May 15th, 2013 at 2:49 pm by Ted Nesi under Nesi's Notes
By Dan McGowan
PROVIDENCE, R.I. (WPRI) – A Providence councilman has proposed a five-point plan to help reduce or prevent a property tax hike, but the Council’s top fiscal advisor said a residential rate increase is “unavoidable” for Rhode Island’s capital city.
May 10th, 2013 at 5:05 pm by Ted Nesi under Nesi's Notes, On the Main Site
Providence has topped a set of national rankings, and Mayor Angel Taveras probably isn’t happy about it.
Taxpayers in Rhode Island’s capital city paid the highest commercial property taxes charged in any of the nation’s 53 biggest cities in 2011, according to the latest edition of a widely cited comparative study by the Lincoln Institute of Land Policy and the Minnesota Taxpayers Association.
The previous edition of the study listed Providence as having the second-highest commercial property taxes among big cities, behind only Detroit – a statistic that’s been widely referenced locally ever since Governor Chafee cited it on Newsmakers and then had his research confirmed by PolitiFact.
But the tax burden on commercial property in Providence grew even heavier in 2011, when Rhode Island’s cash-strapped capital slapped a tax bill of $4,975 on commercial property worth $100,000 – $69 more than second-ranked Des Moines and $75 more than third-ranked Detroit. Here’s a chart:
Taveras has proposed freezing the commercial tax rate for seven years – apparently at what has been the highest level in any major U.S. city, according to this study. Even that may not happen: City Council members have expressed skepticism about the proposal, suggesting they may raise commercial taxes even more.
The study said Providence also charged the fifth-most on apartment buildings among the 53 big cities in 2011, with a tax of $21,765 on a $600,000 property, behind Des Moines, Detroit, New York City and Buffalo. In addition, Providence ranked 11th-highest for homestead property taxes on the median-value home and 9th- and 10th-highest for industrial property taxes on machinery, equipment, inventories and fixtures.
The latest edition of the study was cited Friday on Twitter by Gary Sasse. “Rhode Island’s economic health is linked to more competitive business taxes in the Capital City,” he commented (in abbreviated tweet form). Not coincidentally, the owner of the now-vacant Superman building wants a tax break to redevelop it.
April 25th, 2013 at 8:59 pm by Ted Nesi under Nesi's Notes
By Dan McGowan
PROVIDENCE, R.I. (WPRI) – The average Providence resident would see his or her property taxes increase by 6% and the city would eliminate its structural deficit by asking the state to boost municipal aid under a budget proposal introduced Thursday by Mayor Angel Taveras.
April 15th, 2013 at 5:00 am by Ted Nesi under Nesi's Notes, On the Main Site
April 1st, 2013 at 2:52 pm by Ted Nesi under Nesi's Notes, On the Main Site
A new report says the General Assembly isn’t saving enough for a rainy day.
The Center on Budget and Policy Priorities, a liberal Washington think tank, argues Rhode Island and other states would have weathered the recession better if they’d had more money in reserve to cover budget shortfalls. “In many states, it was not just a lack of foresight but poor rainy-day fund design that led to this inadequate funding,” Elizabeth McNichol, a senior fellow at the center, writes in the report.
Rhode Island caps its rainy day fund at 5% of spending, an amount McNichol criticizes as “far too low.” She suggests Rhode Island should triple its rainy-day cap to 15% of spending, the level used in Massachusetts. Connecticut’s cap is 10%. ”Rainy day funds would have been even more effective in the most recent downturn if they had been larger,” she writes.
In addition, McNichol argues Rhode Island should ease its rules on how quickly the state must replenish the rainy-day fund, which doesn’t take into account the economic situation at the time. “Such rules have proven to create a disincentive to use the fund and place the rainy day fund in competition with other programs for scarce resources during an economic downturn,” she writes.
On the subject of rainy-day funds, the Center on Budget is actually in rare agreement with the Tax Foundation, its frequent nemesis among think-tanks.
A report last year by the Tax Foundation’s Joseph Henchman found that the size of most states’ budget reserves were inadequate during the recession, and cited research arguing that states should save 13% to 18% of revenue to cope with future downturns. “To achieve this during a typical period of economic expansion, states would need to save between 2.4% and 2.8% of each year’s revenues during good economic times,” Henchman wrote.
