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3.0% Sales Tax: Superior Reform than Car Tax Repeal or Free College Tuition?

Car Tax, Free Tuition Programs Could Mean Loss of Jobs and Lower Municipal Revenues

3.0% Sales Tax Adds Thousands of Jobs, Increases Local Revenues

OVERVIEW:

As taxpayers continue to be asked to fund generous corporate subsidy programs, lawmakers are now dueling over two new spending ideas – reimbursing localities to phase-out the car tax and public funding for free college tuition – each of which would likely further raise taxes and fees on Rhode Islanders.

But would these programs make Rhode Island a better state? Or would the more innovative and bold policy concept of cutting the state sales tax help families become more self-sufficient?

Neither the Speaker nor the Governor have offered research or economic projections on the impact of their respective ideas. The Center, conversely, offers well-researched projections from a credible economic modeling tool.

As will be clearly demonstrated, the Center’s previously proposed 3.0% sales tax reform would help working Rhode Islanders and businesses much more than would car tax repeal or free college tuition. A cut in the state sales tax rate to 3.0% from 7% would :

  • Keep significantly more money in the pockets of Rhode Island families and businesses
  • Produce thousands of new jobs, as opposed to potential job losses with car tax or tuition spending
  • Require lower budget cuts and/or corresponding tax increases than would car tax reform
  • Create a major revenue windfall for municipalities that could go a long way toward funding local “self” phase-out of the car tax, where car tax repeal could result in lower municipal revenues
  • Would allow every Rhode Island family to save for any college education

Funding? Elimination of corporate welfare subsidies and free college tuition funds could go a long way towards paying for the $82.3 million required to dynamically fund a 3.0% sales tax … vs the $229.7 required to dynamically fund car tax repeal.

Regressive? While many view the current car tax play as regressive, a revenue-neutral car tax repeal plan would be further so in that low-income individuals who do not own a car, or who own a car valued under existing exemption thresholds, would be indirectly funding property tax relief for wealthier people. A 3.0% sales tax would disproportionately help low-income families. Similarly the college tuition and corporate welfare plans require lower income families and businesses to pay for benefits that will go, in part, to the more wealthy.

Fairness? The car tax plan would inequitably distribute money to localities, and would reward those cities and towns that imposed excessively high car tax rates.

Business Climate Benefit? The sales tax is a tax on business. Collectively businesses pay almost half-of all sales taxes. A 3.0% sales tax would reduce such costs across the board and improve our state’s last place business climate ranking. Car tax repeal would only impact those businesses that have company owned vehicles.

Municipal Dependency? The car tax repeal plan would make municipalities even more dependent on state aid via its associated reimbursement mechanism. Depending how the policy is implemented, municipalities may simply increase regular property taxes to compensate for the car tax no longer collected, avoiding the state tax cap. A 3.0% sales tax would give new revenues to cities and towns to able to phase-out the car tax on their own, especially when in combination with other “tools”  that could free them from state mandates and regulations.

Ease of Implementation? The car tax plan would require negotiation with low car tax municipalities, given the varying rates and exemption limits set by each municipality. Sales tax reform could be easily and uniformly implemented across the board.

BACKGROUND: Why bold reform is required

Rhode Island is losing the competition to retain and attract families who want to make our state their home-of-choice, where they can work hard, earn a respectable living, and support their families. But many Rhode Islanders feel left out. They are fed up with the status quo of ever-increased spending on special interest causes … and the perpetually high taxes and red-tape that are driving others out of town.

Our state’s stagnant population growth will likely result in the loss of one of our two precious U.S. Congressional seats after the 2020 census. This net-migration problem can be attributed to concerns about present and future financial security. Factors that contribute to this problem are obvious: In 2016 Rhode Island ranked as the worst state business climate in America and ranked just 48th on the national Family Prosperity Index (FPI) and on the Jobs & Opportunity Index (JOI)

People want restored hope that government is working for them and to feel that they have not been forgotten. To accomplish this, a bold reform idea is clearly required.

The RI Center for Freedom & Prosperity agrees with the Speaker of the House and with the Governor that Rhode Island families should keep more of their hard-earned income via tax reductions and that a college education should be more affordable. Car and property taxes, as well as college tuitions, are indeed high; they are an irritating or unbearable cost for most families. However, directly confronting those issues, may not be the most prosperous path forward.

