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Summer Budget Battle: Status Quo Approach Will Not Work

Enough is enough. For too long, the political class has taken more than what they needed from hard-working Rhode Island families and businesses. The chosen few have benefited from the broken insider system, while the rest of us have suffered. Now, Rhode Island lawmakers will return this summer, and decide the fate of our state for a century to come.

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Larry Fitzmorris: Portsmouth Looks to Raise Taxes Over 4% With Unemployment Over 15%

The budget for next year is one of the worst produced in the last twenty years. This budget is characterized by the Council’s complete lack of interest in reducing costs to prepare for the economic downturn and its continuing emphasis on the growth of Town government. In fact, the only changes over a routine year are using the Fund Balance to provide revenue for routine spending and to cover any shortfalls in State funding. Currently the budget is at the Provisional stage and there are further votes, but significant changes after this point are rare.

The budget that begins next July 1 has a residential property tax increase of 4.43% at a time when the unemployment rates for Portsmouth taxpayers are probably at least 16%.

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Time for Government to Pop the Superficial and Focus on What’s Important

Being in the car less, recently, I’ve fallen behind on podcast listening, so the episode of Changing Gears to which I listened while working out last night was a few weeks old.  The guys were explaining the various reasons (having to do with materials, labor, and politics) that Rhode Island’s roads don’t last.

Not long afterwards, I was back at the computer and thinking (again) how far Internet technology has come in the past year… when the power went out.  All the Zooming, podcasting, on-demand streaming, and other innovations that this viral crisis has made so critical to basic life fell of the table of social organization in an instant.  On a clear night, the flow of electricity just stopped.

Growing up, I don’t remember ever losing power when the weather didn’t provide an obvious explanation, and it seems to be becoming more common in recent years.  Every time it happens, I can hear a few more generators running, as my neighborhood adapts to this new reality over time.

While the world has been substantially shut down, I’ve also been catching up on reading legislation that managed to receive floor votes.  Here’s one to ban disposable plastic shopping bags, and I note the news today that San Francisco has now banned reusable shopping bags to prevent spread of COVID-19.  Another bill that didn’t manage to get a vote in the innocent days before the pandemic (House, Senate) would have criminalized the intentional release of balloons into the air.

Yes, while a virus was spreading around the planet bringing death and economic ruin, Rhode Island legislators were pondering a bill titled “Relating to Health and Safety – Balloons.”

Whether we’re talking about the roads or the power grid or the budgetary desperation we’re hearing from our elected officials, the message ought to be clear:  Rhode Island has to get back to basics.  Stop worrying about balloons.  Stop micromanaging the economy.  Stop confiscating tax money from people in order to fund superfluous things or pet projects.

This crisis is illustrating the necessity of government for a variety of functions, but it is also proving the need for government to do those critical things well.  And that means focusing on them, including a halt to the drain of taxpayer money to things that just shouldn’t be priorities.  Both basic government functions and private-sector activity are more important.

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McNamara’s Bid to Make Others Pay for His Heroism

The legislative proposal by Warwick/Cranston Democrat state representative Joseph McNamara has made the news rounds, but it deserves a stronger point to be made.  The press release says he’s “drafting new legislation that would help businesses hit hard by the COVID-19 crisis by guaranteeing that business interruption insurance would cover their losses regardless of policy language.”

It’s kind of a dishonest move.  Insurance companies charge their clients rates based on the risk involved in their policies.  These charges go toward a fund to cover the estimated payouts based on the risk for each thing that’s insured.  There is competition in insurance just as there is in every other private-sector market, so companies can’t charge fees that are so high they’re disconnected from this relationship to payouts.

If the General Assembly and governor pass a law that requires insurance companies to pay for events that were deliberately left out of the calculation of risk, the insurance companies will have to find that money somewhere.  One way or another, that means distributing the cost among other clients.  The complications of reinsurance (insurance for unexpected insurance payouts), do not change this fundamental fact; they just mean the spread is broader.

