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Micromanaging Ourselves to Death (Indictment Edition)

Can we please stop trying to use the law to ensure that every situation has the outcome that we want on the time frame that we’d prefer?  Some processes are best left out of the direct, immediate dictation of legislators trying to correct something that happened in the past.

This problem is all over the place, all the time, but it comes to mind today with this news out of Providence, reported by WPRI’s Dan McGowan:

If this policy were already in place, former Providence City Council President Luis Aponte would have been forced to resign his leadership position immediately following his May 10 indictment.

That’s the pitch from Councilman Sam Zurier, who’s put forward a proposal to amend the city’s code of ethics to require any councilor indicated on a felony “directly related to his or her employment’ to step down from leadership positions and subcommittees. It will get a public hearing Tuesday evening at 5:30 in City Hall.

Zurier’s motivation is that it took political pressure for Aponte to resign his presidency, and it wasn’t a sure thing that he would do so.  That should be how we want such issues to be resolved.

If the removal from leadership becomes an instant consequence of indictment, prosecutors would have huge power to bring about political outcomes.  Perhaps we trust the people who have such power right now, but the same could be said of city council leaders as a general proposition.

The system worked in this case.  People made a case (and a scene) for Aponte’s resignation, and he wasn’t able to mount an adequate defense of himself.  If the indictment were corrupt or superfluous, he would have been able to push back against it and hold on to his role.

There are reasons we consider folks innocent until proven guilty, and one of them is that we don’t want to empower those who can bring charges to produce binding consequences without due process of the law.  We forget that at our own peril.

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Little Compton Shows Education Evolution is Inevitable

Folks elsewhere in the state may not know that Little Compton sends its high school students all the way through Tiverton to Portsmouth High School.  Why?  Because it’s generally understood to outperform the high school that they bus right past.  Some Tiverton private school families move to Portsmouth when their children hit high school or pay the tuition.

Now, according to the Providence Journal’s Linda Borg, Little Compton is looking to market its K-8 school to area families as a school choice option in its own right:

… By pricing tuition at $6,000 — less than the typical parochial school — the district hopes to attract students from neighboring Portsmouth, Tiverton, Middletown and Westport, Mass. …

“If I’m sitting in Portsmouth or Tiverton, I’m going to say, ’I can get my kid into a class where the student-teacher ratio is 14 to 1, where the school has music, choir, band, athletics, where we go on field trips to New York and Washington, D.C.,” said Supt. Robert B. Powers.

With Rhode Island families generally on a decline, we may see more and more public school districts looking for similar opportunities.  As that happens, Little Compton’s approach may raise questions at the Dept. of Education.  Can the state allow particular schools the flexibility to price their tuition under the assumptions that it will have a cutoff before they have to start thinking about hiring new teachers and “have a conversation” if any higher-cost special needs students apply?

These questions will start becoming thorny pretty quickly.  What happens to Tiverton, for example, if Little Compton starts filling out its excess capacity with low-cost Tiverton students for K-8 and Portsmouth tries the same for high school?  For that matter, what happens to private schools as the government’s subsidized competition expands beyond just charter schools to include all public schools, too?

Little Compton’s proposal may be an early indication that change is coming to education whether established players like it or not.  Given the degree to which government already distorts the education market, edging into it on a case-by-case basis will prove extremely disruptive.  Better to implement a well-considered, all-encompassing school choice program.

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About the Other Stadium…

Tim White raises an important point that seems to have been avoiding discussion related to the PawSox deal:

If approved, there will be another cost associated with building a new stadium in downtown Pawtucket to host the PawSox: tearing down McCoy Stadium.

The city of Pawtucket owns the land that 75-year-old McCoy is on, and officials have indicated there are no plans to keep the ballpark if the PawSox leave, whether by moving across town to the proposed Apex site or out of state.

The options on table range from likely to certain to require more government money and debt.  Rebuilding the high school on the spot will mean a big bond and a state taxpayer fund match and still leave the city with a plot of land to repurpose or dispose of.  A private buyer would probably negotiate and receive subsidies for some part of the property redevelopment.  Or just leaving it alone will mean a tax-free chunk of land in the city.

Whatever the final ask for the new stadium is, don’t forget that the project isn’t done with taxpayers, yet.

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Talk Property Taxes in Real Terms

Here’s a worthwhile exercise.  Pick a house value — the median for your town, perhaps — and search your town’s tax rolls for every house of about that value.  Then go back a few years, find the same houses, and see how things have changed.