The Center also believes that the state needs to  relieve burdens on employers, increase  our state’s consumer and tax base, and create more opportunities for meaningful work for those who want to improve their quality of life.

As such, not all tax and spending programs are created equally, as adjustments to certain taxes and fees will have greater impact on job creation and can be more of an economic stimulus than others. Given our state’s dismal national status, it is vital that Rhode Island takes bold and well-researched reforms to maximize the impact of every budget dollar.

Years ago the Center researched and proposed major cuts to – even repeal of – the state’s nationally high,  job-killing sales tax. A complex economic modeling tool that has been used by dozens of states and major municipalities, STAMP (State Tax Analysis Modeling Program), showed that for the Ocean State, sales tax reform, among all taxes and fees considered, would produce the greatest and most beneficial dynamic* economic impact.

However, neither the House leadership at that time, nor the special commission that was created to study sales tax cuts, were interested in re-configuring the state’s budget to accommodate for the major economic growth projected by STAMP.

But now today, with House leadership and the Governor apparently appreciating that tax and fee cuts would keep more money in the pockets of Ocean Staters, the Center suggests, once again, that reform to the sales tax would produce more benefit to families and businesses than would the Speaker’s or the Governor’s plan.

Not only would sales tax reform keep more money in the pockets of every Rhode Island family, it would reduce costs for every Rhode Island business. It would also spur increased consumerism by both in-state and out-of-state shoppers, and; most importantly … it would create thousands of good, new job opportunities.

The Center further researched which level of cut to the sales tax would produce the most benefit. It was clearly demonstrated that a cut in the sales tax to 3.0% would produce the best value for taxpayers and for the budget by creating a high number of jobs at the lowest budget-cost per job created.

*Based on 2014 figures from STAMP (State Tax Analysis & Modeling Program) developed by the Beacon Hill Institute. Dynamic scoring impact takes into account the “ripple” impact of tax reforms by projecting increases or decreases to other tax revenues and fees.

BUDGET RECONCILIATION METHODS

There are two primary methods to accommodate the budget to account for the impact of any tax cut or new spending program:

  1. Revenue Neutral” approach by raising other taxes to make up for the anticipated lost revenues or higher spending
  2. Spending Cuts” to other budget items

Or, some combination of the two.

To date, neither the Speaker nor the Governor have identified how they will reconcile, or pay, for their respectively proposed programs.

Revenue Neutrality?

The Center maintains that Rhode Island spends too much taxpayer money for the state to quickly break-out of its economic stagnation. No matter how lawmakers slice and dice the many taxes and fees that are imposed on our citizenry, our high level of spending – and corresponding need for high taxation – creates a permanent negative drag on our state economy.

RI State Budget Versus Inflation and Population Growth and Personal Income Growth (2001 Baseline)

In the past two decades, Rhode Island’s spending trajectory has risen far faster than inflation, population growth, or personal income would otherwise dictate.

By comparison, New Hampshire, which consistently ranks near the top of most national rankings, spends almost 50% less per person than does Rhode Island.

In order for any public policy reform to achieve maximum economic impact, it is necessary that budget cuts – without offsetting tax increases – are used to pay for the reform. However, the reality and history of public policy in the Ocean State tells us that lawmakers will likely consider only “revenue-neutral” scenarios, where revenue losses due to cuts in one tax are offset by increased fees or taxes elsewhere. While this practice would minimize or – as we will show – potentially eliminate any economic benefits in some cases, a revenue-neutral policy is seen as the likely political solution … as economically-unsound as it may be.

To be clear, the Center contends, for a state struggling as much as is Rhode Island, that revenue neutrality should not be the goal of bold tax reform … and that both tax and budget cuts are required if we want to generate maximum stimulus to our state’s stagnant economy.

Found Revenues? It has also been suggested by both the Speaker and the Governor, that “newly found” revenues from debt restructuring, casinos, or other sources, might be used to fund their new proposed spending. It is the Center’s contention that such new revenues should be applied to help pay for sales tax cuts.

