education reform opponents go to to show that they believe that government and not families should control the lives of children, or the unconscious bias amongst progressive education reform opponents it reveals, that life is just a big lottery that education cannot change..
4. H5631: Allows individuals who have property confiscated as part of a civil forfeiture proceeding to “seek a court determination as to whether the forfeiture is disproportionately excessive to the gravity of the offense giving rise to the forfeiture”. (H Judiciary; Tue, Mar 31)
5A. H5610: Mandates that the Department of Public Safety begin “to implement an electronic automobile and commercial vehicle liability insurance confirmation and compliance system” that includes “an automatic license plate recognition system to electronically capture license plate images in two seconds or less and noninvasively attempt verification of the insurance and when possible, the registration status of the vehicle”. (H Finance; Wed, Apr 1)
5B. H5606: Requires that applicants for operators and chauffeur licenses have a valid social security number. (H Finance; Wed, Apr 1) It will be interesting to see how many legislators end up taking the position that requiring social security numbers for operators and chauffeur’s licenses is unreasonable, while supporting an electronic system that is supposed to watch every automobile in the state.
6. H5495: Minimum-manning for social workers at public schools, one per 400 students. (H Health, Education and Welfare; Wed, Apr 1)
7. H5961: Unambiguously establishes that holding a seat on the Cumberland Fire District board is holding public office — and that “members shall hold no other public office”. (H Judiciary; Wed, Apr 1) I understand and agree with the spirit of this bill: it’s crazy that here in Rhode Island, we pretend that there’s ambiguity about whether Fire Districts are part of the government or not. However, 1) a bill like this shouldn’t be confined to one community and 2) the authors of the bill need to carefully review the law in this area, to make sure there aren’t potential problems (legal and ethical) with burdening Cumberland Fire District Board members more than other local officials.
Ever wonder what it must have felt like when “normal” was a life with little communication with the rest of the world, periodic monster storms that arrived without warning, such rudimentary medicine that relatively minor wounds and illnesses could be fatal, and the perpetual threat that some invading force might sweep through and upend everything that gave people a sense of meaning in the world?
I think that sense of reality must have been in some ways opposite to the modern experience. Sure storms, illnesses, and attacks can still occur, and sometimes they can overwhelm us, but we’re able to have so much more foresight, and we have options when threats arise. We’ve almost reached the point of being able to be largely ignorant of the world around us because we’re protected. It’s not that we can’t know about the world beyond our field of vision, but that we don’t have to.
If it must have been difficult to have a sense of “normal” in a less predictable and less manageable world, it may be too easy to hold on to a sense of “normal” in our lives these days.
That thought is in line with a recent op-ed from Michael Morse in the Providence Journal:
So, what to do? Do we isolate, and ignore the dark tide that is rising? Or do we live and let live, and try and make sense of a world going mad? The fact that I’m tempted to pull the blankets over my head and stick my head in the sand scares me more than mobs or terrorists. The fear of surrendering to a group mentality of aggression and oppression keeps me fighting, and speaking my mind.
Morse’s examples are the British-accented terrorist beheading people for snuff-film propaganda videos and the riots and sometimes-violent activism stoked by the Obama administration and the news media in response to a police shooting. There are many more he could have used, from the massive financial bubble created through public policy to the fabricated fear campaign warning about rape epidemics to the collapsing international order.
Through it all, we can just go about our lives, expecting the ship to right itself, because the world will always return to “normal.” Or maybe we hold a secret, even subconscious, hope that we’ll be gone before everything falls apart completely.
What’s disconcerting is that we can still repair most of what’s damaged in our world today and return to a path of expanding global normality with just a little bit more discernment and a little bit of discomfort in the face of those who would use our desire for a normal life as a means of steering us toward a corral and lock us in.
Give this to our super smaht, financially savvy new governor: She knows how to pack a budget with things that require detailed review and analysis if the public is going to have any real sense of whether it’s a good or bad package, on the whole.