For Tiverton, I used $260,000, which is around the median for the town, with this result:

In 2009, which is the first year for which the town has tax rolls that are easy to search on the computer, those same households paid $4,231, and the average value of their homes was $294,843. In other words, each family is now paying $744 more in taxes, even though each house is worth about $35,000 less.

Of course, that doesn’t tell the whole story because for the past three years, voters have used the [financial town referendum] to keep their taxes from increasing more than 0.9%. From 2009 to 2013, before the first zero-point-something FTR, those 37 taxpayers lost 14% of the value of their homes, but their actual tax payments went up 16%. Does that seem fair? Would Mr. Edwards tell his neighbors, “Hey, don’t worry! We ‘only’ added $166 to your tax bill every single year, and you ‘only’ lost $11,563 of your house’s value each year”?

Those who run government, and those who profit from it, are focused on their expenditures and finding ways to get taxpayers to keep handing over more and more money for their use and personal gain.  Hey, $166 added per year is only $3 per week.  If everybody in town would just skip a couple of coffees every week, they can collectively hand over millions more of their dollars to the town government.

Of course, after a few years of that, the entire town has had to give up the pleasure of coffee altogether, but it’s for the greater good, right? And we can feel comfortable letting the people who benefit from the money decide what the greater good is, can’t we?

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What Are City Governments’ Real Priorities?

Ted Nesi reports (if I may paraphrase) that Rhode Island cities have been crawling over each other to slurp from the sluice some money from the Boston Federal Reserve:

Federal Reserve Bank of Boston President and CEO Eric Rosengren visited Rhode Island on Thursday to award $400,000 grants to three local cities through the bank’s Working Cities Challenge.

The program aims to promote collaboration between local leaders to address socioeconomic challenges. The three Rhode Island winners are Providence, Cranston and Newport. Eight other cities submitted applications but did not win grants, which are funded by public and private contributions, not the Fed. …

Appearing on this week’s Executive Suite, Rosengren said the four-year-old program grew out of research conducted by the Boston Fed that showed efforts to tackle cities’ challenges worked best when leaders from different groups worked together toward a common goal.

Readers may recall that the Boston Fed’s involvement with Lawrence, Massachusetts, under a project in the same program is what kicked off my thinking about the “company state” or “government plantation” model, whereby government services become an area’s core industry, with the revenue coming from other taxpayers or higher levels of government (such as state or federal taxpayers).

With these new grants, we should also put the matter in the context of political structures and incentives.  Here we have cities competing to charm “public and private” outside interests with their proposals.  That is, they’re competing to match the values of the Boston Fed and the people or groups funding the project.  Sure, these “community” projects have local advocates (most often ideological activists, special interests, and other insiders), but ultimately, these projects are things being done to local constituents, not for them.

It’s time we stop seeing money that our governments manage to collect from other sources as money that we’ve somehow received.  It isn’t.  That’s especially true when it’s used for projects that the government wouldn’t otherwise have bothered to do.  It’s money that goes to the sorts of people who know how to get government money and spent in order to shape our society in ways that other people want, not us.

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Government Connections as Their Own Qualification

Here’s a peculiar tidbit from the Newport Daily News (not online).  Tiverton is hiring a new town administrator, and one of the applicants has a name that might be familiar to others across the state:

[Democrat State Representative from Lincoln and Pawtucket Jeremiah] O’Grady, a former Town Council president in Lincoln, is the director of operations for asset management for ONE Neighborhood of Providence, managing a 330-unit residential portfolio, he said.

He does not have any experience as a town administrator and does not have any experience negotiating union contracts.

OK, then.  On the other hand, O’Grady has “studied” some “town documents, such as budgets and audit reports” and therefore feels “comfortable in the position,” according to reporter Marcia Pobzeznik.

As a general proposition, I’d never discourage people from putting themselves out there for jobs for which they might not be credentialed, but I have to scratch my head on this one, not only the application, but also the fact that the Personnel Board would forward it on to the Town Council as one of three finalists.

Incidentally, ONE Neighborhood Builders appears to be a successor or parent organization to the Olneyville Housing Corporation, which has received nearly $400,000 per year from the state government in the past two (and more than $100,000 in prior years) from multiple agencies.

