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A Two Million Plus Dollar a Year Loser of a Stadium: What Does the Governor See that Almost No One Else Does?

Two million dollars per year because that is the projected annual loss for state taxpayers in the just-unveiled proposal by the new owners of the Paw Sox for construction of a baseball stadium in Providence. It’s worth repeating: the numbers offered by the Paw Sox owners THEMSELVES have state taxpayers losing two million dollars per year.

“Plus” – and the plus could be quite a large figure – because the president of the Providence City Council has told WPRI’s Dan McGowan that Providence would be looking to state taxpayers to pick up the property taxes that the owners of the Paw Sox have requested to be relieved of. This suggestion would be a laff riot, especially in light of the state’s multi-hundred million dollar structural deficit, except that the council president seemed quite serious about it.

Earlier today, John Marion tweeted out,

Received a call from someone looking to know if there is an organization actively opposing the PawSox stadium deal. Anyone know if there is?

Most of the reaction I’ve seen and heard can be described as “actively opposing” the stadium (also: vigorously opposing, seriously concerned about and downright appalled by), though a single-purpose opposition organization – presumably what Marion’s caller meant – has not yet popped up. Even Bob Plain over at RI Future, never shy about spending tax dollars, has expressed skepticism about the proposal.

In fact, it would be far quicker to list those who support the Paw Sox proposal. This list so far consists of the building trades unions – not a shock as the Paw Sox owners have promised that the proposed stadium would be built with union labor.

Enter Governor Raimondo, who spoke to NBC 10’s Bill Rappleye today.

“I also think this has the potential to create a lot of jobs – immediately construction jobs,” Raimondo said. “It brings people into the city and could catalyze other economic development in the area, which has been done in other cities. If we do it right, I think it could be a good piece of our economic puzzle.”

The Convention Center Authority, 38 Studios and others – the very last thing that state taxpayers can afford is yet another costly economic development loss leader. But by the Paw Sox owners own calculations, that’s exactly where we would be headed with a minor league baseball stadium in Providence. We would respectfully ask to see your numbers, Governor Raimondo. How exactly would a brand new $2+ million hole in the budget make a good contribution to the state’s “economic puzzle”?

Following Up on EITC

While looking into Rhode Island’s earned income tax credit (EITC) benefit for lower-income workers, I asked Director of Revenue Analysis Paul Dion to clarify something in the revenue expenditure report that his office maintains.  The answer might put Governor Raimondo’s proposal to increase the EITC in a new light.

Under current law, recipients of the EITC can receive 10% of the federal version of the benefit, and 100% of it is refundable, meaning that even if the credit is greater than their actual tax liability, they get the money back as a refund.  (I have confirmed, by the way, that beneficiaries do actually have to have some taxable income.)

The estimates for the cost of the program that I cited from the report were based on the law as it was before the General Assembly changed it last year.  Before, beneficiaries could get 25% of the federal EITC, but they would only receive 15% of a resulting refund.

That change slipped through without much notice, though, because budget documents paired it with a reduction of property tax relief for elderly and disabled residents.  The two changes together actually had a taxpayer savings of $3.9 million.  I, for one, had thought that meant the EITC change turned out to be a reduction, so both parts of the package were cuts.

According to Dion, that was not the case.  The EITC change actually increased the cost of the program by $4,293,291.  Roughly speaking, then, the cost of the program, in 2015, is more like $16 million, rather than $12.2 million, with an average benefit of $167 per year.

For the next budget year, Raimondo’s benefit increase would bring the total program up to $19.1 million, about a 70% increase over two years, bringing the total average benefit to around $192 per year.  The following year would bring the program’s cost up to $22 million or so, because the budget increases it by the same increment in the second year, essentially doubling the cost from its 2014 base.

Can Rhode Island really afford to continue ratcheting up its degree of income redistribution?  Add in other burdens on the economy, like the continually growing minimum wage, and it’s little wonder that our labor force is shrinking and employment struggling.

