This is the first in a series of articles based on my interview with Governor Chafee.
The Providence Journal is “hurting Rhode Island” with its barrage of negative editorials, advertisements and articles about the Chafee administration’s sales tax proposal, the governor told WPRI.com on Monday.
Governor Chafee offered a robust, spirited critique of the Projo and other state leaders during a 45-minute interview in his office. He defended his budget proposal as responsible and measured while accusing the paper of lambasting it because he proposes to end the newspaper’s decades-old exemption from the state’s sales tax.
“There’s so much negativity that outsiders reading this must think, ‘What a bleak picture is this’ – inaccurate – ‘portrayal of the Chafee tax plan; it’s going to just turn out the lights and drive a stake in the heart of Rhode Island’s economy,’ ” the governor said.
Chafee repeatedly emphasized that he entered office facing a large budget deficit – now estimated at $331 million – for the fiscal year that begins July 1. The Journal and his other critics have offered “not a syllable of constructive alternative to the deep hole that I did not create, I inherited,” he said.
Chafee pointed to other examples of tax increases that did not derail nascent economic recoveries, noting that Massachusetts raised its sales tax from 5% to 6.25% in August 2009 but has nevertheless weathered the recession better than Rhode Island, and that Bill Clinton signed a law in 1993 that included tax increases even as the boom of the 1990s was just getting going.
Chafee also tempered his suggestion that there was nothing left to cut in state government after former Gov. Don Carcieri’s efforts. “I guess I would rephrase that,” he said. “The easiest cuts have been done.”
Proposed ideas for savings ‘bizarre’
During the interview, Chafee walked over to his desk and fished out a copy of the editorial page in Sunday’s Journal, which included three suggestions for closing the deficit – renegotiating union contracts as Providence Mayor Angel Taveras has done; repealing unfunded mandates on cities and towns; and eliminating the Coastal Resources Management Council (CRMC).
The governor then critiqued them one by one.
Chafee said the first suggestion – renegotiating contracts – is nearly impossible because of a two-year ban on state worker layoffs agreed to by Carcieri in late 2009. “Mayor Taveras is not saddled with a no-layoff contract,” Chafee said. “He can go to his union and say there will be layoffs – and they know that there will be layoffs. I can’t do that.”
Asked whether he had approached Council 94 and other unions about concessions anyway, Chafee said he didn’t see the point when he could not threaten layoffs and might just add to the existing unhappiness about previous furloughs and his proposed hike in employee pension contributions.
“I’ll look for savings, but I don’t want to go into a meeting with no cards in my hand,” he said.
The editorial board’s next suggestion – repealing unfunded municipal mandates – is unlikely to lead to significant savings if it even passes, according to Chafee, and he thinks the latter outcome is unlikely considering how long the idea has been on the table. “I’m not going to budget huge savings on the thin hopes” that the General Assembly finally acts on those proposals, he said.
Chafee saved his harshest criticism for The Journal’s proposal to eliminate the CRMC, which has a $10.2 million budget and 30 full-time employees this year. He described the suggestion as “bizarre,” because the ban on layoffs would require him to move those workers elsewhere and possibly continue paying to lease the agency’s office.
“It’s just so irresponsible – it’s almost farcical,” Chafee said. “And they’re our established, statewide paper.”
“I want constructive dialogue,” he added. “We’re in a crisis. This isn’t a time for just temper-tantrums.”
‘I don’t like any taxes’
The governor defended his overall sales tax proposal – which would lower the rate from 7% to 6% while exempting fewer items, some of which would be taxed at a new 1% rate instead of 6% – as part of his broader plan to stabilize Rhode Island’s shaky finances.
Asked whether he would reconsider, for example, his particularly unpopular proposal to tax home heating oil, Chafee said: “Let’s make it clear: I don’t like any taxes. Any taxes. This has not been a good year, and none of these decisions has been easy.” He went on to say he was willing to listen to alternatives on that and other issues.
Chafee described the increased sales tax revenue as necessary to pay for other priorities. Those include ending the practice of borrowing to fund transportation projects – which he said will force the state to spend an “outrageous” $40 million on DOT’s interest payments this year – and his proposed new Municipal Accountability, Stability and Transparency (MAST) Fund.
Chafee also said it was important to him that the sales tax rate be brought down to 6%, and he had originally pushed to get it even further down to 5.75%. “I wanted to get lower and really send a message: This is the place to shop,” he said.
“These are tough decisions,” Chafee said. “But in order to have my children not paying for DOT interest and not paying for Coventry’s police and fire pension system down the road, I’m willing to take some hits on this tax.”
Still, Chafee left the door open to a compromise or a different plan, saying he was open to other ways of closing the $331 million deficit and funding his various priorities. “Absolutely, I’ll be open-minded,” he said.
Keep checking back during the week for more from the interview – including why Chafee is hesitant to endorse President Obama next year and whether he’s really open to reducing promised pension benefits.
(photo: Ted Nesi/WPRI)