Rhode Island Employment Snapshot, August 2014: What Goes Up Comes Down

Whether or not one believed the six-month boom in employment that government statistics proclaimed, the trend has turned around in Rhode Island.  The unemployment rate may have frozen at 7.7%, which is definitely an improvement over our nearly six years above 8%, but much of the credit goes to the large reduction in the labor force.

Even if fewer people are working, the unemployment rate goes down if an even larger number of people decide not to look for work.

The first chart below shows the dramatic rise of the first six months of the year (which a January revision will likely flatten out) followed by the reversal.  The recent shift of the lines is a good illustration of how the rate works.  If the upper line, which is labor force, had increased more than the lower line, which is employment, the unemployment rate would have gone up.  That circumstance can actually be an indication of a rebounding job market, because it shows that people are sufficiently optimistic to start looking for work again.

The second chart shows how Rhode Island, Massachusetts, and Connecticut are faring versus their labor forces and employment before the recession.  Clearly, the Ocean State has a long way to go.

The third chart shows what the unemployment rate would have been if the labor force had remained the same throughout the recession.  The big takeaway is that the unemployment rate would have peaked much higher, but the newer takeaway is the uptick of the red line over the past few months.  What it illustrates is that the unemployment rate would be going back up, rather than freezing or edging down, if more people weren’t giving up on looking for work.

RI-laborforceandemp-0107-0814

RIMACT-laborforceandemp-0814perc0107

RI-unemploymentrate-steadyLF-0107-0814

“Shall there be a convention to amend or revise the Constitution?”

How a Constitutional Convention might benefit the Ocean State!  #ConConRI

Will you vote “Yes” or “No” this November?

[button url=”http://www.rifreedom.org/concon” target=”_self” size=”medium” style=”royalblue” ] ConCon RI Home Page [/button]

Center Launches Local Transparency Portal

Does your city or town have an open government website? Tiverton taxpayers are the very first!

Find out how you can shine light on your municipality’s operations. Contact the Center at info@rifreedom.org .

[button url=”http://tivertonfactcheck.org/tiverton-transparency-payroll/” target=”_blank” size=”medium” style=”royalblue” ] Tiverton Transparency Site [/button]

New Study: higher tax burden reduces state economic growth & population

August, 2014 – We consistently hear Rhode Island lawmakers claim that citizens or the wealthy can “afford” some minor, new tax to pay for some new government project. That may be true in some cases.

But what is also true, in almost all cases, is that OUR STATE’S ECONOMY CANNOT AFFORD THE TAX HIKES.

A new study by the nationally renowned Mercatus Center explains this cause and effect.

***

Read below or go to the Mercatus page here; http://mercatus.org/publication/state-economic-prosperity-and-taxation

State Economic Prosperity and Taxation

Pavel A. Yakovlev | Jul 10, 2014

Policymakers frequently debate how different methods of taxation affect their states’ economies. While most economists agree that higher taxes result in reduced investment and innovation, previous studies have not found overwhelming evidence that higher tax rates lead to lower eco­nomic growth.

To untangle this paradox, new research by economist Pavel Yakovlev for the Mercatus Center at George Mason University examines the effects of taxation on states’ economic performance, busi­nesses growth, and net migration rates. The study finds that higher state taxes correlate with lower economic performance, even when controlling for various factors. The magnitude and sig­nificance of this effect varies depending on the type of taxes and the type of economic activity in question. The study analyzes the relationship between states’ economic performance and tax variables including effective average tax rates, the personal income tax, and personal income tax progressivity.

To read the study in its entirety, please see “State Economic Prosperity and Taxation.”

