Why RI Should Opt Out of Exchanges and Medicaid Expansion

Quick Links: download a printable PDF of this brief here;   go to our Healthcare home page here ; read our policy brief about a Healthcare Freedom Act here;   

News Coverage: GoLocalProv article – good discussion in the comments section

High Cost of State Implementation

The federal government’s healthcare law — the Patient Protection and Affordable Care Act (PPACA) — if fully implemented in Rhode Island, will impose a high cost for the Ocean State in terms of budgets, jobs, dependency, and privacy. In upholding the law as constitutional, the Supreme Court alleviated one very narrow area of uncertainty but did nothing to repair problems with the policy.

Rhode Island will experience multiple negative ramifications if a state-based exchange and the Medicaid expansion options are put into practice, including:

  • Unfunded budget costs that Rhode Island does not have the capacity to absorb
  • Job-killing employer mandates and penalties that would otherwise be avoided
  • Increased dependency on government for health care and other services
  • Government intrusion on privacy in the highly personal areas of healthcare and family finances

Despite its lofty claims, PPACA will not lower health care and insurance costs and will do nothing to increase the supply of quality healthcare services in our state. The law will also lead to new federal and state taxes and cost the economy even more jobs.

State officials are already envisioning the exchange as what might be termed a dependency portal. Using information that residents enter for the purpose of determining health program eligibility, the exchange will alert users to a menu of other benefits for which they qualify, expanding Rhode Island’s public welfare system to an unknowable degree.

Policy Recommendation

The RI Center for Freedom & Prosperity recommends that the state of Rhode Island halt its headlong lunge into expensive and intrusive policy changes concocted in Washington, D.C., and join with other states that have taken a more skeptical view of the promises of the poorly vetted health care reform.

  1. Repeal the executive order creating RI’s health benefit exchange and replace it with patient-centered, market-based reforms, as described in the Center’s Healthcare Freedom Act policy brief.
  2. Opt out of the Medicaid expansion program, declining partial federal funding that would increase dependency on publicly financed health care and lead to increased budget deficits.

The Health Care End Game

Within two hours of the Supreme Court’s determination that the Patient Protection and Affordable Care Act (PPACA) is constitutional, three Rhode Island public officials held a related press conference. Lieutenant Governor Elizabeth Roberts has made health care a focus of her time in office; Secretary Steven Costantino heads the Executive Office of Health & Human Services; and Christine Ferguson is the newly appointed director of the Rhode Island Health Benefits Exchange.

During the conference, the trio promoted the inchoate exchange as more than a Web site for comparing products. Rather, they described what small-government advocates might see as a dependency portal. Based on information that users provide in order to determine eligibility for health premium subsidies, the site would also offer other forms of public assistance and subsidies that they could claim.

The prudence of government’s promoting its services as if they were private-sector products is a matter of legitimate debate. But the idea of a dependency portal does highlight one critical fact: The exchange, and PPACA generally, will expand the size, cost, and scope of state government.

Compounding Government Costs

Much has been made of the federal government’s 100% coverage of direct expenses for expanding Medicaid under PPACA. All childless, able-bodied residents with household income below 133% of the federal poverty level (i.e., individuals below $14,856 in 2012) will for the first time be eligible for health care through Medicaid.

Under the assumption that the state and federal governments will be somewhat aggressive in promoting enrollment, the Kaiser Family Foundation estimates that these new Medicaid recipients in Rhode Island will cost an additional $1.8 billion from 2014 to 2019, or about $301 million per year. However, costs will not be evenly distributed across those years, with increasing participation as time goes on. In 2019, the total cost for these newly eligible Medicaid recipients will be approximately $414.0 million.

The federal aid covering the Medicaid expansion will have phased down from 100% in 2014 to 90% in 2020. Therefore, in the unlikely event that total Medicaid spending does not increase from 2019 to 2020, the annual cost to Rhode Island taxpayers that year will be about $41.4 million. (The RI Center for Freedom & Prosperity inferred this annual total using the ratio of total state and federal spending in 2019 to total state and federal spending for 2014-2019, as provided in Table 4 on page 38 of the Kaiser report.)

But that total doesn’t account for the “woodwork” effect, which suggests that people who are currently eligible for Medicaid but have not applied will do so as implementation of the reform draws attention to the program. In Rhode Island, this population includes:

  • All children under 19 and pregnant women in house-holds at 250% of the poverty level, as well as all parents with children under 18 and household income below 175% of the poverty level.
  • Seniors (over 65) and disabled adults who qualify for Supplemental Security Income (SSI) or have income below the federal poverty level and have limited resources.

