Rhode Island (with the rest of the states) is apparently experiencing an employment boom, although the evidence is difficult to see outside of the statistics.
Ted Nesi tweets that state tax revenue data for March was down 26% from the expected $52.6 million, at $39 million, which Director of the Revenue Rosemarie Booth Gallogly calls “sobering.” That’s actually not the whole story.
The numbers Ted cites are actually just income tax. Looking at the monthly estimate to actual report from the office of Revenue Analysis shows that the $13,556,296 shortfall in income tax is only part of the $23,761,918 shortfall in all taxes, the $25,002,703 shortfall in total taxes and departmental receipts, and the total general revenue shortfall of $27,586,944. Almost every major tax was down, except the sales tax, by a little.
That’s more than the controversial annual cost of the HealthSource RI health benefits exchange. It’s more than twice the controversial 38 Studios bond payments. And it’s on top of projected deficits, expected loss of gambling revenue, and the budget-busting decision to lure more Rhode Islanders into Medicaid.
It’s important to note that the previous table, which shows year-to-date revenue isn’t quite as discouraging, yet. Total general revenue is only down $1.877,918 (-0.1%) for the year. Still, all of the data points accord with the shrinking workforce and an anecdotal sense that Rhode Islanders are just demoralized and giving up, as personified by a governor who seems most focused on starting his retirement speaking tour early.
I’d suggest that these holes can’t be patched, and that trying to do so will only accelerate the decline. The state needs a radical readjustment of its priorities, emphasizing the free economic activity of its residents. Rhode Islanders need a bold shot in the arm to give them a sense that things can turn around
More tightening of the leash and moving of the needle in the wrong direction can only hurt.
Another organization speaking out against the RI Center for Freedom & Prosperity’s Spotlight on Spending report appears to have a business model that charges dues for access to taxpayer-funded services.
On a personal note, I’d like to sincerely thank PolitiFact RI for starting my day with a big smile this morning, though perhaps they would not be altogether pleased at the reason.
In today’s Providence Journal, they’ve rated a statement by the Rhode Island Center for Freedom and Prosperity (hereinafter “the Center”) pertaining to the $224.5 million in wasteful spending identified by the Center in the governor’s proposed 2015 budget. PolitiFact is not questioning that the state gave away the $5,000 example offered by the Center of an expenditure item in the Governor’s Workforce Board from a prior year. PolitiFact is only saying that the Center did not fully explain what the $5,000 in hard earned taxpayer dollars was spent on.
Justin and Bob Plain talk about the pay differential between men and women.
The “Superman Building” bill was submitted in the Rhode Island Senate today. It is clearly a private appropriations bill…
This chapter shall establish the 111 Westminster historic redevelopment program and revolving fund. The program shall be for an amount not to exceed thirty-nine million dollars ($39,000,000), provided that the projects total QRE’s equal or exceed one hundred million five hundred thousand dollars ($100,500,000). The amount of the direct allocation to the owner shall be allocated over four (4) consecutive fiscal years in equal amounts of nine million seven hundred fifty dollars ($9,750,000), commencing with fiscal year 2015, and administered by the Rhode Island department of administration. No funds from the program shall be released until the project is placed in service.…which should mean that it needs 2/3 of both chambers to pass, according to Article VI section 11 of the state constitution…
Section 11. Vote required to pass local or private appropriations. — The assent of two-thirds of the members elected to each house of the general assembly shall be required to every bill appropriating the public money or property for local or private purposes.
Employees of the RI Hospitality Education Foundation came to the defense of the Governor’s Workforce Board, which the RI Center for Freedom & Prosperity recommended eliminating, and which supplies one-third or more of the foundation’s funding.
Comparison of a theoretical corporate income tax rate with a comparable sales tax cut illustrates the way in which cutting different taxes benefits different groups and shapes the economy differently.
Fine, tell me I need to get a life. But it is not an exaggeration to say that the “Spotlight On Spending” report compiled by the R.I. Center for Freedom & Prosperity and released Tuesday made my year.
Rhode Island currently has the eight highest local and state tax burden. While this is up from sixth highest, it is clear that we continue to spend beyond our means and our ability. Yet we’ve been told repeatedly – sometimes explicitly (thank you, Rep Tanzi); usually more subtly by the substance of the budget itself that emerges from the end of the legislative session – that there is nothing left in the state budget to cut. The “Spotlight On Spending” report resoundingly contradicts this.
Call it fingerprints for food. In the latest effort to keep shelves stocked in Venezuela, the government on Tuesday will begin registering the biometric information of customers who use state-run grocery stores.
President Nicolás Maduro says the measure will prevent hoarding and help keep price-controlled food from being resold for a profit on the black market.
A new report from the RI Center for Freedom & Prosperity should convince Rhode Islanders that government officials’ priorities are what they fund, and there’s plenty of room to adjust those priorities.
Pulled from most context, Rhode Island’s February employment picture looks great. With a little bit of context, though, it’s difficult to remain upbeat.
Michael Barone reports the findings of Canadian economist Livio De Matteo, who says that the optimal size of government — in terms of economic growth — is 26% of GDP. Having not investigated how De Matteo gets to that number, I can’t say whether it’s unreasonably high or even too low, but out of curiosity: How do we stack up in Rhode Island?
