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The Unspeakable Options to Repair Rhode Island’s Schools

Anybody who’s ever gone through a period of his or her life — or observed one in somebody close — during which he or she made the mistake of finding debt so easy as to avoid a necessary reduction in household spending will recognize what’s going on with the current push for new funding for school repairs.  Your budget seems impossible to manage without the debt, because unforeseeable yet inevitable expenses have a way of coming up.  You can’t know that the fridge is about to go or a health issue is cropping up out of sight or a loss of income is looming, but some of the expenses that can occur will occur over a given time period.

So, you spend money that ought to go into maintenance or savings on other things that seem justified at the time, and you wind up with the sort of thinking that Rhode Island’s young general treasurer, Seth Magaziner, exhibits when he “outlines funding options for school-facilities overhaul” in a Linda Borg article in the Providence Journal:

“I’ll argue that K-12 has been underfunded for a long time,” Magaziner said. “We haven’t had a K-12 bond [for school repairs] since 1984.”

One way to pay for these repairs is for the state to float a statewide bond to fund the pay-as-you-go system. He said a recent analysis projected that the state has the capacity to borrow $1.2 billion over 10 years.

When the RI Center for Freedom & Prosperity developed its District Impact Model for Educational Scholarships (DIMES) tool for assessing the budgetary and enrollment effects of school policy, we found that school choice would free up hundreds of millions, even billions, of dollars in government spending on education, depending how the policy was designed.  At the same time, school choice would draw more investment from parents and others into education in Rhode Island.

Yet, we hear about billions of dollars of new funding that the state, cities, and towns will have to find in order to repair or replace neglected buildings, because public officials don’t want to change how things are done and don’t want to revisit their priorities to find the money in existing revenue.

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PawSox Hearings Giving Troubling Insight into Officials’ Thinking

The final Senate Finance hearing about the proposal for a new PawSox stadium in Pawtucket, as reported by Kate Bramson of the Providence Journal, has a couple of details that ought to be warning signs to Rhode Islanders with respect to the attitudes of government officials in the state:

[Pawtucket City Commerce Director Jeanne] Boyle said city payments could be made in early years from money set aside in a capitalized-interest account from bond proceeds. She said the city could also assess a fee on property near the stadium so some additional money would flow into the city’s general fund right away.

If this is correctly reported, then it’s new.  Up to now, the hints that we’ve heard have been that the city might expand the tax increment finance (TIF) area around the stadium so that more taxes would go to the stadium.  Ultimately, that’s just a sneaky way to force an increase in taxes without immediately blaming it on the development.

This sounds like a direct tax on businesses and residents around the stadium under the assumption that they’re profiting somehow from the stadium.  That would be a terrible way to go.

On a different matter, consider this evidence that Bristol, Portsmouth, Tiverton Senator James Seveney isn’t really representing his own constituents:

… Sen. James A. Seveney pinpointed that the legislation says money from a surcharge on premium tickets (in corporate suites, for example) might help the state pay off its $23-million contribution. But as it is written, the legislation doesn’t allow that for the city’s payments.

“Maybe that should be in yours,” Seveney said, to which Grebien responded: “We’d gladly take that. Having said that, it was very difficult negotiations.”

Seveney continued: “I’m not too worried about the state’s position, and I’m not worried about the team’s position. I think they’re going to be fine. I am worried about you guys.”

Why is an East Bay senator more concerned about Pawtucket taxpayers than about the liability of the people who elected him?  Sure, we should care about Pawtucket’s problems, but Seveney is essentially putting forward his constituents as a cash cow.

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Prepare for Another Innovative Way to Take Your Money

Katherine Gregg’s Providence Journal interview with Democrat Governor Gina Raimondo contains a number of interesting tidbits, but the most significant section may be the round of questions on school infrastructure funding:

“The question … is how much money is needed to do the school construction properly — over what period of time — and where are we going to get that money … to which I don’t have an answer for you today,″ Raimondo said. …

Raimondo does not favor a surcharge on the sales tax or any other major tax, but says she is considering other ways to create a dedicated revenue stream.

The article cites $628 million as the bare minimum funding we supposedly need, and she mentions (but does not “favor”) the Massachusetts approach of devoting a penny of the sales tax to the matter.  Noteworthy, in that context, is that Rhode Island’s sales tax was implemented in the first place in order to give teachers raises and resolve financial crises in the cities and towns.

Whatever the solution that the governor ultimately proposes, this being Rhode Island, we should expect to see some scheme to increase revenue, not redirect it from some other expenditures are of lower priority.  The incentives of government ensure that low priorities are always the first to be funded.