The federal government will assist with this new spending at its standard rate, which Kaiser estimates at 53-1/8% for Rhode Island over the six years, leaving the state to cover $30 million of the $64 million tab. (Note that the latest RI Executive Office of Health and Human Services Annual Medicaid Expenditure Report puts the federal contribution “typically” at 52.47%.)

Again, this spending will not be evenly distributed by year. With the same assumptions for 2020 as above, the annual cost to the state at the end of the examined period will be $6.9 million. In total, therefore, the Medicaid expansion portion of PPACA will represent new annual service costs to the Rhode Island taxpayer in the neighborhood of $48.3 million.

A third cost component that must be added to the total is administration. A 2010 Heritage Foundation study found that “administrative expenses add an average of 5.5 percent in addition to total (federal and state) benefit costs, and that, on average, the federal government pays 55 percent of total administrative costs.”

Taking all of these factors into account, the push for expanded enrollment will result in around $452.3 million in annual Medicaid spending. Of that, the State of Rhode Island will be responsible for $58.9 million in 2020. At that time, about one in four Rhode Islanders will be directly dependent on the Medi-caid program for health care.

The good news, from the Supreme Court’s ruling, is that states cannot be forced to participate in the expansion through the threatened loss of all federal Medicaid assistance.

Exchanges: More Costs

Where Medicaid leaves off, at 133% of the federal poverty level, subsidized premiums through the health care exchange will pick up, providing public money to families up to 400% of the poverty level. That’s $92,200 for a family of four, in 2012. The subsidies will come via advance federal tax credits, but there are five major cost factors of concern at the state level.

First, federal assistance toward start-up and operation expenditures for exchanges will end after 2014. Stan Dorn, of the Urban Institute, notes that states will thereafter have to come up with some reliable funding source — perhaps “surcharging insurance premiums; assessing health plans, employers, or individuals; appropriating state General Fund dollars; or otherwise.”

In Massachusetts, as part of its recent state-based health care reform, the exchange charges participating insurers a fee equivalent to 3% of premiums. Writes Dorn, “The insurers then pass on this cost to purchasers of coverage.”

Second, Rhode Island taxpayers will have to subsidize costs, through the exchange, associated with benefits that the state requires plans to offer beyond federally designated “essential benefits.” According to the RI Center for Freedom & Prosperity, Rhode Island leads the nation in health care mandates.

Third, state-based exchanges will be the mechanism for imposing penalties against “large” businesses (those with 50 or more employees) that either do not offer health benefits or that require employees to share more than a federally designated maximum amount of their cost.

Consider a business with 50 employees who work at least 30 hours per week, but that is unable to provide health care benefits beyond its other compensation. If a single employee acquires a subsidy through a state-based health benefit exchange, the employer will be responsible for $40,000 in annual penalties. For many, that will be substantially higher than the costs of hiring an additional employee.

Fourth, PPACA imposes tighter “community rating” standards on the individual and small group markets, within and outside of exchanges. Broadly speaking, in the “small group” market (employers with 100 or fewer employees), Rhode Island’s already-restrictive statutes forbid insurers from varying their premium costs by more than four times. That is, one family plan covering a spouse and children cannot differ by more than four times another such plan. PPACA reduces the differential to three times and limits family types to “individual” and “family.”

Plainly put, community rating lowers prices for plan members who actuarially should pay higher premiums by increasing them on those who should pay lower premiums.

This relates to the exchanges because, if Rhode Island decides to open its exchange to large groups, then the community rating scheme will apply to all such plans in the state for the first time ever. This rule apparently applies even if no insurers utilize the exchange for this purpose.

Finally, state officials’ vision of an expanded dependency portal will produce an unknowable increase in recipients of food stamps, cash payments, and other forms of public welfare whom the exchanges rope in as a bonus feature. These costs will span multiple layers of government and will be compounded to the extent that they require additional expenses to administer and maintain.

None of these five cost drivers applies if the state does not initiate and maintain a health benefit exchange.*

Danger Cubed: More Regulation, Less Freedom, Lost Privacy

Arguably more substantial than the direct financial costs of the Medicaid expansion and health benefits exchange is the danger created through the new authority that PPACA grants to the state and federal governments.

That danger comes first through dependency. Under the Medicaid expansion, 25% of Rhode Islanders will be direct wards of the state, when it comes to health care. Under the state exchange, up to 57% of Rhode Islanders will be eligible for health care handouts. And the expanded menu of the dependency portal will deepen families’ reliance on the state.

The danger comes second through a new ease of regulation. As health benefit exchanges absorb a greater percentage of the industry, local and national bureaucrats will be able to introduce new mandates and requirements not as legislation passed by duly elected members of the General Assembly or Congress, but simply as new requirements in order for plans to qualify for the exchange. Alternatives will be increasingly diffi-cult to procure, and costs will be forced upwards.

