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​How Does the Governor Reconcile Her Support for Lower Electric Costs with Her Push for Renewable Energy?

All eyes on Philadelpha and the Democrat convention, of course. Thanks to Wikileaks, by the way, for furnishing an interesting Rhode Island connection for us all to speculate on.

Meanwhile, it’s important not to totally lose sight of stuff going on back in Rhode Island. The debate about a natural-gas powered electric plant proposed for Burrillville, for example, moved into the arena of the PUC this week.

The hearings are set to run Monday, Tuesday and Wednesday and will differ markedly from the public hearings that have been held so far on the application, which gave Burrillville residents and others the opportunity to air their opinions and concerns about the power plant but didn’t allow for any back and forth.

On Thursday, Governor Raimondo called into the WHJJ Morning News with Ron St. Pierre to defend her support of the plant. (Podcast.) In doing so, she said

Well, I support natural gas because I support lower energy costs and lower electricity costs for Rhode Island.

That’s a pretty categorical statement. Yet only seven months ago, the Governor signed an Executive Order

… committing state agencies to get 100 percent of its power from renewable sources by 2025

Further, in February,

A bipartisan group of 17 governors, including Governor Raimondo, have signed a pact agreeing to work together to build modern, sophisticated transmission grids and to advance clean energy and transportation technologies. Called the Governors Accord for New Energy, the agreement includes commitments to diversify energy generation and expand clean energy sources

All of these actions by Governor Raimondo are a big problem for everyone’s electric bill and a huge conflict with what she said on WHJJ. Because the dirty little not-so-secret about renewable energy is that it is far more expensive than conventional energy. Further and worse, as an important new report by the Rhode Island Center for Freedom and Prosperity demonstrates, the state’s continued pursuit of renewable energy would come at a high cost to ratepayers and taxpayers while providing an extremely poor return on greenhouse gases abated BY THE EPA’S OWN STANDARDS. In fact, the cost of renewable energy to Rhode Islanders could be as much as five times higher than the EPA recommends.

The Governor seems to want to manage her stance on energy in silos. “I’ll support the gas powered energy plant and say that I support lower electric rates and that will cover me with a lot of Rhode Islanders. Meanwhile, I’ll aggressively push renewable energy mandates onto ratepayers and taxpayers and that will satisfy the environmentalists.”

But it does not work that way, on any level. Firstly, the walls of the silos are not opaque. So everyone, whether inside a silo or outside of it, can see what she is doing in all of them. Far more importantly, the effect of her actions in one silo do not remain contained therein: what she does in one – the renewable energy silo, in this case – will most definitely have the effect – higher electric rates – that she claims to deplore as she’s standing in another.

Her words, to phrase it more plainly, do not match her actions. And that’s a real problem for the ratepayers (let’s remember, this category includes businesses) of a state that has some of the highest electric rates in the country. They very much need her actions – a wholesale repeal, not an expansion, of very expensive renewable energy mandates – to match her words when they open their electric bills every month.

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When the High-Tax Advocates Feel Free to Speak Their Minds

If the Town Council follows through with the Budget Committee’s threat to end trash pickup in Tiverton (or charge extra for it), it will be because elected officials and their supporters want to teach taxpayers not to attempt to control their taxes.  But the real lesson will be that we must be more careful about whom we elect to office.

At the May 21 financial town referendum (FTR), 1,224 voters out of 2,210 approved Budget #2, for a 0.9% tax increase, resulting in zero increase in the property tax rate.  That made supporters of a much-bigger tax increase angry; here are some examples of things that they wrote on the Facebook page of the local activist group Tiverton 1st:

  • May 21. Budget Committee member Deborah Scanlon Janick: “Make sure you all personally thank Justin Katz when you lose the services you are used to.” (Somebody even printed up business cards at this time, telling people to call my cell phone and complain.)
  • May 22. Former Town Council Vice President Joanne Arruda: “First thing… snow plowing… I know this is awful, but those people who put in this budget out there and had their minions vote for it will have to be affected.”
  • May 22. Tiverton 1st organizer Mike Silvia: “… in this town, the uninformed and greedy followers who outnumber the community-minded aren’t smart enough to know they’re being played.”
  • May 26: Tiverton 1st activist, school department employee, and school committee candidate Linda Larsen: “Unfortunately, [voters] won’t care until they feel pain. … It won’t make a difference unless it becomes personal.”
  • May 26: Tiverton 1st organizer Kelly Anne Levesque: “I would like to see trash pickup removed which will require you to schlep your maroon bags to the dump or hire a private company.”
  • June 7: Deborah Scanlon Janick: “The residents of Tiverton will pay the price for voting for Budget 2 or for not voting at all.”

Continue reading on Tiverton Fact Check.

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OPEB: Another Hole and a Proof of Problem

This Patrick Anderson article about Rhode Island’s liability for other post-employment benefits (OPEB) for employees shouldn’t slip by without notice for two reasons.  First, OPEB is another drain on the budget, which already limps along from year to year in structural deficit:

Rhode Island needs to contribute $60.7 million toward non-pension retiree benefits, primarily health insurance, in the budget year starting in July 2017, the state’s actuary said Friday.

That FY2018 contribution was approved Friday by the Other Post Employment Benefit Board, the panel that oversees health insurance liabilities for retired state employees, teachers, judges and state police officers.

Perhaps more significant, though, is the teachable moment arising from the math involved:

The OPEB trust fund assumes a 5-percent annual investment rate of return and made 9.2 percent in 2014, then 7.8 percent in 2015, the report said.