Jennifer Bogdan does the good work of digging into the big refinance part of Governor Raimondo’s proposal in today’s Providence Journal:
Roughly $64.5 million in Raimondo’s 2016 fiscal year budget would come from a refinancing effort. Another $20 million would flow in fiscal year 2017. The bonds in question have an average interest rate of 4.9 percent, but if refinanced the interest rate is expected to be lower than 2.34 percent. She calls the refinancing conservative and says it would be irresponsible not to consider a money-saving measure for the state.
By “money-saving,” what the governor means is that she’s using the restructuring to borrow around $84 million in the first two years. In the third year, the state will actually have to pay about $10 million more in debt service, and the years will change between costing more and costing less over the refinancing period. As shown in a table included with Bogdan’s article, when the state reaches the end, in 2032, it will have actually paid $13.6 million more in debt service.
That’s where the governor deploys an accounting trick to make the analysis a bit murkier. In the words of Budget Officer Thomas Mullaney, “The key here is that we would not enter into this transaction if the state would not ultimately come out ahead.”
He’s referring to the fact that if you look at the present value of the changes in payments up and down over the sixteen years — in other words, adjust them for inflation to what they would be in today’s dollars — the real value of the changes is actually $225,238 less in debt service.
Like so many of the “bold and innovative” moves in the governor’s budget, that’s misleading. For one thing, the assumed inflation rate is critical. A rough spreadsheet suggests it’s 2.97%. In that case, it would erase these so-called savings if inflation turns out to be 2.91%. Below that, we’ll be well into negative territory.*
For another thing, the state isn’t going to treat the refinance like a restricted fund. The state will spend the savings in the years that there are savings and will have to come up with the money in years that there are costs. The money is going to have to come from somewhere to pay the extra debt service, and that somewhere will very probably have been worth more to the economy than simply inflation. (Hey, maybe the governor should invest the savings along with the state pension fund, which the state assumes makes 7.5% profit every year.)
Simply refinancing from 4.9% to 2.34% interest for the same number of years would have saved a great deal of money that could have been left in the hands of Rhode Islanders. Whatever the governor’s room full of smaht people do for economic development, they have to do better not only than the cost of the refinance, but also the economic activity of people acting without the government’s meddling.
UPDATE (03/27/15 8:37 p.m.): According to the governor’s office, the estimated rate of inflation is 2.44%, which my math leads me to believe would produce a $2 million cost to the refinancing, in current dollars. I’ve asked for more insight into the governor’s math, but if anybody has an idea, I’d be interested to hear it. There also must be something incorrect in the information out of the governor’s office. They’re saying the refinancing is of $160 million of debt, but the Projo’s numbers have the state paying nearly that amount every year.
* Posting this of a Friday afternoon, I got my signs reversed. I’ve fixed the relevant text.
Kevin Williamson’s “Utiopia’s Jailers” would be good assigned reading for a low-level political philosophy course:
The Left’s heart is still in East Berlin: If people want to leave your utopia and have the means to do so, then build a wall. If they climb over the wall — as millions of low-income parents with children in private schools (very commonly Catholic schools) do — then build a higher wall. …
It isn’t just education, of course. In much of Canada, private health insurance is effectively banned. The existence of private insurance is a very strong indicator that there are some people who are not entirely pleased with Canada’s single-payer system. (Monopolies rarely have happy customers.) So they opt out, at least in part, exercising the right of exit that is the most fundamental of civil rights. This is an affront to progressive values. Solution? Ban private health insurance. …
… try opting out of Social Security or Medicare and see how long it takes for Uncle Stupid to put you in prison as a tax evader. Those metaphorical prison walls are almost always political veneers for actual prison walls.
A more difficult question is why we let them do it. In East Berlin, there was the little matter of an invading military force, but Americans are letting progressives rope them down like an incrementally compliant Gulliver. Williamson’s examples give a good indication of the answer.
Acquiescence to the pitiful likes of President Obama and former Governor Chafee, let alone the legions of Whitehouses, Cicillines, Foxes, and so-ons, requires a long-term effort to miseducate the population, promise them things at others’ expense, and gain a patrician’s power over them. As the wall goes up, the effort of dismantling it becomes greater and greater, making it easier and easier to succumb to the hope that the malicious builders will stop after one more row of bricks.