The danger comes third through the loss of privacy and financial intrusion. In order to qualify for Medicaid coverage and health care subsidies, Rhode Islanders will regularly have to inform the state about minute details of their lives. Indeed, it is likely that even families that receive no assistance at all will be faced with the same standardized application process.

In this way, two of the most intimate aspects of a person’s life — finances and health — will be collected through a single agency in a single location for the great majority of Rhode Islanders.

Conclusion

For all of this expense and intrusion, the state will not likely experience any reduction in the overall cost of health care, and Rhode Islanders will likely see the quality and availability of the care that they receive worsening. A Beacon Hill Institute study of Massachusetts’ health care reform, after which much of PPACA was modeled, found cost increases across the board — in and out of government, in an out of public assistance programs, and across tiers of government.

The reason, according to the researchers, was that the reform increased the demand for health care services without increasing the supply. The most alarming manifestation of this dynamic appeared in the state’s emergency rooms.

Across the country, there has been a noticeable decline in enthusiasm for exchanges among states that had begun work on them shortly after PPACA passed Congress. North Dakota, New Hampshire, Idaho, and South Carolina are among the states resisting the federal timetable to implement these insurance “marketplaces.” Kaiser Health News reports that, by the end of June, “only 14 states and the District of Columbia have so far passed legislation authorizing the exchanges.”

At Rhode Island Lt. Governor Roberts’s June 28 press conference, the three public officials made the familiar point that the availability of preventative, regular care might reduce the utilization of more-expensive emergency services. To the contrary, with wait times likely to increase for family physicians, and with greater portions of the population accessing subsidies for premiums and other expenses, the savings for which Rhode Islanders are being asked to sacrifice privacy and self-reliance may never materialize.

 

* Whether employer penalties ultimately depend on state-initiated exchanges is likely to be the subject of political dispute and litigation. However, the penalties are triggered by employees’ receipt of premium assistance, and PPACA Sec. 1401, which creates those subsidies, refers to “an Exchange established by the State under 1311.” Sec. 1311 describes state-initiated exchanges, but not federally initiated exchanges. It is Sec. 1321 that empowers the Secretary of Health and Human Services to create a federal exchange for use in a state.

Healthcare Exchanges in RI Should be Replaced with a Healthcare Freedom Act

Download a PDF of the complete policy brief here; go to Healthcare home page here

In 2010, Congress passed and President Obama signed the Patient Protection and Affordable Care Act (PPACA) amid great controversy. Passage of the bill did not resolve the dispute, and the law has been a source of uncertainty for state governments around the country.  Moreover, the Supreme Court’s ruling that the law is constitutional did not resolve the instability:

  • There is a substantial likelihood that PPACA opponents in Washington, D.C., will be able to stymie implementation and funding of the law or even repeal it, depending on who ends up controlling the U.S. House of Representatives, the U.S. Senate, and/or the White House after the 2012 elections.
  • Multiple provisions of the law, notably services defined as “essential,” are left to the whims of the U.S. Secretary of Health and Human Services and will be readily adjusted by future administrations.
  • With the Supreme Court’s recent decision, a movement will surely begin to pass an amendment to the Constitution of the United States making all or part of the law a violation of the founding document.

Therefore, Rhode Island must take the lead — as it has with pension reform and the Global Medicaid Waiver — in ensuring that its residents maintain access to health care service through the maintenance of choices, control of costs through free-market mechanisms, and confidence in the quality of care provided.

Changing Rhode Island’s current arrangement, vis-à-vis health care, must be a top priority for public officials and engaged citizens, alike. The state leads the country in the number of mandates that it imposes on all health plans within its reach. Partially as a result, only three insurers are willing to operate within its borders, and only one of those offers individual plans for direct sale to consumers.

Policy Recommendation: Enact a Health Care Freedom Act for RI Citizens

While there are many policy reforms to consider, the recommendations in a Health Care Freedom Act will put the Ocean State’s health insurance sector back on a path that produces higher levels of competition, provides more choices for consumers, and shields Rhode Island from current and future federal mandates.

  1. Repeal the governor’s executive order creating PPACA Health Insurance Exchanges.
  2. Apply for a State Innovation Waiver to free RI from certain provisions of PPACA, including exchanges.
  3. Enact a Health Care Freedom Act that would:
    1. Open up competition by allowing interstate sales to permit Rhode Islanders to purchase health insurance plans from approved providers in other states.
    2. Allow an “opt out” provision from the state’s currently burdensome level of health insurance mandates and require insurers to openly display the original mandates not included.
  4. Pass an amendment to the state constitution to prohibit the federal government from ever requiring Rhode Island residents to buy health insurance.
  5. Pass a resolution calling for amendment of the federal Constitution to invalidate PPACA.