If government officials want to insure Rhode Island businesses against a loss during a crisis, they should do it the more-honest way of using government funds.  The legislature and governor should make the statement that this is a worthwhile priority and will therefore either displace lesser priorities or require tax increases.

Of course, cost comes at a political price, which politicians prefer to avoid.  Thus, these sorts of mandates that make other people pay for government policies (aka hidden taxes) ensure that the McNamaras of the state can pat themselves on the back for giving away money while hiding the fact that it has to come from somebody.

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Reduce Roadblocks Prohibiting Meaningful Work

In 2018, our Center published one of our most comprehensive policy briefs, The Right To Earn, which highlighted Rhode Island’s bottom-10 standing when it comes to over-regulation and the need for across the board occupational licensing reform. The Ocean State has also recently been ranked as having the worst state business climate in all of America.

Since then, we have been encouraged that reforms continue to move forward based on our report on the heavy burdens of “occupation licensing” laws in the state.

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Casimiro and Vella-Wilkinson on Pending Legislation

Guests: Julie Casimiro, State Representative, H-D 31, rep-Casimiro@rilegislature.gov
Camille Vella-Wilkinson, State Representative, H-D 21, rep-vella-wilkinson@rilegislature.gov
Host: Richard August
Topic: Vaping and other pending legislation
Host: Richard August Time: 60 minutes
Representatives Casimiro and Vella-Wilkinson discuss a broad range of pending legislation and other matters, which have their concern. Topics include vaping legislation; a veteran joint oversight committee; pharmacist having birth control prescription authority; reproductive health; firearm legislation; climate control; out of school time learning; early parole for young rehabilitated offenders; military sexual assault trauma; and more. Other matters include the need for a constitutional convention; line item veto; minimum wage; and candidate endorsements.

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Redistricting Toward a People’s Convention

When an initiative like this moves through the news cycle, I find myself wondering what workaday Rhode Islanders think of it:

Common Cause Rhode Island is asking state lawmakers to support a constitutional amendment to create an independent redistricting commission, rather than continuing to allow the legislature to create the commission and fill most seats with incumbent legislators.

This would be an important change to Rhode Island’s civic structure, but how many voters will find out about this legislation, and how many of them will know what it means (or bother to find out)?

Then there’s the path Common Cause is taking.  The bills in question are H7260 and S2077, and if either passes and is signed into law, the legislature and governor would ask voters in November if we want to modify the state constitution to take the power of setting up their own district lines away from legislators.    It seems obvious, but it also seems impossible.  After all, the assumption is that we cannot trust lawmakers to oversee the redistricting, so why would we pursue a plan that relies on the same lawmakers to change the rules that allow them to do that.

What’s needed is to back off the request one step more.  Ask the legislators to put a people’s convention on the ballot, as allowed under our state constitution.  Then a world of possibilities will open, including changing how we draw our legislative districts.  Voters could more readily understand the value of reviewing the constitution, and the people elected to the convention would more readily take the time to understand redistricting.

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Rolling Effects of Housing Wealth Redistribution

As hints had suggested Rhode Islanders should expect, Democrat Governor Gina Raimondo’s proposed budget for fiscal year 2021 (beginning July 1, 2020) includes a new program with new dedicated funding to build affordable housing.  (Naturally, Democrat Senate President Dominick Ruggerio, of Providence and North Providence, a Laborers Union careerist, loves the idea.)

WPRI’s Eli Sherman summarizes the plan:

The budget, which will now be vetted by lawmakers during the coming months, suggests creating a two-tiered tax system that doubles the so-called “conveyance tax” to 0.92% on all property sales – both residential and commercial – totaling more than $500,000. The current rate — 0.46% — would apply to the first $500,000 of any transaction. …

State officials estimate the new tax would generate about $3.6 million in state revenue next fiscal year, and $8 million in each budget year afterward. The money would create a dedicated funding stream that would go into a restricted receipt fund at Rhode Island Housing, a quasi-public agency, and be controlled by the Housing Resources Commission.

