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Bright Today Educational Freedom Scholarships To Counter Collective Bargaining Inequities

At a cost of approximately $888 per year for each of Rhode Island’s one-million or so residents, a typical family of four is paying over $3500 annually to support the extravagant compensation programs for government workers, while the basic needs of their own families are being ignored by politicians.

Beyond these extreme financial costs, there may be an even more corrosive impact from this kind of political cronyism.

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The Mystery of Deteriorating Roads

As is true around the state, the condition of the roads are a constant (and justified) complaint in Tiverton, with a particular focus on those that the state owns and, therefore, is responsible to fix.  Oh, they’re on the 10-year plan for repair, but that means at least five more years — five more winters and five more thaws — until the worst of them are addressed.

A local landscaper asks a question that occurs to many Rhode Islanders, in one form or another:

Louis Dupont, said the state “better do something.”

“The state gets all this money from the lottery. Where does it go?” Dupont asked. “That baffles me. All that money. Where does it go?”

Asked his opinion of the eastern stretch of East Road, Dupont says: “The tractor almost jumps off the trailer.”

The state now has a $10 billion budget, and the municipalities collect another $2.5 billion in taxes on top of that.  Where does all the money go?

Well, this is the Know a Guy State, and budgets fund special favors, handouts, pet projects, and a substantial pay premium for government employees.  Once a chunk of cash is claimed for anything or anyone, it becomes an entitlement that is extremely difficult to take away.  When money does go toward infrastructure, cost-growing mandates from the state, such as prevailing wage, drive up the expense to ridiculous heights so taxpayer dollars can’t go as far as they otherwise would.

Big-government politicians everywhere understand that they’re better off siphoning money to things that shouldn’t be priorities so that the public will consent to higher taxes and more fees in order to fund the things that they really care about, and Rhode Island has made that principle a way of life.  Until we stop shaking our heads and writing it off simply as the way things are around here, the practice will continue.

But imagine if we insisted on change and our roads were rapidly repaired, perhaps even while we experienced a reduction in taxation.  Decline has been a choice, and it is within our power to reverse it and rocket up the national rankings that give Ocean State residents a near-monthly slap.

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MA and Fall River Should Help with Their Drug Dealers’ Disruptions

The only recreation marijuana store in Fall River is experiencing booming business, and it’s disrupting the neighborhood, not to mention one of the major traffic areas into Tiverton:

“We totally understand their frustration as far as last week because it was mayhem,” said Kyle Bishop, the dispensary’s chief operating officer. “The Fourth of July was insane.”

Bishop estimated that business at the dispensary was up 30% over the holiday weekend and that as many as 1,800 customer transactions were taking place daily.

To help remedy the problem, Northeast Alternatives is considering making some changes. Bishop said the business will request an increased police presence to help direct traffic at the intersection of William S. Canning Boulevard and Commonwealth Avenue, to which the dispensary’s parking lot is connected. Police will also create a new traffic lane at the intersection using traffic cones on weekends, Bishop said.

The dispensary will also post signs discouraging customers from parking on the nearby residential streets of Commonwealth Avenue and Heritage Court and have private security patrols of the neighborhood.

That’s all well and good, but a piece of the puzzle is missing.  The Commonwealth of Massachusetts collects a 10.75% excise tax on top of the 6.25% sales tax on marijuana, and the city is allowed to pile on another 3%, for a total of 20% of every sale.  If there’s any legitimate use of all that extra money, it’s dealing with the challenges that the state’s entry into recreational drugs might create.

In short, modifying that stretch of road to accommodate the cash cow should be a top priority.

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Larry Fitzmorris: All Down Side, No Benefit to Portsmouth Unifying High School with Newport

In a stunning decision, the Portsmouth Town Council voted 7-0 on June 24 to enter into discussions with Newport for joining the two high schools into a unified system. The proposal by Newport School Superintendent Colleen Burns Jermain had been rejected by the Middletown Council.