KEY FINDINGS

  • A higher average tax burden reduces state economic growth. Dividing total tax revenue by gross state product (GSP) shows that a 1 percent increase in a state’s average tax rate is associated with a decrease of 1.9 percent in the growth rate of its GSP.
  • Taxes impact migration patterns. If higher state taxes lead to lower economic activity and employment, it is conceivable that people will move to states with better economic pro­spects. Of the nine states with no personal income tax, four—Florida, Nevada, Washington, and Tennessee—are among the states with the highest population growth rates in the country in recent decades. Also, data show that a higher personal income tax rate is associ­ated with a higher probability of residents migrating to a state with a lower tax rates.
  • Income tax progressivity affects the number of new firms. The number of new firms open­ing in a state is a key indicator of beneficial creative destruction and innovation that will improve living standards for the state’s residents over time. Other studies have found that new firm entry accounts for 20–50 percent of a state’s overall productivity growth. The lat­est economic data show that the rate of start-up creation is sensitive to personal income tax progressivity. A 1 percent increase in personal income tax progressivity is associated with a reduction of 1.2 percent in the growth rate of the number of firms.
  • While the data show an important relationship between GSP growth and average tax rates, the impact of average tax rates on per capita income is less clear. A 1 percent increase in a state’s average tax rate can be expected to decrease per capita income by 0.07 percent.
  • As previous studies have also noted, these findings can be sensitive to the time period, statisti­cal methods, and variables used. Nevertheless, the results still lead to a general con­clusion: not all tax variables exhibit a significant correlation with the selected measures of economic activity, but when they do, the relationship is usually negative.

CONCLUSION

Higher state taxes generally reduce state economic growth, GSP, and even population. It is clear that people produce or consume less, or even move to a different state, in response to higher taxes. Not all types of tax increases can be expected to significantly harm economic outcomes, but higher taxes are generally correlated with lower standards of living.

Read Publication PDF

Legal Precedent to Ban Legislators from Running as ConCon Delegates

Go to ConCon RI Home Page

The RI Center for Freedom & Prosperity commissioned a legal brief by the Stephen Hopkins Center for Civil Rights to determine if any constitutional language or case law exists that would impact the eligibility of a sitting elected official from running as a Constitutional Convention delegate, should voters approve ballot Question-3 this November.

Based on the legal brief below, the RI Center for Freedom & Prosperity urges the special convention commission to recommend that the General Assembly, if and when a Constitutional Convention is approved, should establish a requirement that any currently elected official would first have to resign their current position before declaring their candidacy as a Convention delegate.

***

August 21, 2014:

The Prohibition of Service by Legislators and Other Office Holders as Delegates to a Constitutional Convention –

A “ConCon” Conflict

Written by the Stephen Hopkins Center for Civil Rights; commissioned and released by the RI Center for Freedom & Prosperity

Summary: There is clear constitutional language and supporting case law that would prevent General Assembly members, and perhaps other state or local officials, from serving as delegates to a Constitutional Convention.

Background: This November the voters of Rhode Island will have the opportunity to approve or reject a ballot measure calling for a Constitutional Convention for the state.[1]  While varied forces and interests are aligning around the question itself, one legal argument – who is permitted to run for convention delegate – is not only being raised but has also been the subject of a significant court case since the last Constitutional Convention was called.

In the 2009 decision in Felkner v. Chariho Regional School Committee [968 A.2d 865 (R.I. 2009)] the Rhode Island Supreme Court held not only that a specific statutory exclusion prevented a citizen from holding two public offices, but that “the simultaneous holding of these two positions violates the long-recognized common law doctrine of incompatibility.” [Felkner, 868.]

As with the statutory prohibitions in Felkner, the Rhode Island Constitution erects a clear bar to the holding of multiple offices in Article III, Section 6:

ARTICLE III – OF QUALIFICATION FOR OFFICE – Section 6. Holding of offices under other governments —Senators and representatives not to hold other appointed offices under state government. — No person holding any office under the government of the United States, or of any other state or country, shall act as a general officer or as a member of the general assembly, unless at the time of taking such engagement that person shall have resigned the office under such government; and if any general officer, senator, representative, or judge shall, after election and engagement, accept any appointment under any other government, the office under this shall be immediately vacated; but this restriction shall not apply to any person appointed to take deposition or acknowledgment of deeds, or other legal instruments, by the authority of any other state or country. No senator or representative shall, during the time for which he or she was elected, be appointed to any state office, board, commission or other state or quasi-public entity exercising executive power under the laws of this state, and no person holding any executive office or serving as a member of any board, commission or other state or quasi-public entity exercising executive power under the laws of this state shall be a member of the senate or the house of representatives during his or her continuance in such office.

