One really has to go out of one’s way not to see evidence that Democrat Governor Gina Raimondo and the rest of Rhode Island’s political establishment is not interested in coming to correct answers so much as saying anything to get their insider deals over the (ostensibly) legal finish line. In today’s Providence Journal, Steven Frias notes that Raimondo’s friends at the Brookings Institution proclaim that “Massachusetts and New Hampshire show the way forward,” but gloss over the degree to which cutting taxes made a difference:
In 1979, the Massachusetts High Technology Council (MHTC), a trade association of high-tech companies, declared that the “single most important step to stimulate the growth of the high technology industry in Massachusetts is real tax relief.” MHTC explained that the “higher cost of living and doing business in Massachusetts can no longer be offset by the proximity of MIT or Boston’s active venture capital market, or the cultural and environmental amenities.” Instead, MHTC insisted “Massachusetts must reduce the tax burden,” particularly for property taxes and income taxes.
MHTC and Citizens for Limited Taxation, an anti-tax grass roots organization led by Barbara Anderson, joined forces to support a voter initiative known as Proposition 2½. Proposition 2½ was designed to reduce property taxes and limit future property tax increases to 2.5 percent per year. To control spending, Proposition 2½ also repealed state laws that gave school committees fiscal autonomy and mandated binding arbitration for police and firefighter unions.
In passing, we should observe that Frias has hit on another of Rhode Island’s problems. Whether because of the state’s size or its long history of corruption, the “business backed” groups that should offer a counterweight to state government as the MHTC did in Massachusetts — think chambers of commerce, business associations, and RIPEC — have simply been bought into the insider system. In RI, they are now almost completely controlled by people with high (often six-figure) salaries who are more worried about losing access to the political font than losing ground for their members.
More relevant to the governor’s budget, though, is the tax-limiting reform: “Proposition 2½ was designed to reduce property taxes and limit future property tax increases to 2.5 percent per year.” Raimondo is headed in the opposite direction.
As I noted last week, her Funding Formula Working Group suggested getting rid of the legal requirement that local taxpayers must pay at least as much toward education each year as they did the prior year, instead requiring them to increase taxes every year for inflation and/or for enrollment increases. (The report did not suggest that this ratchet should go in reverse in times of deflation or dropping enrollment.)
I didn’t see confirmation in the governor’s budget documents that this provision made it in, and the budget legislation isn’t available, yet, but Lynn Arditi has reported that it is, presumably as part of the governor’s effort to make the districts’ complaints about charter funding go away by throwing more money at them.
Bottom line: The Raimondo-Brookings plan is an attempt to work around the problems we all know are destroying the state.
UPDATE (2/3/16 7:58 p.m.):
Well, there it is on page 167. Local taxpayer funding of schools must go up by the greater of inflation or the increase in student enrollment. Municipalities can still calculate the increase per student (to account for decreased enrollment), but inflation must still be included. (Of course, this per-student approach is tricky, because it’s not clear what number counts. If the district projects an increase, for example, even after years of decreases, does that mean the budget must go with the district’s estimate? In RI, the safe bet is that the answer is “yes,” if the district challenges the number.)