We have been down this road before. This decision reverses a May 2011 unanimous vote by the Portsmouth School Committee to end discussions on regionalizing all three of the Island’s districts and reject any regional approach.

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Rhode Island’s Politicians Are Failing

For too long, the political class has failed the people of our state. At $888 per year for each of Rhode Island’s one million residents, a family of four is paying over $3,500 annually for excessive compensation deals for government workers, while the basic needs of their own families are being ignored by politicians.

With almost two-thirds of these excessive costs being heaped upon municipal taxpayers, our recent Public Union Excesses report further estimates that property taxes could be reduced by 25% if more reasonable, market-based collective bargaining agreements were negotiated.

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Rhode Island: An OK Place to Live

Obviously, the more subjective the thing an index attempts to measure, the more subject it will be to interpretation, and WalletHub has made a cottage industry of cranking out subjective rankings.  That said, the Web site’s “Best States to Live in” ranking from June has some interesting considerations for the Ocean State.

Notably, the Ocean State is supposedly the 29th best state in which to live… which seems OK, considering Rhode Islanders’ expectation to come in at the very bottom of all rankings.  OK begins to look not so good, though, when one zooms out on the map.  WalletHub claims Massachusetts is #1 and New Hampshire #3.  Vermont and Maine are both in the teens, and Connecticut comes in at #20.

Looking at the subcategories, RI’s worst result was in “affordability,” which shouldn’t surprise anybody.  The Ocean State was the fourth least affordable state, after New York, California, and New Jersey.  But here’s the thing:  No New England states are very affordable.  Massachusetts, for example, is 43rd and New Hampshire is 42nd.

So what makes the difference?  Massachusetts is in the top 5 for everything else:  economy, education & health, quality of life, and safety.  New Hampshire only misses the top 5 in quality of life.  Meanwhile, Rhode Island only breaks the top 20 on the safety subcategory (at #5).  The conclusion is that Rhode Island might not be able to avoid being expensive, but that only means it can’t afford to be unattractive by other measures.

Here’s where the subjectivity of the index becomes important.  Quality of life includes things that Rhode Island can’t help, like the weather, and things that depend on one’s values and interests.  The importance of “miles of trails for bicycling and walking” will vary from person to person.

But quality of life also includes things like the quality of the roads, which is pretty universally valued.  Meanwhile, multiple criteria that the index uses center around leisure activities that cost money, which means disposable income is a factor, as is the ease with which businesses can pop up to answer the demand.

MIT’s Living Wage Calculator states that a single Rhode Islander needs to make $12.35 per hour over a 2,080-hour workyear.  However, $1.86 of that goes to taxes.  For comparison, in New Hampshire, only $1.50 per hour goes to taxes.

This all suggests an unsurprising solution for improving Rhode Island’s standing:  lower taxes, use the money that is collected for things that are of more universal value, and decrease regulations.  We’d all have more money to spend, we’d feel better about our day-to-day life, and we’d be better able to answer each other’s needs.

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The State’s Casino Monopoly and a Wall Street Gamble

For practical purposes, the Twin River casinos are government run, with the state contracting its monopoly of the gambling market to the private company.  However, it’s worth remember from time to time that isn’t how the market sees the business:

In just over three months as a public company, the owner of the Tiverton Casino Hotel in Rhode Island has rapidly gained a following in the hedge fund community. Currently, 10 hedge funds own shares of Twin River, a massive amount for a $1.22 billion company that does not have two full quarters of trading under its belt. …

Twin River owns the only two casinos in the Ocean State, giving it a competitive advantage there. While a new regional threat is emerging in the form of Wynn’s recently opened Encore Boston Harbor, TRWH has some avenues for stemming the rivalry, including a different target demographic and legalized sports betting.