Governor Wants to Remove “Privilege” from Tax

Behold the power of a parody song.  Governor Raimondo’s office sent a request to the House and Senate finance committees yesterday:

The Governor requests that several amendments be made to Article 11 entitled “Relating to Revenues”, including changes to sections 3, 8 and 15. The changes requested are listed and explained below.

The bulk of the changes (irrespective of the actual impact of each one) are geared toward removing the language that, as I first pointed out last month, makes the “Taylor Swift Tax” on valuable second homes a tax on the privilege of owning the property, rather than on the property itself.  As a matter of legal and political philosophy that’s a massive affront to property rights, because it implies that owning property is not a right, but a privilege granted by the state.

Of course, this only adjusts the outrage from being an assault on rights to being a first step toward imposing a new tax on Rhode Islanders, and a duplicate one, at that — even a triplicate or quadruplicate one.  Rhode Island cities and towns already have property taxes.  Indeed, fire and water districts also levy taxes on real estate holdings, as do (or will) waste-water districts, like the one that the General Assembly just imposed on the people of Tiverton.

Apparently, reading all of the reports that the General Assembly has commissioned to study our tax and business environment, government officials took the fact that we have high property taxes as an indication that it was a good place to stick a syringe.  Here’s the new language from Governor Raimondo:

Imposition of Tax. (a) The tax administrator of the state of Rhode Island is empowered to impose a tax on non-owner occupied residential property within the state during any tax year commencing with the tax year beginning July 1, 2015 and every tax year thereafter.

In other words, the only thing making this a tax on high-end properties is the “definition” section of the legislation.  This could easily be adjusted downward as budget shortfalls require.

Worse, now that the tax is on the property, not the “privilege” of owning it, rental properties with “five or less units” will definitely be caught up in it.  A landlord renting out five units valued at $200,000 each (not exactly luxury living, necessarily) will be caught.  And as property values climb (assuming they do, in Rhode Island) more and more properties will be captured, even without the General Assembly lifting a finger to tighten the screws.

In the not-too-distant future, a family owning a relatively modest vacation home or renting out property will face up to four different taxes on it.  As the song goes: “Ask any economist, he’ll tell you we’re insane/But you know we love taxpayers, like hungers love game.”

The Ongoing Welfare Argument in Rhode Island

The generosity of Rhode Island’s welfare system is a matter of recurring debate, with taxpayer advocates’ having a general sense that it’s too generous and welfare advocates’ giving the impression that they’re picking points to serve their script.  The latest iteration of the latter comes from Scott MacKay on RIPR.  His first salvo pretty well sets the tone:

Well, let’s start with the basic welfare program that helps the poorest folks in the Ocean State. That’s a program called  Temporary Aid to Needy Families, known by the acronym TANF. The vast majority of these families are single-parent families headed by a single woman. A typical family is a woman with two children. The monthly welfare benefit for such a family is $554 a month, a figure that has not been increased since the 1970s.

MacKay next compares this payment amount to those in other New England states, finding that Rhode Island’s payment is lower than every other state’s in New England except Maine.  First, for clarification, let’s note that it overstates things to say that “the vast majority” of TANF families are single-parent.  Sixty percent are, with another 33% being “zero-parent families” and 7% being two-parent families.  I haven’t found a good definition of “zero-parent families,” but they’re likely children in foster care and teens who, in both cases, have other sources of support.

The more important point, though, comes with MacKay’s comparison to other states.  I looked into this point back in May 2004 and noticed that Rhode Island is slower to reduce benefits for those with other income, which quickly improves Rhode Island’s comparative standing.

Another point I made back then was that it’s too narrow of an analysis to define “welfare” as only the simple cash payments; there are so many other ways that taxpayer dollars flow to social services.  To his credit, MacKay addresses this argument to some degree, giving comparisons for a few other programs, but then he undoes any reasonableness by getting on a high moral horse to spear some straw men, calling on us to “dial down faux rhetoric that demonizes the poor.”