It appears potentially to be a temporary accommodation, but the weightlifting firefighter retired on a disability pension has thus far managed to keep it:
Former city firefighter John Sauro, described in sworn court testimony as “the poster boy for pension fraud,” will be receiving his pension check again. For how long remains to be seen.
The city Retirement Board voted Wednesday to reinstate Sauro’s $3,902-a-month tax-free disability pension after Sauro reluctantly submitted to a followup medical evaluation to reconfirm his continuing disability. He also handed over updated medical records.
As I sang back in November: “They got me, they got me. Now I’m disabled from tension. They got me, they got me, at least they won’t get my pension… ’cause it’s Rhode Island.”
Last August, I noted that HealthSource RI had largely become a means of shuffling people into Medicaid, highlighting this grim fact:
The number of new Medicaid enrollments in Rhode Island from March to August was more than five times greater than the number of seasonally adjusted new jobs based in Rhode Island. If you want a barometer of the direction in which the state is headed, that’s a pretty good one.
Well, herewith, one of the more depressing things I’ve ever read in the Providence Journal:
The total personal income of Rhode Islanders rose 4.3 percent from 2013 to 2014, ranking the Ocean State as the 16th fastest growing state in the country and second in New England, according to figures published Wednesday by the Bureau of Economic Analysis.
But a large portion of that gain was the result of the expansion of Medicaid benefits under Obamacare.
Total net earnings — wages, salaries, benefits and business owners profit — rose 3.5 percent in Rhode Island, below the national average of 4.0 percent. Similarly, investment income — including dividends, interest and rent collections — rose 3.2 percent in Rhode Island, also below the national average of 3.4 percent.
Rhode Island can’t wait for Governor Gina Raimondo’s court of handpicked economic apothecaries to stumble upon a formula for turning lead into gold — or welfare handouts into jobs. We need the state to get off of the economy’s back and stop pushing freebies onto our neighbors, even if the elite progressives have to go into withdrawal with the removal of their steady source of self-affirming power.
The headline for a new statewide property tax proposed by Rhode Island’s Democratic Gov. Gina Raimondo is that pop star Taylor Swift will be among the hardest hit.
A few years ago, Swift purchased a $17 million mansion on the Ocean State’s coast, which means the governor is looking to cull around $43,000 from the starlet’s fortune.
In its first year, the tax is projected to collect $11.8 million from the accounts of the 2,359 households who own second properties worth over $1 million. As Raimondo put it during her recent budget address, the tax “asks those among us who are most able, to pay a little more.” As if to emphasize the point, the tax is not technically imposed as a tax on property, but on the privilege of owning it, which makes the tax even more radical than it appears on its face.
The Rhode Island media has its eye closely on the drama of the latest proposed settlement of the pension reform lawsuit — that is, the latest attempt to water down a reform that was nowhere near sufficient in the first place. In contrast, Mike Riley is continuing to point out that the state, the labor unions, and retirees are arguing over free drinks on a sinking cruise ship:
The Rhode Island Pension fund is roughly $8 billion dollars invested in stocks, bonds, fixed income securities, Private equity, Hedge Funds, other alternatives and cash. Im keeping the numbers simple here. The state commission, headed by Raimondo, has stated expected return of the portfolio to be 7.5% annually and this is to be achieved compounded over the next 20 to 30 years. A 7.5% return on $8 billion is $600 million for Fiscal 2015. According to the report that Treasurer Magaziner was handed, the return thus far in Fiscal 2015 shows a portfolio (Fiscal ytd )loss of 0.71% and including expenses a loss of 1.03% . This 1.03 % loss translates to a negative $80 million dollars. The State would need to gain $680 million over the next 5 months to achieve their “expected” return.