In order to set the outside parameters for economic impact, the Center created two tables? Each compares the long-term dynamic* scoring of the two tax reform concepts for Rhode Island: 1) phasing-out the car tax; and 2) phasing-down the sales tax to 3.0%:

  • TABLE-1 assumes “revenue neutrality,” with offsetting tax increases, to pay for each policy option
  • TABLE-2 assumes “spending cuts” to pay for each policy option

Any actual implementation of either of these programs would likely fall within these parameters.

Because the governor’s free college tuition plan and the state’s current corporate welfare strategy technically do not qualify as tax reforms, we are not able to effectively run them through the STAMP model. Their economic impact, based on the findings and theory of the model, is assumed and referred to separately.

FINDINGS

Taxpayer Savings and Increased Purchasing Power: The Speaker’s car tax plan would directly save taxpayers $215 million in property taxes, while a 3.0% sales tax would put $585 million back into the pockets of Rhode Island families and businesses, and eventually back into the economy. However, the net dynamic impact would be far less – or even entirely eliminated – if other taxes and fees are hiked under a revenue-neutral approach.

A 3.0% Sales Tax is is the most beneficial reform in terms of jobs, economic stimulus, business climate, and budget value … regardless of whether a revenue-neutral approach is adopted or not.

Car Tax Phase-Out Could Lead to LOSS of Jobs.  Car tax reform, on its own, is a minor economic stimulus at best, as it does little to improve the state’s dismal business climate.

A revenue-neutral car tax phase-out would necessarily increase statewide taxes and fees (relatively) – even while most car owners would pay lower local property taxes – and would lead to a net loss of jobs. This is because the negative economic impact of increased state-level taxes is significantly greater than the positive impact of lowered local taxes.

If a “spending cut” approach is taken, car tax repeal could spur the creation of a limited number of new statewide jobs, but at a significantly lower level, and with far more required budget cuts, than a 3.0% sales tax with spending cuts.

Free-College Tuition Could Also Lead to a LOSS of Jobs. Similarly, using the same STAMP theory, providing free-tuition  would also increase statewide taxes and fees (relatively) – even while some in-state families would have more disposable income due to lowered fees – and would lead to a net loss of jobs. Again, this is because the negative economic impact of broadly increased state-level taxes is greater than the positive impact of more disposable income for a more narrow base.

Under a ‘spending cut’ approach, free college tuition, as car tax repeal, might produce a limited number of new statewide jobs, but at a significantly higher cost per job, than a 3.0% sales tax with spending cuts.

Rhode Island’s Current Corporate Tax-Credit Economic Development Strategy is highly inefficient as it creates relatively few jobs at an extremely high cost per job to taxpayers. Using the same STAMP theory, the negative impact of requiring increased statewide taxes to pay for the credits is presumed to be greater than the positive impact of a few hundred more people working.

Further, this targeted ‘advanced industry’ approach does little if anything to improve the overall business climate, which is necessary if organic entrepreneurial growth is to occur on its own.

EXPLANATION OF S.T.A.M.P. PROJECTIONS (see Tables 1 & 2)

ECONOMIC EFFECTS

Private Employment (or Jobs). Both the Speaker and Governor claim that “jobs” is their top economic priority. Sales tax reform produces significantly more job-growth, regardless of revenue-neutrality, while car tax reform and, as explained above, free-college tuition could lead to a loss of jobs under a revenue-neutral approach.

Investment. The increase/decrease in capital invested in the state due to tax reforms. As with employment, sales tax reform always produces a positive investment, while revenue-neutral car tax and free-tuition programs could produce a negative impact and a reduced investment.

STATE REVENUES:

Sales Tax Revenue: Under a ‘revenue neutral car tax repeal scenario, to partially fund the state’s $215 million in “Transfer” (reimbursements) to municipalities, and in order set the worst-case economic impact parameter, we assume an increase in “Sales tax” revenues. However, because a sales tax hike will negatively impact commerce and the economy, it will dynamically result in less sales tax revenue than the straight-line (or static) calculation, therefore the “Policy target” for sales tax increases must be higher than the needed revenues.

Conversely, under either budget reconciliation method for a 3.0% sales tax phase-down plan, the straight-line (static) calculated sales tax “Policy target” revenue losses are greater than the actual (dynamic) “Sales tax” revenue loss, because the sales tax cuts will spur more sales tax transactions.

