With about one-billion dollars in anticipated revenue shortfalls, and with recent statements from leading Rhode Island lawmakers indicating a general feeling of helplessness, the Rhode Island Center for Freedom and Prosperity published a new report this week with proven budget strategies that can help put the state on a long-term trajectory towards prosperity.
A short new report from the RI Center for Freedom & Prosperity suggests that Rhode Island can take its current setback as an opportunity to plan for a better future.
I applaud the decision makers, at all levels of government, that quickly responded to the medical crisis. But health issues only represent one component of the challenges in front of us. We all hunkered down for weeks to ‘flatten the curve.’ Our common goal was to ensure that, as a community, we had enough hospital beds for those most vulnerable. Well, we’ve flattened the curve. (And we know now that the survival rate of COVID-19 in the United States is almost 95%.) Why then are governments having a hard time moving to the next stage during this time of testing? I can only believe that most people were more familiar with the fears and responses to the medical side of the crisis.
Let’s explore the impact on small businesses. Almost half of all employees in the United States work for a small business. In fact, 96% of Rhode Island businesses are small businesses. They are the engine of our economy. Business owners can feel in their bones, the impact of this shutdown on Rhode Island. We owe it to the rest of the citizens of Rhode Island to communicate this feeling.
My weekly call-in on John DePetro’s WNRI 1380 AM/95.1 FM show, for May 4, included talk about:
- The governor and reopening
- Hospitalization counts
- The General Assembly peeks its head out
- Mattiello and the AG
- Achorn drops from the Providence Journal editorial branch
- A big budget hole
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%.
My weekly call-in on John DePetro’s WNRI 1380 AM/95.1 FM show, for April 13, included talk about:
- The governor’s handling of the virus crisis
- The silence from everybody else
- The RI Center for Freedom & Prosperity’s suggestions
- The decisions facing the governor and the people of RI
In these trying times, with well over fifty thousand Rhode Islanders recently laid-off, common-sense public state-based policy can help mitigate the destructive economic impact of the Rhode Island COVID-19 crisis … and can help restore a sense of normalcy and financial security.
We need your help to tell lawmakers you want them to take action.
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.
If we rely on American innovation in the private sector, our state can weather this horrible COVID-19 crisis! Our Center has ten proactive policy ideas that can help Ocean State businesses and families survive the crisis, while also paving the way to recovery. And, we need your help to tell lawmakers you want them to take action.
State lawmakers must find a way to get back in the saddle, demonstrate calm and deliberate leadership, and consider emergency legislation to help our citizens and businesses lead the way back. We’re recommending:
We see the federal government considering bold ways to keep businesses running and money in people’s pockets. Here in Rhode Island, we’re calling on lawmakers to provide online sales tax relief to residents concerned about their physical and financial health.
Our state must do its part… The government-distancing we are recommending can help people remain at home and practice healthy social-distancing. Every sales tax dollar saved might be vitally important to families who are suffering a loss of income during these trying times.
Take away the scary studies based on China and Italy and frightening “whatifs,” and it’s difficult to conclude that the economic harm has thus far proven worthwhile, leaving citizens to figure out what the thresholds should be.
Are state lawmakers helping to make Rhode Island a better or worse place to raise a family and build a career?
With Rhode Island already ranking a dismal 47th on the Jobs & Opportunity Index and with the worst business climate in America, the Center tracks critical pieces for legislation making their way through the Rhode Island General Assembly and what they will do to your freedom.
We evaluate bills in terms of their likely effect on the free market, the size and scope of government, the balance of residents’ interests against those of public employees and beneficiaries, and the constitutional structure of a divided government with limited power over the people whom it represents.
It is the core tenet of the Center that with greater freedom comes greater prosperity, or conversely, as is the case in the Ocean State, that a continued loss of freedom leads to the type of economic stagnation that Rhode Islanders have suffered from over the past decade.
We encourage you to follow along with us as we track the 2020 General Assembly session. Click on the link here to see our 2020 Bill Tracker.
The all-powerful director of the R.I. Department of Transportation, Peter Alviti, has invoked the authority granted to him by Gov. Gina Raimondo and General Assembly to double the toll rate at Oxford Street overpass. The increase is justified by a nebulous, internally-concocted cost-benefit formula.
