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The Gasping of the Golden Goose

Ted Nesi tweets that state tax revenue data for March was down 26% from the expected $52.6 million, at $39 million, which Director of the Revenue Rosemarie Booth Gallogly calls “sobering.”  That’s actually not the whole story.

The numbers Ted cites are actually just income tax.  Looking at the monthly estimate to actual report from the office of Revenue Analysis shows that the $13,556,296 shortfall in income tax is only part of the $23,761,918 shortfall in all taxes, the $25,002,703 shortfall in total taxes and departmental receipts, and the total general revenue shortfall of $27,586,944.  Almost every major tax was down, except the sales tax, by a little.

That’s more than the controversial annual cost of the HealthSource RI health benefits exchange.  It’s more than twice the controversial 38 Studios bond payments.  And it’s on top of projected deficits, expected loss of gambling revenue, and the budget-busting decision to lure more Rhode Islanders into Medicaid.

It’s important to note that the previous table, which shows year-to-date revenue isn’t quite as discouraging, yet.  Total general revenue is only down $1.877,918 (-0.1%) for the year.  Still, all of the data points accord with the shrinking workforce and an anecdotal sense that Rhode Islanders are just demoralized and giving up, as personified by a governor who seems most focused on starting his retirement speaking tour early.

I’d suggest that these holes can’t be patched, and that trying to do so will only accelerate the decline.  The state needs a radical readjustment of its priorities, emphasizing the free economic activity of its residents.  Rhode Islanders need a bold shot in the arm to give them a sense that things can turn around

More tightening of the leash and moving of the needle in the wrong direction can only hurt.

Tech Collective Defends the Governor’s Workforce Board… and Most of Its Own Revenue

Another organization speaking out against the RI Center for Freedom & Prosperity’s Spotlight on Spending report appears to have a business model that charges dues for access to taxpayer-funded services.

$5,000 – or .000022 – Worth of Sunday Morning Grins & Giggles Courtesy PolitiFact RI

On a personal note, I’d like to sincerely thank PolitiFact RI for starting my day with a big smile this morning, though perhaps they would not be altogether pleased at the reason.

In today’s Providence Journal, they’ve rated a statement by the Rhode Island Center for Freedom and Prosperity (hereinafter “the Center”) pertaining to the $224.5 million in wasteful spending identified by the Center in the governor’s proposed 2015 budget. PolitiFact is not questioning that the state gave away the $5,000 example offered by the Center of an expenditure item in the Governor’s Workforce Board from a prior year. PolitiFact is only saying that the Center did not fully explain what the $5,000 in hard earned taxpayer dollars was spent on.

The Ultimate Joy of Overtime, Part Three of Three: 3 State Employees Tripled Their Pay With O.T.

RIOpenGov data finds three state employees who managed to triple their income, or more, with overtime.

Consolation Prizes for East Bay Legislators?

The rise of East Bay representatives with the ascension to Speaker of the House of Nicholas Mattiello (D, Cranston) is an interesting development to watch. John “Jay” Edwards (D, Portsmouth, Tiverton) is now House Majority Whip.  Raymond Gallison (D, Bristol, Portsmouth) is now chairman of the House Finance Committee.

Some folks have suggested that it’s an indication that the tolls on the Sakonnet River Bridge may be removed, despite Mattiello’s having been the main proponent for the tolls the night they passed the House two years ago.  In Rhode Island politics, however, explanations that work from the top down tend to be more predictive than those that work from the bottom up.  Assume that leadership’s objectives are being maneuvered, not regular members’.

Another possibility is that leadership positions are consolation prizes for the East Bay representatives.  I’ve been suggesting that the legislative fight against the tolls has been little more than a distraction dance.  For all intents and purposes, the only legislators who must fear the displeasure of the East Bay are our own, and if they are boosters of the Democrat leaders, then it makes sense for them to contrive some cover.