Bill Rappleye has picked up that thread on Channel 10, but for the segment, General Treasurer Seth Magaziner spit out a bunch of squid oil to muddy the waters, selectively picking five-year investment returns to make it seem as if the state’s pension fund is doing swimmingly. I noted the problem with this happy talk last month:
The ten-year average investment return is only 6.0 percent, which should be seen as -1.5 percent. And the longest term number provided, back to July 2000, is 4.8 percent, which should be seen as -2.7 percent. …
If the average for the last 14 years was 4.8 percent, then the average for the next 14 doesn’t have to be 7.5 percent, but more like 10 percent, to make up the difference. If we’re already seeing diminishing returns from the Federal Reserve’s quantitative easing policy and President Obama’s binge of trillion-dollar deficits, what are the next 14 years realistically going to look like?
More importantly, I suggested, it should be the state’s general treasurer who is making this case to everybody. It should be Seth Magaziner out in the news saying, “Hey, these negotiations are all well and good, but we may only have a few more years left until this pension reform thing starts to spring new leaks.”
Former Treasurer, now Governor, Gina Raimondo lucked out that the Obama Administration and the Federal Reserve proved to be such believers in stock-market-trickle-down theory. Rather than ease the reins on innovators and working people, they’ve hit the loose-money throttle for the investment market. That’s given the pension fund and the reform a brief period of looking like they might be fine, although as Riley argues, the state managed to do worse than other funds during the bubble’s latest inflation.
The unemployment rate in Rhode Island disguises disturbing trends in Rhode Island’s employment condition.
Nobody’s mentioned it, but the decision of Amazon.com to place a major distribution center in Fall River (rather than Rhode Island) may be a ripple of consequence from the General Assembly’s 2009 attempt to grab money from the company’s sales.
I’m not much into sports, so arguments about long-standing high school rivalries hold no allure for me. But Bob Plain’s been engaging in some Twitter banter about public schools versus private schools, particularly in relation to sports, and it raises an important point.
Private school teams, he claims, “are essentially all-star teams,” elaborating that they “drain away the talent – sometimes they just buy it!” The subsequent exchanges focus on whether private schools give athletic scholarships, but doesn’t that kind of miss the point?
Really, what’s the argument here? That private schools might give a discount to students who play competitive sports? You know who gives a really big discount for education — as in just about free? Public schools.
The important question is why private schools’ core product of education is considered to be so superior to public schools’ that offering a discount can blithely be declared to be “buying” students. I’m not bashing public schools, here. Bob Plain is a big advocate for public schools, as well as an avid class warrior, and even he takes it as given that a private school that charges no tuition is essentially engaging in an unfair competitive practice against public schools.
That’s a very common assumption, but it’s fascinating nonetheless. And it’s an indication of a problem.
Public schools have massive revenue advantages over most private schools. In some cases — notably, the schools directly controlled by the Providence Diocese of the Roman Catholic Church — the income brackets of private school students aren’t as different from the general public as one might think.
If public schools can’t compete for student talent, it’s an indication that educating students is not their core mission. And if Bob’s right, athletic teams clearly aren’t their core mission, either.
According to Rhode Island law, cities and towns are never allowed to decrease the amount of money that they supply to their public school systems. If enrollment goes down, they can calculate their “maintenance of effort” on a per-student basis, but that requires a projected decrease.
By way of example, budgeting for the 2013-2014 school year, the Tiverton school department projected enrollment of 1,899. It turned out to be 1,873 in October. For the 2014-2015 school year, enrollment was 1,871, yet the department is now projecting that it will rebound to 1,890.
This is a side note, though, to my latest post on Tiverton Fact Check.
I recently discovered another area of student projections that has significance for school funding. For this year’s budget, the schools asked for an increase in their budget for out-of-district expenses for special needs students. Last year, there were 93 such students, and it appears that the district projected at least as many. It turned out, though, that there were only 77 such students, so the district transferred exactly $600,000 out of that account.
The projection for next year goes down by another 10 students, so the schools may be returning to their prior ability to project this part of their budget accurately. Still, the schools’ local funding increased by $546,014, this year, presumably on the strength of the incorrect projection, so that money is baked into the budget.
I’ve confirmed with the Department of Education that the state’s view is that the district cannot return the unneeded money, even if the aggressive school committee that recently sued the town for much less were to vote to do so.