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Jackson Caught Up in the Suck of Big Government

Reading Dan McGowan’s detailed background of Providence City Councilman Kevin Jackson’s travails, I couldn’t help but feel sorry for the guy:

On Tuesday Jackson could become the first councilperson in Providence history to be recalled from office. A group of his constituents in Ward 3 on the city’s East Side launched the campaign to remove him after he was arrested last May on charges that he embezzled from the youth sports organization he co-founded in 1978 and misused his political campaign account.

The guy’s been in city government for twenty-something years.  You can see how, over time, funds get mingled, and liberties get taken.  (I’d actually argue that the campaign finance rules ought to be eliminated, anyway.)

The moral, it seems to me, is the value of term limits.  Spending that long in a position that makes one feel righteous and powerful is corrupting.

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School Buses and Regulatory Truancy

Students in Tiverton and elsewhere are having difficulty getting to school on time and parents are being made late for work because of a bus driver shortage, as Marcia Pobzeznik reports in the Newport Daily News.  Here’s the bus company’s explanation:

The company has tried every way possible to attract potential drivers, [First Student Transportation General Manager Bill Roach] said. It has put up billboards at bus stops and advertised at movie theaters.

“We’ve gone to football games, local markets,” Roach said.

The efforts have succeeded in getting 56 candidates into the state’s 50-hour training program, he said. But it takes 20-30 days to get an appointment for a road test.

“It’s very discouraging. The road testing is the choke point,” Roach said.

There are just one full-time and two part-time road test agents for the entire state. They not only have to certify new drivers, but re-certify existing drivers, he said.

So, the state has set up an arduous regulatory regime for bus drivers.  That is, the state has artificially restricted the number of bus drivers by requiring candidates to be approved (and reapproved and reapproved) by the state.  And then the state doesn’t supply the road test agents (or some other system) to handle the demand for this mandatory service.

The state has to begin choosing its priorities, because from UHIP to the DMV to bus driver certification to infrastructure to everything, it isn’t accomplishing the basic tasks that it has set for itself.  Of course, there’s money for crony capitalist tax breaks, flashy videos promoting the governor, vote-buying schemes by legislators, and disproportionate pay and benefits for union employees.

Given the tax burden throughout the state, money cannot be the issue.  The issue is a government that claims for itself too much power and won’t use the bountiful resources it has to accomplish the tasks that it therefore must undertake.

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Even a Little Competitive Incentive Makes Schools Better

This, from Paul Crookston on National Review Online, is… not surprising:

Nine out of the top ten public high schools in the country are charter or magnet schools, according to the latest figures from U.S. News and World Report. In addition, charters and magnets account for 60 of the top 100 high schools. These statistics are even impressive when one considers that such schools constitute a relatively small percentage of the public schools around the country. …

Charters and magnets are unlike traditional public schools in that they must work to attract students, while traditional public schools do not have to. Charters also rely on greater accountability to parents rather than to regulatory regimes, which has spurred innovation.

The education establishment and teachers unions have the government school system figured out.  They elect allies (often current or retired teachers or other school employees) to school committees and legislatures.  Parents who rely on public schools are vulnerable to districts’ well-rehearsed (and well-financed) rhetoric deflecting blame for failure, and the substantial climb from no additional cost for education to paying private school tuition gives the education establishment the upper hand in any interaction.  (“Lunch shaming” illustrates the relationship well.)

This creates an environment in which the insiders work with each other to draw in additional money from taxpayers, which is actually easier if parents feel insecure about their children’s schools.  How could such a system not be easy to out-compete with just a little bit of choice?

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Irrational Avoidance of Actual School Choice

In a not-online Newport Daily News article from April 18, Derek Gomes reports on new programs allowing students from other towns to attend Portsmouth High School:

The move comes on the heels of the state Department of Education designating the high school as a regional program provider for the career and technical pathways of child development and television production.

While the school has offered courses in each subject for years, it had to tailor curricula and have state education officials observe the classes before the state education department approved Portsmouth’s application last month.

“These tuition-based programs will welcome students statewide to participate and earn industry-based credentials and job experiences in these areas,” according to a letter the School Department posted on its Web site.  “Students from other districts may apply for enrollment … and be considered for admission on a competitive basis.”

Details from the district’s Web page don’t make it immediately clear whether students attend the district full time or, as with vocational classes at Rogers High School in Newport, just attend for the few relevant classes.  The Portsmouth tuition of $15,830 could certainly be full time, but the economics of these programs are crazy, with students’ home districts paying the same tuition for a couple of courses as they would for a full course load.