Rhode Island faces an important decision: whether or not to continue down the path of creating an exchange as described by the Patient Protection and Affordable Care Act. Beyond that, Rhode Island must decide whether to rely on the promises of the legislation’s supporters that such policies serve to correct the problems American citizens face in finding affordable health insurance.

Download a PDF of the complete policy brief here …

Minimum Wage Hike Will Cause Loss of 200 Teen Jobs in RI

Watch this video by LearnLiberty.org to see how increasing the minimum wage increases unemployment among low-skilled workers

On the heels of a national report that painted a bleak employment picture for teens, the Rhode Island Center for Freedom and Prosperity issued a policy note today that shows that the Rhode Island General Assembly has made the teen jobs situation even worse in the Ocean State when it raised the state minimum wage by 35 cents to $7.75.

 According to updated data made available to the Center from an earlier study(i) by nationally recognized economists, Rhode Island teens are projected to see 200 fewer jobs this year as a result of the minimum wage hike. This loss, 1% of teens employed in 2011, will hit especially hard on those who do not have high school degrees; this group is expected to suffer 75% of the anticipated loss.

Rhode Island’s teen unemployment rate in 2011 (28.3%) is already 3.4 percentage points higher than the national average of 24.9%. The minimum wage increase will make this discrepancy even worse.

The data, which will be part of a more comprehensive teen employment report the Center plans to release in July, is “yet another example of the death-by-a-thousand-cuts syndrome that is depressing our state’s growth,” said Mike Stenhouse, CEO for the Center. Continual small increases in taxes and regulations are often implemented for compassionate reasons, but it is the contention of the Center that the cumulative effect of these polices has been devastating for area businesses, for the state’s economy, and especially for those seeking work.

“Imagine that because of this minimum wage increase two hundred more Rhode Island teens are not going to have the chance to earn a paycheck, to learn important business skills, or to build their personal résumés,” concluded Stenhouse.

(i) “Update of Evan and Macpherson, 2010.” Economists David Macpherson (Trinity University) and William Even (Miami University) released a study in 2010 that examined the impact of the federal minimum wage increase between 2007 and 2009. 
 
Media Coverage:
6/19/2012: Prov. Business News, Minimum Wage Bump Will Cost 200 Jobs
6/19/2012: GoLocalProv, Minimum Wage Hike Will Cost 200 Teen Jobs, Group Says

Progress Report: 2013 Budget Does Not Improve Failing Report Card

Quick Links: go to Report Card home page; 2013 budget fails to be bold

Download a PDF of this Progress Report here …

When the RI Center for Freedom & Prosperity released its “Report Card on Rhode Island ‘Competitiveness,'” in February, Rhode Islanders had reason to believe that the General Assembly would do something to address the state’s most pressing issue: jobs.  The last time the unemployment rate was below 11% was in June 2009.

Since February, almost two thousand more Rhode Islanders are out of work, and even more than that gave up and left the labor force.  Perhaps the worst news, though, is that the legislature and its enacted budget did nothing to improve the economic climate of the state and arguably made things worse.

The Report Card

The “Report Card on Competitiveness” ranked Rhode Island nationally and regionally in ten categories: tax burden, business climate, spending & debt, employment & income, K-12 education, energy, infrastructure, public sector, health care, and living & retiring in RI.  For half of those categories, Rhode Island received Fs, meaning that the state ranks very poorly in New England and in the United States.

In no category was Rhode Island’s grade higher than D+, which the state achieved only in K-12 education.

Areas Outside the Economy

Because the report card addresses a variety of aspects of life in Rhode Island, it would be possible for the General Assembly to make improvements in one category at the expense of another.  A worsening score in the energy category, for example, might correspond with improvements in overall business climate.  With its scores so consistently low, however, Rhode Island has no areas of strength to compromise for the sake of improving weaknesses.

The two notable areas in which lawmakers would likely assert positive action, during this legislative session, are education and infrastructure.

With respect to education, the budget made three substantial changes that legislative leaders present as improvements:

  • Combining the Board of Regents for elementary and secondary education with the Board of Governors for higher education and creating a “chancellor” position overseeing all public education in the state.
  • Accelerating the incremental implementation of the state’s new funding formula.
  • Creating an Information Technology Investment Fund to consolidate IT improvements and provide a dedicated funding stream from land sales (excluding land freed up along I-195).

Despite grand assertions made by House Finance Chairman Helio Melo (D, East Providence) during the budget debate, however, bureaucratic restructuring is not obviously a route toward improved results.  Indeed, if a combined board of education creates the opportunity to stifle the forces of reform, it could be a step backwards for the state.