“Having a well-funded rainy day fund may not obviate the need for making difficult programmatic cuts during an economic downturn but it can cushion the fiscal system in the short-term,” he concluded. “Well-designed rainy day funds should have set rules for filling and withdrawing the funds, a targeted amount to save that takes into account the state’s historical revenue volatility, and good transparency to ensure that citizens are informed about how the fund operates and is used.”
• Related: How Keynes would manage Rhode Island’s budget (April 29, 2011)
March 7th, 2013 at 12:01 pm by Ted Nesi under Nesi's Notes, On the Main Site
The number of poor Rhode Islanders receiving federal welfare benefits dropped sharply during the Great Recession despite record-high unemployment and a weak recovery, according to a new study by the Center on Budget and Policy Priorities.
The Temporary Assistance for Needy Families (TANF) program’s total Rhode Island caseload fell from 10,929 in 2007 to 7,784 in 2009 and 6,668 in 2011, a drop of 39%, the Washington-based organization found. Rhode Island’s jobless rate jumped from 6% to 11% over the same period.
By contrast, the TANF caseload increased 10% nationwide from 2007 to 2011. The 39% drop in Rhode Island’s welfare rolls was the third-biggest in the nation, behind only Arizona’s (54%) and Indiana’s (51%). Nevada, which like Rhode Island has struggled to bring down its unemployment rate, said its TANF recipients increased by 37%.
That’s not the whole story, however – because Rhode Island went into the recession with the most far-reaching welfare program in the country.
February 21st, 2013 at 11:20 am by Ted Nesi under Nesi's Notes, On the Main Site
By Ted Nesi
NORTH KINGSTOWN, R.I. (WPRI) – The U.S. Navy’s Blue Angels won’t be thrilling audiences at this summer’s Rhode Island Air Show if across-the-board military spending cuts take effect as scheduled starting March 1, according to a Pentagon briefing document obtained by WPRI.com.
January 24th, 2013 at 5:00 am by Ted Nesi under Nesi's Notes, On the Main Site
The Tax Foundation is out with another interesting fiscal map, this one looking at how much of each state’s budget is paid for by the federal government based on 2011 U.S. Census data. Rhode Island ranks 18th, with 38% from the feds, much higher than Massachusetts (40th) or Connecticut (45th):
These numbers may be skewed in part by the 2009 stimulus law, which temporarily increased the share of Rhode Island’s state budget covered by the federal government by a significant amount. Governor Chafee’s proposed 2013-14 budget is only 32% federally funded, a six-point drop compared with the map.
January 21st, 2013 at 10:10 am by Ted Nesi under Nesi's Notes, On the Main Site
Senate Finance Committee Chairman Dan DaPonte caused a stir last week when he told me he was “quite honestly confused at the liberal opinion that the 2010 personal income tax reform was a big giveaway to high-income earners.” Samuel Bell, Rhode Island coordinator for the Progressive Democrats of America, e-mailed this response to the chairman’s comments:
There is a very simple reason Senator Dan DaPonte says he is “confused at the liberal opinion that the 2010 personal income tax reform was a big giveaway to high-income earners.” That is not the liberal opinion. DaPonte is confusing the 2010 reform with the 2006 tax cuts for the wealthy – the flat tax – which were indeed a big giveaway to the rich.
As a package of technocratic changes, the 2010 reform had a fairly minor effect on the overall income tax code. The details are dull and unimportant: instead of allowing the top rate to fall from 6% in 2010 to 5.5% in 2011, as it would have under the law at the time, the 2010 reform froze the top rate at 6%. (Technically, the rate fell by 0.01 points to 5.99%.) So relative to the proposed 5.5% flat tax rate for 2011, the 2010 reform actually raised income tax rates on the wealthy extremely mildly. On the other hand, relative to 2010 policy, the changes represented a minuscule decrease in effective nominal tax rates for the wealthy (due to the complexities of the marginal rate structure). In short, it was a bureaucratic reform of little significance. If progressives opposed the 2010 changes, it was because they did not address the deeply unfair 2006 tax cuts for the wealthy.
Few red states have slashed taxes for the rich as deeply as Rhode Island did in 2006. When state lawmakers dropped the top rate from 9.9% to 5.99%, the General Assembly claimed they were creating jobs. What followed was a clear demonstration of the failure of Republican economics. There is only one difference between what happened in Rhode Island and what the national Republican party would like to do to America: in Rhode Island, many of the Republicans have Ds after their names.