The entire arrangement has long cried for a thorough public discussion of this unique business model, so as to understand Rhode Islanders’ perspective on having a government that has essentially displaced the mob.  The interface with the investment markets adds another dimension.  Because, as the linked article highlights, the monopoly standing of Twin River is a marketable financial asset, should state and local taxpayers continue to benefit only by our percentage of the gambling profits?

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Straight Up Taxpayer Dollars for Promise of a New Treatment

After Steve Ahlquist firstbrought attention to the million dollar handout that the Rhode Island House wishes to give to Dr. Victor Pedro for his Cortical Integrative Therapy (CIT), a WPRI report covered the history of Pedro’s taxpayer funding.  One can’t help but feel that there must be more to the story:

  • Legislative leaders have long gone to bat for the doctor.
  • The executive branch has apparently made extra efforts to secure Medicaid funding for his treatments.
  • And even mild-mannered Lieutenant Governor Daniel McGee has spoken well of Pedro, including his activities in Cumberland schools back when McKee was mainly known as a mayor for that town.

Amazingly, though, nobody has yet mentioned the connection of pop star Paula Abdul, which takes an only-in-Rhode-Island turn.  Says Abdul:

I wish I’d had Cortical Integrative Therapy when I first discovered I had RSD, and I wish Dr. Pedro had been a part of my support system then like he is now.  The treatment replaces the old tapes in your head that have held onto the tapes of pain.  It helps your brain to allow for new experiences and new memories that don’t involve pain.  Think of it in terms of a computer — you’re deleting old files so you can free up more space.  I didn’t find out about Cortical Integrative Therapy until recently, and it has proved to be a life-changing treatment for my RSD.

The strange Rhode Island turn is that Abdul has another connection to Rhode Island as the long-time girlfriend of John Caprio, son of Caught in Providence star judge Frank Caprio and brother of the former treasurer and gubernatorial candidate of the same name as well as former representative David Caprio.  Various online sources also seem to indicate that Abdul has set up various businesses at 2220 Plainfield Pike in Cranston in the past.

This topic could certainly take a serious turn into political theory as an example of why government shouldn’t be in the investment and research business, why Rhode Island should end legislative grants, and why the governor should have the line-item veto.  If Pedro is an innovative practitioner of alternative medicine for the stars, he shouldn’t need government subsidies.

For this post, though, let’s just close with a sincere hope that Rhode Island’s press is sufficiently interested to unravel this entire peculiar tale.

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Upcoming Budget: More Privileges for Insiders or Real Help for RI Families?

With the General Assembly session nearing the end, we fully expect the new state budget to contain no meaningful remedies to the many problems that plague our state, such as high taxes across the board, high energy and healthcare costs, and onerous regulatory burdens on job-producers. In our Public Union Excesses report, we identified that there are $888 million per year in excessive collectively-bargained costs, responsible for driving up local property taxes by up to 25%.

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Dr. Stephen Skoly: Opioid Tax Bill Would Harm Families and Businesses and Do Nothing to Address the Problem

The opioid epidemic is a widespread, complicated problem, and only a collective effort will begin to solve it. The healthcare community and lawmakers need to work in tandem to find policies that effectively lessen opioid abuse while still keeping our state’s economic health as well the health and safety of the patient in mind. It’s unfortunate, however, that Senate Bill S0798, the Opioid Stewardship Act, fails on both accounts.

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Help Spread the Word About the Cost of Government Unions

Wow, has our report shaken up the status quo! We have done the research, and we have connected the dots. The number one driver of the Ocean State’s declining population and jobs numbers – the high property taxes we all pay – can now be directly connected to the excessive costs of government, as mandated by government union collective bargaining agreements.

Now, we are asking your support to help us spread the word.

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Rhode Island’s Political Leaders Are Failing on Their Promise to Help Average Families

At $888 per year for each of Rhode Island’s 1 million residents, a family of four is paying over $3,500 annually for excessive compensation deals for government workers, while the basic needs of their own families are being ignored by politicians.