Why should the OPEB trust fund assume a 5% return when the pension fund assumes 7.5%?  To be more clear-eyed than cynical, the reason seems likely to be that 5% is more realistic (although still at least one percentage point too high for an assumption that’s supposed to be a sure thing), but the state’s politicians and other insiders simply couldn’t withstand the reality of a more responsible investment plan.

Then-Treasurer Gina Raimondo kicked off her pension reform initiative with the “crisis” created by lowering the return assumption by just half a percentage point.  Lowering it another 2.5 percentage points (let alone 3.5) would make it absolutely plain that the state government has been hoodwinking the public (and its employees) and faces either a huge tax increase, a huge benefit reduction, or a huge elimination of other services.

We shouldn’t delude ourselves.  The bill is coming due, and the longer we allow the state government to put off acknowledging it and addressing it, the more painful it’s going to be.  Unfortunately, the people whose elected or appointed jobs are to keep the state running smoothly are almost certain to let the irresponsibility drag on in the hopes of either a miracle or a path to quietly impose higher taxes on us, either through our state taxes or our federal taxes.

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The Pension Disaster Will Be Addressed

Springboarding from the woes of California’s public-sector pension problems, The American Interest suggests that it might be too late to avoid some sort of crisis with such pensions across the country:

This long-running failure of governance may be irreversible. All that’s left for state governments to do now is reform pension systems for new employees, phasing out defined-benefit systems for 401(k)-style plans, and, where possible, trim benefits or raise contribution requirements for current workers. In the meantime, federal policymakers should start thinking about a reform-for-relief framework that will enable states and localities to honor their obligations to retirees while getting their finances back under control for the long haul.

We should consider it evidence of the extent of the problem that the generally wise American Interest falls back to the irresponsible cop-out that the federal government ought to step in and make the problem go away — as if the feds aren’t already headed toward dozens of trillions of dollars in debt absorbing every other bad policy decision made throughout the country over the past century.  That is, pensioners relying on the writer’s solution would have to hope that none of the other myriad problems and looming crises comes to a head and absorbs the nation’s very last tolerance for debt before the pension problem.  (My wager is that the multiple crises will cascade into one uber crisis.)

If the idea of the government takething away the pensions that it gavethed is inconceivable, peruse the ruling issued this week by Rhode Island Superior Court Judge Sarah Taft-Carter (internal citations removed):

It was clear that to avert disaster the City had to act. (p. 11)…

Notwithstanding a finding of substantial impairment, a contract modification remains constitutionally valid if the City produces sufficient credible evidence that the modification was done to further a significant and legitimate public purpose and if doing so was reasonable and necessary. (p. 30)…

… the Court is satisfied that the City has produced sufficient credible evidence through the testimony of Mayor Fung, Mr. Strom, and Mr. Sherman that the Great Recession, the decline in state aid, and RIRSA’s requirements created an unprecedented fiscal emergency neither created nor anticipated by the City. (p. 34)

Taft-Carter affirmed that cities cannot be expected to raise taxes indefinitely, and unless I missed it, she didn’t so much as speculate that the state could be forced to intervene.  The same will prove true up the scale, all the way to our giant national blob of debt.  At the state level, one could imagine a judge considering something like my argument about the flight of the “productive class” as evidence that higher taxes would accelerate a death spiral already underway.

For those who think the same couldn’t happen at the federal level, one can only suggest that they not take the risk of finding out.

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Support for Families More Effective than Government Co-parenting

Grover Whitehurst of Brookings has made an attempt to compare research findings concerning the effects of different programs on the test scores of young students, and the findings conflict with the progressive preference for increasingly moving responsibility away from people and toward government:

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Whitehurst suggests:

The results illustrated in the graph suggest that family support in the form of putting more money in the pockets of low-income parents produces substantially larger gains in children’s school achievement per dollar of expenditure than a year of preschool, participation in Head Start, or class size reduction in the early grades. The finding that family financial support enhances academic achievement in the form of test scores is consistent with other research on the impact of the EITC showing impacts on later outcomes such as college enrollment.

The most important takeaway from this is that it reinforces conservatives’ contention that government should not seek to displace parents, relieving them of responsibility for raising their children.  Government policy should seek to strengthen families.

Of course, the fact that this would tend to reduce the influence of government and (therefore) progressives leads me to expect Whitehurst’s research not to have a significant effect on progressive policies.  Indeed, in his subsequent discussion, Whitehurst endeavors to speculate that imposing restrictions on families’ use of the funding would be even more effective than simply improving their financial standing. However, if giving parents money is so much more effective than public funding of pre-school programs, one might question Whitehurst’s belief that letting the public funding stop in the parents’ accounts for a moment would be better than both approaches.

Note, too, the limits of Whitehurst’s consideration.  The first and irreducible assumption is that government must do something to bring about specific social outcomes.  If supporting families through broad welfare that is largely free of strings is so much more effective than building government programs, one might expect even greater rewards from getting government out of the way of families.  Let people act in the economy without the weight of high taxes and oppressive regulations; allow communities and states to determine their own economic and social policies; allow the society, broadly, to follow cultural traditions that have proven, over time, to be the healthiest for human society (such as the traditional institution of marriage).

Unfortunately, it’s much more difficult to test for and make charts of the effects of progressive redistribution on the whole society.  Researchers can’t know (to simplify) that taking EITC money out of the economy wound up hurting other families, resulting in worse test scores.  Still, taking in all of the evidence, the weight of it suggests that leaving people free is not only the most moral approach, respecting civil rights, but is also likely to prove to be the most effective system by any standard apart from the wealth and power of government.

