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Who Is Working For You? New Major Report Coming Soon From The Center

Who does the Rhode Island General Assembly really work for? Too often, the people of our state are left voiceless as special interest dominate the conversation. Recently, the Ocean State Current broke a major story that ignited media coverage across the state. In H5662 and Whom Rhode Island Representatives Represent, Research Director Justin Katz, uncovers a key admission from the political class.

During the March 11th Tiverton Town Council meeting, a member of the General Assembly admitted that he put forward the bill at the request of Speaker of the House, without regard to the cost to the town he represents for the state firefighters union.

Don’t wait, you can catch the video on the Current by clicking the link here. You can also find the followup here.

In the coming weeks, the Center will be releasing a major report on the cost of collective bargaining in the Ocean State. This will be the longest and most in-depth research project the Center has ever undertaken on any topic. We invite you to be on the lookout for this critical report.

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The Pressure the General Assembly Is Trying to Control

The Providence Journal today has published an op-ed in which I address the admission of Representative John “Jay” Edwards (D, Portsmouth, Tiverton) that he put in legislation for the state firefighters union, by way of Speaker of the House Nicholas Mattiello, without much consideration of its effect on the people he’s supposed to represent:

Watch Rhode Island politics for even a short time, and you’ll catch on to certain truths. Everybody seems to know them, and sometimes an op-ed or talk radio show will blurt them out. By now, in 2019, these truths have been sufficiently longstanding and have produced so many of their inevitable consequences that Rhode Islanders feel them in their bones. They are why few run for office and why many leave the state, year after year.

Still, a person who’s watched Rhode Island politics can’t help but be surprised when an insider, who ought to have the good taste to pretend these truths aren’t true, admits one of them. I had this experience at the March 11 meeting of the Tiverton Town Council, of which I am the vice president. We were engaged in a ritual conversation with our town’s representatives and senators, and I asked state Rep. John “Jay” Edwards about one of his bills.

One important lesson shouldn’t be lost as this matter predictably falls along lines of unions versus taxpayers.  With legislation like the bills Mattiello asked Edwards to submit, legislators aren’t only elevating the interests of the unions over those of the broader public.  They’re also advancing the statewide unions’ interests over those of the union locals and their workers.

That’s ultimately the upshot of having the General Assembly put limits on what the sides can negotiate in any particular city or town.  Inherently, both sides of the negotiating table are restricted in what they’re able to negotiate.

The pressure on budgets doesn’t go away.  Elected officials and municipal employees simply have to find other ways to release it.  Perhaps Mattiello and Edwards expect or hope that the “release” will come in the form of big tax increases in an already over-taxed state.  More likely, the result will be exacerbated under-funding of pensions, infrastructure, and other areas of the budget that aren’t as straightforward.

If the budget pressure can’t be released in those ways, the bubble will only grow, to the point that we’re talking about privatization and regionalization.  Maybe those are good ideas and maybe they’re not, but the only way to truly know is to let the people closest to negotiations talk about and try everything.

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Negotiating with the Speaker in the Room

Thanks to the reporting of Providence Journal reporter Katherine Gregg we have some explanation of the motivation behind Democrat state Representative John “Jay” Edwards legislation to change overtime rules in favor of fire fighters.  Unfortunately, the explanation comes not from the Tiverton/Portsmouth representative who put the bill in, but the Speaker of the House who told him to do it:

During an interview with The Journal on Tuesday, Democrat Mattiello, of Cranston, acknowledged he is an enthusiastic supporter of the legislation that Cranston Deputy Fire Chief Paul Valletta has been pushing at the State House in his role as the $3,035.58-a-month lobbyist for the Rhode Island State Association of Fire Fighters. …

“We had the opportunity to pass this bill several years ago. We elected not to at that point and I remember knocking on one of my constituent’s doors. He was a Providence firefighter and he was a little frustrated and he said, ‘I am still going to vote for you speaker but I’m angry with you. … I have not seen my wife and my 8-year-old daughter in a year.’ That is inappropriate,″ Mattiello said. “The schedules that three platoons create are horrific on families … and if communities are going to do that, they should at least be required to pay the overtime.”