This language clearly and unambiguously prevents General Assembly members from holding office with the Federal Government or that of any other state or country.  Nor, it states, shall they “be appointed to any state office, board, commission or other state or quasi-public entity exercising executive power under the laws of this state.” [2]

While this later clause may seem at first to settle (in the negative) the question of whether a General Assembly member may serve simultaneously as a Constitutional Convention delegate, it could perhaps be read to apply only to those positions that relate to the executive power.  And while a Constitutional Convention may (and likely would) in fact impact the powers and duties of, and limitations imposed upon the executive branch, it would not be unreasonable to view the Constitutional Convention as a body above all three branches, and a participant in none.  If one preferred such a limited reading of the constitutional restriction found in Article III, then the next logical step in a legal analysis would be an assessment of the application of the doctrine of incompatibility.

In her opinion in Felkner, Acting Chief Justice Goldberg provided a clear roadmap to the question and a detailed history of the doctrine of incompatibility, its evolution, and the public policy that drives it.  At its heart, the incompatibility doctrine is not a bar arising from the impracticality or physical impossibility of serving in two offices, but rather a bar against the inherent and unavoidable conflict that arises when “one [office] is subordinate to the other, and subject in some degree to its revisory power; or where the functions of the two offices are inherently inconsistent and repugnant.” State ex rel. Metcalf v. Goff, 15 R.I. 505, 506, 9 A. 226, 226 (1887), 15 R.I.at 507, 9 A. at 227.

After defining the relevant standard, the opinion in Felkner delves into the facts of the matter – the powers and purview of the two offices to which Felkner was elected – to determine whether service in the two offices would give rise to issues that “inevitably would result in the silencing of at least one of [his] constituencies.” [Felkner, at 874.]  As with that case, there are a number of factors in the possible service of a General Assembly member as a Constitutional Convention delegate than implicate the incompatibility doctrine.

First, to put to a General Assembly officer the question of whether their powers should be limited or expanded at the very least draws questions of the appearance of self-interest and inherent conflict.  At worst it creates clear and ethical conflicts if matters such as legislative pay, the shift to a full-time legislature, or other perquisites of office were to arise.  And while some might argue that a recusal may suffice if such questions were to arise, the rare and important nature of a Constitutional Convention should in itself be an argument against such measures.  Too rarely to the citizens have the opportunity to have their representative voices heard on matters of such import, and a system designed with the expectation that their voice may be silenced by the recusal of their representative delegate should be vigorously avoided.

Second, it is clear that the very purpose of a Constitutional Convention is the exercise of a “revisory” power over the structures that define the breadth and scope of legislative power as well as those of the executive and judiciary.  An official who was elected by their constituents to exercise the powers of their office, could not at the same time be an advocate for the limiting (or expansion) of those powers.  Further, the Constitutional Convention itself serves as a super-legislature, allowing the people, through this alternative mechanism, to check, balance and override the action or non-action of the General Assembly relative to specific issues of law and governance.

Finally, given the extensive entanglements of finance, funding, control, and oversight between the General Assembly and the municipalities of our state, a strong argument could be made that the facts of the matter[s] should extend the prohibition to any public official, whether state or local, not just General Assembly members.  In addition to potential structural changes (regionalization, consolidation, shifts of control from state to local or vice-versa) practical administrative questions (such as those relative to school funding, approval of tax hikes, infrastructure, or the balance of powers between the state and its constituent municipalizes) are also very likely to present themselves.  To argue that those local offices or programs that may be funded in large part by state revenues are not integral to the state executive function is to deny the modern reality of public finance.  To assert that the decision making authority granted to the delegates of a Constitutional Convention to alter the scope of authority of local officials does not present a conflict if those local officials serve as delegates would fly in the face of the incompatibly doctrine.