MacKay should dial down the faux rhetoric that demonizes the taxpayer:

  • Who is generous in many ways, including healthcare, education, and more.
  • Who already has the second-highest state and local tax burden in the region.
  • Who has long been struggling to make ends meet in New England’s worst employment environment.
  • Who has a relatively low median income and a struggling middle class.
  • And who has reason to doubt the effectiveness of the state bureaucracy, considering that only 11% of participants in the TANF program are actually fulfilling the program’s theoretical requirement for work or work preparation.

MacKay goes so far as to complain that Governor Raimondo’s budget would remove the extra tax that businesses pay for electricity, but households do not.  That’s shortsighted, inasmuch as every dollar that a business doesn’t have to pay for taxes (or energy) is a dollar that can be spent directly on somebody’s paycheck, or indirectly on employment by growing.

Marketplace Fairness or a Tax Trap?

Beware the word “fairness” when elected officials propose new laws.  Be doubly wary of the word when it appears in the name of an act, as it does in the case of the recent second attempt to pass the “Marketplace Fairness Act” through the U.S. Congress, to allow states to collect sales taxes on Internet (“remote”) retail.

The first attempt, in 2013, made it through the Senate, but not the House. All four members of Rhode Island’s federal delegation jumped on the bandwagon ascosponsors, but of the four, Sen. Sheldon Whitehouse, D-RI, may have done the most to give the game away.

In his related press release, Whitehouse emphasized that unfairness in retail pricing isn’t really an issue for Rhode Island, because consumers are supposed to pay the state’s 7 percent sales tax–rebranded as a “use tax”–no matter where they buy something.  (Other states’ taxes, if collected, count toward the total.)

To the extent that the pricing difference is unfair, it’s because Whitehouse considers Rhode Islanders to be scofflaws who use online purchases as a means of skirting tax laws.  That, obviously, is unfair to the government officials who would like to have more money to spend.

A series of related Rhode Island statutes reinforces Whitehouse’s emphasis on tax collections.

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UPDATED: Governor’ Raimondo’s $13.6 Million Refinance

Give this to our super smaht, financially savvy new governor: She knows how to pack a budget with things that require detailed review and analysis if the public is going to have any real sense of whether it’s a good or bad package, on the whole.

Jennifer Bogdan does the good work of digging into the big refinance part of Governor Raimondo’s proposal in today’s Providence Journal:

Roughly $64.5 million in Raimondo’s 2016 fiscal year budget would come from a refinancing effort. Another $20 million would flow in fiscal year 2017. The bonds in question have an average interest rate of 4.9 percent, but if refinanced the interest rate is expected to be lower than 2.34 percent. She calls the refinancing conservative and says it would be irresponsible not to consider a money-saving measure for the state.

By “money-saving,” what the governor means is that she’s using the restructuring to borrow around $84 million in the first two years.  In the third year, the state will actually have to pay about $10 million more in debt service, and the years will change between costing more and costing less over the refinancing period.  As shown in a table included with Bogdan’s article, when the state reaches the end, in 2032, it will have actually paid $13.6 million more in debt service.

That’s where the governor deploys an accounting trick to make the analysis a bit murkier.  In the words of Budget Officer Thomas Mullaney, “The key here is that we would not enter into this transaction if the state would not ultimately come out ahead.”

He’s referring to the fact that if you look at the present value of the changes in payments up and down over the sixteen years — in other words, adjust them for inflation to what they would be in today’s dollars — the real value of the changes is actually $225,238 less in debt service.

Like so many of the “bold and innovative” moves in the governor’s budget, that’s misleading.  For one thing, the assumed inflation rate is critical.  A rough spreadsheet suggests it’s 2.97%.  In that case, it would erase these so-called savings if inflation turns out to be 2.91%.  Below that, we’ll be well into negative territory.*

For another thing, the state isn’t going to treat the refinance like a restricted fund.  The state will spend the savings in the years that there are savings and will have to come up with the money in years that there are costs.  The money is going to have to come from somewhere to pay the extra debt service, and that somewhere will very probably have been worth more to the economy than simply inflation.  (Hey, maybe the governor should invest the savings along with the state pension fund, which the state assumes makes 7.5% profit every year.)