This scheme brings to mind some analysis I did of tax rates in Tiverton back in 2018.  My conclusion was that the exorbitant tax rate was suppressing home values at the high end of the market.  At the same time, broader market forces were increasing house values at the low end.  Because the tax rate is uniform across the town, and because the tax rate is set in order to match the town’s budget (not the other way around), this had the effect of moving the tax burden toward the working class neighborhoods.  Their houses were worth more, while the expensive houses were worth less, so the taxes followed the value.

Of course, adding a couple thousand dollars at the point of sale will have much less effect than a tax rate that charges that amount every year, but the principle is the same.  Taxing high-end houses more will make them less valuable, shifting the real estate tax burden down the scale.

At the same time, the state projects that it will be building an additional 250 “affordable houses” every year.  Increasing supply at the low end of the market will tend to reduce prices there, too.  So, while the increased stock will expand the low-end’s share of total value, taxpayers’ bills will decrease with the value.  Whether this helps spread municipal tax bills to more homeowners will depend on whether the affordable houses are distributed evenly across the state.

This leaves the middle of the market, which will see upward pressure on its annual tax bill, while also being nudged toward the $500,000 line, where it will be more-expensive to sell.

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For and Against a TCI Gas Tax

The Gaspee Business Network — an alternative business group to chambers of commerce — has published an interactive table showing the opposition or support of the Transportation & Climate Initiative (TCI).

Such lists have long been a tool of professional lobbyists.  The movie, The American President, comes to mind, in which the president (Michael Douglas) begins to date an environmental lobbyist (Annette Bening).  The Internet has increasingly broadened its utility to the general public.  If our elected representatives are going to be representative, the people need to know where they stand.

You might be surprised, however, how difficult it is to find out where they stand.  Send out emails asking where the various legislators who represent your town stand, and you’ll find some don’t bother to respond.  And some of those who do will give answers that evade and/or must be interpreted.  Asked if they support TCI, they might ask if there’s specific legislation.  Asked about the concept in principle, they might stop responding.

As of this writing, only 19 of 113 legislators (17%) have provided an answer, or something close enough to interpret as one.  The only one deemed by Gaspee Biz to support the initiative is Senator James Seveney (D, Bristol, Portsmouth, Tiverton).  Notably, Speaker of the House Nicholas Mattiello (D, Cranston) opposes it.

Imagine if tables like this were available for every hot-button issue the legislature was facing!  That might cut back on some of the late-night votes and horse trading.  And then imagine an electorate that actually paid attention… that would make all the difference.

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Opioid Solutions When the Government Refuses to Address Problems

In his recent essay on this site, Dr. Stephen Skoly described the consequences of legislation seeking to regulate prescription opioids, but he stopped short of broad conclusions about the politics involved.  As it happens, one such conclusion fit in well with the other topics that John DePetro and I discussed on December 30.

We can, of course, debate whether a new $5 million fee for opioid manufacturers and wholesalers is actually about solving a social problem, rather than finding a new source of revenue.  But taking the politicians at their word for their motivation, one can at least say that such policies infantilize the people, as if our legislators and governor are the only adults in the state and therefore must protect patients from their irresponsible selves and from greedy doctors.

Something milder and, in its way, worse is probably going on, as well.  The theme that John and I happened upon in our segment was that government officials in Rhode Island shy away from addressing actual problems.  They look for all sorts of ways to get at them without actually naming and attacking the root causes.

When it comes to a failing education system, they seek work-arounds and small tweaks like, like shifting authority toward principals, rather than draw attention to the labor-union structure that makes the system all about the remuneration of adults rather than the education of children.  When it comes to teenage fights at a mall, the focus goes to things like community programs to give kids something to do, rather than unraveling the progressive assumptions that lead to gang-friendly policing and suspension-unfriendly school regulations (not to mention identity-group entitlement).

Just so, going after fentanyl and heroin on the criminal market would manifest in urban areas and among minorities.  Many people in those communities would be grateful for the improved environment, but the enforcement and incarceration statistics would look bad and draw the attention of groups like the ACLU.  So instead, government tries to find a solution from the other side, making things more difficult (literally more painful) for law-abiding citizens, in the hopes that they can limit the market for the drugs and make the dealers go away for lack of profit.