As for the funding formula, while it may represent a more equitable means of allocating resources where they are most needed, the change represents little more than a reshuffling of dollars. Moreover, money is arguably not the critical area in need of reconsideration.

Even the one provision that looks likely to provide true advancement of the state’s education system, investment in IT, is not clearly a net improvement.  The IT Investment Fund will receive land-sale proceeds, but the budget gets the ball rolling with an authorization for $45.3 million in new borrowing.

Debt plagues the state’s infrastructure advancements, as well.  Between T.F. Green Airport and central landfill improvements, the General Assembly authorized an additional $214 million in debt.  That is in addition to $209 million of bond authorizations that will appear on the ballot in November.

Rhode Island is already 47th in the nation and fifth (of six) in New England for state and local debt per capita, according to the report card.  During the House budget debate, Melo informed the representatives that state government’s total debt currently stands at $1.7 billion, requiring annual debt service of $299 million.

This could be the year that the state breaks $2 billion in total direct debt owed.  (Additional obligations, such as pensions and other post-employment benefits [OPEB] are exponentially larger.)

Asphyxiating the Private Sector

Perhaps the most notable example of infrastructure improvement at the expense of other areas of competitive weakness is the authorization of tolls on the Sakonnet River and Jamestown Verrazano Bridges.

It is true that Rhode Island’s bridges are the most deficient in the nation, but tolls are not a clear answer for two reasons.  First, Rhode Island is also worst in the nation for highway cost effectiveness, meaning that a focus on funding will contribute to, rather than alleviate, the problem.  Second, the tolls will place an exorbitant burden on a region that’s already suffering.

An analysis by the Ocean State Current found that the island and lower bay communities dominated the lists of population and employment loss, over the last decade.  Juxtaposing those trends with median income suggests that the people who’ve been struggling the most are those least able to afford hundreds or thousands of dollars in new transportation expenses.

The imposition of regional tolls is not the only area in which the General Assembly constricted Rhode Island’s private sector.  Under the guise of cleaning up licensing laws, the budget added an estimated $1.8 million to the direct cost of doing business in the state.  Whether it’s $25 license renewal fees for hairdressers and manicurists, a $550 fee for in-state wholesalers of frozen desserts, or a $1,090 re-examination fee for physicians, the burden falls most heavily on individuals and small-business owners who are simply trying to participate in the Rhode Island economy.

The same is true of the $11 million in new sales taxes being levied against taxicab drivers, pet groomers, and high-end clothiers, among others.  Last year, hairdressers across the state successfully lobbied to avoid taxes on the services that they provide.  This legislative session, the restaurants successfully quashed Governor Lincoln Chafee’s move to impose a dramatic increase of the meals tax.

It appears that the state government is intent on probing the various segments of Rhode Island’s economy to find areas of lobbying weakness.  Industries able to mount strong public defenses will be spared while others won’t.  The first test is taxes; the second is fees.

Government Self-Preservation

It is true that the General Assembly’s budget for fiscal year 2013 (FY13) represents a slight decrease from its revised budget for FY12 — down to $8.10 billion from $8.12 billion.  However, the budget that the General Assembly enacted one year ago was supposed to hold FY12 spending at $7.70 billion.  In FY11, the final number was $7.72 billion.

In other words, new revenue and debt is translating directly into government expenditures, with a two-year jump of approximately $400 million.

The growth in full-time equivalent (FTE) employees that the budget authorizes is another indication.  During the second term of Governor Donald Carcieri, the number of authorized FTEs declined 2,077, from 16,417 in 2006 to 14,341 in 2010 (numbers differ due to rounding).  Consequently, the ratio of public workers to private-sector workers brought Rhode Island its only grade above a C on the Center’s report card: an A-.

With the FY13 budget, the total FTEs authorized has returned to 15,026, making up approximately one-third of the reduction.  At the same time, the state’s economy has continued to erode, so the number of FTEs per 100 employed Rhode Islanders has returned to its pre-reduction level. There is a clear disconnect between the public and private sectors.

A specific example may be found in seemingly innocuous government restructuring.  In order to process the millions of dollars in federal stimulus money earmarked for Rhode Island, Governor Carcieri created an Office of Economic Recovery and Reinvestment (OERR), currently with a staff of seven.  For FY13, OERR will be transformed into the permanent, state-funded Office of Management and Budget, with an initial staff of eleven.

Yet another example of government’s preservation of its own interests at the expense of the overall economy can be found in article 22, which allocated $2.6 million as a partial bailout of the locally administered Central Falls pension plan.  During the restructuring of the city’s finances through the receivership and bankruptcy processes, police and fire retirees experienced benefit reductions up to 55%.  With state funds, the maximum reduction will now be 25% through FY16, for most retirees.