Simply refinancing from 4.9% to 2.34% interest for the same number of years would have saved a great deal of money that could have been left in the hands of Rhode Islanders.  Whatever the governor’s room full of smaht people do for economic development, they have to do better not only than the cost of the refinance, but also the economic activity of people acting without the government’s meddling.

UPDATE (03/27/15 8:37 p.m.): According to the governor’s office, the estimated rate of inflation is 2.44%, which my math leads me to believe would produce a $2 million cost to the refinancing, in current dollars.  I’ve asked for more insight into the governor’s math, but if anybody has an idea, I’d be interested to hear it.  There also must be something incorrect in the information out of the governor’s office.  They’re saying the refinancing is of $160 million of debt, but the Projo’s numbers have the state paying nearly that amount every year.

* Posting this of a Friday afternoon, I got my signs reversed.  I’ve fixed the relevant text.

In Rhode Island, Taylor Swift’s Rights Are Our Rights, Too

The headline for a new statewide property tax proposed by Rhode Island’s Democratic Gov. Gina Raimondo is that pop star Taylor Swift will be among the hardest hit.

A few years ago, Swift purchased a $17 million mansion on the Ocean State’s coast, which means the governor is looking to cull around $43,000 from the starlet’s fortune.

In its first year, the tax is projected to collect $11.8 million from the accounts of the 2,359 households who own second properties worth over $1 million.  As Raimondo put it during her recent budget address, the tax “asks those among us who are most able, to pay a little more.”  As if to emphasize the point, the tax is not technically imposed as a tax on property, but on the privilege of owning it, which makes the tax even more radical than it appears on its face.

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More Money, Fewer Students, and Trust

According to Rhode Island law, cities and towns are never allowed to decrease the amount of money that they supply to their public school systems.  If enrollment goes down, they can calculate their “maintenance of effort” on a per-student basis, but that requires a projected decrease.

By way of example, budgeting for the 2013-2014 school year, the Tiverton school department projected enrollment of 1,899.  It turned out to be 1,873 in October.  For the 2014-2015 school year, enrollment was 1,871, yet the department is now projecting that it will rebound to 1,890.

This is a side note, though, to my latest post on Tiverton Fact Check.

I recently discovered another area of student projections that has significance for school funding.  For this year’s budget, the schools asked for an increase in their budget for out-of-district expenses for special needs students.  Last year, there were 93 such students, and it appears that the district projected at least as many.  It turned out, though, that there were only 77 such students, so the district transferred exactly $600,000 out of that account.

The projection for next year goes down by another 10 students, so the schools may be returning to their prior ability to project this part of their budget accurately.  Still, the schools’ local funding increased by $546,014, this year, presumably on the strength of the incorrect projection, so that money is baked into the budget.

I’ve confirmed with the Department of Education that the state’s view is that the district cannot return the unneeded money, even if the aggressive school committee that recently sued the town for much less were to vote to do so.

From the 2001-2002 school year to the one we’re currently in, the Tiverton school department’s budget, from state and local funding, has gone up 65%, from $17.7 million to $29.3 million.  Meanwhile, enrollment fell 16%, from 2,219 to 1,871.  It’s as if two full grade levels disappeared from the school, but we’re paying for another five.*  And word has it that the district is about to come forward and ask local taxpayers for millions of dollars for necessary spending on the school buildings, which will certainly require more debt.

The people who support such trends (probably because they profit from them) are quick to accuse anybody who finds them disconcerting of “hating the schools.”  To the contrary, it doesn’t take but a dose of common sense to see that something is seriously out of whack, here.


* Preventive PolitiFact note: Using inflation-adjusted dollars, the schools’ budget increase would only be 24%, so it’d be more like losing two grades while paying for an extra two.  But (1) this is a quick illustration to compare numbers, (2) a healthy town’s school system should grow, so the loss in students is arguably understated, and (3) I don’t know why a school system can’t be expected to become more efficient over time, which would require another adjustment.

