Budgeting in a Crisis Tells Taxpayers a Lot

When an unexpected crisis hits, it’s very important to watch the things that the people in charge prioritize.  In Tiverton, the Town Council is worried that the town won’t get the minimum payment of gambling revenue from the state:

The problem is this. Under Rhode Island General Law 42-61.2-7(g)(2), the state guarantees Tiverton at least $3 million in gambling revenue from the Twin River casino. The way the statute is written, we didn’t get the minimum payment the very first year, because the casino opened a few months into the fiscal year and was therefore not open “all of such state fiscal year.” The law repeats “all of such state fiscal year” for every year after that, stressing that “if in any state fiscal year either video-lottery games or table games are no longer offered at a facility in the town of Tiverton… then the state shall not be obligated” to pay the minimum.

Before our state faced the unusual threat of a pandemic, that language seemed intended to ensure that, just like the first partial year, the town would not get the minimum payment for a partial year of gambling if the casino were ever shut down for good — if games “are no longer offered at the facility in the town of Tiverton. Now, town officials are worried that the state will insist a couple months of COVID-19 closure means the games were not “offered” for the whole year and, they say, we’ve built the minimum payment into our budget.

The revealing part is that the council members, particularly Council President Patricia Hilton and John Edwards (the Fifth) are taking the opportunity to say “I told you so” about not using the casino money for regular operations.

But that only makes sense if the town uses it for things it wouldn’t otherwise have to buy.  Whether it’s going to capital expenses or operations, if the money is paying for things that have to be paid for, then it’s just part of the revenue.

Implicitly, what government officials who think this way are saying is that all new revenue should go on the government books, without offsetting taxes, so that government can keep as much money as possible.  These particular politicians are proving that this is their view because while all this is going on, they are ignoring the fact that the town is sitting on $4.5 million, which is about $3 million more than our charter requires in the reserves.  This is money the town taxed its residents but did not spend, and the fact that it is growing shows that, no, we didn’t build all of the casino revenue into the budget.

The question they should answer is this: If holding millions in reserve isn’t meant to provide a cushion during an emergency, what is it for?  The answer seems to be that it is to ensure that government is the last part of society to feel the effects of problems.  That’s backwards.

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