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National Popular Vote and the Company State

Yesterday, Dan Yorke had Providence College Political Science Professor Joseph Cammarano on his 630AM/99.7FM WPRO show, discussing a variety of topics.  When I first tuned in, a caller was growing angry that the professor wouldn’t say for whom he intended to vote, and over the next hour or so of sporadic listening, I came to see how Cammarano might have inspired that response.  His bias came through, most notably in his drive for equivalence with Republicans whenever a caller brought up Democrats’ malfeasance.

One question that came out of nowhere was the professor’s opinion of the electoral college, and he clearly supports the efforts of states, including Rhode Island, to work around the Constitution with the national-popular vote movement.  In not so many words, he that it makes no sense — given our increasingly national culture — to have a system in which we think of states as states, regardless of their population.  That is, he thinks it’s obvious that states don’t have an equal standing of themselves, as political entities, necessitating that the votes of people in low-population states are weighted to give them greater balance against the national votes of people in high-population states.

When this topic came up a few years ago, I mainly thought of it in terms of politics and the calculation for Rhode Island.  After all, Democrats tend to do better in urban areas, so the General Assembly’s signing on to the national popular vote compact was a partisan act, not a representative one (as in advocating for the people whom one actually represents).  The reason Rhode Island gets no attention in national politics isn’t that we’re small; it’s that we’re one-sided.  Republicans have no chance, and Democrats don’t have to work for our electoral votes.  But the reality is that the national popular vote scheme would cut Rhode Islanders’ electoral sway in half.  Why would our representatives agree to do that?

Cammarano’s short statement was the first time I’ve considered this question since stumbling upon the idea of the “company state.”  I’ve been noting that certain cities and the whole state of Rhode Island are moving toward a civic business model in which government becomes the major industry, with incentive to import or create new clients for its services as justification for taking money away from other people in order to finance them.  As Rhode Island has long been learning, the flaw in this model is that the payers can simply leave, and the state is under constant risk that, due to recession or otherwise, people in other states will push back on the federal government’s subsidization of the scheme.

The electoral college, in other words, is one protection against having this “company state” model become truly national, such that municipal and state governments that rely on the compulsory transfer of wealth will be able to reach any wealth from sea to shining sea.

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The Status Quo’s Boasts – And Rhode Islanders’ Complacency?

Rhode Island has the worst business climate in the nation. It ranks 48th on both the Family Prosperity Index of the American Conservative Union and the Jobs and Opportunity Index of our Rhode Island Center for Freedom & Prosperity. It has virtually zero population growth, and it has suffered the ignominy of dozens of other near-bottom rankings. Despite all this, our Rhode Island political class appears content not to rock the boat. The question remains why are they satisfied with being in the bottom of the pack?

When we hear boasts that there were no broad-based tax increases in the recently passed state budget, we hear an attitude of complacency that is typical of the political elite, whose main goal is to perpetuate the status quo, as opposed to making the hard decisions that will improve the quality of lives of its residents. The irony, of course, is that our political leaders seem to genuinely believe that they have made major positive reforms. Maybe, relatively speaking, they just don’t understand what major reform looks like.

If Rhode Island’s complacency continues – both by our political class and by voters who re-elect it year after year – we will soon see Rhode Island lose one of its two congressional seats and shamefully slip to last place when it comes to renewing hope and opportunity for our families. Rhode Island needs to dare to disrupt the status quo and boldly evolve itself into a regional outlier so that we can become a magnet – on our own – for businesses, jobs and families.

In this wild and unpredictable year of national politics, the big question is whether or not the tsunami of public discontent will reach our Ocean State shores and compel voters to send a necessary jolt to our political class. Rhode Island politicians will not have the chance to change their act until next year. However, voters can lead the way by acting this year to deliver a clear message at November’s ballot box. I encourage you to continue to speak out against the status quo public policy culture in Rhode Island. Your voice is powerful, and things can change.

[Mike Stenhouse is the CEO of the Rhode Island Center for Freedom and Prosperity.]

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Katz’s Kitchen Sink: But Bountiful Parody Song

As the fiscal year comes to a close for the State of Rhode Island and most municipalities in June, it’s ever more clear that civic life in Rhode Island revolves around government budgets.  For insiders, town, city, and state budgets represent their hopes and dreams — often their livelihoods.  For everybody else, though, they can be a time of dread, as the impossibility of real change is affirmed, cherished programs are threatened (if you’re on that side of the ledger), or more money is confiscated from your bank account (if you’re on the other side of the ledger).

Herewith, a parody song to the tune of “But Beautiful,” inaugurating a somewhat regular new video series, “Katz’s Kitchen Sink,” which will feature whatever sort of content I think might be useful to throw at the problems of the Ocean State — songs, short skits, commentary, or whatever.

Download an mp3 file of this song.

But Bountiful

A budget’s taxes, or it’s pay
Handouts are credits or giveaways
We’re investing, or we save
But bountiful

Bountiful, our industry’s bureaucracies we run
It’s a budget you have no choice but to fund

A budget appropriates, or it steals
Votes are traded in backroom deals
Nobody’s sure just what’s real
But bountiful

And I’m thinking if I had chips, I’d cash them in for gold
And take them to a more bountiful abode

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The Minimum Debt Load of Rhode Island: $16 Billion

Just for fun (come on, you know you do it, too), I thought I’d go through the audits for the State of Rhode Island and the cities and towns contained therein to total up the amount of debt.  The exercise wasn’t intended to be comprehensive, so I just grabbed, as well as I was able, the long-term debt or liabilities from each government’s statement of net position (including the current portion for long-term liabilities).  The numbers therefore capture pensions, other post employment benefits (OPEB), bonded debt, and other ways in which a town, city, or state can owe somebody money.