Under a ‘spending cut’ approach, car tax reform would produce a very limited increase in “Sales tax” revenues, because of greater disposable income across the state.

The difference between the static and dynamic sales tax revenue projections is portrayed as the “Dynamic difference”

Personal Income Tax Revenue: Similarly, increased “Personal income tax” revenues are also assumed to fund the rest of  revenue-neutral car tax plan. However, because negative dynamic impact will lessen such revenues, a higher income tax “Policy target” is required.

Under the 3.0% sales tax plan, because of the thousands of new jobs created, “Personal income tax” revenues are projected to dynamically rise by between $304 million to $468 million, regardless of which budget reconciliation process is utilized.

Corporate/Business Tax . As with sales and income taxes, the negative statewide impact of a  revenue-neutral car tax plan that includes other tax hikes, may produce lower “Corporate/business taxes”. Under all scenarios, a 3.0% sales tax will always produce positive and significantly higher “Corporate/business tax” revenues.

Cigarette Tax, Other Taxes & Other Sources.  As with the personal and income taxes, the negative statewide impact of a  revenue-neutral car tax plan, may reduce revenues from “Cigarette taxes”, “Other taxes” and “Other sources”. Under all scenarios, a 3.0% sales tax will produce positive and significantly more revenues in these areas.

MUNICIPAL REVENUES: Additional municipal benefits from sales tax cuts will result from the increased retail and overall economic activity .

Business Property Tax. The stimulus of sales tax cuts would see many existing businesses expand and many other new business established. Cities and towns will likely see an expansion of its local commercial property tax base and will result in increased “Business property tax” revenues. While municipalities must comply with a 4% annual tax-levy cap, this larger tax-base will allow localities to reduce property taxes in other areas, potentially including the car tax.

Conversely, under a revenue-neutral car tax repeal plan, municipalities could actually see reduced municipal “Business property tax” revenues, due to the more potent impact of statewide sales and income tax hikes as compared with local property tax cuts.

In fact, the potential new municipal revenues from a 3.0% sales tax – on their own – could fund over half of the cost of statewide car tax repeal.

Municipal Sales Tax, Other taxes and Other sources of revenues:  Similarly, under a car tax repeal plan, municipal revenues in other areas could increase or decrease in limited amounts. Conversely, under any 3.0% sales tax scenario, these revenue areas would increase, potentially in a significant way.

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Trump Was Right. Unemployment Rate Masks RI’s Deteriorating Employment Market. Real Unemployment Rate 12.4%?

FOR IMMEDIATE RELEASE: March 15, 2017

Unemployment Rate Would be 12.4% if Labor Force Matched Nation

Inadequacy of Unemployment Rate Clouding Political Discourse
Deteriorating Labor Force Produces Positive Rate?

Providence, RI — Donald Trump may have been correct in his skepticism of apparently positive national unemployment rate news during the 2016 Presidential Campaign. As the RI Center for Freedom & Prosperity has long argued, and once again backed by the latest employment data, negative declines in the state’s labor force have led to positive improvements in Rhode Island’s official unemployment rate. Yet, a broader look employment actually shows that the Ocean State remains mired as the third-worst state nationally on the Center’s January Jobs & Opportunity Index (JOI).

Labor Force Change RIDespite boasts of a strengthening state economy based on its January unemployment rate of 4.7%, a closer look at the data reveals a major underlying problem that is often overlooked: Since 2007 U.S. employment and labor force participation has risen by 4-5%, while Rhode Island saw an opposite decrease by 4-5% in these same categories over the same time period.

“It is not a positive when our state’s decreased unemployment rate is almost entirely due to policies that are driving our labor force out of state,” warned Justin Katz, research director for the Center. “If our state’s labor force instead had increased at the same rate as the nation, our unemployment rate would be a whopping 12.4%.”

JOI takes a broader look at employment and prosperity than does the narrowly-defined unemployment rate. JOI makes it clear that meaningful long-term work and high-paying jobs, which are vital to individual dignity and family self-sufficiency, are not in high supply in Rhode Island as compared with other states. A more detailed analysis of the January data by Katz, specifically on employment and jobs, can be found on The Ocean State Current, the Center’s journalism and blog website.