The economic devastation we are facing does not call for the laughably tiny tweaks Chafee and the General Assembly are proposing. What we need is a jobs bill, one we can easily fund by rolling back the 2006 giveaways to the rich. So let’s not waste our time discussing the bureaucratic baby steps Smith Hill loves. Let’s actually fix the economy.
• Related: DaPonte: RI progressives are wrong about income tax changes (Jan. 18)
January 18th, 2013 at 1:39 pm by Ted Nesi under Nesi's Notes, On the Main Site
By Ted Nesi
SMITHFIELD, R.I. (WPRI) – Drug manufacturer Alexion Pharmaceuticals is criticizing Governor Chafee’s proposal to sharply reduce the generosity of a tax credit he offered them just three months ago in exchange for agreeing to keep jobs in the state.
• Related: CVS reviewing Chafee push to cut tax credit worth $15 million (Jan. 17)
January 18th, 2013 at 5:00 am by Ted Nesi under Nesi's Notes, On the Main Site
Senate Finance Committee Chairman Dan DaPonte has had it with liberal critics of the income tax law he helped shepherd through the General Assembly in 2010.
DaPonte, D-East Providence, and his colleagues are under renewed pressure this legislative session from Rhode Islanders for Tax Equity, a coalition of progressive activists and unions leaders who want taxes hiked on upper-income residents. This year’s top rate is 5.99% on income above $133,250.
DaPonte, the Senate’s top budget-writer and a key lieutenant to Senate President M. Teresa Paiva Weed, told me on Wednesday he doesn’t want to revisit the issue:
I think the 2010 changes that are in place are appropriate. I think when you look at the increased revenues that we’ve gotten – I’m anxiously awaiting the revenue report that’s published in March, to show which income brackets paid what taxes.
I’m still quite honestly confused at the liberal opinion that the 2010 personal income tax reform was a big giveaway to high-income earners. From everyone that I’ve heard from, particularly tax professionals who do this stuff for a living – they have a completely opposing opinion, that that is not, in fact, what we did do.
That was testified to during the process. There are going to be winners and losers, but we needed a simpler, fairer tax formula, and that’s what we have now.
• Related: Paiva Weed stays vague on whether she’d OK income tax hike (Jan. 16)
January 17th, 2013 at 4:30 pm by Ted Nesi under Nesi's Notes, On the Main Site
CVS Caremark is holding its fire on Governor Chafee’s budget – for now.
The governor on Wednesday proposed reducing Rhode Island’s corporate tax rate from 9% to 7% over three years, and paying for it partly by cutting in half the value of Jobs Development Act tax credits – the vast majority of which benefit Woonsocket-based CVS, to the tune of more than $15 million in fiscal 2011-12 alone.
“We will be reviewing all of the elements of the governor’s budget proposal and look forward to continue making significant contributions to Rhode Island’s economy,” CVS spokesman Mike DeAngelis told WPRI.com on Thursday.
“CVS Caremark shares Governor Chafee’s commitment to improving and growing Rhode Island’s economy and we applaud his focus on job creation and a competitive corporate tax rate,” he said.
January 17th, 2013 at 5:00 am by Ted Nesi under Nesi's Notes, On the Main Site
By Dan McGowan and Ted Nesi
PROVIDENCE, R.I. (WPRI) – The reaction to Gov. Lincoln Chafee’s budget proposal Wednesday night was very different from the response to his first two. Here’s a roundup of reactions from Fox, Paiva Weed, Raimondo, Taveras, Fung, Melo, DaPonte, Newberry and Tanzi.
• Related: Chafee seeks lower corporate tax rate, more school funding (Jan. 16)
January 16th, 2013 at 7:01 pm by Ted Nesi under Nesi's Notes, On the Main Site
• Overview: No tax hikes in Chafee budget
In March 2011, a newly inaugurated Gov. Lincoln Chafee proposed an ambitious restructuring of Rhode Island’s sales tax to boost revenue. House Speaker Gordon Fox killed the idea just a month later amid a huge outcry.
Last year Chafee tried a different tack, proposing an increase in the meals tax and trying to win support by earmarking the money for education. But the dining industry protested, putting signs on restaurant tables from Woonsocket to Westerly, and lawmakers ignored the governor’s big idea on revenue once again.
Chafee may be stubborn, but he’s not insane: his first two budgets taught him that proposing high-profile tax hikes is political suicide. So the message in Chafee’s proposed 2013-14 budget is unequivocal: read my lips, no new taxes.