The numbers therefore are extremely conservative.  The incentive, for governments, is to minimize the amount of money that it looks like they’re spending, and truly cutting through the methods for answering that incentive would be a very significant project.  One notes on the audits, for example, that some portion of pension debt is calculated as a “deferred outflow” rather than a liability, and so would not be included; in Cranston, for example, the deferred outflow for pensions is $36.6 million, while the liability is listed as $1.5 million.  (There is typically a deferred inflow, too, but even subtracting in from out tends to produce a greater liability; $1.8 million in Cranston.) Remember, too, that the calculations that government auditors use to figure pension and OPEB liabilities can underestimate a more-realistic assessment of liability by four or five times.  Oh, and none of this includes other government units that might not fall under these specific audits, such as fire and water districts.

Consequently, the $16 billion total that this method produces is pretty much the absolute minimum that governments in Rhode Island have saddled residents with.  Using the latest U.S. Census data provided by the state Dept. of Labor and Training, this comes out to $15,180 for every person in the state, or 27.3% of the total annual income of Rhode Islanders.

If you want to darken your financial picture, for some reason, add that amount to the $154,000 or so each of us owes for the federal debt.  Then factor in entitlement programs like Social Security and Medicare… and don’t forget to adjust everything up for accounting gimmicks and understatements, as with pensions.

In short, the $16 billion of acknowledged debt in Rhode Island is just the tiniest tip of an iceberg of hopeless proportions.  Don’t fall for the distractions, either: The bill is going to come due, and somebody is going to get shafted.

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RI Foundation’s Sneak-Attack on Free-Speech

Should Rhode Islanders silently accept the corrupt political climate that has failed so many of us? Or should we, as free citizens in our uniquely American democracy, be encouraged to freely speak-out and engage in a battle of ideas so as to help make our state a safer and more prosperous place to live, to raise a family, and to build a career?

It is the Center’s primary mission to stimulate such rigorous public debate about important policy issues. However, the most powerful and wealthy nonprofit organization in our state is asking you to shut up.

As part of its own 100th year celebration, the Rhode Island Foundation this week published and promoted a video, which, in essence, encourages people to remain silent and to accept that the political elite know best about what’s in your and my best interests.

In what initially seems to be a video for kids, it is shameful that the Foundation hides its adult message behind children. With the frequent backdrop of our State House, it is obvious that the video is intended to be political. Under the pretense of “be nice or be quiet”, the Foundation is clear in its message that is directed to all of us – that we should just “stop complaining”.

Stop complaining about Rhode Island’s 48th place ranking on the national Family Prosperity Index?
Stop complaining that so many of our neighbors cannot find or have given up looking for meaningful work?
Stop complaining about the political corruption that continues to embarrass our state?
Stop complaining about the lack of bold and decisive action to do anything significant about it?

I don’t think so.

It is also despicable that the Foundation forces these children to read text that has to be bleeped.

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Rhode Island Government Budgets as if Stealing Play Money

Patricia Morgan’s op-ed in yesterday’s Providence Journal lists a handful of the items in the latest state government budget that will represent new money taken from our pockets:

As we look back on this legislative year, one phrase comes to mind: “It’s easy to spend other people’s money.” The political majority trumpeted Rhode Island’s $8.9 billion budget as spending that would improve the lives of citizens. But it’s hardly austere, especially when compared with the financial challenges that average families have endured for the past nine years. …

For me, this session was another missed opportunity, and our citizens deserved better.

I’d go a step farther and suggest that it was continued theft.  Sure, the politicians in power have multiple rationales by which to convince themselves that they’re governing, rather than stealing, but they have no track record of success to substantiate that delusion, and they repeatedly offer evidence of self-dealing that brings the whole system into doubt.  Really: If they think this type of government is a benefit to the state and its people, then they must, by implication, believe that we’d reduce ourselves to barbarism and destitution were it not for them.

Rhode Island’s problems get more and more clear, and as they do, people decide whether to try to get in on the system or to leave.  Some set out to change it, but it’s a difficult fight that often seems more like missionary work.

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Hurdles Enabling a Pick-and-Choose Culture

Although it leaves me feeling as if there might be more to the story, a Kate Nagle article on GoLocalProv has the strong smell of Rhode Island to it.  The Peregrine Group (no strangers to our insider culture) is prepared to build a large waterfront mixed-use development in Pawtucket, but Rhode Island’s additional costs for building make government subsidies a necessity, and the Commerce Corp. appears to be dragging its feet:

“We have a profound live for the site and the city, and we’ve made a “Rebuild RI” application [with Commerce]. We’ve had preliminary conversations, but right now, the current iteration doesn’t work,” said Kane. “It’s just the economics of new construction. In Boston, I can do projects without the city and state’s help. I’m doing 80 more units in Rumford [Center] with no help. Pawtucket is hard.” …

The Commerce Corporation recently awarded RebuildRI tax credits to Ocean State Job Lot (who had threatened to leave the state if truck tolls were approved), and AT Cross (whose former CEO began serving as a consultant at the Commerce Corporation).