How many times has Buddy Cianci said that Edwards has done the “yeoman’s work” trying to stop the tolls?  And yet, the delays remain only delays.  Some firey speeches on the House floor (though Edwards never withdrew as deputy majority leader under Gordon Fox), some commission hearings, some unlikely legislation (requiring other reps to impose new taxes on their own constituents), and voila the people of the East Bay think their reps did everything they could. And now those reps are in “leadership” positions… why rock the boat?  Maybe they’ll be able to help in other ways, moving forward.

Out of ceaseless hope and optimism, I haven’t wanted to pick between these two possibilities in the past couple of weeks.  I must say, though, that news that first-time, mostly quiet Representative Dennis Canario (D, Portsmouth, Little Compton, Tiverton) has become deputy majority leader begins to sway me back toward the distraction-dance thesis.

It just feels like preparation for the election-season line that “the East Bay shouldn’t give up its big role in leadership.”

The Joys of Overtime, Part Two of Three: 102 State Employees Doubled or Better (100-199%) Their Salary with O.T.

The RIOpenGov Web site shows 102 state employees who doubled their salaries or more with overtime and other pay.

The Joys of Murky Data, Part One of Three: 500 State Employees Boosted Their Pay in 2013 by 50-99% of salary with O.T.

New transparency releases and updates from the RI Center for Freedom & Prosperity help fill out the picture as Rhode Island follows the pension settlement ping pong.

More From Rhode Island’s “Business Voices”: RI Hospitality’s Worforce Board Funding Stream

Employees of the RI Hospitality Education Foundation came to the defense of the Governor’s Workforce Board, which the RI Center for Freedom & Prosperity recommended eliminating, and which supplies one-third or more of the foundation’s funding.

The Difference the Tax Cut Makes, Corporate versus Sales

Comparison of a theoretical corporate income tax rate with a comparable sales tax cut illustrates the way in which cutting different taxes benefits different groups and shapes the economy differently.

10 News Conference Wingmen, Episode 25 (Spotlight on Spending)

Friday’s discussion on Wingmen was about the RI Center for Freedom & Prosperity’s Spotlight on Spending report.

“Spotlight on Spending” Report: Where Have You Been All of My (Political, Taxpaying) Life?

Fine, tell me I need to get a life. But it is not an exaggeration to say that the “Spotlight On Spending” report compiled by the R.I. Center for Freedom & Prosperity and released Tuesday made my year.

Rhode Island currently has the eight highest local and state tax burden. While this is up from sixth highest, it is clear that we continue to spend beyond our means and our ability. Yet we’ve been told repeatedly – sometimes explicitly (thank you, Rep Tanzi); usually more subtly by the substance of the budget itself that emerges from the end of the legislative session – that there is nothing left in the state budget to cut. The “Spotlight On Spending” report resoundingly contradicts this.

HealthSource RI Numbers in Perspective

Coverage of HealthSource RI results is setting Rhode Islanders up to be blindsided by budgetary reality, as a massive fraud and failure is presented as a success.

Possible Spotlight on Spending Error Makes the Point Better

Randal Edgar’s Providence Journal front-page article on the RI Center for Freedom & Prosperity’s Spotlight on Spending report (which is much better than the article featured on the paper’s Web site, last night) raises another small-dollar item from another year that we used as an example:

Preserve Rhode Island questioned the assertion that a $3,000 Certified Local Government Grant to the town of Bristol to “produce a smart-phone application to guide visitors” through the town’s historic areas had led to downloads by only about 100 people.

“The Bristol Walking Tour project is only in the planning stage; no walking tour smart-phone application has been developed,” the group said.

As we wrote in the introduction to the report, government spending is so massive and difficult to trace that it would be impossible for interested citizens to assess it without a little margin for error, and in this case, we may have been incorrect to think that the Bristol community app featuring a “historic walking tour” released at the end of the 2013 fiscal year was the one for which taxpayers paid during the 2013 fiscal year.