In effect, a year and a half of revenue from increased professional licensing fees are going to mitigate the harm that Central Falls’ mismanagement did to its personnel. Alternately, the Central Falls bailout could have been funded through the elimination of the OERR now that federal stimulus dollars are drying up.

Competitiveness Is About Priorities and Decisions

On the night it was unveiled, House Minority Leader Brian Newberry (R, Burillville, North Smithfield) referred to the General Assembly’s revision as a “status quo budget.”  But the status quo for the state of Rhode Island is characterized by economic decline, and continuing on that path is a choice.

Between the February release of the Center’s report card and the final passage of the budget, the General Assembly chose to bolster government at the expense of private citizens struggling to build a life in one of the harshest economic environments in the United States.  Between now and the legislators’ return to their chambers, the next round of choices will be voters’.

2013 Budget Fails: Who’s Really Running our Lives?

Quick Links: further analysis of 2013 budget; Report Card on RI Competitiveness

2013 Budget Fails to be Bold

I don’t know about you, but the spectacle of General Assembly members congratulating each other for passing a self-proclaimed “bold” 2013 Budget for Rhode Island and outwardly celebrating by pointing out the tax hikes that they didn’t impose on our citizens and businesses might make you think that our state’s economy is “just fine”.

The measure of a good budget should not be mild improvements to a bad budget proposed by the governor. A few legislators, who understood the shortcomings and economic harm the budget would inflict on some, saw their common sense amendments systematically shot down, one after another.

The whole charade is disturbing to me and should be troubling to all citizens; it is indicative of the tax and spend culture that has become so firmly ensconced on Smith Hill

For example, with regard to the new tax on taxi services, consider cab drivers, who, on average, earn pay near the poverty level. All they want is the freedom to earn a living of their choice. Instead, because of the new sales tax on their industry, they will now see their business, their tips and their profits reduced; they will have to jump through hoops to collect and remit the sales tax to the government; and they will suffer the professional ignominy of having their service trade singled-out as one that must help fund the state’s voracious spending habit. Do you think that today … taxi drivers feel that they are in full control of their own lives?

The Political Class calls this tax an “investment” that is necessary for what they deem are more important programs. Most of us just call it more “wasteful spending” to feed their never-ending appetite for government dependency.

How long will it be before they come after your business sector? After all, in the past few years, a number of industries have been threatened with new tax increases, and regrettably, not all were able to escape the assault.

When I speak with pro business groups, even they consider it a “victory” when certain industries, who have good lobbyists, somehow managed to elude taxation – at least for now. What is the matter with our state? These are not victories. These are symptoms of a culture of failure. What Rhode Island needs is a new “winning” culture.

What our state needs is a new, pro business tax policy that will lead to economic growth and more jobs. The 2013 budget fails in this regard.

What our state needs is to upgrade our standing in all those national categories where we rank last or near the bottom. The 2013 budget fails in this regard.

What our state needs is real relief for the massive pension and health benefits liabilities facing our cities and towns. The 2013 budget also fails in this regard.

What our state needs is freedom of choice for disadvantaged students and families who are condemned to a failed school. The 2013 budget fails in this regard, as well.

And yet, they celebrate. And no one else steps forward to lead.

I am left wonder how many Rhode Islanders are wondering themselves about who’s running their lives. Do we each really still own that sacred freedom? Or is the State now our boss? One that dictates and manages more and more parts of our individual lives by herding us into more and more collective, politically-created buckets?

Do not be fooled by all the self-aggrandized back-slapping. Unless you can afford a strong lobbying group, they are likely scheming to manage you and your business next.

Read our Zero.Zero Sales Tax Executive Summary here …

Nationally Recognized Investigative Reporter Joins The Ocean State Current

Kevin Mooney has appeared on Breitbart and Glenn Beck

FOR IMMEDIATE RELEASE: June 12, 2012

Providence, RI — The Ocean State Current, the news division of the Rhode Island Center for Freedom and Prosperity, announced today that Kevin Mooney will join its staff as Investigative Bureau Chief.

“Accountability and transparency are vital to our democracy,” said Mooney, an investigative journalist who reports on the public sector with an eye toward taxpayer interests. “Unfortunately, we see government at the local, state and national level operating at odds with long-standing American principles rooted in the idea of constitutional limited government.”

 Most recently,Mooney served as the Capitol Bureau Reporter for the Pelican Post, the news division of the Pelican Institute for Public Policy in Louisiana. Mooney’s work also appears in the Daily Caller, The American Spectator, The Washington Times, the Washington Examiner and Breitbart.com. A contributor to Fox News, Mooney previously appeared on the Glenn Beck program to discuss the connection between The Service Employees International Union (SEIU) and the Association of Community Organizers for Reform Now (ACORN). Mooney was also the first to report on the $53 million in federal funding ACORN has received since 1994.