Despite its weak national ranking remaining unchanged, the state’s raw JOI score improved slightly in January to 19.0 on a scale of 0-100 from its December score of 17.9. Findings from another national study, the Family Prosperity Index (FPI), where Rhode Island ranked 43rd overall in “economics” and 44th and last in New England in “entrepreneurship”, tend support JOI’s stagnant rankings as opposed to the unemployment rate rank.

Of the three factors that make up the January JOI, the Ocean State ranks:

  • 35th on the Job Outlook Factor (measuring optimism that adequate work is available): UP four slots from last month’s rankings
  • 41st on the Freedom Factor (measuring the level of work against reliance on welfare programs): DOWN two slots from last month
  • 46th Prosperity Factor (measuring the financial motivation of income versus taxes): NO CHANGE from last month

Rhode Island’s poor JOI and FPI rankings are personified by Robert Martinez, a US Navy veteran, who fought a losing battle against oppressive local government regulations and a statewide hostile business climate that has derailed his dream of forging a better quality of life for himself by developing a successful mobile food vendor business.

The Center’s monthly JOI report is based on state and local tax collection data from a a variety of federal agencies including the U.S. Census and on income data from the Bureau of Economic Analysis (BEA).

Rhode Island has not gained ground on the national JOI metric, remaining – as it has for years – in the bottom five among all states. JOI is a broader and more accurate measure of employment and well-being than the traditionally cited and highly narrow unemployment rate, which has fluctuated more dramatically in recent years for Rhode Island, but which is not an accurate barometer of economic growth or family prosperity.

Supporting the findings of the JOI metric, Rhode Island also ranks 48th in 2016 the Family Prosperity Index, the broadest national measure of family well-being.

For the JOI homepage, click here.
For a description of JOI and its three sub-factors, click here.

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Jobs & Opportunity Index (JOI), January 2017: Rhode Islanders Less Free from Government Dependency

The RI Center for Freedom & Prosperity’s first Jobs & Opportunity Index (JOI) report for 2017 finds the Ocean State slipping on the Freedom Factor, measuring welfare dependency versus employment. The Bureau of Labor Statistics (BLS) revised employment down for Rhode Island, reducing the state’s employment health, and more Rhode Islanders slipped into dependence on Medicaid and SNAP (food stamps).

Eight of the 13 datapoints used for the index have been newly updated. Employment was down 653 from the previously recorded number, while labor force fell 2,358. On the positive side, RI-based jobs increased by 600. (Note that these are calculated with pre-revision data for the prior month.) Perhaps beginning to show the UHIP-enabled expansion of welfare programs, Medicaid enrollment numbers increased by 3,455, and SNAP enrollment increased by 5,187. Quarterly data for additional employment measures were also released, with 1,400 fewer people long-term unemployed and 300 fewer part-time against their will; marginally attached workers remained exactly the same.

The first chart shows Rhode Island still in the last position in New England, at 48th in the country. Once again, the only two New England states to move in the rankings were Maine (now 18th) and Connecticut, although the latter changed direction, lost two spaces, and, at 34th, is now just one space ahead of Masaschusetts, at 35th. New Hampshire remained 1st in the nation, and Vermont held at 21st.

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The second chart shows the gap between Rhode Island and New England and the United States on JOI. The Ocean State made up a little ground against both averages. Rhode Island also made up ground on the gaps for unemployment rate (third chart).

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Results for the three underlying JOI factors were:

  • Job Outlook Factor (measuring optimism that adequate work is available): RI moved up four spots to 35th.
  • Freedom Factor (measuring the level of work against reliance on welfare programs): RI fell two to 41st.
  • Prosperity Factor (measuring the financial motivation of income versus taxes): RI held at 46th.
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STATEMENT: Center Joins National Taxpayer Group to Oppose Carbon Tax Scheme

FOR IMMEDIATE RELEASE: March 1, 2017

15 Cents per Gallon & other Increased Energy Rates Will Further Harm RI Families, Businesses, and State’s Overall Competitiveness

Providence, RI — The Rhode Island Center for Freedom & Prosperity supports a letter to Ocean State lawmakers issued today by Americans for Tax Reform (ATR), the national pro-taxpayer group headed by Grover Norquist, in opposition to the concept of a new state carbon tax on energy; a tax that will kill jobs in Rhode Island.