I am reminded of the very telling testimony of one Mike Riley, my friend and the former head of the Connecticut Motor Truck Association, who joined us in opposition to RhodeWorks before the House Finance Committee back in 2015.
He stated: “Methinks your director protests too much. He wants way too much authority and you ought not give it to him. You ought to stop. You ought to think about this. Remember the highway intersection sign: Stop, look and listen.”
With the General Assembly’s self-proclaimed “firewall” against car tolls currently taking on water, the recently-announced move by RIDOT to “nationalize” the R.I. Turnpike and Bridge Authority, and this latest toll increase maneuver, I urge Rhode Islanders to “stop, look and listen.”
Methinks (MeKnows) you are next on the establishment’s “cost-benefit” menu. After all, the formula is very simple: your cost will always be to their benefit.
Guests: Julie Casimiro, State Representative, H-D 31, rep-Casimiro@rilegislature.gov
Camille Vella-Wilkinson, State Representative, H-D 21, firstname.lastname@example.org
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.
Is it time for you to get involved… to save our state? If we are ever going to change the policies that are driving away families and crippling businesses, the sad truth, my friend, is that we are going to have to change the players.
Rhode Island’s political class is so beholden to so many special interest groups and agendas, that they are paralyzed when it comes to considering common-sense, pro-growth policy reforms.
A couple things should be observed about the claims of RI Department of Environmental Management Deputy Director Terrence Gray on State of the State, recently.
Mr. Gray was on the show to talk about the Transportation & Climate Initiative (TCI). That’s a proposed regional organization that our state government wants to permit to tax gasoline to create a slush fund for projects that can fit under the “green” umbrella.
The definition of the “tax” is the first observation that must be made. At one point, Mr. Gray insists that TCI is not a new gas tax, but then he proceeds to describe the mechanism by which the tax is implemented. It reminds me of an old Remi song about cap-and-trade schemes:
It sounds like cap and trade is a tax we pay then
No sir, cap and trade is just a regulation
See tax is when there’s money spent
this is just a fee to the government
With TCI, the new regional government artificially limits gasoline production and distribution, forcing companies to bid for “allowances.” The profit from these bids goes to government. It’s a tax.
Which brings us to the spending part of the equation. The other important observation one can make from Mr. Gray’s commentary is that he tried to sell the new tax on a wide variety of great things that could be done with the money, when obviously, it can’t go to everything. So, when convenient, he’ll talk about spending it on public transportation… or charging stations for private cars… or some sort of dividend or fund to offset the new costs for residents. Until there’s a written plan, it’s possible to say that the money will do any number of wonderful things.
If we look to the spending of the similar Regional Greenhouse Gas Initiative (RGGI), which covers energy production with a regional cap-and-trade scheme, we can get some sense of what actually happens. Maybe early on the money is used to offset something in the costs to average Rhode Islanders, but inevitably, the funds drift toward government, whether solar for municipalities, buses for RIPTA, or similar programs.
Those may or may not be worthwhile projects, but one suspects it would be a harder sell if it were made clear that TCI is, yes, just another tax to fund government activities, which ought to be funded already if they’re good ideas, given the amount we already pay for government.
You can’t let them get away with it! The political insiders are planning a new gas tax that will harm Rhode Island families. We’ve fought back hard, but there is still more to do…
The common interests of labor unions and progressives are draining the Ocean State of its lifeblood.
Guest: Chris Maxwell, RI Trucking Association, www.ritrucking.org
Host: Richard August Time: 30 minutes
In a recently completed study the state of RI learned that truck toll revenues have not yielded what had been expected or predicted by the RI Department of Transportation. This shortfall is consistent with what the local trucking industry has been predicting since the state announced its plans to toll trucks. The RI Trucking Association has filed a court case challenging the plan and more. Maxwell discusses various consequences of the tolling and the court case his Association has filed.
Q. What is TCI?
The Transportation & Climate Initiative (TCI) is a multi-state regional agreement designed to drive up the price of motor fuel (gasoline and on-road diesel). As a regressive tax, the TCI Gas Tax will disproportionately harm low-income families, especially those who live some distance from commercial centers or their workplace.