Now, I don’t know whether this particular development is a net positive or negative, but state government’s handing out taxpayer-funded subsidies shouldn’t be the mechanism for making such decisions.  Even if we were to assume that government functionaries are qualified to pick and choose the best projects for Rhode Island, the incentives of politics and government are inefficient, in part because of one unavoidable question:  “the best projects” for whose interests?

If one believes in the importance of government involvement, maintaining the governor’s programs becomes a critical objective.  So, when an iconic company ramps up opposition to a new toll program that government agents think they need, the value of handing that company subsidies far exceeds whatever direct economic development is involved, to the government agents.

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Happy 240th Birthday To America!

Happy Independence Day from everyone at the Rhode Island Center for Freedom & Prosperity! As we celebrate the Fourth with our family and friends, it is important to reflect the principles that led to the American revolution. On this anniversary of the original Brexit, we must remember that “US-Away” happened because free people stood up to an imperial power and demand that their rights be respected. In our own time, people are standing up against the elites here in Rhode Island that want to micromanage our lives.

We should all be proud of our fellow citizens working to advance freedom here in the Ocean State. The recent opposition to the Brookings agenda is a good example. Because Rhode Islanders spoke out against RhodeMap RI and central planning, many of the crony corporate welfare deals were squashed before they could begin. The stadium deal and the superman building are two more examples of stopping corporate welfare in Rhode Island. There are reasons to hope. However, we must remain vigilant and continue to speak out. The political elites will continue to try to give special deals to their cronies.

When will the insiders learn? We are warning the status quo against seeking to devolve Rhode Island into a dependent appendage to the Boston economy, or to some other form of regional governance. The citizens of our state demand local control. Centralized plans are not the answer for the Ocean State. We urge lawmakers to reject the concept of a centrally controlled, regional bureaucracy that will infringe on the authority of locally elected officials. Rhode Islanders do not want intrusions into their own lives.

There are better solutions than the central planning of economies and the loss of local control. It is time to end the insider culture where the little guy suffers. As we saw in the recent Brexit vote, citizens are demanding more from their leaders. How many of us would say that the status quo public policy culture in Rhode Island is making anything easier on the average family? For too long, the political elites have thought they’ve known how to better run your life than you do. I encourage you to speak out against the status quo and remember that things can change here in the Ocean State.

And once again, Happy Fourth of July.

[Mike Stenhouse is CEO of the Rhode Island Center for Freedom and Prosperity.]

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Two Paths When Things Go Bad

As the scarcity of posts in this space illustrates, I’ve been extremely busy, this week.  Things have slowed, but I’m still getting back on track.

One thing I’ve been doing has been to sift through the data available from the Family Prosperity Initiative (FPI).  In summary, the conclusion seems to be inevitable that Rhode Islanders are good people who are just relatively unhappy, with something having happened around 2012 to reinforce that feeling, as suggested by adverse changes in things like new business establishments after that year.  Notably, that was the year that Rhode Island first sank to 48th in the country by the RI Center for Freedom & Prosperity’s Jobs & Opportunity Index (JOI), where it has remained since.

But the broad data from the FPI has some interesting contrast.  Rhode Island does poorly on almost all markers, whether economic or having to do with healthy behavior, with an up-tick around that year in, for example, obesity.  Yet other positive markers also jumped that year, or soon thereafter, including an increase in marriages, a decrease in divorces, an increase in weekly church attendance, and an increase in the percentage of children living in married households.

I wonder if some of these results are an indicator of two distinct paths’ that Rhode Islanders follow.  I’ve long been saying that Rhode Island has been driving out its “productive class“; that is, people at a point in life during which they want to make progress and be productive tend to account for a disproportionate share of the Rhode Islanders parting for elsewhere.  I’ve also been describing the “company state” mentality, whereby the state government pursues policies that increase the number of clients who give it justification for taking money from other people (the producers), in the state and elsewhere.

Maybe what the data shows is that, when a community gets in a funk, some people turn toward things that have traditionally led to stability, meaning, and success (religiosity and family), and other people turn to unhealthy behaviors, like drug use.  This is speculation, at this point, but I’d wager that there’s a strong correlation between these two paths and the other options of leaving the state, on the one hand, or falling into government dependence, on the other.

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The Backbone That Jumps from Body to Body

Let’s question a bit of common wisdom in big-government circles, shall we?  This is from an article in the Worcester Telegram about Woonsocket Glass Fabricators — a Woonsocket, Rhode Island, company that Northbridge, Massachusetts, lured away from the city whose name it bears:

Small businesses are the backbone of the economy as well as communities.

That was the message conveyed on Thursday during a celebration marking Woonsocket Glass Fabricators’ new 33,000-square-foot production center and showroom at 369 Douglas Road in Whitinsville.

Founded in 1946, the company outgrew its space in Rhode Island and, after an extensive search, decided to relocate in Massachusetts, according to president and chief executive officer Chip Rogers. He said he received nothing but support from Northbridge officials and the Blackstone Valley Chamber of Commerce.

Massachusetts provided a $5 million taxpayer-backed bond and $375,000 in additional tax credits, which makes one wonder: What sort of “backbone” can be lured out of its body with easy money?  Once again, the point of this worldview seems to be that government is the backbone of the economy and the community.

Supporters of this sort of government-picks-the-winners crony capitalism would take this story as an opportunity to say, “See, this is why Rhode Island has to be able to compete in handing out taxpayer dollars.”  How Rhode Island could possibly compete with nearby states that have more people, more money, and stronger economies is never explained.