From the 2001-2002 school year to the one we’re currently in, the Tiverton school department’s budget, from state and local funding, has gone up 65%, from $17.7 million to $29.3 million. Meanwhile, enrollment fell 16%, from 2,219 to 1,871. It’s as if two full grade levels disappeared from the school, but we’re paying for another five.* And word has it that the district is about to come forward and ask local taxpayers for millions of dollars for necessary spending on the school buildings, which will certainly require more debt.
The people who support such trends (probably because they profit from them) are quick to accuse anybody who finds them disconcerting of “hating the schools.” To the contrary, it doesn’t take but a dose of common sense to see that something is seriously out of whack, here.
* Preventive PolitiFact note: Using inflation-adjusted dollars, the schools’ budget increase would only be 24%, so it’d be more like losing two grades while paying for an extra two. But (1) this is a quick illustration to compare numbers, (2) a healthy town’s school system should grow, so the loss in students is arguably understated, and (3) I don’t know why a school system can’t be expected to become more efficient over time, which would require another adjustment.
1. H5621: Resolution calling for a Constitutional Convention to propose amendments to the Federal Constitution (requiring 2/3 of state legislatures to agree), with the initial scope of the Convention limited to narrowing First Amendment protections for political speech. (H Judiciary; Wed, Mar 25) Also, the article of describing the proposed make-up of the convention is grammatically awkward: “That this House hereby respectfully requests that the delegates to said convention be comprised equally of individuals currently elected to state and local office, or be selected by election, in each Congressional district for the purpose of serving as delegates”. Formally that could say we either get a split between state and local officials or a special election. Is that what’s meant?
2. Series of anti-Uber bills, H5808 prohibits non-taxicab rides from being arranged less than 2 hours in advance. H5809 requires non-taxicabs used for transporting passengers to obtain a “vehicle identification device” from the state. H5811 subjects “public motor vehicles” to the Public Utilities Commission. (H Corporations; Tue, Mar 24) A government that wants to tell people they can’t schedule rides with one another less than two hours in advance needs some deeper thought on the fundamental limits it should be allowed to place on its citizens, just because an activity is considered “commercial”.
3. S0488: Moratorium on opening new “licensed home care, home nursing care, inpatient hospice care, and outpatient hospice care agencies” in Rhode Island, and creates a “home healthcare system planning task force” that will lift the moratorium at some time in the future. Also, S0486 gives the Department of health new powers for shutting down unlicensed home healthcare agencies. (S Health and Human Services; Thu, Mar 26)
4. H5455: Anti patent trolling legislation. (H Judiciary; Tue, Mar 24) This seems to be as good a place as any for actual bi-partisan agreement in Rhode Island.
Coverage of Governor Raimondo’s proposed new tax on health insurance premiums strikes me as highly misleading:
… most individuals who buy their insurance through HealthSource would find the tax, since it would be rolled into the premium, covered by their federal premium tax credits, said [HealthSource Director Anya Rader] Wallack. Of the roughly 30,000 Health-Source customers, 88 percent qualify for the credits.
“So the bulk of individual customers won’t be paying the premium assessment; the federal government will instead be paying it,” Wallack said.
Those who obtain coverage directly from insurers or don’t qualify for the credits wouldn’t gain that tax advantage.
If we’re particular about the use of language, then Wallack’s statement is simply not true. In a recent WatchDog article, I estimated that the 3.8% HealthSource tax on all individual and small group premiums in the state would have to be 9.1% if it were calculated based only on the plans sold through the exchange. That suggests that about 60% of all plans subject to the tax do not receive subsidies because they are sold outside of the exchange.
According to the latest enrollment data, 12% of Rhode Islanders who are buying insurance through the exchange also receive no subsidies. That means that only 37% of all people on whom the tax would be levied receive federal assistance for their premiums.
I’ve asked for clarification as to whether it’s actually true that the the federal subsidies will go up to cover the insurance tax. I didn’t think so, but with Obama as president the rules of government can change without notice, so let’s assume that charging the tax as part of a premium will indeed increase subsidies. That’s still not the whole story.