Mooney will join Justin Katz, managing editor, on The Current’s staff.

“Our Center is thrilled to have Kevin partner with Justin in growing The Ocean State Current into a prominent news source for concerned citizens,” said Mike Stenhouse, CEO for the Center. “Kevin’s proven ability to follow the money and uncover instances of undue special interest influence and cronyism will add a new dimension to our news bureau.”

RI Needs a Criminal Intent Rule to Protect Innocent Citizens

Criminal Penalties Should be Levied only on those with a Guilty Mind

 

Download the full Policy Brief here …

No person should be convicted of a crime without the government proving that he or she intended to violate a law or knew that his or her conduct was unlawful. Generally, criminal offenses under Rhode Island law include such specific standards, but if they don’t, then a default requirement should apply. The Rhode Island Center for Freedom & Prosperity supports state efforts to protect citizens from unjust punishment because of ambiguous and poorly-drafted criminal offenses.

There are myriad factors required to ensure a fair and just criminal justice system: both the United States’ and Rhode Island’s Constitutions protect the rights of the accused to counsel, speedy trials, and due process, among other guarantees. But those constitutional protections exclude one notable aspect of a fair criminal justice system, which may be so fundamental that it escaped constitutional inclusion in the heady days of constitution writing.

Our full Policy Brief discusses these issues in greater detail.

According the Report Card on Rhode Island Competitiveness, our state grades out at an “F” in the categories of State Lawsuit Climate and in Domestic Migration. Passage of the protections recommended in this Policy Brief would help ensure that a high profile legal case based on some obscure law might not further deter people and businesses from remaining in or moving to the Ocean State.

Our Policy Brief was published on the RIGHT ON CRIME website …

Crosstown E-Battle of Ideas Takes Stage in Providence

Ocean State Current joins Breitbart, Heritage, and Franklin in “Future Of Journalism Summit”

Click here to see national news stories about what people are saying about the Summit …

The Ocean State Current, the news wing of the Rhode Island Center for Freedom and Prosperity, will participate with the Heritage Foundation and the Franklin Center for Government & Public Integrity at this weekend’s events, which will include a tribute to the monumental journalistic achievements of Andrew Breitbart at the “Breitbart Awards Dinner” on Friday, June 8, at 7:00 p.m. The dinner is the main event of the “Future of Journalism Summit” – establishing a center-right beachhead north of the State House, opposite the left-wing Netroots Nation summit to its south – on Friday and Saturday.

Andrew Breitbart pioneered a new media revolution that transformed journalism and the political landscape. As his tragic passing is mourned, many seek to ensure that his legacy is honored and that the movement he spawned continues with the army of citizen activists that he cultivated and inspired to carry the torch for freedom and truth.

The spirit of that movement is represented locally by the RI Center for Freedom & Prosperity, which worked with the Franklin Center in the development of the Ocean State Current, its online news bureau. CEO Mike Stenhouse says, “In terms of both inspiration and practical example, the trail that Andrew Breitbart and these organizations have blazed – to uncover the truth and to provide greater government transparency – has been a guide as we’ve made our own way, here in the Ocean State.”

“Interacting with other journalists in the Franklin network around the country these past few months has been very encouraging,” says the Current’s managing editor, Justin Katz. “It’s easy to feel like the Netroots crowd controls the conversation in this state, so it’s great to have some friends from the other side mingling in the shadow of the Independent Man,” he says, referring to the statue on top of the State House dome.

The first annual Breitbart Awards Dinner will honor three individuals from the realms of 1) professional journalism; 2) blogging; and 3) citizen activism-whose efforts advance the spirit of Andrew Breitbart’s work, which was driven by an indomitable pursuit for truth and accountability that advances those causes on behalf of the public good.

The winners of the 2012 Breitbart Awards:

Professional Journalism: Phillip Klein, The Washington Examiner Blogger: Ace of Spades, Ace of Spades HQ Citizen: Andrew Marcus

Breitbart Awards Dinner Details:

Keynote Addresses by John Fund and Sonnie Johnson, Breitbart Award winners

Breitbart Awards Dinner

Friday, June 8th at 7:00 p.m. EST

Providence Marriott Downtown-1 Orms Street, Providence, Rhode Island

The Franklin Center for Government & Public Integrity supports transparency, accountability, and fiscal responsibility. It trains reporters, produces investigative news content, and holds government officials accountable.

The Heritage Foundation is the nation’s most broadly supported public policy research institute. Its mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense.

Schilling’s Rookie Mistake

Oped by Mike Stenhouse published by the Providence Journal on June 3, 2012

See the ABC-6 interview on this OpEd here …

When All-Star, world champion and potential Hall Of Fame pitcher Curt Schilling stepped from the dugout into the corporate board room, and then into the public-policy arena, he did what most of us did when we first put on our uniforms: He made a rookie mistake.