Legislation sponsored by Senators Jeanine Calkin, Ana Quezada, James Seveney, Harold Metts, and Frank Lombardo (S0365) would place a new tax of $15 per ton of emissions; a tax that will then increase by an additional $5 per year. The bill will be heard today by the Senate Committee on the Environment and Agriculture. The House version of the bill (H5369) sponsored by Representatives Regunberg, Carson, Handy, Keable, and Donovan has not yet been scheduled for a hearing in the House Finance Committee.

“This progressive-government kind of interference in the market, which will drive up energy rates for every Rhode Island family and business, is one of the major reason’s why Ocean Staters suffer from the 50th ranked business climate and the 48th rank in family prosperity,” commented Mike Stenhouse, CEO for the Center. “Once again, some lawmakers are placing the advancement of a radical green agenda, ahead of the interests of the people of our state – the forgotten families.”

Already paying some of the highest energy and gasoline rates in the country, Rhode Island families and business could see an increase of up to 15 cents per gallon if this bill were to become law, according to ATR.

Job-Killing, Economy-Busting Proposal? Whether via carbon taxes, green energy mandates, or restrictions on cheaper fossil-fuel based energy production, higher energy costs are a major drag on economic growth. According to a 2016 report by the Center, an extreme green energy agenda, which this bill would advance, could result in dire economic consequences;

  • 4,000 – 6,000 fewer jobs
  • $141-$190 million in total costs
  • a 49-73% increase in the base cost of electricity, leading to
  • a 13-18% increase in electricity rates
  • $670-$893 million extracted from the economy

“Our state economy is simply too fragile to be able to handle this kind of negative hit,” concluded Stenhouse. “And at what offsetting gain?”

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Stenhouse Testimony on Justice Reinvestment Initiative Bills

The PDF below is the written testimony submitted on January 31, 2017 to the House Judiciary Committee by the Center’s CEO, Mike Stenhouse, with regard to the House package of bills recommended by the state’s Justice Reinvestment Initiative (JRI).

The testimony follows the prior day’s release of the Center’s Right on Crime policy brief, which discusses the impetus behind these bills, as well as other criminal justice reform issues.

PDF of Stenhouse Testimony

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Right on Crime: Increasing Family Prosperity via Criminal Justice Reform

by Justin Katz and Matthew Henry Young

A Pressing Need for Reform

Many families seeking upward mobility and prosperity must first break the cycle of incarceration — a cycle that makes it nearly impossible for those caught up in it, ex-offenders in particular, to achieve productive lives for themselves and their families.

New national research shows that Rhode Island ranked just 48th on the 2016 Family Prosperity Index (FPI) as well as just 48th on the Jobs & Opportunity Index (JOI). In December 2016, the RI Center for Freedom & Prosperity, in conjunction with its national partner, the American Conservative Union, issued a 52-page RI Family Prosperity report that highlighted contributing factors to our state’s poor rankings across 57 indexes.

Among other things, the report suggests that Rhode Island has room to modernize and improve its criminal justice system. Reforms put forth as part of the state’s Justice Reinvestment Initiative (JRI) and by other organizations can lessen the harmful consequences of over-incarceration for Ocean State families:

  • S0005: to request that the state government continue to seek ways to help Rhode Islanders return to productive activity after having been convicted of crimes
  • S0006 & H5065: to add dedicated funding to an intervention program for domestic abusers, to make supervision more effective and humane through increased training and assessment, with more emphasis on government-driven manipulation toward “pro-social behaviors”
  • S0007 & H5063: to increase and expand the reimbursements for which victims of crime are reimbursed by the state, for example reimbursing families for funeral expenses of deceased victims and expanding the time to report crimes.
  • S0008 & H5117: to modify the rules related to probation and violations thereof by, for example, allowing a punishment of only time served in cases of technical violations of probation and giving judges more flexibility when sentencing for guilty or nolo contender pleas
  • S0009 & H5128: to expand the ability of the parole board to take into account parolees’ circumstances and behavior before incarcerating them for violations (with flexibility in the duration) and to expand the impact statements required for corrections legislation
  • S0010 & H5064: to allow the state judiciary to create a diversion program, enabling defendants to make restitution in ways other than prison terms, to give judges flexibility in handling the sanctions for complaints, and to expand programs for pre-trial risk screening
  • S0011 & H5115: to remove fines over $1,000 as an automatic trigger for designation as a felony ease automatic designations of misdemeanors and petty misdemeanors, with specific exceptions/differences for assault and larceny