“Governor Chafee’s revenue plan was very simple – taxpayers have already shouldered enough of the cost of government, and the delicate recovery we are in today should not be derailed by any tax increases,” the budget document declares. “Therefore, Governor Chafee’s FY 2014 Proposed Budget does not include any increases in taxes, fees or charges.” (They underlined it in the original.)
November 15th, 2012 at 12:42 pm by Ted Nesi under Nesi's Notes, On the Main Site
The liberal Center on Budget and Policy Priorities think tank in Washington is out with a new study today looking at the growth of income inequality in the 50 states since the 1970s. Rhode Island had the ninth-biggest growth in the gap between the top and bottom of the income distribution and the 10th-biggest increase between the top and middle over the period.
Adjusted for inflation (in 2009 dollars), the average income rose for households in the bottom quintile from $21,021 in the late 1970s to $23,501 in the mid-2000s; for households in the middle quintile, from $49,388 to $70,215; and for the top quintile, from $95,090 to $189,260, according to the study.
Here’s an infographic from CBPP and its local affiliate, The Economic Progress Institute:
September 4th, 2012 at 3:51 pm by Ted Nesi under Nesi's Notes, On the Main Site
When is a surplus not a surplus? When lawmakers already spent it.
Rhode Island finished its 2011-12 fiscal year with a $115.5 million surplus, State Controller Marc Leonetti told lawmakers in a letter [pdf] last week. But before reduction-ravaged state agencies start popping champagne corks, they should take a closer look at the numbers.
The budget lawmakers adopted in June included a projected $93.9 million surplus, so they already allocated that extra cash to various programs in this year’s spending plan. The additional surplus revealed last week – that is, the amount of money lawmakers weren’t expecting and thus didn’t already spend – is a lower $21.7 million.
The budget surplus is a good sign as far as it signals a stronger-than-expected economy is producing more tax revenue and the tax-and-spending blueprint isn’t out of whack. But considering Rhode Island’s large projected deficits in future years, an extra $21.7 million isn’t a game-changer.
Update: Another way to look at it – the $21.7 million surplus will cover less than 15% of the $148.9 million deficit already projected for next year (2013-14). There’s still a $127.2 million deficit projected for next year even with this additional money.
June 8th, 2012 at 8:24 am by Ted Nesi under Nesi's Notes
All the most thoughtful lawmaking takes place in the middle of the night, right? Check out the Projo’s rundown, our WPRI overview, the official press release and the live blogs from the Current and RIFuture for more, as well as Ian Donnis’s Twitter feed. The final vote was 57-15, and the only surprise I saw was when leadership decided not to tax car washes after all.
The Senate Finance Committee is wasting no time in moving the budget through the upper chamber. The committee will take up the tax-and-spending plan at 3:30 p.m. Friday in Room 211. And for all the grief Governor Chafee gets for his policies, he tried harder than lawmakers to shrink the deficit:
• Related: Budget on autopilot gives Rhode Island permanent deficits (June 13)
June 7th, 2012 at 12:56 pm by Ted Nesi under Nesi's Notes
The big day is here. The Rhode Island House of Representatives will take up the finance committee’s $8.1 billion tax-and-spending plan for 2012-13 this afternoon, with the debate scheduled to start at 2 p.m. – a likely story – and expected to continue for hours.
Most of the buzz is about whether Speaker Fox will be able to beat back attempts to add a tax hike on upper-income Rhode Islanders to the budget proposal. Legislative leaders and Governor Chafee have made clear all along they won’t support that, but many rank-and-file Democrats are queasy about voting against a populist measure with strong labor backing.
I’ll have live coverage of the budget debate on my Twitter feed (@tednesi) this afternoon and evening, and I’ll post a full article wrapping up what lawmakers do after the day’s events are done. And, of course, we’ll have live coverage on WPRI 12 at 5 p.m., 6 p.m. and 11 p.m., as well as on Fox Providence at 10 p.m.
If you really want to wonk out, dive into the budget analysis briefings written up by the House Fiscal Office [pdf] and the Senate Fiscal Office [pdf]. This chart from the Senate staff, for example, shows Democratic lawmakers are leaving yawning future deficits:
Update: Well, it was a nice idea anyway. I’ve been pulled off budget coverage to tackle all today’s 38 Studios developments, so no budget coverage from this corner tonight.