And so, while some might hope that certain (or even a great mass of) current legislators might run for and take the oath of office as a delegate to a Constitutional Convention, thereby resulting in their effective resignation from the General Assembly, it is probably more beneficial for our democracy to make sure the rules are clear in advance, and let those who might have such an interest be aware that their service in one capacity will effect their resignation[3] from their prior hard won office.  As importantly, the strong potential for a legal challenge to any legislator who attempted to serve in two capacities simultaneously would only serve to delay, demean, and complicate the process of convening a Constitutional Convention if called for by the voters of or state.

Therefore, we would call on those who may eventually be tasked with defining the qualifications and restrictions for our Constitutional Convention delegates to make clear the Constitutional, statutory, and common law restrictions discussed herein.  As a practical matter, legislators should be prohibited from running for delegate seats without first resigning their elected office.  A further exploration of who else might face a similar bar should be undertaken promptly, perhaps with appropriate anticipatory guidance from our courts.

Just as importantly, we would ask the General Assembly to consider (and take into account in the drafting of rules of election) the underlying public policy question and the impact of such conflicts, whether real or potential, on the gravity and import of a Constitutional Convention.  To ignore this question would only muddy the process and add the expense of litigation, special elections, or other contests, and possible delay the Constitutional Convention itself.

The best and most prudent approach would be a clear legislative requirement that a candidate for delegate to the convention must first resign any state or local office before declaring as such.

***

End notes:


[1] ARTICLE XIV – CONSTITUTIONAL AMENDMENTS AND REVISIONS – Section 2. Constitutional conventions. – The general assembly, by a vote of a majority of the members elected to each house, may at any general election submit the question, “Shall there be a convention to amend or revise the constitution?” to the qualified electors of the state. If the question be not submitted to the people at some time during any period of ten years, the secretary of state shall submit it at the next general election following said period. Prior to a vote by the qualified electors on the holding of a convention, the general assembly, or the governor if the general assembly fails to act, shall provide for a bi-partisan preparatory commission to assemble information on constitutional questions for the electors. If a majority of the electors voting at such election on said question shall vote to hold a convention, the general assembly at its next session shall provide by law for the election of delegates to such convention. The number of delegates shall be equal to the number of members of the house of representatives and shall be apportioned in the same manner as the members of the house of representatives. No revision or amendment of this constitution agreed upon by such convention shall take effect until the same has been submitted to the electors and approved by a majority of those voting thereon.
.
[2] Interestingly, the perhaps most well know prohibition on political activity – the Hatch Act – may or may not prevent Federal employees from running for delegate slots in a Constitutional Convention.  That act prohibits participation in partisan elections, and so if the General Assembly were to structure the delegate races as non-partisan, there may be an opportunity for participation by Federal employees.
.
[3] “It is well settled that, when a person accepts an office incompatible with one which he then holds, he thereby impliedly resigns or vacates his former office.” ; 3 McQuillin, § 12.67 at 367.  Further, “[T]he mere acceptance of the second incompatible office per se terminates the first office as effectively as a resignation.”  In explaining the premise upon which the rule of implied resignation is based, we stated that the resignation “can be thought of as one of election, though not properly one of individual choice. There is no room for an actual election, unless it exists simply in choosing to accept a second, incompatible office. Once that act is done, the law implies an immediate resignation of the prior office, accompanied by a surrender of all claim and title to that office.” Advisory Opinion to the Governor, 121 R.I. at 67, 394 at 1357. [Both referenced and cited in Felkner, 872,873.]

Rhode Island Employment Snapshot, July 2014: Job Trend Cools in Summer

Whether or not there has been any tangible evidence, the statistics have suggested that Rhode Islanders’ job prospects boomed for the first six months of 2014.  The number of employed Rhode Islanders hit a ledge in July, but a state doesn’t lead the country in job growth without showing some gains relative to other states.