The HealthSource Tax and Federal Subsidies

Coverage of Governor Raimondo’s proposed new tax on health insurance premiums strikes me as highly misleading:

… most individuals who buy their insurance through HealthSource would find the tax, since it would be rolled into the premium, covered by their federal premium tax credits, said [HealthSource Director Anya Rader] Wallack. Of the roughly 30,000 Health-Source customers, 88 percent qualify for the credits.

“So the bulk of individual customers won’t be paying the premium assessment; the federal government will instead be paying it,” Wallack said.  

Those who obtain coverage directly from insurers or don’t qualify for the credits wouldn’t gain that tax advantage.

If we’re particular about the use of language, then Wallack’s statement is simply not true.  In a recent WatchDog article, I estimated that the 3.8% HealthSource tax on all individual and small group premiums in the state would have to be 9.1% if it were calculated based only on the plans sold through the exchange.  That suggests that about 60% of all plans subject to the tax do not receive subsidies because they are sold outside of the exchange.

According to the latest enrollment data, 12% of Rhode Islanders who are buying insurance through the exchange also receive no subsidies.  That means that only 37% of all people on whom the tax would be levied receive federal assistance for their premiums.

I’ve asked for clarification as to whether it’s actually true that the the federal subsidies will go up to cover the insurance tax.  I didn’t think so, but with Obama as president the rules of government can change without notice, so let’s assume that charging the tax as part of a premium will indeed increase subsidies.  That’s still not the whole story.

Premium subsidies are calculated as a cap that a person would pay for the second cheapest “silver” plan on the exchange (the “benchmark” plan), as a percentage of income.  An individual who makes $10,000 a year is under the poverty level, so that would cap his annual insurance premium for a silver plan at 2% of income, or $200.  Let’s say the benchmark plan is $2,500.  The individual would pay the $200 and receive a subsidy of $2,300.

According to estimates, the new HealthSource tax would make the hypothetical benchmark plan $2,595.  So, the low-income individual would still pay the $200, but receive a subsidy of $2,395.

However, that varies with with income and with the plan.  For an individual making a little over 2.5 times the poverty level (around $30,000), the $2,500 benchmark would start to approach his cap.  Maybe he’d receive some subsidy for the tax, but not all of it.

Moreover, the federal subsidy of the tax in the example would be held at $95.  A gold plan at $3,500 would bear a tax of $133, which is $38 higher than the government subsidy would be.  According to the enrollment data, this dynamic would affect all of the 13% of customers who bought gold plans and some portion of the 65% who bought silver plans.

In other words, “the bulk of individual” insurance customers would be paying the full tax, and a significant number more would pay at least some of it.*


* The phrase in quotation marks should be “the bulk of individual and small group.”  See here for explanation.

Some of the Larger, Seriously Ill-Advised Items In the Governor’s (What Kind of) “Jobs Budget”

During the days following its release, reporters, analysts and observers worked to unpack the budget that Governor Raimondo sent to the General Assembly — and found some unpleasant items therein. Here is a bullet list of some of the bigger ones.

Proposed Statewide Property Tax

… aka, the Taylor Swift tax.

Justin got clarification from Governor Raimondo’s office that the INTENT is not to include apartment buildings as properties to be taxed. This conforms to Governor Raimondo’s attempt to sell this tax as having only a narrow list of targeted properties. (So, gosh, don’t worry about it. And, anyways, we only want to tax those icky rich people.)

Intent, however, is completely secondary. If this tax passes into law, the door will be opened wide for future – and current! – governors and General Assemblies to tax apartment buildings (of all classes and sizes); commercial buildings; second homes of less than one million dollars; PRIMARY homes of more than one million dollars; primary homes of $750,000 – $1,000,000; et empty state cetera. The critical issue is not that the initial list of targeted properties is short. It’s that the list comes to exist at all. To subject just one property classification to a new, statewide tax would set the precedent to subject virtually all real estate in Rhode Island to a statewide property tax via an easy tweak of the targeted property list.