As public attention understandably turns to legal developments in the toll case and the very visible construction of toll gantries around the state, it is important to note how the governor explicitly broke her word on the critical matter of when toll gantries would go up and highlight the heavy financial consequences to which she has needlessly exposed Rhode Island residents with this completely unprincipled volte-face.
It is not by accident that the proposed Transportation & Climate Initiative (TCI) is losing support among many of the states it has targeted… to the point where some proponents are considering a Plan-B.
Last week, I traveled to Boston to meet with other organizations from east coast states who oppose TCI, a regional compact targeting 12 states and Washington DC that seeks to impose a 5 to 17 cent per gallon tax on gasoline and diesel fuel, with the intent of forcing Rhode Island to drive less often and into more costly and less convenient electric vehicles and public transportation options.
My weekly call-in on John DePetro’s WNRI 1380 AM/95.1 FM show, for January 20, included talk about:
- The governor’s budget (and popularity)
- The speaker’s interest in the Convention Center
- The women’s march
- Big money state jobs, especially corrections
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.
With the advocates for the Transportation & Climate Initiative (TCI) now revving up for their cause, and with Democrat Governor Gina Raimondo remaining intrepid in her desire to push Rhode Islanders out of their cars for the good of the planet, Ocean Staters might wonder where we stand already on the gas tax. Fortunately, the American Petroleum Institute has compiled information on all states’ gas taxes, and the Tax Foundation provides this useful map:
Taking note that none of these numbers includes $18.40 added per gallon by the federal government, we can say that Rhode Island is most definitely not in need of new taxes on this basic fuel. If the TCI tax were to be implemented at the 17-cent high that has been cited, the Ocean State would rocket to 4th highest.
My weekly call-in on John DePetro’s WNRI 1380 AM/95.1 FM show, for January 13, included talk about:
- A union president accuses race heretics
- OPEB swamping Providence and Warwick
- Fear about “red flag” laws
- The legislative session starts
- RI losing claim to a Congressional seat,
- The rolling fundraising party of the State House
The more freedoms we have, the more prosperity we will enjoy. The constitutional government of our great nation was formed to preserve our freedoms. But in the Ocean State, we reduce freedoms … and we suffer the consequences.
As the 2020 General Assembly Session begins, and we are once again looking at even more of status quo (or worse) based on the policy agenda from the political class, when will Rhode Islanders say enough is enough?
Instead of focusing on the real issues harming the business climate of our state… the insiders are looking to restrict the rights of citizens by stopping the use of plastic straws and bags. Give me a break.
Back before many people trusted the Internet as a medium through which to conduct consumer transactions — or even thought to use it for that purpose — I would periodically travel over the bridge from the University of Rhode Island to Newport to hit the Music Box, a record store on Thames Street. When searching for recordings of the (sometimes relatively obscure) music I was studying for performance or theory, a trip of that distance was often unavoidable.
Now we’ve reached the point that almost any recording you might want to hear is available instantly on a portable device for a relatively inexpensive annual subscription. It isn’t difficult to understand why the business model of stores like the Music Box has hollowed out.
As Scott Barrett reports, however, Rhode Island’s pitiless government didn’t make it any easier for the store — which just closed after extending its life by changing its product mix — to survive:
Jay added that operating a business in Rhode Island, and Newport specifically, is getting more and more difficult because of the mounting taxes.
Express, a clothing store located directly next to the Helly Hansen store, also had signs in the window Thursday announcing a going-out-of-business sale. An associate at Express told The Daily News the store will close at the end of the month. Across the street, a pair of stores — The Tourist Trap and Nautical & Nice — had signs on the door that read “Sorry, closed.”
Defenders of Rhode Island’s insider status quo sometimes assert things like, “Businesses don’t go under because the tax rate is a couple percentage points higher,” or, “People move south for the weather, not the tax savings.” Such arguments, while they may be untrue because too simplistic, make valid points, but they miss the critical point. Our government shouldn’t be laying sticks on the camel; it should be striving to accomplish what it needs to accomplish with the least amount of disruption possible.
Politicians are terrible at predicting and adequately considering the consequences of their policies. Rhode Island officials frequently prove they can manage to provide targeted incentives so new businesses can overcome the artificial barriers, but they should be making business easier across the board so legacy businesses like the Music Box can better survive the changing landscape.