Premium subsidies are calculated as a cap that a person would pay for the second cheapest “silver” plan on the exchange (the “benchmark” plan), as a percentage of income. An individual who makes $10,000 a year is under the poverty level, so that would cap his annual insurance premium for a silver plan at 2% of income, or $200. Let’s say the benchmark plan is $2,500. The individual would pay the $200 and receive a subsidy of $2,300.
According to estimates, the new HealthSource tax would make the hypothetical benchmark plan $2,595. So, the low-income individual would still pay the $200, but receive a subsidy of $2,395.
However, that varies with with income and with the plan. For an individual making a little over 2.5 times the poverty level (around $30,000), the $2,500 benchmark would start to approach his cap. Maybe he’d receive some subsidy for the tax, but not all of it.
Moreover, the federal subsidy of the tax in the example would be held at $95. A gold plan at $3,500 would bear a tax of $133, which is $38 higher than the government subsidy would be. According to the enrollment data, this dynamic would affect all of the 13% of customers who bought gold plans and some portion of the 65% who bought silver plans.
In other words, “the bulk of individual” insurance customers would be paying the full tax, and a significant number more would pay at least some of it.
Reading this Sunday front page article from the Providence Journal, about consummate Rhode Island insider James Skeffington, one gets the sense of a community-minded figure pulling together beloved public projects:
Friendship, sports, business, government and charity mix together for Skeffington. It’s a recipe that’s served him well through 40-plus years as a corporate lawyer and political adviser.
You won’t find Skeffington’s name on public buildings or laws in Rhode Island, but you’ll see his hand in many high-profile projects.
It could be realigning a Navy base in North Kingstown into a business park, building a convention center and a mall in Providence, attracting a global financial firm to Smithfield, keeping a lottery giant from fleeing to Massachusetts, developing a state airport parking garage or a private retirement home. He’s had a hand in all of these projects.
To bring it back to a Rhode Island cliché, Skeffington doesn’t just know a guy; he’s a guy you wanna know. Of course, it’s not all friendship and charity. Scion of a funeral home–operating family, he’s made himself very wealthy fulfilling his role in the Ocean State’s back rooms. Indeed, the following paragraph could be the pivot point from the pro-government worldview to the government-skeptic worldview:
He joined the Edwards & Angell law firm in Providence after college and made himself an expert bond counsel, later importing to Rhode Island an economic-development tool devised in New York — moral-obligation bonds. Such bonds allow quasi-public agencies to issue debt without voter approval, a provision often criticized by government watchdogs.
The poster child for moral-obligation bonds in Rhode Island is 38 Studios.
It’s an easy principle to forget, as we get caught up in debating one public policy proposal after another, but every time Rhode Island undertakes economic development projects, a small group of people whose names Rhode Islanders don’t know do very well for their personal economies. Bonds, tax credits, development, and public-private partnerships all require lawyers, brokers, dealers, negotiators, advisers, lobbyists, and on and on.
All they have to do to keep their game going is to keep friends in office and voters falling for one scheme after another.
During the days following its release, reporters, analysts and observers worked to unpack the budget that Governor Raimondo sent to the General Assembly — and found some unpleasant items therein. Here is a bullet list of some of the bigger ones.
Proposed Statewide Property Tax
… aka, the Taylor Swift tax.
Justin got clarification from Governor Raimondo’s office that the INTENT is not to include apartment buildings as properties to be taxed. This conforms to Governor Raimondo’s attempt to sell this tax as having only a narrow list of targeted properties. (So, gosh, don’t worry about it. And, anyways, we only want to tax those icky rich people.)
Intent, however, is completely secondary. If this tax passes into law, the door will be opened wide for future – and current! – governors and General Assemblies to tax apartment buildings (of all classes and sizes); commercial buildings; second homes of less than one million dollars; PRIMARY homes of more than one million dollars; primary homes of $750,000 – $1,000,000; et empty state cetera. The critical issue is not that the initial list of targeted properties is short. It’s that the list comes to exist at all. To subject just one property classification to a new, statewide tax would set the precedent to subject virtually all real estate in Rhode Island to a statewide property tax via an easy tweak of the targeted property list.