• Related: Budget on autopilot gives Rhode Island permanent deficits (June 13)
(photo: Ted Nesi/WPRI)
May 31st, 2012 at 10:38 pm by Ted Nesi under Nesi's Notes
By Ted Nesi
PROVIDENCE, R.I. (WPRI) – Legislative leaders unveiled a state budget proposal late Thursday night that would send $33 million more to school districts and raise some taxes but would not increase the restaurant tax as proposed by Governor Chafee.
Update: Lots of random trivia about the budget on my Twitter feed. Which boards and commissions will keep paying their members? Who will be the new Chancellor of Education? Will Central Falls’ pension system get moved to MERS? Find out here.
February 3rd, 2012 at 9:53 am by Ted Nesi under Nesi's Notes
That was one of the riddles in the governor’s budget. My colleague Steve Nielsen tracked down the answer:
If you really want to dig in, check out the state law definition of a “distressed community.”
February 1st, 2012 at 11:38 am by Ted Nesi under Nesi's Notes, On the Main Site
January 31st, 2012 at 7:04 pm by Ted Nesi under Nesi's Notes, On the Main Site
In 2011, Governor Chafee proposed a state budget that was big and bold. It flopped with lawmakers.
Lesson learned: Chafee’s 2012-13 budget is less big and bold, more modest and managerial. Beyond targeted spending on his top priorities – notably more than $38 million for education – his vision is a relatively austere $7.9 billion tax-and-spending plan for a state that’s spent five long years in the economic doldrums.
Last year’s budget debate left Chafee looking ineffective and out of touch with the mood on and off Smith Hill. This is a humbler document after a year atop state government. The governor still thinks broadening and lowering the sales tax is a good idea, for example. But lawmakers aren’t interested, and he left it out. There’s no combined reporting or other major shift in business taxation.
The initial focus will likely be on Chafee’s $93 million in tax and fee increases. While far less sweeping than his doomed sales tax overhaul, there’s still plenty for critics to seize on: a two-cent rise in the meals tax to pay for the education increase will draw howls, as will the expansion of the tax base to cover pricey clothes, limo rides, small cigars, bed-and-breakfasts and vacation homes.
January 16th, 2012 at 12:30 pm by Ted Nesi under Nesi's Notes, On the Main Site
Brown University and the Taveras administration are at loggerheads over how much the school should increase the annual payment in lieu of taxes it makes to Providence’s city budget.
The numbers at issue sound big – the city says the original deal that Brown backed out on was for $5 million a year, and the university is now offering $3 million. The lower amount would be “a substantial contribution and comparable to what any U.S. university contributes to its local community,” Brown President Ruth Simmons wrote in an email to the university community last week.
Still, in the context of Providence’s city budget ($614 million), Brown’s consolidated operating budget ($834 million) and Brown’s endowment ($2.5 billion), even $5 million is a drop in the bucket:
November 4th, 2011 at 2:30 pm by Ted Nesi under Nesi's Notes
By Ted Nesi
PROVIDENCE, R.I. (WPRI) – The expert hired by the state to forecast Rhode Island’s economic future offered a grim outlook on Friday – and then warned them it may be too optimistic.
“The risks of going into a second recession are uncomfortably high” despite “some mild cause for optimism,” Zachary Sears of Moody’s Economy.com told a group of frowning state budget officials as he presented his twice-a-year economic forecast at a Statehouse hearing.
What’s holding back Rhode Island’s job market at this point are ongoing layoffs in the public sector, particularly by cash-strapped local governments, Sears said. Manufacturing has not bounced back as robustly in the state as it has in the Midwest, he said.
Rhode Island’s snail-paced recovery from the Great Recession is frustrating state officials from Gov. Lincoln Chafee on down. Treasurer Gina Raimondo recently described the state’s jobs crisis as “a monumental challenge.”
October 19th, 2011 at 1:40 pm by Ted Nesi under Nesi's Notes
State Rep. Jon Brien is leaning toward supporting the Raimondo-Chafee pension bill based on what he’s learned so far even though it includes reamortization, a policy he’s vocally opposed in the past.
“As it stands, I didn’t find that portion of ream to be nearly as nefarious as the effort that was put forward a few years back,” Brien, D-Woonsocket, told WPRI.com, describing a House-approved budget bill rejected by the Senate last year because it included “a complete and total refinancing” of the state’s unfunded pension liability.