With the job security of his employees and the investment value of his stakeholders in play, Schilling also took on the public trust of Rhode Islanders when he accepted a $75 million state loan guarantee for funding for his new company, 38 Studios.

While it is now good sport to openly deride Schilling as a hypocrite — or worse — I have a different take on where I think that he may stand to gain a valuable life lesson.

At many points along their athletic journey, most athletes learn the hard way that they must forgo certain activities to be successful in achieving their professional-sports ambitions. At each step along the way, more and more of our energy must be dedicated to our sport if we are to continue to achieve at a higher and higher echelon. This means that such activities as partying, skiing, off-season leisure and hobbies must be curtailed or eliminated to maintain a high level of physical conditioning and emotional focus.

As a rookie in the Major Leagues, I tried to have it all initially: the uniform, on-field success, the night life and the offseason leisure. This formula does not work for most, and it certainly didn’t work for me.

Having experience myself in professional baseball and in the dot-com world as an executive with a $50 million start-up venture, I understand what it takes to succeed. And now, with my experience in public policy, I understand the responsibilities of public officials and publicly financed organizations to taxpayers, it strikes me that Schilling may, likewise, have lost focus and spread himself too thin.

Over the past year, when I saw Schilling regularly at the ESPN studios as a baseball analyst, I kept wondering to myself how he was maintaining focus on growing his company and if he was truly committed to its success. Whether his ESPN gig had anything to do with the problems that 38 Studios now faces we’ll probably never know.

However, when Curt Schilling accepted the loan guarantee by Rhode Island’s taxpayers, he truly stepped into the big leagues. I’m not sure that he understood the commitment required to maintain the public trust. Putting everything that we have into starting a business is the type of entrepreneurship that Americans admire, even if the venture fails. But taking things for granted, especially when that includes acceptance of taxpayers’ hard-earned money, is entirely different.

I disagree with all of those who paint Curt Schilling as some kind of evil or dishonest person. I simply think that he made a rookie mistake and I don’t think he’ll make it again. In the same way that Curt Schilling worked hard to achieve success as a pitcher, I expect that he will re-dedicate himself to making 38 Studios a successful enterprise.

Mike Stenhouse is a former Major League baseball player, a former executive with Myteam.com and now chief executive of the Rhode Island Center for Freedom & Prosperity, a conservative think tank.

©2012, Published by The Providence Journal Co.

The Whole Truth

Task Force Stirs Controversy in Warwick

Are local governments unknowingly or purposely hiding the truth from their residents?

How do you solve a problem if some don’t think there is a problem?

An debate is underway, and the sides are taking shape. On one side are the City of Warwick, its local newspaper, and state officials. On the other side are current and former Warwick city council members, a scholar from a nationally recognized think tank, National Review, and our own Center for Freedom & Prosperity.

A locally published interview with a member of the national pension task force, assembled by the RI Center for Freedom & Prosperity, has caused a stir in Warwick, puzzling the Mayor, confusing the local paper, and leading to an online rebuttal. Even the Providence Journal has covered the action.

On May 24, the Warwick Beacon published an article from an interview with Eileen Norcross senior research fellow and lead researcher on the State and Local Policy Project with the Mercatus Center at George Mason University, attempting to refute her warnings that the City of Warwick is not accurately representing the true scope of the liabilities in its locally administered pension plans. Norcross published a pie-chart depicting what she calculates as the true budget snapshot for the city. See the pie-chart here.

In citing Mayor Avedisian’s puzzlement by Norcross’s figures, and in misstating facts itself, the article is an example of the complexities involved in this important issue for cities and towns in Rhode Island.  A point-by-point clarification, “Wake Up Warwick,” was subsequently posted by Norcross as a rebuttal to the Warwick Beacon article.

Further, National Review Online has also published an article in support of Norcross’ perspective.

At question is the “discount rate,” or “rate of return,” utilized by most government agencies to value long-term pension liabilities. Many economists believe that government actuaries use higher rates than they should, which ends up understating the scope of the liability. If rates that are commonly used in private industry were to be utilized, the pension liability would be 2-3 times larger in many cases. What politician would want that kind of information to come out?

Is this arbitrary accounting practice done out of habit, or ignorance or, worse, is it done to purposefully deceive the public by kicking the can down the road and forcing future administrations to deal with the true scope of the problem?

The Center for Freedom & Prosperity takes the position that this debate — and this level of transparency — should take place in every city and town in Rhode Island. We strongly urge concerned citizens to publish or otherwise distribute the Open Letter to Municipalities: Tell Us The Truth previously published by our Center.