In a perfect bit of timing, RIPEC released an analysis right before the governor released her budget of just how much Rhode Islanders are already taxed. By one measure, Rhode Island already has the fourth highest property taxes in the country. The governor is seriously proposing to raise that ranking? In fact, the one thing above all that our elected officials should not do is exacerbate this burden.
Further, there’s the matter of Rhode Island’s already undesirable reputation as a high tax state. On Twitter, Gary Sasse correctly asks,
When Tax Foundation.et. al.rank tax climate will new statewide property tax impact rankings w resulting reputation risks?
Further to “reputation risks”, WPRO’s Gene Valicenti pointed out Friday morning that the governor’s mere proposal has made the national news via the AP’s feed. This is exactly the kind of publicity that Rhode Island needs to avoid, not curry.
Governor Raimondo’s Proposed Statewide Property Tax Redefines Ownership of Real Estate as a Privilege
This one was a great catch by Justin.
How could a proposed new statewide property tax that’s been given a nickname homage to a part-time-resident pop star not have a parody song?
Pam Gencarella has a good article on GoLocalProv, describing some of the ways Rhode Island’s handout programs seem always to cost more than expected. As she says, the state’s ObamaCare health benefits exchange, HealthSource RI, is “not much more than a big advertising campaign for Medicaid and its expansion.” The state’s Medicaid expenses prove the point, with the November revised estimate adding $211 million (10%) in costs.
Meanwhile, despite the exchange’s offering thousands of people subsidized health insurance and more than one-quarter of the state on Medicaid (not to mention Medicare), the bill for uncompensated care is up 16%, to $137 million.
Gencarella also brings up the Unified Health Infrastructure Project (UHIP), which is designed to cascade all government handout programs to those who qualify for any of them. Her focus is on the budgetary effects of UHIP’s intent, but even the cost of the program massive. According to Pam, “the total projected cost for this project is $229 million.”
If I may throw another log on the fire, as I noted in last year’s Spotlight on Spending report, UHIP was projected, at that time, to cost $209 million. There’s another mysterious 10% increase!
Really, Rhode Island, we have to make this stop.
Ever since Governor Gina Raimondo announced a proposal to impose a statewide property tax on residential properties over $1 million, if their owners do not live in them for a majority of the year, debate has raged as to what would be included. Much of the discussion has been behind the scenes, among people who follow Rhode Island policy closely and representatives of groups that might be affected.
Initially, anonymous blogger CoffeeBlackRI suggested that the tax would apply to rental apartment properties worth more than the threshold. I replied with an interpretation of the law suggesting that it would not.
The director of Office of Revenue Analysis, Paul Dion, told Katherine Gregg of the Providence Journal that his estimate of revenue that would be produced by the tax included “two-to-five-family residences,” along with other properties. Some observers took that as conclusive evidence that the tax would apply to small apartment complexes.
A budget summary from Ted Nesi, posted today on WPRI’s Web site, seemed to confirm the interpretation. Nesi quoted from a report by the House Fiscal office, “It appears that the intent of the legislation and the revenue estimate excludes apartment buildings from the tax; however, as written, the tax would apply to these properties.”
In a statement to the Ocean State Current, Raimondo spokeswoman Marie Aberger echoed House Fiscal’s report, affirming that “the intent is to exclude apartment buildings.”
Specifically, the intent is to apply it to the following categories, if they are worth $1 million or more: non-owner occupied single family residences, two-to-five family residences (only if they are non-owner occupied and not available for long-term tenants), and non-owner occupied estates, seasonal and beach property, residential condos, time shared condos, dockominiums, mobile homes, and vacant residential land.
The “two-to-five family residences” category was included in the estimate from Revenue Analysis because available data does not allow finer differentiation. For example, wealthy seasonal residents often employ groundskeepers who reside on the property year round.
According to Aberger, the administration’s plan had been to draft more-specific guidance while writing regulations to enact the law, if passed. “However,” she continued, “we are happy to work during the legislative process to modify the language, if necessary, to ensure that the intent of the legislation is carried out.”