Mattiello acknowledges that he did no research concerning this issue or how other states have addressed it.  Despite the distance from Cranston to the East Bay, he might at least have made some inquiries about things in Tiverton.  We’ve worked hard on a solution — through a contract negotiated in good faith that is on track to be signed within mere weeks — precisely because employees were unhappy with the arrangement and it has affected morale, retention, and hiring.  In fact, his interference at the state level has complicated the situation locally.

Readers of this site know that I’m (let’s just say) skeptical of unionization, especially of government employees, but even by labor’s own standards the whole idea is that two sides come to the table and work out an agreement.  If the Speaker of the House is in the room, too, then the arrangement deserves much more than skepticism.

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The Effects of the Minimum Wage

Written testimony from the RI Center for Freedom & Prosperity’s CEO, Mike Stenhouse, opposing an increase in the minimum wage emphasizes that such legislation kills jobs:

After Seattle passed a rapid minimum wage hike, a study by the Univ. of WA found the cost to low-wage workers outweighed the benefits by a 3-1 ratio, and found that on average overall, low-wage workers, lost $125 per month – because of lost work hours, lost employment, or lost job opportunities because of the hike.

In Boston, high minimum wages have been publicly cited as a primary reason for many restaurant closings.

Writing on PJ Media, Stephen Green notes that the contagion has hit New York City:

Which brings us back to the NY Post, where an industry group was quoted saying that “full-service restaurants recorded a 1.6 percent job loss [in 2018], which is the first recorded annual loss in two decades.” The new minimum wage hadn’t kicked in yet, but fast-food and fast-casual restaurants were already rushing to automate in anticipation, and this year looks to be even worse

Green also shares this helpfully explanatory cartoon:

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By capitulating to progressive-union pressure, and despite disingenuous claims that no broad-based taxes were imposed, Ocean Staters will once again bear increased burdens to pay for new taxes and regulations, more spending, and more union giveaways. Lawmakers chose to appease, rather than resist, the progressives’ job-killing, big-spending agenda.

Another Reckless Shackle on Businesses’ Backs

On Monday, I pointed out that Rhode Island’s elected leaders should at least be concerned about the possibility that progressive impositions on Rhode Island businesses — like the paid-time-off mandate — might be hurting our jobs and employment market.  Well, now there’s this:

Rhode Island business groups are asking state lawmakers not to emulate Massachusetts’ tax on companies whose workers receive public health insurance, saying it has had “devastating” and “nightmarish” economic consequences there.

Grocers, home-care providers, restaurant chains and some hospitals are among the business interests fighting the plan in Gov. Gina Raimondo’s budget to charge companies with at least 300 employees a 10-percent fee on the wages of Medicaid-enrolled workers. The budget expects to collect $15.6 million next year and $19.5 million each year after that from the charge.

“Some of our members in Massachusetts are hearing horror stories,” Lenette Forry, lobbying for the Northern Rhode Island Chamber of Commerce and Rhode Island Hospital Association, told Rhode Island lawmakers Tuesday night.

Raimondo’s contrary argument is not persuasive.  She says that the state’s provision of Medicaid helps the businesses, so they should pick up some of the tab.  More than anything, this is an indication of the rolling consequences of bad policy.

Progressive officials pushed the policies making taxpayers liable for the health care of able-bodied people with lower incomes.  Progressive officials spent all kinds of money on an online health insurance system that shuffles people automatically into free-to-them Medicaid, even when they were willing to pay for individual plans.  Progressive officials spent and millions advertising and drawing people toward it.   Progressive officials overestimated how many paying customers they’d have and underestimated how many people would be added to Medicaid.  So now progressive officials are looking for a villain whom they can stick with the bill.

The thing is, businesses exist to make money for the people who own and operate them.  The more expense government layers on the balance sheet, the harder it is to accomplish that goal.  When it stops making sense to run the business, or at least to run it in Rhode Island, businesses will just stop doing it.

That’s where we’re going, and it’s going to be a disaster.

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Paid Leave and Rhode Island’s Employment Freeze

A couple of weeks ago, the Wall Street Journal published a letter by a Rhode Islander who stated that “seven of 10 members of my small-business study group are moving their businesses to Massachusetts as a result of a seriously flawed paid-leave bill the governor signed last year.”  Over the weekend, somebody from out of state asked me about the policy, which the Dept. of Labor an Training explains in a fact sheet on its Web site.

