UPDATED: Frias Shows Raimondo Doubletalk on Taxes

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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 To control spending, Proposition 2½ also repealed state laws that gave school committees fiscal autonomy and mandated binding arbitration for police and firefighter unions.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.)



  • bobwashburn

    Frias’ article was right on the money. The work done in the late 1970s by Barbara Anderson and her Citizens for Limited Taxartion, helped Massachusetts move to lower property taxes (town level),

    And the Mass High Tech Council persuaded the state to sharply reduce capital gains taxes – letting tech company company stock option holders make extra money over and above their salaries. MHT’s prime mover was Brad Stroup, Data Generals’ pub affairs guy.

    As a long time Massachusetts guy, I moved to RI in 2005. I love my neighbors, friends and associates, but the inept/corrupt state house crowd puts a drag on daily life here.

    • Rhett Hardwick

      I read the Boston Herald regularly, it makes RI look like it is in the minor leagues of corruption.

  • Northern Exposure

    Page 167 of the bill!

    • OceanStateCurrent

      Where is the bill language?

      • Northern Exposure
      • Northern Exposure

        Katherine Gregg posted on Twitter

        • OceanStateCurrent

          Well, there you go. Every year, RI government makes life a little bit harder and a little more difficult.

          • ShannonEntropy

            You know who I kinda feel bad for ??

            The Millenials and the ‘Gen-Z’ kiddies

            Us Boomers pay all the property & income taxes now to support the schools and all the public “service” unions

            … but we are already starting to collect Social Security & Medicare benefits to re·coup most if not all of those tax bucks spent

            Just wait until our kids and grand·kids get a look at all the debt we left behind for them to pay off !!

            And Kids!! … here is a handy hint for dealing with your Student Loan Debt =►

            Take your Total Student Loan Debt and divide it by 4 … that will equal the number of years before you can even *think* about qualifying for a home mortgage

  • Philip Spadola

    “To control spending, Proposition 2½ also repealed state laws that gave school committees fiscal autonomy and mandated binding arbitration for police and firefighter unions.” – Republican National Committeeman Steven Frias

    Two questions for Justin Katz

    Do you think that control of spending be taken from local people and their elected representatives?

    Do you believe in the freedom for an individual to collectively bargain with an employer and to withhold their labor if no agreement can be reached?

    • OceanStateCurrent

      1. I think locals should control their spending, but it doesn’t make sense to let a school committee negotiate contracts and dictate spending while the responsibility for raising the money falls on the municipal government.
      2. I believe in the freedom of an individual to hold a job without being forced to participate in collective bargaining. In the private sector, I do believe in the right of employees to agree to bargain collectively and stop work, but I also believe in the right of the employer to fire them and hire others. In the public sector, things are more complicated. Our current system is manifestly unfair, in which unions become politically active and employees essentially elect the people with whom they’re going to be negotiating. Pick one: voting or organizing. Since voting is a fundamental right, that means organizing has to go.

      • Joe Smith

        Justin – I get the municipal side generally sets the final tax rate, but what makes municipal councils or Mayors any more competent at public sector contract negotiations? I can look at police and fire contracts around the state and point out examples of more egregious giveaways than school departments; it varies by the localities, whether
        it’s a school committee or town council.

        What would be interesting is to compile salaries and benefit cost per FTE and do a 6 year comparison between school and town budgets and also do a OPEB (that locals control like retiree healthcare benefits, paid unused absences) comparison.

        Who negotiates the Providence Teacher’s contract? Isn’t it the Mayor? How has that worked out?

        You could argue why not give school committee the power to set the education component of the tax rate and make the two budgets approved by voters instead of either by municipal approval or some hybrid town finance meeting that exists now.

        I agree these state mandates about MOE erode the ability of the municipal side, but enrollments are falling
        (comparing 2010 census to 2015 census) in most districts (except Prov and Pawtucket – and hey, the Mayor runs the show on the former). So essentially in most places, the municipal side has control and the mandate would not apply- they can limit school budgets and if school committees have generous contracts, something will have to give (and since what, 70% -80% of the budget is
        tied to people..).

        The problem with many local councils is they
        are part-time and most don’t even comprehend well enough the municipal functions, let alone pile-on understanding all the different aspects of education. Do school committees do better? Maybe not, again, it varies
        by locality, but the number one job of both is to hire competent managers and superintendents and if they fail at that, it’s swimming up stream to get quality results and good stewardship of resources.

        Wait until FY 18 budgets when the impact of that negative return on the state pension plan comes to roost. The biggest issues are the facts we have employees in an unsustainable defined benefit plan, too many beyond retirement benefits, and excess capacity.

        And for those that think state control would be better, look at Vermont as an example where state control essentially over property tax and education mixed with mostly inefficient economy of scale local control have lead to complete chaos (good thing that state got Stephen Constantino to fix their single system public health care, which is busting the budgets of many small towns in that state).

        Interesting court cases pending on union dues/agency fees and support to mandated public support of religious private schools..

        • OceanStateCurrent

          It’s not a matter of municipal authorities’ being more competent to negotiate. It’s a matter of having clear lines of accountability between the negotiation and the raising of the money to pay for the results.
          And again, the biggest problem is that the labor unions have the most motivation (plus resources confiscated from taxpayers) to elect the people who’ll do the negotiating against them.

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