Note that Raimondo isn’t even floating a comprehensive fix (at least not yet) as she did with pensions or roads and bridges, just “a dedicated revenue stream.”  Rhode Islanders pay enough in taxes to have our school buildings maintained and well staffed.  The problem is that the money is being redirected in ways it shouldn’t be.

Nobody should believe any claim that this new tax, fee, or scheme will be the one that actually accomplishes what government promised decades ago.  The pressures of the unnecessary or extravagant expenditures are now becoming such that the state keeps looking for ways to add new sources of money to pay for the basics.  But the waste, fraud, and abuse will continue to grow and expand, making it inevitable that corrupt insiders will come for this cash, too.

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The Stealth Tax Increase in Pawtucket for the Stadium

Kate Bramson’s Providence Journal article hones in on the possibility that Pawtucket might need to borrow more money for the proposed PawSox stadium than is being stated in order to have a fund to pay off the bond in the time before the supposed wave of new economic development.  The other possibility is more of a red flag, though:

Extending the district around the stadium from which commercial property and other taxes would go into a special account to pay back the bonds, rather than into the state’s or city’s general fund [such a district is called a “tax-increment financing district”].

In theory, this means that the city would draw a circle around the stadium and assume that any increase in taxes from within that circle are attributable to the stadium.  This money would go to pay off the bond.

The fact that this would be an “extension,” however, is an acknowledgement that the increase in revenue probably isn’t really attributable to the stadium.  So, in practice, the expanded TIF district means that taxes will have to go up for everybody else in Pawtucket in order to cover the city’s regular operating budget.

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Evergreen Contracts One Positive of Special Session

As Ted Nesi reminds us in his weekend roundup, the legislation making municipal labor contracts, including those for teachers, essentially permanent until renegotiated did not overcome Democrat Governor Gina Raimondo’s veto at this week’s special session of the General Assembly:

The issue has become a game of chicken between the two chambers, with the Senate saying the House needs to vote first because Raimondo vetoed a House bill, but the House saying the Senate first needs to pass its own version and get that vetoed, too. …  a Senate spokesman reiterated that there will be no override unless the House votes. A House spokesman declined to comment, but there’s little indication Speaker Mattiello is inclined to call a vote.

That’s pretty obviously a pair of thin excuses to do the right thing in the face of labor union pressure, but hey, we’ll take it.  The lingering question — as with so much legislation that works its way into law — is why our representatives and senators would pass such horrible legislation to begin with.

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School Repairs and Where the Money Goes

So Democrat Governor of Rhode Island Gina Raimondo wants Rhode Islanders to make a “once-in-a-generation investment” to fix our substandard school buildings, and I can’t help but wonder:  Where is all the money we’re already spending going?

Rhode Island’s public schools need $627.5 million worth of major repairs to simply put students out of harm’s way, according to a major independent study commissioned by state officials.

But it would cost $2.2 billion to bring schools to an ideal condition — buildings that are energy-efficient, offer the right mix of technology and provide plenty of sunlight and fresh air.

The first thing to note is that $2.2 billion isn’t all that much higher (relatively) than the $1.8 billion that the state proclaimed a few years ago.  Suffice to say that it’s a lot of money and that this isn’t a surprise.

But again:  Where is all the money going that we’re already spending?  This whole thing has the feel of a government scam.  The first marker is that, by just about any measure, Rhode Islanders pay a great deal in taxes.  How can that not be enough to cover basic maintenance and improvement of something that’s long been considered a central function.

The second marker that raises questions about this new ask for huge taxpayer expenditures and debt is how we’re coming up with these numbers.  Tiverton, for example, is listed as having $46 million in “deficiency costs,” but the town is already paying off $54 million in debt for construction and repairs.  How did we reach the point of requiring $100 million in school repairs for a district serving about 1,800 students?

Something isn’t right with this whole pitch across the state, and Rhode Islanders should insist that elected officials figure it out before agreeing to put themselves into even more debt.

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Alexion Closure… Centralized Economic Development Not Cutting It

Back in 2012, just as the Town of Portsmouth was beginning to crow about the profitability of its taxpayer-subsidized wind turbine, government officials had to eat that crow when the unit failed, with a fix priced at more than the supposed profit.  That anecdote came to mind when I read of Alexion Pharmaceuticals’ plan to close up its Rhode Island shop.  According to WPRI’s Nancy Krause:

Alexion Pharmaceuticals Inc. announced Tuesday morning it is closing its plant in Smithfield and moving manufacturing operations to other sites in the United States and Ireland.