Thinking about the matter, the most recent jobs and employment report came to mind, wherein a painful downward revision of past numbers joined with foreboding downward trends for January.  That trend continued in February, and we’ll give further detail on that shortly.

The key point for the moment is that Rhode Island’s economy didn’t do as well as analysts had thought during the latter half of 2018, and we’re now bucking national trends and backsliding.  What if the paid-sick-leave bill is as damaging across the state as the letter writer described in that one small-business group?

The following chart shows the changes in employment and RI-based jobs through 2018 and up to February’s release.

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This cursory presentation is insufficient to prove that progressive policies like mandated paid sick leave have an immediate and detrimental effect on Rhode Islanders’ ability to find work.  The chart is striking enough, though, that we ought to at least pause before layering on more such policies — enacted by people who do not understand economics and who impose their whims on Rhode Islanders without even basic consideration of what their emotion-driven governance might do to people when the fantasy becomes reality.

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Governor Seeks to Punish Employers Via Proposed Medicaid Tax

Businesses should be applauded for hiring those most in need of work…not punished with more taxes, and certainly not made out to be the bad guy. It is misguided to think that if employees are not covered by their employer’s insurance plan, full or part time, and instead are enrolled in Medicaid, then the business should be punished.

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Tilted Labor Relations All Around the State

The Providence Journal editorial board points to one of those deep details of state government that does more damage than the average voter probably realizes.  The subject is the State Labor Relations Board (SLRB):

It is supposed to include three members representing labor, three representing management, and one representing the “public.” What could be fairer?

Except the politicians’ appointments heavily tilt the board toward labor.

Board Chairman Walter Lanni, appointed by Gov. Lincoln Almond in 2000, is supposedly in the management camp. But he served for more than two decades on the executive board of the Cranston firefighters union, securing extraordinarily generous contracts for union members.

Another “management” appointee is lawyer Alberto Aponte Cardona, who has represented public employees and is the brother of Democratic Providence City Council member Luis Aponte.

However experienced and dedicated to public service they might be, these hardly seem like rock-ribbed defenders of the interests of management and business. There are plenty of other business people, surely, available to serve.

To my experience, among those who negotiate contracts in Rhode Island, it’s well understood that the SLRB is a dead end for managers seeking protection of their rights — basically an added step (and expense) before getting into an actual court.  (And the courts are only fair in comparison.)

Of course, the SLRB is only one gear in the machine tilting things toward organized labor.  Last week, Democrat state Representative John “Jay” Edwards told the Tiverton Town Council that the way to get legislation passed is to ask the local unions to put in bills.  (I’ll have a post on that in the near future.)

All of this raises a concern that it’s impossible to have truly good faith negotiations in the Ocean State.  When legislators use bills to put a thumb on the scale for labor unions during specific negotiations and the SLRB can’t be trusted to keep labor relations fair, there can be no doubt who holds sway.
A related problem is that simply grousing about the inequity in local publications is going to have absolutely no effect. We need a concerted effort to disrupt the political fortunes of those who resist change toward a more fair arrangement, and few are willing to make themselves that clear of a target.

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A Simple Way to Keep a Sales Tax Promise

On Monday, the RI Center for Freedom & Prosperity suggested that the State of Rhode Island should keep its promise to reduce the sales tax rate to 6.5% whenever it began to collect taxes on Internet sales.  Now, Republican Representative George Nardone, of Coventry, has put in legislation intended to do just that:

State Representative George Nardone District 28 Coventry is introducing legislation to lower the sales tax from 7% to 6.5% based on a 2014 R.I. law that was universally supported by the House, Senate, and Governors office.

“It’s time for state lawmakers to keep the promises we made”

The bill, H5854, is very simple.  State law already states that Rhode Island will collect Internet sales taxes and drop the rate to 6.5% “upon passage of any federal law that authorizes states to require remote sellers to collect and remit sales and use taxes,” and reduce the rate.  Nardone’s legislation simply adds the words “or court decision” after “federal law.”

This would be a no-brainer for elected officials if their brains were able process the notion of not always increasing revenue.