In a perfect bit of timing, RIPEC released an analysis right before the governor released her budget of just how much Rhode Islanders are already taxed. By one measure, Rhode Island already has the fourth highest property taxes in the country. The governor is seriously proposing to raise that ranking? In fact, the one thing above all that our elected officials should not do is exacerbate this burden.

Further, there’s the matter of Rhode Island’s already undesirable reputation as a high tax state. On Twitter, Gary Sasse correctly asks,

When Tax al.rank tax climate will new statewide property tax impact rankings w resulting reputation risks?

Further to “reputation risks”, WPRO’s Gene Valicenti pointed out Friday morning that the governor’s mere proposal has made the national news via the AP’s feed. This is exactly the kind of publicity that Rhode Island needs to avoid, not curry.

Governor Raimondo’s Proposed Statewide Property Tax Redefines Ownership of Real Estate as a Privilege

This one was a great catch by Justin.

Government Handouts, Mo’ Money, Mo’ Money

Pam Gencarella has a good article on GoLocalProv, describing some of the ways Rhode Island’s handout programs seem always to cost more than expected.  As she says, the state’s ObamaCare health benefits exchange, HealthSource RI, is “not much more than a big advertising campaign for Medicaid and its expansion.” The state’s Medicaid expenses prove the point, with the November revised estimate adding $211 million (10%) in costs.

Meanwhile, despite the exchange’s offering thousands of people subsidized health insurance and more than one-quarter of the state on Medicaid (not to mention Medicare), the bill for uncompensated care is up 16%, to $137 million.

Gencarella also brings up the Unified Health Infrastructure Project (UHIP), which is designed to cascade all government handout programs to those who qualify for any of them.  Her focus is on the budgetary effects of UHIP’s intent, but even the cost of the program massive.  According to Pam, “the total projected cost for this project is $229 million.”

If I may throw another log on the fire, as I noted in last year’s Spotlight on Spending report, UHIP was projected, at that time, to cost $209 million.  There’s another mysterious 10% increase!

Really, Rhode Island, we have to make this stop.

Governor’s Office: Apartment Tax Not Intended

Ever since Governor Gina Raimondo announced a proposal to impose a statewide property tax on residential properties over $1 million, if their owners do not live in them for a majority of the year, debate has raged as to what would be included.  Much of the discussion has been behind the scenes, among people who follow Rhode Island policy closely and representatives of groups that might be affected.

Initially, anonymous blogger CoffeeBlackRI suggested that the tax would apply to rental apartment properties worth more than the threshold.  I replied with an interpretation of the law suggesting that it would not.

The director of Office of Revenue Analysis, Paul Dion, told Katherine Gregg of the Providence Journal that his estimate of revenue that would be produced by the tax included “two-to-five-family residences,” along with other properties.  Some observers took that as conclusive evidence that the tax would apply to small apartment complexes.

A budget summary from Ted Nesi, posted today on WPRI’s Web site, seemed to confirm the interpretation.  Nesi quoted from a report by the House Fiscal office, “It appears that the intent of the legislation and the revenue estimate excludes apartment buildings from the tax; however, as written, the tax would apply to these properties.”

In a statement to the Ocean State Current, Raimondo spokeswoman Marie Aberger echoed House Fiscal’s report, affirming that “the intent is to exclude apartment buildings.”

Specifically, the intent is to apply it to the following categories, if they are worth $1 million or more: non-owner occupied single family residences, two-to-five family residences (only if they are non-owner occupied and not available for long-term tenants), and non-owner occupied estates, seasonal and beach property, residential condos, time shared condos, dockominiums, mobile homes, and vacant residential land.

The “two-to-five family residences” category was included in the estimate from Revenue Analysis because available data does not allow finer differentiation.  For example, wealthy seasonal residents often employ groundskeepers who reside on the property year round.

According to Aberger, the administration’s plan had been to draft more-specific guidance while writing regulations to enact the law, if passed.  “However,” she continued, “we are happy to work during the legislative process to modify the language, if necessary, to ensure that the intent of the legislation is carried out.”