If it was an error, though, I wish we hadn’t made it mostly because the reality serves our point even better, for three reasons:

  1. We paid $3,000 in FY13 for an app, and as we approach the end of FY14 (and the tourist season), it isn’t even in development, yet, but still in planning? I’d say that’s clearly “non-essential spending.”
  2. If the app that we highlighted in the report was entirely funded by private organizations, why is the government (much less the state government) getting involved at all (much less to produce a duplicate product)?
  3. As phrased, Preserve RI was contesting our characterization of the number of users of the app. Does anybody really think that an app produced by the government and with a much narrower scope than the one we described would actually do better?

The Consequences of Bad Government, Tiverton Edition

So, the Tiverton Youth Soccer league — an independent community group in our town that works with networks in Rhode Island and Massachusetts to provide (not-for-free) year-round soccer programs for interested children in the town — has sent out an interesting request by email:

Dear Parents,

Every year the town has rolled our fields at the beginning of each season. With the recent departure of our Town Maintenance Person and helper the DPW said it is too busy to do it at this time.

If you have a roller or access to a roller and could possibly complete such a task please reply to this email ASAP.

In general, I’m energized by the idea of people in the community coming together to accomplish things for each other without having to make people who aren’t interested pay the bill. But here’s the thing: The fields are town property, and maintenance is factored in to our tax bills. This is a service for which we’re paying.

So, what were the circumstances of “the recent departure of our Town Maintenance Person”? Well, Channel 10 filmed him stealing time from the town, doing work on his own rental properties while on the clock.

And what were the circumstances of the departure of his “helper”? Well, the (now-former) town administrator fired him for being a whistleblower, which is explicitly against the law, and for which the town is now being sued.

The Tiverton Town Council allowed both the maintenance foreman and the administrator to retire gracefully (while being dishonest about the background of their decision). In fact, Maintenance Foreman Bob Martin is technically still employed by the town, until his retirement on April 22.

The local political action committee Tiverton 1st, which promoted the current town council and worked closely with Democrat state Representative John “Jay” Edwards, ran on assertions that they were the real supporters of community and alternatives were evil interlopers trying to “destroy the town.” Somehow, I don’t think the folks who voted for them thought they meant that they’d build our sense of community by forcing us to do volunteer labor because corrupt town employees were busy enjoying early retirements.

Picking Nits in Outrageous Underwear Spending

It appears that members of the Rhode Island media are digging into a report that found $225 million in cuts to the next state budget and focusing on two passing examples of past spending that aren’t even included in that total.

Spotlight on Spending Illuminates Priorities

A new report from the RI Center for Freedom & Prosperity should convince Rhode Islanders that government officials’ priorities are what they fund, and there’s plenty of room to adjust those priorities.

HealthSource RI’s Million Dollar Media Buy

HealthSource RI has spent $1,115,666 on advertising for the five-month period from October 13, 2013, to March 14, 2014.

Another Indication Government Can Shrink

Michael Barone reports the findings of Canadian economist Livio De Matteo, who says that the optimal size of government — in terms of economic growth — is 26% of GDP. Having not investigated how De Matteo gets to that number, I can’t say whether it’s unreasonably high or even too low, but out of curiosity: How do we stack up in Rhode Island?

Given available data, 2011 is a good year to check, and it looks like the following:

  • Rhode Islanders’ portion of federal spending: $12.75 billion
  • State general revenue spending: $2.96 billion
  • State restricted receipt spending: $0.16 billion
  • Total municipal tax levy: $2.25 billion

That list misses some stuff, such as fire district taxes and municipal revenue not included in the levy. (I went with levy rather than budget because much of the additional spending would double-count federal dollars.)

Duly noting the minor tweaks, that list totals to $18.12 billion, or 37% of the state’s $49.42 billion GDP that year. Government is 41% to big in Rhode Island. Put differently, optimal economic growth would require the three tiers of government to cut their Rhode Island–related budgets by $5.27 billion.

That’s a big number that nobody would expect to realize, but it kind of puts in context the few hundred million dollars that the RI Center for Freedom & Prosperity projects to be the cost of eliminating the sales tax, doesn’t it?

Blaming the Rich a Distraction in Question of Income Stagnation

The disconnect of productivity from inflation-adjusted income ultimately points back (once again) to the meddling of government in the economy.