The alternative, of course, would be to reduce taxes and eliminate regulatory burdens to make the Ocean State more attractive on its own merits, without the handouts.  But that wouldn’t leave as much room for politicians’ ego trips and corruption.

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What If Rhode Islanders Really Had a Say on Budgets, Like Tiverton?

In this video, I wonder what would happen if the people of the Ocean State had a say in the budgeting process. In Tiverton, electors in town have the ability to submit budgets directly to voters. For the third year in a row, a budget that I submitted for the financial town referendum to set Tiverton’s upcoming budget won a strong majority of votes. That makes three years with tax increases under 1%.

By design, Rhode Island politicians at the state level leave the public no time to digest the budget and express their preferences to their representatives, and most of their representatives have no intention of bucking legislative leaders anyway.

Imagine, though, if Rhode Islanders really did have a say, like we do in Tiverton. What do you suppose the result would be?

Watch this new video to learn more now.

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Government-Pushed Pre-K May Be Worse than Neutral

Progressive politicians, like Rhode Island Democrat Governor Gina Raimondo, simply assume that more government support for pre-K is a good thing, and the news media doesn’t help.  In 2014, for example, WPRI reporter Dan McGowan characterized RI’s program as “one of the most successful state-funded pre-K programs in the country,” but all of the benchmarks used to determine “success” are inputs, like teacher degrees, free meals, and number of students per teacher.  “Success” in those terms is basically measured in the cost of the program — as in, “we’re successful at making people give us money and power.”

Lindsey Burke and Salim Furth, of Heritage, have looked at the research and found that government-centered pre-K programs have no measurable academic benefit and may, in fact, do harm academically and, especially, behaviorally.  Sure, it creates new union jobs and encourages more families to organize themselves around government dependency, but that comes at a cost.  Note this, for example, in Quebec:

The program has had a large impact: privately funded child care arrangements have almost disappeared, and Quebec has the highest rate of subsidized child care in Canada, at 58 percent in 2011.

One can’t help but wonder whether that was more the goal than an unfortunate side effect, but other results were surely unintentional:

Regrettably, new research has found that children who became eligible for the program in Quebec were more anxious as children and have committed more crimes as teenagers. The availability of day care clearly worsened children’s non-cognitive “soft” skills.

Why is this?

The effects could be occurring through any (or all) of three channels:

  1. Worse care for children who would have been cared for by a family member if day care were not subsidized;
  2. Worse care for children who would have gone to a less-regulated, non-subsidized day care; and
  3. Spillover impacts on children who are not participating.

So while all of the “success” benchmarks cited to push Rhode Island’s program forward were of the form “we think this must be a good thing,” evidence of actual outcomes is not encouraging.

We can predict, however, how government will respond as its programs harm the economy by withdrawing money that would have been better spent elsewhere and harm students by reshaping their early lives to put them in something resembling the public school system that we already know to be failing in Rhode Island:  Elected and appointed officials will all claim that they need more money and more authority over our lives and must put more private companies out of business in order to fix the intractable problems of our humanity.

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Standing Firm Against Political Abuse

With local progressives’ lashing out and attempting an overt Saul Alinsky ploy to tar me as the cause of lost basic services in Tiverton, I’ve been giving a lot of thought to moral culpability.  A couple of days ago, I suggested that groups that are acting in the interest of their communities position themselves so that good policy benefits them politically, while the hurt-the-taxpayers faction currently in power in my town are pushing bad policy with the expectation that it will be good for them politically.  Objectively, one must admit that raises the questions of intention and blame and who is responsible if standing up for good policy nonetheless has adverse effects for political reasons.

At the moment, Tiverton is awaiting the judgment of its Town Council as to whether it will follow the lead of the town’s Budget Committee and attempt to inflict pain on residents by eliminating the curbside trash pickup to which we’re accustomed as a basic service.  Through founding member Robert Coulter, the Tiverton Taxpayers Association (TTA) has released a statement that cuts right to the questions I just mentioned:

If the Town Council follows through with the Budget Committee’s threat and breaks its contract with Patriot Disposal, maybe voters will “learn the lesson” that angry insiders want to teach them… or maybe instead we’ll remember this stunt when the officials who are supposed to represent voters are up for reelection in less than five months from now. Maybe, too, we’ll decide to take back the new trash fee through additional tax reductions at next year’s FTR. After all, the Budget Committee left over $2 million in alternatives on the table.

The statement is clear that the TTA would prefer a different outcome — one in which the Town Council continues the job that the Budget Committee started and then abandoned, accommodating voters’ will in the way that causes the least amount of disruption.  Still, when the budget season comes back around next year, if taxpayers are paying a new trash fee, they may very well decide that it ought to be an even exchange taken out of the tax bill of the following year.

No doubt the angry radicals in town will respond by attempting (or at least threatening) to kill another of the services that they hold hostage, but that will be, once again, on them, not on voters who pursue the necessary policy of long-term tax relief.  Standing firm against abuse is one of the most fundamentally good policies.

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Sustainable? Some of RI’s Corporate Welfare is Funded by Moral Obligation Bonds!

Brian Bishop points out in today’s GoLocalProv that certain corporate welfare handed out by the state is funded not pay-as-you-go, out of the budget, but by moral obligation bonds.