A spokeswoman told Eyewitness News Alexion has 250 employees at the location, which the company said has been a key manufacturing site for Soliris – a high-priced treatment for two rare genetic disorders – over the past 10 years.

Add that 250 to the 715 Benny’s employees now set to lose their jobs, and it begins to appear that the economic winds might blow away every single job increase that Governor Gina Raimondo’s Commerce Corp. has bribed, or will bribe, companies to create in the state.

Of course, we can’t know whether anything that the State of Rhode Island could have done would have saved the nearly 1,000 jobs that are now going to be erased from our local ledger from just these two companies, but if the economy is shedding jobs while only creating them when heavily subsidized, that’s a very strong signal that we should try another approach.  Simply change the state’s focus to making it easier for residents to live and do business, and companies will have more incentive to stay and innovate here.

All those bribes would have gone a long way toward making such refocusing possible.

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One Thing is Clear: The Progressive Agenda Is A Failure

Despite the false hopes expressed by lawmakers based solely on a reduced unemployment rate, Rhode Island families are hurting. The Ocean State suffers under a terrible business climate, and remains stuck 48th rank on our Center’s Job’s & Opportunity Index. Just this week, it was announced that Benny’s, a Rhode Island institution, is closing.

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Rhode Island Costs Take Years Off Your Retirement

Ted Nesi highlighted a telling finding about how long $1 million in retirement savings will last you from state to state:

It’s not easy to save $1 million for retirement. But if you do, the money will last you nearly two decades in Rhode Island.

A new study by GOBankingRates, a personal-finance website, estimates that $1 million will last a retiree 18 years and 2 months in Rhode Island. That’s less than most states – Rhode Island ranks 42nd out of 50 for how long the million can stretch – but about a year longer than Massachusetts or Connecticut.

The difference between Rhode Island and Mississippi (the top state by this measure) is eight additional years of having to work in order to stay in the Ocean State.  A Rhode Islander willing to move to Mississippi, Tennessee, Indiana, Texas, or a variety of other states could retire in his or her 50s, rather than at 65.

Putting it that way brings our political problems to the fore.  For those who have bought into the state’s insider network, mainly as employees of state and local government, the corrupt system allows them to retire in their 50s anyway, if they want.  And they can still move to a more congenial state when they’re ready, having “gotten theirs” while here.

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Rhode Island Motto: “Hope for Bribery to Live Here”

Kate Bramson has checked in on Rhode Island government’s “Wavemaker” program, which bribes college graduates to live in the Ocean State:

The state has selected 224 college graduates to receive personal income tax credits under the state’s Wavemaker Fellowship program, which would defray their student loan debts totaling about $868,000 while the recipients work in science, technology, engineering, mathematics and design jobs in Rhode Island. …

This year’s average annual tax credit is approximately $3,875 per student, but recipients earn varying amounts based on their education levels. Those with associate’s degrees are eligible for up to $1,000 of credit each year, while those with postgraduate degrees are eligible for up to $6,000.

The working class and underemployed in the state must be very comforted by the knowledge that they’re helping to give a $6,000 bonus to a Ph.D. in a high-paying job.  But that’s the key to living in Rhode Island: do something (or be something) that local elites like.  Otherwise, you’re out of luck.  You’re a nobody loser.

Many of us have watched in disbelief every time some government-employed or otherwise-connected schemer walks away from an impropriety scot-free, but the mystery is solved when once one understands a quirk about Rhode Island culture.  Just as many Americans romanticize mafiosi, Rhode Islanders tend to look up to those who “got theirs.”  The insider crooks are the archetypes around which we build our entire system of government.  The political message is, “Vote for me, and I’ll get you yours just like my pal got his.”

Sure, it is odd that the same folks who implicitly acknowledge that we have to pay people to live here and companies to set up shop here also tend to insist that the tax-and-regulatory burden doesn’t drive people out.  But that seeming contradiction only underscores the principle:  Doing something for insiders means you’re not a mooch, but somebody deserving of support.  If you just want to mind your own business and keep what you earn, then you’re a mooch.

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Center Blasts Newest Truck Toll Tyranny; RIDOT’s Laughable Denial

It has come to light that, on August 11, RIDOT *corrected* requested a hearing, scheduled for today, to issue commercial truck route restrictions within the state. The Rhode Island Center for Freedom and Prosperity (for whom I am Communications Manager) has just issued a statement strongly condemning this. It says, in part,

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