Given available data, 2011 is a good year to check, and it looks like the following:
- Rhode Islanders’ portion of federal spending: $12.75 billion
- State general revenue spending: $2.96 billion
- State restricted receipt spending: $0.16 billion
- Total municipal tax levy: $2.25 billion
That list misses some stuff, such as fire district taxes and municipal revenue not included in the levy. (I went with levy rather than budget because much of the additional spending would double-count federal dollars.)
Duly noting the minor tweaks, that list totals to $18.12 billion, or 37% of the state’s $49.42 billion GDP that year. Government is 41% to big in Rhode Island. Put differently, optimal economic growth would require the three tiers of government to cut their Rhode Island–related budgets by $5.27 billion.
That’s a big number that nobody would expect to realize, but it kind of puts in context the few hundred million dollars that the RI Center for Freedom & Prosperity projects to be the cost of eliminating the sales tax, doesn’t it?
A statement on NBC 10 Wingmen about Providence hotels was not what it’s been stated to be, and a look at the other side of the labor dispute suggests that the controversy may not be what it’s been stated to be, either.
Justin and Bob Plain talk unionization and hotel workers and whether the economy should be about balancing business power with union power or about making sure that all workers have value as human beings that they can leverage on their own behalf.
Rhode Island is celebrating the promise of 390 jobs being brought to Quonset Point, but a more careful look at the deal raises questions about whether it follows the right strategy for economic development.
The disconnect of productivity from inflation-adjusted income ultimately points back (once again) to the meddling of government in the economy.
Rhode Island employment is now dead last in the nation by the three markers that the RI Center for Freedom & Prosperity used two years ago, and the gap between employment and jobs is at (at least) a seven-year low.
Two interesting assessments, today, give one the impression that the characteristic Rhode Island game of “let’s pretend” is perhaps coming to its untenable end, at least with regard to land usage. This is from a column by retired Providence Journal commentary page editor, Robert Whitcomb:
It is hard to quantify how much Rhode Island has gained or lost from trying to preserve old mills because people think that they’re quaint. Many can never be retrofitted to make a fair (without tax breaks) profit. Preservationists (not a few of whom are financially secure and don’t have to worry too much about finding a job in the sluggish Rhode Island economy) fiercely fight to save as many of these mills as possible, once built for economically logical reasons that disappeared decades ago. Indeed, the Ocean State has not exactly become a boom town during all these years of trying to keep old factory buildings that don’t make anything anymore except the occasional arsonist.
And this is from the weekend column of Millennial WPRI journalist Ted Nesi:
It’s time for Rhode Island to take a deep breath about the old I-195 land – particularly the state’s politicians, who’ve been promising big things from the 19 acres of potential redevelopment for years now. I-195 Commission Chairman Colin Kane said on this week’s Executive Suite he doesn’t expect construction on any buildings to begin there before the fall of 2015, with the spring of 2016 more likely. And as Jef Nickerson has pointed out, Providence already has plenty of undeveloped land in prime locations in the form of surface parking lots (not to mention Victory Place); the fact that developers aren’t snapping those up suggests weak demand.
It all comes back to Rhode Island’s practice of single-entry bookkeeping — meaning that the powers who be like to coddle the public into believing that the benefits of their preferences have no negative consequences.
Ours isn’t a mature polity. Rhode Island is an excellent sampling of what the world would look like if teenagers ran it. Every game is designed to make sure the cool kids do well.
Andrew Ferguson has an interesting article about a jargon-laden and passively voiced mea culpa from the Organisation for Economic Co-operation and Development (OECD) regarding its erroneous economic projections. The key part — related to many of our battles in Rhode Island, particularly over economic modeling of the sales-tax elimination — is this:
… The biggest mistakes, the economists point out, occurred when they forecast growth rates in countries with a relatively high level of government regulation. This surprises the economists, though it won’t surprise anyone who takes a dim view of government regulation generally. The forecasters, good statists all, assumed that the regulations “would help to cushion financial shocks” in the highly regulated countries and would therefore aid recovery.
Just like the folks in RI’s Office of Revenue Analysis and the developers of the Regional Economic Models, Inc. (REMI) tool that they use for their forecasts, they hew to the belief that a rationally determined allocation of resources must be more effective. (The humor, for free marketers who catch the joke, is that the insiders then insist that the government behave irrationally… cutting critical services, for example, rather than fluff.)
The economists now say they failed to consider the damaging effects of regulation. In the real world, regulations “delay[ed] necessary reallocations across [economic] sectors in the recovery phase”—which, translated from the Economese, means that government was retarding the ability of businesses to do what they do best: find a way to create value and make money even in calamitous circumstances.
In fairness to the economists, the politicians who set policy allow them to believe that they’re all acting with the same interest of efficiency, rather than securing power for a very limited group. But even if the politicians were completely well intentioned, the forecasts would fall short.
The reality of the economists’ predicament is that they must acknowledge something that can be divined without their extensive research and education: They simply can’t have the information necessary to make projections and real-time decisions. Only lowly business-owners and consumers have sufficient information about their own circumstances and the economic resources that it is their right to conduct.