The “Twice on the Pipe” Tax

There appears to be unanimity that I was reading the legal language of the “Taylor Swift Tax” on second homes too closely when I wrote that it should not apply to apartment buildings.  Lawyers for landlord groups, analysts in the executive branch, and analysts in the legislative branch all agree that the net will snag smallish multifamily units, if they’re worth $1 million or more.

If we’re looking for a new nickname for the proposal, I’d suggest the “Tony Orlando Tax.”

But frankly, I’m still suspicious.  As a long-running concern, I think it’s a grave problem that all of us in the policy and law game fall to the legalistic practice of pretending that profound shifts in legal language (like taxing a “privilege” rather than a “property”) are just immaterial “terms of art.”  At the end of the day, the law isn’t what’s written on paper; it’s what lawyers and bureaucrats agree that it means, as a sort of legal clerisy.

Well, these things are “terms of art” until they aren’t… when we discover on some massive, crucial question that (quoting some future judge) “the principle that the ability to have and hold property is a privilege granted by the state is firmly established in the law.”  When that day comes, we’ll learn that the words as written actually did mean something, even though legal experts on both sides of the issue advised us to focus on more immediate traps and loopholes.

As a practical political matter, I have a hard time believing that Governor Raimondo and her staff thought they’d try selling this as a tax on rich vacation-home owners only to turn around once it had been passed and declare, “Ah-ha!  We fooled you landlords!”  At the same time, it’s difficult to believe that they didn’t pick up on the fact that even the guy estimating the revenue for them included such properties.

I suggest the new nickname of the “Tony Orlando Tax” not just because his most famous song was about a guy in an apartment, and not just because the video was filmed in front of a mansion-looking building, but because I think there’s political significance to the lyric:  “knock three times on the ceiling, if you want tax; twice on the pipe, if the answer is ‘no.'”

In order to sneak in the leading edge of a statewide tax on property — on the very privilege of owning property in the first place — the governor knocks on the ceiling asking to tax vacation property, vacant land, and year-round properties.  Then the landlords bang on the pipe to signal, “no, just the other two” and the mistake of including the most organized target for the tax is fixed.  Everybody’s happy, right?

The state’s Director of Revenue Analysis, Paul Dion, tells me that 111 of the 2,359 properties over $1 million that he included in his estimate are “two-to-five family residences,” accounting for 4.7% of the total take.*  That’s about $550,000 total — an easy concession to make in the course of negotiating a budget through the legislature.

* Note: An earlier version of this post characterized the 111 properties as “multifamily rentals,” which was how I asked the question. I should have used “two-to-five family residences,” which is how he responded.

Rhode Island Is Too Small to Sustain Its Obamacare Exchange, so It’s Raising Taxes

“Insufficient scale to justify investment.  Do not pursue.”

Such was the conclusion of a 2009 report funded by the Robert Wood Johnson’s State Coverage Initiative to investigate then-Lieutenant Governor Elizabeth Robert’s plan for HealthHub RI.  This year, the first budget proposed by Rhode Island’s new governor, Democrat Gina Raimondo, provides proof that the study was right.

In 2009, the idea was to follow Massachusetts, Connecticut, and Washington in setting up a government-run health benefits exchange.  The hope (at least as publicly expressed) was that an exchange would help the state expand access to insurance while lowering the cost of health care.  Yet, members of the group conducting the study “were disappointed to learn that the development of a full exchange model, as established in Massachusetts, would not” accomplish their goals.

A few years later, with the help of the Obama Administration and a party-line vote in the U.S. Congress, creating the Affordable Care Act, otherwise known as Obamacare. Then following an executive order from Governor Lincoln Chafee, Rhode Island officials went ahead and set up exactly the sort of exchange that their report had warned them not to pursue, calling it HealthSource RI.

With the Affordable Care Act requiring federal funding to cease soon, Rhode Islanders are now finding out what “insufficient scale” actually means.

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