Brien’s cautious initial support for the bill is a sign that Treasurer Raimondo and Governor Chafee – not to mention Speaker Fox – may be able to forge a coalition to pass a version of their bill through the chamber despite fierce labor opposition.
Brien said he thinks the best predictor of how the pension battle will end in the House is the chamber’s 33-39 vote earlier this year against an amendment that would have let state workers keep longevity payments. “I think the numbers will be right around there,” he said. (See below for the roll call.)
June 28th, 2011 at 2:14 pm by Ted Nesi under Nesi's Notes
The House passed Rhode Island’s state budget for 2011-12 just before 2 a.m. early Saturday morning, continuing the local tradition of wee-small-hours appropriating. “There’s got to be a better way,” one person tweeted. “Hey @tednesi, how ’bout a piece on what time of night other states pass their budgets?”
Ask and you shall receive. A quick search shows Rhode Island is hardly alone among state legislatures in passing its budgets in marathon, late-night sessions. (Of course, it’s possible states that pass their budgets in a quieter fashion simply don’t make the news – it’s not very dramatic to write “In a marathon mid-afternoon session…”)
Here are the budget timestamps I found for a handful of other states:
• Massachusetts: 6 p.m. (House), 11:30 p.m. (Senate)
• Connecticut: 11:59 p.m. (House), 3:10 a.m. (Senate)
• Vermont: 7 p.m. (House)
• New York: “by midnight” (Senate), “past midnight” (Assembly)
• Texas: “late Saturday night” (House and Senate)
Not everybody’s passed a budget yet, either; New Jersey’s finance committees finished their work just yesterday. Lawmakers in California did manage to pass a balanced budget earlier this month, partly prodded by the fact that they would have stopped getting paid if they hadn’t. Other states turned over a new leaf: “In a significant break with recent history, Delaware’s House of Representatives voted to approve the coming year’s state budget a week before the end of its business for the year,” a publication there reported.
As for Rhode Island, the Senate Finance Committee passed the House budget unchanged yesterday. It will go before the full Senate Wednesday, and then (presumably) land on Governor Chafee’s desk.
Update: And our neighbors to the north had to pass a stopgap 10-day budget because the Massachusetts House and Senate haven’t been able to resolve their differences over the new tax-and-spending plan.
June 16th, 2011 at 2:00 pm by Ted Nesi under Nesi's Notes
What Congress giveth, Congress taketh away.
Back in February, I put up this chart showing why the withdrawal of federal stimulus aid was going to make it a particularly painful process to put together the state budget for the fiscal year that starts July 1.
With House leaders inching closer to releasing their tax-and-spending plan, I thought it would be a good time to update the chart. These numbers are based on Governor Chafee’s proposal from March:
A couple things stick out to me.
Though it’s a little hard to tell from this chart, Governor Chafee’s 2011-12 budget calls for the first decrease in the total size of the state budget since the recession began. State spending grew by about $1 billion, from $6.9 billion in 2007-08 to $7.9 billion in 2010-11, over the past four years.
But that top-line growth masks a big change in where the money that pays for that spending came from.
Total general revenue (that is, regular Rhode Island state tax revenue) dropped 16% between 2007-08 and when it bottomed out in 2009-10, from $3.4 billion to $2.9 billion. But federal funds’ contribution to the state budget grew a whopping 50% between 2007-08 and 2010-11, from $1.9 billion to $2.9 billion.
Put another way, federal funds covered the entire billion-dollar growth in the state budget over the past four years. Much of that extra money is now disappearing; the federal contribution will decline from $2.9 billion to $2.6 billion in 2011-12. The state is making up some of the gap, but not all of it.
Put a third way, the state-covered share of the budget plunged from 49% in 2007-08 to 36% in 2009-10, but is now creeping back up. It’s expected to be around 40% in 2011-12 – higher than last year’s 38% but still far less than the pre-recession level. The federal share was 28% in 2007-08, peaked at 37% this fiscal year, and will decrease to 33% next year.
May 12th, 2011 at 12:37 pm by Ted Nesi under Nesi's Notes
The Rhode Island Public Expenditure Council just released its post-Revenue Estimating Conference analysis of Governor Chafee’s 2011-12 budget proposal. Here’s a quote from the press release:
The budget must guide the delivery of a finite amount of resources through expenditures prioritized to reflect the concerns and needs of citizens while accounting for out-year fiscal implications of those spending decisions to ensure continued delivery of services.