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Honoring the Good-Policy Promise of Lowering the Sales Tax

Today, the RI Center for Freedom & Prosperity released a policy brief arguing that, with the 2020 budget, the state will have effectively reached the point of online sales tax collection that was supposed to trigger a reduction in the tax rate from 7% to 6.5%:

While the U.S. Supreme Court’s decision is not literally the same thing as “passage of any federal law,” it can be argued that the State of Rhode Island has effectively triggered this threshold of collecting sales taxes from remote sellers, including Internet vendors. It can further be argued that our state has actually exceeded this legal threshold.

Yet, politically, not one lawmaker has made any noise about how Rhode Islanders may legally be getting ripped off by a broadened sales tax that doesn’t fulfill the legally required lowered rate that was promised.

The Center suggests that the General Assembly should honor its commitment to the people of Rhode Island, should abide by legislation that the legislature itself passed, and should complying with state law. The House of Representatives should include in its FY20 budget statutory language that would officially reduce the state sales tax to its statutorily required 6.5% rate.

The included chart pretty well tells the story of the state’s expansion of the sales tax — at more than twice the rate of inflation, with nearly a 40% increase since fiscal year 2012:

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Another Day, Another New Fee in the Budget

Here’s an-easy-to-have-missed tidbit on the Raimondo nickel-and-diming front:

To help buy and maintain new DMV technology, Gov. Gina Raimondo’s budget plan for next year proposes hiking the $1.50 “technology surcharge” on DMV transactions to $2.50 and making it permanent. (The fee was slated to sunset in 2022.)

What the budget doesn’t mention, but Raimondo administration officials acknowledged this week, is that in addition to increasing the size of the fee, the DMV hopes to start charging it to vehicle owners when they have to take their cars in for mandatory safety and emissions inspections every two years.

These fees may seem small, but when you’re hit with them every time you take a breath, they add up. And when new fees are constantly added to cover that which was supposed to be covered under other fees or taxes, we should ask where all the money is going.

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A School Choice Nose in the National Tent

Presumably, this proposal would greatly enhance Rhode Island’s tax credit scholarship program:

While most of the K–12 educational-funding and -policy decisions are appropriately housed in the states, an innovative new policy idea would allow the federal government to play a constructive role in expanding educational opportunity in America. U.S. Secretary of Education Betsy DeVos has unveiled a proposal for Education Freedom Scholarships, with corresponding legislation introduced by Senator Ted Cruz and Representative Bradley Byrne. The plan would invest $5 billion annually in America’s students by allowing individuals and businesses to make contributions to in-state, non-profit Scholarship Granting Organizations (SGOs) that provide scholarships to students. Contributors would receive a non‐refundable, dollar‐for‐dollar federal tax credit in return for their donations. No contributor would be allowed a total tax benefit greater than the amount of their contribution, and not a single dollar would be taken away from public schools and the students who attend them.

The program would actually be administered through the state, which puts Rhode Island at an advantage because we’ve already got such a program going.  Of course, it would be even better if Rhode Island expanded its own program in the ways suggested, here, notably by allowing individuals, and not just corporations, to contribute.

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Not Seeing the Argument for Public School Protectionism

Readers of political and policy news should make it a practice to try to understand an issue from the other side.  If the other side’s advocates are making a complaint, try to understand their legitimate grievances.

I have to admit, however, that I’m having a difficult time seeing the grievances expressed by opponents of Rhode Island’s school “pathways” program as legitimate:

Warwick Supt. Philip Thornton said pathways schools such as Ponaganset are draining students away from his schools, to the tune of $1.4 million a year in lost tuition.

Tuition dollars follow the student when he or she moves from one district to another. Thornton said Warwick has “lost” 86 students to Ponaganset and North Kingstown. In a district facing significant financial challenges, that’s a lot of money.

Shanley, a Warwick Democrat, said the bill would require students to stay in their own school district if the home district has a similar program. …

Parents, he said, see this as a way to get their children into higher-performing school districts.

How can one respond to this except to suggest that Warwick schools should get their act together and make their programs good enough that families don’t pull their children, and maybe even so good that families from other districts move their children into Warwick schools?  And how can one possibly read Representative Evan Shanley’s bill as anything other than protectionism for school districts at the expense of students?

Yes, parents will look for ways to provide a better education for their children.  We should be looking for those ways, too — that is, if our goal really is to provide opportunities and ensure an educated population.