Rhode Island’s dismal overall circumstances will only be improved if policymakers and civil society leaders are willing to join together to pursue needed reforms, one issue at time, as highlighted in the state’s FPI report. The status quo has obviously not been working for Ocean State families.

Outdated and overly harsh policies have done little to help Rhode Islanders and their families when it comes to criminal justice. Our policies have long-term consequences that ripple throughout time and adversely affect children and families… generation after generation.

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Jobs & Opportunity Index (JOI), December 2016: RI Holds Steady Despite Jobs Hit

The preliminary yearend Jobs & Opportunity Index (JOI) report from the RI Center for Freedom & Prosperity shows the Ocean State holding on to 48th place in the country despite a hit to its jobs and employment numbers. In part, this result derived from improved income numbers, which lag by a quarter and may moderate when the full year is included in a final result for 2016.

Eight of the 13 datapoints used for the index have been newly updated. Employment was down 803 from the previously recorded number, while labor force fell 2,199 and RI-based jobs slipped by 600. (Note that these are calculated with pre-revision data for the prior month.) Medicaid enrollment numbers, now available through November, increased by 5,157, perhaps resulting from UHIP and HealthSource RI’s open enrollment period. Within the index that increase was offset by a 2,608 reduction in SNAP enrollment and a 199 reduction in TANF. (Note that these results predate UHIP, which may drive them up when fully functional.) Meanwhile, annualized state and local tax collections were up by $24 million, but personal income was up $802 million.

The first chart below shows Rhode Island still in the last position in New England. As the only two New England states to move in the rankings, Maine and Connecticut managed to increase their distance from Vermont and Massachusetts, respectively. New Hampshire remained 1st in the nation, with Maine a distant second, at 19th, now two places ahead of Vermont, at 21st. Connecticut moved up two to 32nd, outpacing Massachusetts, at 35th.

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The second chart shows the gap between Rhode Island and New England and the United States on JOI. The Ocean State lost ground against both averages. Rhode Island also lost ground with growing gaps on the unemployment rate (third chart).

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Results for the three underlying JOI factors were:

  • Job Outlook Factor (measuring optimism that adequate work is available): RI remained at 39th.
  • Freedom Factor (measuring the level of work against reliance on welfare programs): RI remained at 39th.
  • Prosperity Factor (measuring the financial motivation of income versus taxes): RI moved up one to 46th.
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Initial Reaction to Governor’s Proposed Budget

FOR IMMEDIATE RELEASE:

January 19, 2017

Lack of Vision and Bold Action – Stunning

Providence, RI — The Center’s CEO, Mike Stenhouse, provides initial reaction to the Governor’s proposed 2018 budget:

“When our state ranks 48th in family prosperity and dead last in business climate, a ‘no broad-based tax increase’ strategy simply is not good enough. We just lost 1000 jobs! The new mandates, increased minimum wage, and new penalties on businesses only rub salt in the wound. More taxes and more special handout spending policies are exactly the wrong approach; especially corporate tax credits, which do nothing to help the average family and business. Where is the bold action? The lack of leadership and vision and the acceptance of our dismal status quo is stunning.”

A more detailed statement from the Center will be issued tomorrow.

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Disintegration of RI Families? Center Invites Civic, Religious, & Political leaders to Forum to Discuss New Report

FOR IMMEDIATE RELEASE: December 21, 2016

Turning the Tide Toward Prosperity in the Ocean State:
Rhode Island Center for Freedom and Prosperity and American Conservative Union Foundation Unveil Report on Underlying Reasons for Rhode Island’s Rank (48th) on Family Prosperity Index

Government Crowd-Out of Business & Civil Society, Family Disintegration Contribute to Migration of Residents to Other States, Create Drag on Family Prosperity

Providence, RI — The Rhode Island Center for Freedom and Prosperity, along with its national partner, The American Conservative Union Foundation, today unveiled an in-depth analysis of factors contributing to the Ocean State’s dismal score on the Family Prosperity Index (FPI). The Rhode Island Family Prosperity report – the second “deep dive” state study following the national introduction of the FPI at CPAC earlier this year – highlights Rhode Island’s poor scores on a number of factors, including family self-sufficiency, family structure, fertility, and illicit drug use, compounded by its significant out-migration rate, as the determinant factors in the state’s overall FPI rank of 48th in the nation.