With almost two-thirds of these excessive costs being heaped upon municipal taxpayers, the report further estimates that property taxes could be reduced by 25% if more reasonable, market-based collective bargaining agreements were negotiated.

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Unfairness in RI Government’s Priorities

Mike Stenhouse’s recent op-ed in the Providence Journal puts the RI Center for Freedom & Prosperity’s Public Union Excesses report in a broader context:

Beyond these extreme financial costs, an even more corrosive impact from this political cronyism is at play. People have lost trust in their government and are fed up with betrayals from lawmakers who have forgotten them, who cater only to special-interest concerns. Lawmakers make it ever-harder for people to take care of their families and reside in Rhode Island.

For these reasons, Rhode Island is not keeping pace with the rest of the nation when it comes to jobs and population growth. After 10 years of perhaps the slowest economic recovery among all states, Rhode Island’s political leaders are failing on their promises to help the average family.

Instead, by heaping more privileges upon those who help get them elected, politicians continue to lose the trust of the people, who are also losing hope for their state. These tragic circumstances have conspired to make it a virtual certainty that the Ocean State will lose a prized U.S. congressional seat after the 2020 national census because of its stagnant population growth.

Rhode Island strangles its families and businesses with taxes and regulations, but often, the sheer unfairness of the system can be the real poison.  As a member of the Tiverton Town Council, yesterday I participated in a “business walk” hosted by the Newport County Chamber of Commerce, which involved stopping in to talk with some business owners around town.

Of course, we heard about the problem of taxes, but the subjects that really animated business owners would better be classified as injustice.  The cost of government labor was seen not only as a cause of high taxes, but also as a budget imbalance preventing infrastructure improvement.  Similarly, the capriciousness of enforcement, with the rules not seeming to apply fairly to every business and changing depending on which government inspector paid a visit, is irksome beyond the cost.

Even after figuring out how to overcome all the regulatory obstacles that the state throws in their way and even after building high taxes, regulation-driven energy costs, and government bungled healthcare expenses into their business models, they still never know when an inspector will find some new rule to enforce or the legislature will come up with some new fee or obstacle to impose.

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How Much Union Members Are Paid, And How Much Taxpayers Can Afford

With the third highest property taxes in the country, a major encumbrance within an overall anti-taxpayer and anti-business climate that has dropped Rhode Island into bottom-10 rankings in a number of critical national indexes, the excessive costs of collectively bargained government services can be directly linked to this statewide problem.

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Local Pensions and the Labor Squeeze

A summary for Pensions & Investments of Rhode Island’s latest report concerning local pension plans passes a spotlight quickly past the ways in which government agencies, aided and abetted by labor unions, obscure the costs of benefits:

For the underfunded plans, assumptions about investment returns and payroll growth “may not be realistic,” said the report, which cited Providence’s 8% return assumption as the highest in the state.

“In more than a few cases … local pension liabilities are, or have the potential for, crowding out other important budget priorities.”

Take a look at the scorecard for Providence on page 22 of the report.  The plan is 26.3% funded, which means it would have to have about three times more money in the fund collecting investment returns right now in order to be solvent.  The city assumes that its payroll will only grow 3.5% per year, which must account for both raises and new hires.  It also assumes an unrealistic 8% return on its investments every single year, which means it can put less actual money into the plan each year, because it assumes more will come from investments than is likely.

To top it all off, Providence has more former employees collecting pensions than it has employees paying into the system.  Consequently, it pays out more every year than it adds to the fund, by about 4%.

Think about that.  The city’s pension fund is actually shrinking, not growing.

In order to buy labor peace, Rhode Island governments have made huge retirement promises.  So they don’t break the bank, they’ve then disguised the true cost with unrealistic assumptions.

That sword cuts both ways, though.  Because the pressure that the pensions should be applying to budgets is drastically understated, labor unions are able to push for bigger raises and benefits for active employees, which has crowded out the money for appropriate pension funding.  Now that accounting standards are making pension funding more visible and even mandatory, it has joined with other labor costs in squeezing the budgets for other expenses — even as prevailing wage and other union rules have ensured that the money for those other expenses cannot go as far as it should.