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Siccing the Tax Man on the People

In early December, I pointed to a story about the state taxing authority going after funeral homes to tax urns and prayer cards.  The State of Rhode Island was hitting these small businesses with bills for back taxes on products that had always been handled as tax exempt.

As I looked through the tax changes in Democrat Governor Gina Raimondo’s budgets for the past few years over the weekend, a connection became clear, with an important lesson:

  • In fiscal year 2017, the governor called for two new revenue agents for field audits and three new revenue officers for collections, with an estimated increase in revenue of $1,793,806.  The General Assembly accepted this proposal, but assumed a net budget impact of $3 million, meaning that the actual revenue collected would be higher in order to pay the five new employees, so actual revenue would be around $3.5 million.
  • In fiscal year 2018, the governor called for two more revenue agents and two new data analysts who were supposed to generate another $750,000. The General Assembly accepted this proposal but assumed a $2 million increase in revenue.
  • In her current budget, the governor wants to add a lawyer and case management system to the collections unit, to generate another $750,000.

Going after small businesses for back taxes nobody ever told them to collect is what this effort looks like.  After the changes in fiscal years 2017 and 2018, the state had nine new employees with an implied mandate to find $5.5 million in new tax revenue.

To the extent anybody even notices these new hires, the impression is that they’ll be going after scofflaws for money they are somehow hiding from the state.  There may be some of that, but what the funeral homes are experiencing is the effect of the state hiring people with a monetary target and siccing them on the people of Rhode Island.

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Loss of US Congressional Seat Underscores Need for Reform Agenda

The state of the State of Rhode Island is not good. Even as the rising national economic tide has lifted ships in all states, when compared with the rest of the nation, our Ocean State is severely lagging, and is in danger of sinking further behind if progressive policies continue to be implemented.

Perhaps no indicator more appropriately demonstrates the failure of the leftist status quo, than does the near-certainty that Rhode Island will lose one of its precious House seats in the U.S. Congress. The persistent jokes of family and friends “moving out of state” have now tragically manifested themselves into the harsh reality that our state is not competitive enough to see population growth on par with the rest of the country.

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Upcoming Pro-Life Day of Action at R.I. State House

Citizens for Life, Liberty, & the Pursuit of Happiness, a new pro-life group, will be holding a rally on Tuesday, February 26th at the Rhode Island State House from 3:00 PM – 5:00 PM. The rally will feature pro-life speakers in opposition to the legislation removing restrictions on abortion in the Ocean State. Members of the public are encouraged to attend.

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Political Monday with John DePetro: Fees, Fraud, Fetuses, and Finding a Field of Candidates

My weekly call-in on John DePetro’s WNRI 1380 AM/95.1 FM show, this week, was about the many new fees and taxes in the governor’s budget, a progressive’s alleged embezzlement, the significance of an abortion poll, and the multiple candidates for RIGOP chair.

Open post for full audio.

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Parks and Beaches: Another Investment We’re Already Making

Along with her budget’s request to increase fees for beaches and Rhode Island parks, Democrat Governor Gina Raimondo is rolling out the usual message about “investing” in our state:

“Our beaches and parks are such a special part of who we are as Rhode Islanders, and we need to preserve them for future generations,” said Governor Gina M. Raimondo. “The study DEM commissioned recently makes clear that we’re not doing enough now. It’s critical that we commit to long-term investments in our parks and beaches. Let’s make sure our kids have the same opportunities that we did.”

The study noted that Rhode Island exhibits high park use and low investment compared with the rest of the nation – ranking 1st in visits per park acre but 47th in state spending per visit. The study calls on the State to make a strategic, sustained, long-term investment to increase the self-sufficiency and economic potential of the park system, protect infrastructure, enhance programs, and bolster operations and staffing.

The missing statistic in that summary is anything gauging Rhode Island’s tax burden.  Especially in the messaging of our current governor, everything is an “investment.”  The problem is that we’re already making those investments.  We’re just not getting much for them, whether in terms of infrastructure, economic development, or education.

Another budgetary favorite of Raimondo’s emphasizes the point:  budget scoops.  When the governor’s office makes a regular practice of “scooping up” money from restricted funds, which are often driven by fees of one sort of another, it sends the message that it’s all really about finding new sources of revenue.

In other words, she’s actually looking for investments in more of the same old insider deals that have drained money away from things Rhode Islanders actually value.

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