In conjunction with the release of the report, the organizations announced their plans to co-host a forum featuring national and local experts in early 2017 to explore the problem areas outlined in the FPI report as well as possible solutions. The forum will take place on the afternoon of Tuesday, January 17, at the Hassenfeld Institute for Public Leadership at Bryant University.

The Family Prosperity Index, created by ACU Foundation economists Wendy Warcholik, Ph.D., and J. Scott Moody, M.A., is an entirely new tool that does what no resource has done before – demonstrate quantitatively the undeniable link between economic and social policy in determining family prosperity. In so doing, the Index provides a road map for finding real solutions to the cultural and financial problems that keep families – and the nation – from flourishing. A more holistic measure than the one-dimensional unemployment rate or GDP, which only considers economic data, the FPI makes it possible to measure U.S. progress every year and rate states against each other according to how well they are providing an environment for families to flourish.

The FPI provides the credible data that state policymakers, civic and religious leaders, think tanks and activists need in order to develop and advocate effectively for policies that improve the prosperity of families and the communities where they live.

“Everyone concerned about the well-being of our state’s families should be alarmed by our unacceptable 48th-place ranking,” said Mike Stenhouse, Chief Executive Officer of the Rhode Island Center for Freedom & Prosperity. “It is time to challenge the status quo insider mindset and to search for a more holistic path to help real Rhode Islanders improve their quality of life. Our January forum will provide an ideal opportunity for community, religious, and political leaders to convene to begin this process.”

The FPI assesses the economic and social status of six discrete index categories – economics, demographics, family structure, family self-sufficiency, family culture and family health. The categories are supported by 57 data-sets from publicly accessible data and backed up by current documentable research. In the inaugural 2016 edition of the FPI, in which Utah was ranked first and New Mexico last overall, Rhode Island ranked in the bottom ten states on economics, demographics, family structure, and family self-sufficiency; dead last on family health; and in the middle of the pack on family culture.

According to the report released today, “With such a low overall FPI score, Rhode Island clearly has a lot of work to do to improve the economic and social conditions necessary for enhanced family well-being. On the economic side, we must expand the private sector, boost entrepreneurship, and reduce net out-migration. On the social side, Rhode Island would benefit from a boost in fertility, stronger intact families, and a significant reduction in illicit drug use and incarceration.”

The report provides direction for a path forward for the Ocean State. “Rhode Island’s politicians would do well to focus on minimizing government encroachment on its citizens by reducing its onerous tax burden, which, in turn, would spark new entrepreneurship and jobs, and on taking up pro-family measures that encourage healthy familial activity. Rhode Island’s community and religious leaders would also do well to inspire their constituents to aspire to a higher level of self-sufficiency as part of stronger marriages or otherwise healthier lifestyles.

“Religious institutions and other elements of civil society can help mitigate Demographic Winter in the Ocean State by addressing issues associated with family fertility, out-of-wedlock births, incarceration and drug abuse, and overall religious participation….

“If we want to turn the tide of friends and family members moving out of Rhode Island…we must embark on a new path toward renewed well-being. The Family Prosperity Index shows us the way.”

The FPI, which will be published annually and ranks each of the 50 states according to their respective scores, is the basis for a multi-year effort of the ACU Foundation’s Family Prosperity Initiative. The Initiative includes a deeper analysis of each state and its performance on the Index, providing potentially county-by-county guidance for possible policy changes. The state reports – of which Rhode Island’s is the second – will occur on a rolling basis.

Said American Conservative Union Chairman Matt Schlapp, “I hope Rhode Island’s leaders will take to heart the recommendations in the report released today to help turn the tide toward greater prosperity for Ocean State families.”