What strikes me at the moment, though, is how narrow and convoluted this all is.  There’s a reason Little Compton sends its high school students all the way through Tiverton to attend Portsmouth High School.  People actually move to Portsmouth for the same reason, and some private school parents in the area simply treat Portsmouth as another private school and pay the tuition.  Why should the district have to offer specialized programs in order for the Department of Education to incorporate the choice into the system?

As I’ve written before, taxpayers should see themselves as funding the education of children in our community, not the maintenance of a government-branded school system.  If that were the attitude, then we’d direct our resources where they will be used to greatest effect.

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The Measure of Debt in Rhode Island

The debt study put out today by the state treasurer’s office merits a more detailed look than I’ve been able to do today.  For the quick summary, see Ted Nesi’s article on WPRI:

The $10.5 billion in total public debt – excluding pensions – breaks down as $1.9 billion for Rhode Island state government, $6.6 billion for quasi-public state agencies such as Rhode Island Housing and Commerce RI, and nearly $2.05 billion for municipalities and local special districts. With pensions, the combined total rises to $17 billion, Magaziner’s office said. …

… The study suggests a community’s debt and pension liabilities should be less than 6.3% of its total assessed property value; in Providence that ratio is 17.8%, and in Woonsocket it’s 20.3%. Central Falls, Pawtucket, Johnston, West Warwick and Cranston are also above the target.

One question Rhode Islanders should consider is whether assessed property value really ought to be the measure.  Assets are certainly important to the question of debt, but mainly from the perspective of the lender, not the borrower.  For your mortgage, banks want to know your property value and other assets because they’re looking at the likelihood that you’ll be able to liquidate and pay them back if things go wrong.  That’s not really possible for a state (even “a state for sale,” as Rhode Island has been called).

From the perspective of the borrower, income is more important, because it relates to the ability to pay off the loan.  In that regard, we can look at the matter in two ways.  Rhode Islanders’ personal income (including investments) is about $44.5 billion, which means that even using the treasurer’s unrealistically sunny estimate of pension debt, government debt is about 40% the size of our income.  And of course, personal debt would come into play when thinking about personal income.

The second way to look at the public debt would be public revenue, and Rhode Island’s state and local tax revenue totals around $6 billion.  So our government owes about three years’ worth of revenue.

Each man woman and child in the state owes $17,000, around $68,000 for a family of four.  Whatever arbitrary benchmarks politicians may pick, that’s too high.

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The Cheese Sandwich Lesson for Socialism in Schools

It’s difficult to believe that Bob Plain isn’t trying his hand at parody with an interesting article on RI Future today about “lunch shaming”:

It’s known as lunch shaming. Students are subjected to special, sometimes embarrassing, treatment because their parents didn’t pay the school lunch bill. “Some provide kids an alternative lunch, like a cold cheese sandwich,” according to a recent NPR story. “Other schools sometimes will provide hot lunch, but require students do chores, have their hand stamped or wear a wristband showing they’re behind in payment. And, some schools will deny students lunch all together.”

The so-called cheese sandwich policy seems popular in suburban Rhode Island: Bristol/Warren, South Kingstown, and East Greenwich all use it.

From Bob’s article it appears that we’re talking debts in the amounts of $5 or $10, which seems like a paltry amount that districts could find some way to accommodate.  I’m trying to imagine a working-to-middle-class private school taking such steps.  In a transaction in which one side actually has the option to leave, other approaches have to be considered, whether a mandatory up-front fee, a deposit of some kind, a credit card on file, mandatory use of a payment processor that handles the collection, or a slight increase to all lunches in order to generate a reserve fund that provides a buffer for this sort of “debt.”

Putting aside the “what would the private sector do” comparison, though, think of what this little story says about the relationship of government to the people.  Adults in position of authority over school districts with budgets in the tens or even hundreds of millions of dollars are agonizing over ways to embarrass children so as to extract a few owed dollars from their parents.  That doesn’t indicate a mindset of provider-client or public-servant–beneficiary.  Rather, it indicates the dynamic of ruler-subject similar to a Dickensian orphanage.

Suffice to say it takes a series of monumentally bad social and public policy decisions to get us to the point at which the proverbial lunch lady is scornfully handing a child some bread and cheese over $5 owed.  We should start unraveling those decisions.