Even if you think historic tax breaks are a necessary evil, we didn’t budget for the cost of these breaks, we used moral obligation bonds through the Commerce Corporation to pay for them, a harbinger of the tax [breaks] and spend ‘fireworks’ economy. The flash and bang from each growth purchase fades quickly, requiring us to head back to the fireworks factory and buy more and more, when we haven’t even paid for the fireworks that have already gone off and faded.

The corporate welfare in the form of crony-targeted tax breaks that Governor Raimondo, with the approval of the General Assembly, hands out are bad enough. But the state also hands out corporate welfare for which taxpayers must pay interest! (Remember, this was also the funding method of the 38 Studios debacle.)

The cool new thing with progressive politicians is “sustainable”, as in “sustainable development” and “sustainable energy”. But how can (re)development funded at someone else’s (taxpayers) expense via high-interest moral obligation bonds be cast as “sustainable”?

In fact, what state and local taxpayers really need first and foremost is sustainable budgeting! And further to that, we need elected officials in the Rhode Island Executive and Legislative branches who recognize these (corporate welfare and, even worse, corporate welfare charged to someone else’s high interest credit card) for the unsustainable policies that they are and put an end to them.

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ProJo Editorial Correctly Highlights Bad Jobs Report

Spot on editorial by the Providence Journal yesterday about last week’s bad jobs and employment report.

Two points in particular to highlight.

1.) Their call for broad-based improvement to the state’s business climate.

Beyond targeted incentives, Rhode Island needs a better tax and regulatory climate that encourages companies that are here to grow and others to come.

Thank you thank you thank you.

2. And this.

Perhaps what is most alarming about last week’s jobs report is that it’s never really felt as though Rhode Island was out of the woods.

Indeed, a well-founded feeling confirmed by the Rhode Island Center for Freedom and Prosperity’s Jobs and Opportunity Index (JOI): our state has been stuck at forty eight since 2012. This is a situation that will only change when state officials take to heart the call by the ProJo and many others to take a much broader approach to economic development than the handing out of welfare to a very narrow list of corporate cronies and occasional, isolated tax reductions that lack credibility as they are unaccompanied by a reduction in overall spending.

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Please Check Out the Gaspee Business Network Thursday!

On Thursday (June 23, 2016) at 5:30 pm, the Gaspee Business Network will be holding a Partner Information event at the Radisson Hotel, 2081 Post Road, Warwick. If you’re a business owner and you’re not satisfied with the state’s business climate, please consider dropping by to check out the “Incorruptible Voice of Rhode Island Business“.

We will be discussing why the GBN is different from other business networking groups and how you can take part in the most formidable force to fight the hostile business environment so prevalent throughout Rhode Island.

For more information about the GBN, click here. Click here to register for the event. Or just show up!

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With This Year’s Session a Bust, Can RI Try Something Different, Next?

Yesterday, the RI Center for Freedom & Prosperity released its monthly Jobs & Opportunity Index (JOI) report.  By design, the index doesn’t change much month to month, and the multiple data sources cover different periods.  Nonetheless, it was a pretty down month, with employment, labor force, and jobs all down, while Medicaid enrollees were up.  Of the five updated numbers, only SNAP (food stamp) enrollment moved in a positive direction (that is, down).

The key finding of JOI is the longer-term ranking among states, and by that measure, Rhode Island has been stuck at 48th since 2012.  Combine that with the employment stagnation that the recent post in this space pointed out, covering nearly a year, and we’re clearly not in good shape, and we’re clearly not being helped by the approach of Governor Gina Raimondo and the General Assembly.

The problem is that the things that Rhode Island insiders place as their highest priorities — the irreducibles that they will not touch — are not only directly contrary to policies that would encourage economic health, but if politicians are to attempt to do anything at all, the irreducibles require workarounds that exacerbate, rather than alleviate, the problem.  That is, rather than reduce the high taxes, regulations, voluminous give-aways, and labor union stranglehold by which insiders protect their own sinecures, they “invest” our tax dollars in new special interests that are bought off from the start, such as large companies given tax breaks to set up shop, here.

This won’t end well, the only question being whether the Ocean State will continue to bleed out slowly or have a fatal crisis.

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Definitely No Taxpayer “Bridge Financing” – Or Any Other Tax Dollar Involvement – for Superman Building

An editorial in yesterday’s ProJo mentions an interesting and disturbing prospect that I at least had not yet heard about: taxpayer funded “bridge financing” for the Superman Building. (Tolls on “bridges”; now the possibility of “bridge” financing for an empty building. How did bridges suddenly become a new peril for state taxpayers and residents?)

The editorial also identifies the $64 million question that needs to be answered.

It is not the taxpayers’ business to make High Rock whole on a bad investment. But there is public interest in seeing activity there rather than vacancy and slow deterioration. For example, turning the Superman into a classy downtown apartment building with magnificent views of the city and the water would breathe economic life into the downtown, since new residents would dine out, shop and pay taxes.

The question is: How much is this activity worth to the taxpayers?

The latest estimates to rehab the Superman Building are in the $60-100 million range, though this GoLocalProv story from three years ago mentions the even more insane figures of $140 to $145 million.

To answer the ProJo’s question – “How much is this activity worth to the taxpayers?” – there simply is no amount of secondary/related economic activity that could come close to justifying any taxpayer involvement in such an exorbitantly expensive real estate rehabilitation project. Any official who proposes to do so must satisfactorily answer every entirely valid question posed by the Rhode Island Center for Freedom and Prosperity three years ago.