As the RI Center for Freedom & Prosperity’s new report on excessive labor costs shows, these and other problems are creating a huge additional burden on our state, which is already struggling to meet budgets while allowing its economy to grow.

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The Balance of the Budget Under Collective Bargaining

Today, the RI Center for Freedom & Prosperity released a major study that I coauthored with Penn State business professor Dennis Sheehan about the effects of collective bargaining in the public sector on the cost of government.  Using both statistical estimates and reviews of specific contract provisions and budgets, we found that the state government’s cost of labor is $96–299 million too high, with an additional total for all municipalities, school districts, and fire districts coming in at $228–825 million.

Our “best estimate” for the combined total excess for the whole state is $888 million, or 21%.  This is money that state and local governments should be able to use for other purposes, including tax relief.  In this sum, we see the primary reason that state and local governments never seem to have enough money to accomplish basic objectives like maintaining buildings, roads, and bridges and why our taxes are still among the highest in the country.

There is a lot to the report, and we’ll be laying it out in detail and building on it over time.  The ultimate conclusion, however, can be seen in the following chart.  We chose Portsmouth for our most-detailed analysis because it is the median town for taxes and population and also makes a good amount of the required information publicly available.

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One way to understand this chart is to take the two largest segments as the baseline budget that the town must have to do everything it currently does, with market-rate employee compensation in green and the budget for everything else in dark blue.  Right now, every wedge on the chart in between those two goes toward employee pay and benefits.

If the report’s “low-end estimate” of excess compensation is correct — that is, if we use our most conservative methodology — the second-darkest blue wedge could shift from employee compensation in order to pay for other expenses or to provide tax relief.  At the other end, if even our “high-end estimate” of excess is accurate, nearly one-quarter of the town’s entire budget could be shifted away from paying employees.

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Rhode Island Is Losing The Competition Between States – Look for Major Report by Center

Although the state’s rank stayed the same, this month was not a good month for the state on the Center’s Jobs & Opportunity Index. Rhode Island remains last in New England at 47th place in the country. Employment was down another 521 people from the first-reported number for February, and the labor force dropped 1,234.

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Low Revenue and Locking in the Union Advantage

A week ago, Providence Journal reporter Katherine Gregg tweeted out that the state’s revenue was under performing by about 7%:

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Note two things.  First, if not for the application of sales taxes to new items, especially online, and an increase in the various fees and such that make up “departmental receipts,” the picture would be significantly worse.  Second, about half of the shortfall is attributable to unexpectedly low income taxes.

This is fully in keeping with the latest Jobs & Opportunity Index report from the RI Center for Freedom & Prosperity, which found that Rhode Island is uniquely lagging the country in residents’ personal income growth.  In fact, we were the only state to lose personal income between the latest report from the Bureau of Economic Analysis and the originally reported numbers for the prior quarter.

Combine that fact with a downturn in employment in the Ocean State, and we’ve got a clear warning sign that we need to change direction.  Unfortunately, our governor is busy pushing progressive social-welfare policy while the General Assembly is hurrying to grab the unions everything they can before the next downturn.

That last note kind of makes one wonder what the legislators know that the rest of us don’t.  If they are expecting another recession in Rhode Island, that would be the time to lock in as much as they can for their friends in the labor unions.

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The Employment Situation In Rhode Island Is Getting Worse – Bucking National Trend

Happy Easter from everyone at the Center to you and your family! We hope you had a great holiday weekend.

We wish we had better news to deliver. Unfortunately, the employment situation in Rhode Island is getting worse, bucking the national trend. While state politicians crow each year about not implementing broad new taxes, the unfortunate truth is that by nickle-and-diming residents and by not implementing aggressive reforms Rhode Island will continue to lose ground, nationally.

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