That’s a very sensible sentence, but boy – they’re not making this policy reporter’s job any easier with prose like that. On the plus side, RIPEC recently put up a snazzy new website that I’m digging.
The report says the state will end this year with a $65 million surplus, though that doesn’t include putting $22 million back into the Rainy Day Fund. If memory serves, Chafee’s budget suggested deferring the repayment and putting the surplus toward next year.
April 21st, 2011 at 2:02 pm by Ted Nesi under Nesi's Notes
With state leaders heading back to the drawing board to craft a plan for closing the $331 million shortfall in next year’s budget, it’s a good time to revisit the results of last month’s Brown University poll, which included a series of questions on the topic. What do voters want the politicians to do?
First off, it’s a myth that Rhode Islanders are dead set against any increase in taxes. (It would also be a myth to say they’re opposed to any spending cuts, but I haven’t really heard people assert that.) Nearly three-fourths of registered voters prefer a mix of lower spending and higher taxes:
As always, though, the devil is in the details. Which taxes should be raised? Which spending should be cut? Brown offered eight options, and here’s how voters responded:
The most popular option by far is reducing spending on government employees’ pensions, which will cost the state $233 million next fiscal year and much more in subsequent years. In fact, that’s the only one of the eight choices with a majority in favor – 66% of voters support the idea.
After pension cuts, the next three options with the most support are increased taxes on sales (41%), businesses (38%) and incomes (33%), followed by cuts to higher education (32%). Of course, there are many more types of taxes and spending in the nearly $8 billion state budget, so those questions don’t exhaust the possibilities.
Finally, Brown took a closer look at the sales tax question by testing support for adding 10 items to the list of those that get taxed – a key question since a broadening of the sales tax at either 7% or 6% remains on the table, although Chafee’s 1% proposal appears to be dead.
Only two of the 10 – dry cleaning and tickets to movies and concerts – are supported by more than half of voters:
The telephone survey of 425 registered voters in Rhode Island was conducted March 11 to 13. The margin of error is plus or minus 4.7 percentage points. If you’re wondering how these priorities match up with the state’s current taxing and spending policies, check out these charts.
April 18th, 2011 at 2:16 pm by Ted Nesi under Nesi's Notes
Greater Providence Chamber of Commerce chief Laurie White took a victory lap in the Projo on Saturday after effectively killing off the original version of Governor Chafee’s sales tax proposal. This caught my eye (emphasis mine):
The community-wide outcry over Governor Chafee’s proposal to widen the state sales tax base to “capture” $281 million in new tax revenue has real and very personal consequences.
Thankfully, Assembly leaders have put the brakes on this wrongheaded proposal as Rhode Islanders representing a wide swath of the jobs-producing sector of our economy descended on the State House to fight it off — hopefully permanently! We must be vigilant.
$281 million? Where’d that come from? The net cost of Chafee’s proposal is always reported as $165 million, 41% less than the figure White cited.
I asked the Chamber how they got that figure, and they explained that White specifically used the term “new tax revenue” to only include the additional taxes Chafee’s proposal would collect by adding the new 1% tax and broadening the goods and service taxed at 6% – leaving out the revenue that would be lost (or, for taxpayers, the money they would save) by reducing the rate from 7% to 6% on items currently taxed.
Here’s how much cash the three parts of the Chafee plan were forecast to have raised or lost next year:
White added together the first two pieces – taxing more items at 6% ( +$198 million) and 1% ( +$85 million) – and voilà: that’s $281 million in new taxation. (There’s some rounding.)
Across the economy, though, Chafee’s plan would only have resulted in $165 million in additional taxation on sales because the rate would fall from 7% to 6% on all the items that are already covered by the sales tax. So the Chamber is describing the proposal as if it were all pain and no gain, which is a somewhat incomplete picture of how the governor’s proposal would have worked.
On a related note, relations between the Chamber and the Chafee administration may not be quite as hostile as last week’s contretemps would make you think.
In a story over the weekend about Chafee’s first 100 days, The AP’s David Klepper quoted some relatively kind words about the governor from White. “He’s inherited a very difficult situation,” she said. “I believe [the sales tax plan] was a sincere proposal, and I believe he truly does want to work with us.” White is also scheduled to join Chafee on a fact-finding mission to Baltimore later this month.