Elected officials would be wise to instead address the conditions that have contributed to the dearth of business tenants that financially imperil this building, and almost certainly others: the state’s business-repulsive tax and regulatory climate. Taxpayers cannot possibly “bridge” the financial chasms, either at 111 Westminster Street in Providence or everywhere else around the state, created by state officials’ continued refusal to do so.

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Vengeance of Progressives Scorned

Faced with another budget year during which voters repeated, “Yes, we’re serious; stop raising taxes,” progressives in Tiverton are lashing out to teach us a lesson.  Unfortunately, they dominate the town’s Budget Committee, so they were able to convince themselves that the best path forward, politically, would be to virtually eliminate the town’s budget for trash pickup.

Oh, they’re claiming that the budget that I submitted (which won with 55% of the vote) forced them to eliminate that service, but as I show in a post on Tiverton Fact Check, that simply isn’t the case.  They had $2.3 million of options from which to find $783,000 without touching trash or paving, and in fact, the Budget Committee itself was 84% of the way to covering the necessary amount before deciding to reverse course and hurt the greatest number of people possible.

That’s what it’s really about.  They’re angry, and as tends to happen with angry people, their solution starts with the impulse to inflict pain.  A number of details that are probably too localized to be of interest to a statewide audience support that interpretation, but here are a few examples:

  • They (sadly including the police chief) are handing out business cards telling people to contact me if they aren’t happy about the pain; that is, the goal is to hurt people so that they’ll blame me.
  • The town administrator said ending trash pickup would save $300,000 at most, but the Budget Committee decided to pretend it would save $500,000; the point, obviously, was to eliminate the service, not actually to find areas of real savings.
  • During the budget debate, they argued against the lower budget on the grounds that 80% of town expenses are unchangeable and under contract, yet trash pickup is under contract until next year…. and they changed it.
  • Their actual hope is that the Town Council will implement a new fee — imposing the tax that voters rejected by changing its name — and actually overspend the budget that the voters and Budget Committee approved.
  • The Budget Committee didn’t even bother to balance the budget, just assuming that the Town Council will find some $150,000 in revenue.

Groups that are acting in the interest of their communities behave very differently.  For one thing, they try to position themselves so that good policy benefits them politically.  What we’re seeing in Tiverton is a group of insiders who think that bad policy will benefit them politically, and the politics are their priority, not their community.  Hopefully, their friends on the Town Council — who will actually have to make the decision for real, not pretend — will see the calculation differently.

If we can learn locally, maybe we can take the lesson to the state level, where bad policy for political benefit pretty much defines Rhode Island government.

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Going to the Heart of Costly Renewable Energy


In this podcast excerpt, I discuss with the Heartland Institute’s Donald Kendal and John Nothdurft the findings of the Rhode Island Center for Freedom and Prosperity’s new report on renewable energy that confirms a very poor cost-benefit return to Rhode Islanders of renewable energy. (Listen to the full podcast of our conversation here.)

Because 98% of Rhode Island’s energy is generated by natural gas, our state already has a comparatively small carbon footprint. Further reducing it to hit purely arbitrary renewable production targets would cost state ratepayers and taxpayers $141–190 million per year in production expenses alone – four to five times the EPA’s recommended cost standard.

Rhode Islanders also cannot afford the cost to the state economy in the form of lower employment levels or in the $670–893 million per year extracted in unnecessarily higher electricity rate payments by private sector businesses and families. When will the status quo learn?

Based on these findings, the Center has strongly recommended that lawmakers reject all proposed new energy mandates and, instead, repeal those that are currently written into law. The EPA’s own cost standard highlighted in the Center renewable energy report demonstrates that state officials can set aside all renewable energy mandates with a clear conscience.

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You Deserve Better Than a Losing Team

Lawmakers must understand that the people of Rhode Island are demanding that we move in a different direction. As the General Assembly session comes to a close, we have seen another year where the insiders ignore the voice of the people and continue to further their own special interest laden agenda. The big spending in the state budget must end, the backroom deals must end, and the public corruption must end if we are ever to see our state become prosperous again. Rhode Island families are being harmed by the lack of opportunity created by the elitists and the failed public policy culture.

What does the average family have to cheer about in this budget? The few provisions that offer minor relief to some are overwhelmingly outweighed by the huge special interest and corporate welfare spending. Things do not have to be this way.

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GE(e), Rhode Island is Losing Jobs

With the latest numbers, Rhode Island’s jobs and opportunity picture has worsened.

Rhode Island lost 3,900 jobs over the last two months — 1,900 in April and 2,000 more in May — a clear signal that the economy is slowing, according to data released Thursday by the Rhode Island Department of Labor and Training.

Other numbers, like the size of the state’s labor force, are also going in the wrong direction, which unfortunately, corresponds to the state’s ranking on JOI, the RI Center for Freedom and Prosperity’s new, broader spectrum reflection of the state’s employment situation. (Be sure to check back on Monday, when the Center will be updating the Jobs and Opportunity Index.)

State officials are quick to point to a national turn down as a contributory factor to the state’s worsening employment numbers. But that only highlights the need for Rhode Island officials to strengthen the business climate here so that we are not so susceptible to undesirable national trends.

On that front, a note to Governor Raimondo and General Assembly leadership: targeted tax breaks and subsidies do NOTHING to improve the state’s business climate as a whole. (Evidence: the one hundred jobs that General Electric will be bringing here, while welcome, have been engulfed by the 2,000 jobs that the state lost in May.) Corporate welfare only adds to the burden of the average guy and other businesses in the state.