If that approach also produces a $5 million fee for government, so much the better.

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Of Course Police Like Powerful Tools

For the category of the news media constructing narratives on behalf of government, is there any way this finding could have been otherwise?

Police: R.I.’s red flag law ‘likely averted potential tragedies’

As of Oct. 31, state and local police across Rhode Island had invoked the red flag law on 33 occasions since its adoption in June 2018. The law allows police to petition a court for an “extreme risk protection order” that allows them to confiscate firearms from individuals believed to be at “imminent risk” of killing themselves or others.

Yeah, of course any time you take away somebody’s gun, you can say you might have stopped some tragedy.  But (of course) maybe you didn’t.

The implicit bias of this article is indicative of the entire gun-control impulse.  It’s the same mentality that says if we just take away all guns, we’ll obviously be avoiding tragedies.

Except when we don’t.  In those cases, there’s always an excuse and an explanation of how being even more aggressive about taking away guns would work better.  Contrary evidence is also difficult to connect decisively; while law enforcement can claim that every confiscated gun might have “averted potential tragedies,” we simply don’t know what “potential tragedies” might be caused by confiscation.

There are the immediate scenarios, of course, like the woman who obeyed a gun-free-zone law while the stalker who murdered her husband did not or the Texas church-goers who brought a quick halt to a mass shooting attempt.  And then there are the longer-term consequences of being the sort of people who’ll let government promise us greater security if only we’ll sacrifice a little bit more of our freedom.

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Political Monday with John DePetro: RI’s Avoidance of Real Problems

My weekly call-in on John DePetro’s WNRI 1380 AM/95.1 FM show, for December 30, included talk about:

  • Elorza’s interest in being governor
  • Causes and effects of Providence Mall brawls
  • Disappointment in Raimondo’s failure to succeed
  • Stephen Skoly’s warning about opioid nannyism

Open post for full audio.

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Raimondo’s Strange Excuse for Marijuana

Sometimes the explanations that politicians give for their support for a particular policy make you go, “Wait… what?”  Such was the case with Democrat Governor Gina Raimondo’s response in a recent Providence Journal interview:

The setting: a roundtable discussion with students in one of Rhode Island’s poorest cities, a week after she had signed an executive order temporarily banning the sale of flavored vaping products.

“And the kids said vaping is expensive. ‘We use that as a treat for party nights …. Marijuana is the day-to-day thing.’”

“Like, wow,” Raimondo remembered thinking and maybe saying. “How do you obtain that? And they’re like, ‘Attleboro is 10 minutes away, if you haven’t noticed.’ So we are kidding ourselves if we think we don’t [already] have recreational marijuana [in Rhode Island]. Talk to the state police. They see it on the roads.” …

Yes, for the second year in a row, she intends to propose legalizing the adult use of marijuana — and not, she said, just because of the millions of dollars in new revenue it could provide the state (at least $9.4 million a year, the state estimates) but because she sees unregulated access to the drug as a “safety issue.”

Umm… if the point of the story is that the kids are buying marijuana in a state where it’s legal, then it isn’t “unregulated access to the drug.”  It might be regulated badly, but legalizing the drug in Rhode Island will only mean that the kids have regulated access that is more convenient.

This isn’t an argument against legalization, but since the governor isn’t making a rights-based argument, and since her rationale for regulation is foolish, that leaves us with “thou dost protest too much” and the conclusion that, yes, she’s after the money.  (Whether that money is cash for the state government or donations from vested donors I leave for the reader to decide.)

This time of year, my usual analogy is even more apropos.  Our culture has repeatedly warned us about people who make fortunes in the private sector and then take over government to make illicit businesses legal and prominent, as with the alternative Pottersville reality in It’s a Wonderful Life.  But that can happen in the other direction, too, with government making previously illegal industries for profit, and we should all be wary of it.