In the case of the Ocean State, it managed to slip its unemployment rate below those of the Southern states of Mississippi and Georgia.  For the first time in a long time, that is, Rhode Island doesn’t have the worst unemployment rate in the country.

The safe money, however, should still bet on a dramatic revision to the data, next January.  What the numbers will turn out to show after the election will be interesting to see.

The first chart below illustrates the boom and halt, as well as the multi-year patter that 2014 has shown, thus far.

The second chart shows that, however well Rhode Island may compare with distant states in another region, it continues to lag the two neighbors whose economies the Ocean State’s should more closely resemble.

The third chart shows the unemployment rate as it’s been in comparison with what it would have been if so many Rhode Islanders hadn’t stopped looking for work.  (When the total labor force decreases, fewer people who are not working are considered “unemployed” because they aren’t looking for work.)

RI-laborforceandemp-0107-0714

RIMACT-laborforceandemp-0714perc0107

RI-unemploymentrate-steadyLF-0107-0714

Stenhouse – Constitutional Convention – Video Testimony & OpEd

The Center’s CEO provides testimony & opinion about how a ConCon can be structured to best serve the people of Rhode Island and not the typical special interest insiders.

[button url=”http://oceanstatecurrent.com/opinion/a-constitutional-convention-in-rhode-island-citizen-democracy-in-action/” target=”_blank” size=”medium” style=”royalblue” ] OpEd on The Ocean State Current [/button]

– Republished in the Providence Journal, 8/14/14 (click button above to read)StenProJoOpEdConCon

 

 

 

Stenhouse testimony at August 7, 2014 bi-partisan preparatory commission hearing … (click below)

Stenhouse testimony re. a “People’s Convention” at August 21, 2014 bi-partisan preparatory commission hearing … (click below)

[button url=”http://www.rifreedom.org/concon” target=”_self” size=”medium” style=”royalblue” ] ConCon Home Page [/button]

The Path to a Constitutional Convention

[button url=”http://www.rifreedom.org/wp-content/uploads/ricfp-pathtoconcon-080614.pdf” target=”_blank” size=”medium” style=”royalblue” ]Full Analysis[/button]

“Shall there be a convention to amend or revise the Constitution?”

The Rhode Island constitution requires the Secretary of State to place such a question on the ballot every 10 years. In 2004, this ballot initiative was narrowly defeated, 52:48 percent.   In 1984, Ocean State voters did approve a convention. This year, the RI Center for Freedom & Prosperity expects a similar ballot question — to convene a statewide constitutional convention — to be approved by Ocean State voters in the upcoming 2014 November elections.

If the question is approved by voters in 2014, the rules that will govern the constitutional convention (more simply referred to as the “ConCon”) will be determined by the state’s General Assembly in 2015, beginning with how delegates will be elected — at least one for each of the 75 House districts — in a specially scheduled general election. The convention will then convene for a specified length of time, with various constitutional amendment measures to be considered and approved by delegates. Finally, all ConCon-approved amendment measures will be put forth for approval from voters as future ballot initiatives.

Read full analysis (PDF).

 

Center Holds “ABCs of School Choice” Event in Honor of Milton Friedman

Know as the “father of school choice”, Milton Friedman was feted on July 31 in Providence on what would have been his 102nd birthday!

Because every child deserves a BRIGHT TODAY educational opportunity.

[button url=”http://www.rifreedom.org/ABC” target=”_self” size=”medium” style=”royalblue” ] More on the event [/button]

Six BIG Questions No One is Asking in the 2014 Campaign

What do the candidates for governor say?

Or other statewide and General Assembly candidates? Why are they and the media avoiding the BIG questions?

[button url=”http://www.rifreedom.org/2014/07/2014-campaign-six-big-issues-no-one-is-talking-about/” target=”_self” size=”medium” style=”royalblue” ] 6 BIG Questions [/button]