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Live by Cronyism, Die by Cronyism

GoLocal is reporting that Blue Cross Blue Shield of Rhode Island plans to move a good chunk of its Providence workforce to East Providence:

Despite making promises to the City of Providence in 2007 to centralize its work force in its gleaming $125 million tower, Blue Cross Blue Shield of RI confirmed late Tuesday that it will be moving more than 125 jobs out of Providence to East Providence.

The Blue Cross Tower is assessed at $46 million, but only pays a portion of its tax obligation because of a generous twenty-year tax stabilization.

Average residents tend to get caught up in rhetoric and lose sight of basic realities like incentives.  Although individual workers and executives do take morality and personal fulfillment into consideration, private businesses ultimately exist to make money (whether for profit or non-profit).  If they don’t do that, they don’t get to do what it is they do.  Likewise, politicians’ have to gather votes and political support, otherwise they lose both their livelihoods and ability to accomplish what they want.

So, when a particular arrangement is no longer optimal for a business, given other opportunities, it will walk away from deals.  And when a politician comes into office who didn’t make a particular deal and is building a different base of support, the dynamic changes from that direction.

Public policy should therefore build beneficial incentives and then let people work out their deals in a free market.  From cutting deals for office buildings to reshaping an entire population for the benefit of a sugar-daddy industries (through, for example, “free tuition”), it is utter folly to accept central planners’ promises that the people can make out in the long run.

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Building in a Structural Surplus

Over in Tiverton, the school department is considering campaigning for an alternate budget that would add to its structural surplus.  I look at the history over on Tiverton Fact Check:

The prospect of that campaign reminds me of spring 2015.  That year, a budget petition that I put forward reduced the school’s increase by about $126,000.  (The school budget still went up more than that, but not with local taxes.)  The school committee voted to cancel plans for all-day kindergarten.

Ultimately, they reversed that decision after weeks of advocacy on my part and that of affected parents.  How much would you guess their budget came up short at the end of the year?  It didn’t.  In fact, the school department had $1,130,867 left over, a surplus, bringing its reserves to $3,454,163.  If my budget petition had lost (or if all-day kindergarten had actually been cancelled), the surplus would have been around $1,257,208 for a total of about $3,580,504.

The most important phrase in Rhode Island public school budgeting is “maintenance of effort.”

Continue reading on Tiverton Fact Check.

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A 3.0% Sales Tax Is A Question of Fairness

As taxpayers continue to be asked to fund generous corporate subsidy programs, lawmakers are now dueling over two new spending ideas, reimbursing localities to phase-out the car tax and public funding for free college tuition, each of which would likely further raise taxes and fees on Rhode Islanders. But would these programs make Rhode Island a better state? Or would the more innovative and bold policy concept of cutting the state sales tax help families become more self-sufficient?

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Consolidating the Pension Problem for Whose Benefit?

Not that long ago, I might have been supportive of Rhode Island General Treasurer Seth Magaziner’s initiative to move the remaining municipal pensions into a group under state control.  Among the positives would be getting them all together so that Rhode Island could make a decision about how to resolve the problems once and for all and move forward.

I’ve shed a bit of naiveté since then, and information like this, from Ted Nesi’s WPRI article has disconcerting undertones:

Magaziner emphasized that the proposal does not involve putting state money into the local pension plans, and said allowing them into MERS would not impact the funding of plans that are already in the state-run system. He also suggested joining MERS could force communities to be more responsible about making their annual required pension contributions.

“There are some pretty strong sticks to get communities to be responsible” in MERS, he said, such as withholding state aid or taking legal action if they fail to make their contributions.

This means the state will pressure municipalities to raise taxes as pensions prove to be unfundable through reasonable payments plus investment returns, which is almost certainly going to happen.  The bill will go up, and local governments will turn to voters and say, “We have no choice.  The state is making us pay more toward pensions.”  This will defuse some of the local push back, both on pension payments and the deals being offered to active employees.

Meanwhile, the looming catastrophe at the state level will be that much more threatening, and compromises on the employees/pensioners’ side will come later (meaning the promises will be bigger).  In short, my thinking is increasingly that, as with most budget items, the more local the decisions and the pain can be, the better.  The people paying the bill have a more-fair hand locally (if only slightly), and if one municipality slips into the abyss, the others may have time to work out their problems based on that lesson.

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