For decades, Rhode Island state politicians have practiced allegiance to a budget that has failed its people; a budget that requires unhealthy levels of taxation and regulation. This, as opposed to the allegiance they are sworn to uphold to the people of Rhode Island.

Massive Deficits: The State’s Budget is the Enemy of the People

BACKGROUND:

Should the hopes, dreams, and aspirations of Rhode Island families be limited by an arbitrary, politically driven budget number at the bottom of a spreadsheet? Unfortunately, our state is now suffering the consequences of such an approach, dragged-down by the progressive-left’s big-spending agenda; as projected economic growth has not materialized, leaving the state with massive budget deficits.

Failure of Budget-Centric Apporoach. Yet, for decades, state politicians have practiced allegiance to a budget that has failed its people; a budget that requires unhealthy levels of taxation and regulation. This, as opposed to the allegiance they are sworn to uphold to the people of Rhode Island.

Despite the false hopes expressed by lawmakers based solely on a reduced unemployment rate, on broader measures, in 2016 the Ocean State suffered the worst business climate and the 48th rank in family prosperity in the nation. Furthermore, Rhode Island was the only state in New England to see its labor force decline in size in recent years, as hundreds of thousands of people have chosen to leave our state since 2004. This is not a recovery. The RI Center for Freedom & Prosperity maintains that the high levels of taxation and over-regulation imposed for the sake of the state budget are the primary culprit in causing this stagnant performance.

It should now be plainly clear that this progressive-left, big-spending, budget-centric approach is not working. Indeed, the state budget itself, could be considered the enemy of the people! Put another way, overspending by a government that primarily seeks to perpetuate and grow itself, actually works against the best-interests of the very people it is supposed to be serving. Instead of seeking to grow prosperity, government seeks to grow itself. This approach must end.

A battle of visions. The progressive-left vision measures compassion and progress by how many people are enrolled in — and become dependent upon — public assistance programs; and by how much money is thrown at a perceived problem. Conversely, the Center believes that Rhode Island families can improve their quality of life and increase their level self-sufficiency only if more and better businesses are free to create more and better jobs and if families can keep more of their hard-earned incomes!

To realize this latter vision — and for true prosperity to be realized — the size of government via budget spending must be cut, so that taxes can be decreased.

What is really in the best interests of Rhode Island families? Is dependence on an unreliable and inefficient government what people hope and strive for? Or, should it be the American dream; where promised freedoms and opportunities abound so that we can increase our own own personal wealth and quality of life?

Deficits: An Opportunity to Reverse Course. Rhode Island’s budget spending rises every year — far beyond the rate of inflation and population growth — as lawmakers are resistant to spending cuts, even when such cuts could lead to increased prosperity for its residents!  If phasing out the car tax and cutting the state sales tax to 3.0% would keep more money in the pockets of residents … and could create thousands of new jobs and better opportunities at the same time … why should any budget number stand in the way?

The state budget should be constructed to reflect the opportunities we want for our people; it should not be the tool to restrict those opportunities.

The nearly $134 million budget deficit presents a new opportunity for our state and a test for lawmakers to determine if they will be wise enough to begin to reverse this budget-centric trend, and move toward an approach that will free its families and business to become more self-sufficient. To bridge the gap, our Center urges lawmakers NOT to continue to seek to extract new revenues from the people they represent; instead we ask them to appreciate our state’s recent history lessons and cut spending instead.

BUDGET CUTS: Over $250 million previously identified

The RI Center for Freedom & Prosperity recommends that, to balance the 2018 state budget, spending cut must be implemented. Further, now is the exact time to consider even greater spending reductions so that bold, pro-growth tax cuts can benefit every Rhode Island resident and business. Only budget and tax cuts can spur the economic growth.

The obvious question then becomes: Where can be spending be trimmed without adversely affecting our people? Over recent years, the Center has put forth many specific ideas that can easily account for hundreds of millions of reductions to unnecessary spending items.

If there’s a will, there’s a way. In its 2014 Spotlight on $pending report, as well as in its 2013 recommendations on how to pay for sales tax reduction and in its 2015 PayGo policy brief on how to pay for bridge and road repairs without imposing new tolls, the Center has suggested many items for reduction or elimination.  Some of the numbers or programs may have changed in the years since, but the following examples (based on the former budget value) give an indication of what can be done:

  • $116 million in handouts. Legislative and Community grants; Workforce Board and Training grants; subsidies to film, television, motion pictures, and the arts industries; historic tax credits, etc.
  • $44 million in other corporate welfare. WAVE and other Brookings Institution-inspired economic development corporate subsidies and tax credits.
  • Up to $80 million in Medicaid and Social Services waste and fraud.
  • $22 million in government operations savings. Facilities management; Convention Center (net $15M annual operating loss; level fund this loss-leader while state arranges to sell), Corrections and inmate-related expenses, excessive administrative expenses, etc.
  • $30 million in personnel savings. Executive and Legislative branch staff, excessive overtime pay, non-essential departments and offices; etc.
  • $6 million in government overreach. UHIP contributions, pre-K and full-day kindergarten, Commerce Corp. administration, etc.
  • $8 million for shutdown of HealthSource RI. If the U.S. Congress passes its AHCA legislation, there will no longer be a need for a state-based exchange.

Additionally, newly adopted or proposed spending programs can also be reduced or eliminated.

  • Up to $35 million for free college tuition.

STATEMENT on Proposed 2017 RI Budget

STATEMENT: FOR IMMEDIATE RELEASE 
June 8, 2016

RI Families Once Again Left Out of State Budget

Multiple Special Interest & Corporate Welfare Programs Outweigh Few Relief Provisions
Lawmakers Adopt Center’s Recommendation to increase EITC in lieu of Minimum Wage hike

Providence, RI — With nothing bold to address the massive structural budget deficits, its dismal business climate, or the state’s 48th ranking on the RI Center for Freedom & Prosperity‘s Jobs & Opportunity Index, Rhode Island lawmakers are once again advancing a special interest laden agenda that offers little relief or hope for new opportunities for the average Rhode Island family.

“What does the average family have to cheer about in this budget? The few provisions that offer minor relief to some are overwhelmingly outweighed by the massive special interest and corporate welfare spending that will continue drag-down our state economy,” commented Mike Stenhouse, CEO for the Center. “Only when the total relief package is bigger than new spending can we claim that Rhode Island is heading in the right direction.”

While recognizing the reductions in retiree income taxes, the corporate minimum tax, and trucker registration and beach parking fees, the Center notes that these cuts are themselves narrowly targeted and are more than offset by the increases in corporate welfare, new Uber and marijuana taxes, pre-K funding, and new special-interest bond initiatives.

The Center maintains that major broad-based tax reforms are required to jump-start the Ocean State’s stagnant economy and jobs market.

Also according to the Center, the continued funding of the unethical legislative and community grant programs, despite the mirage of reform, can only be seen a perpetuation of a corrupt, status quo insider culture.

As help to low-income workers, the Center praises lawmakers for adoptng the Center’s March 2016 recommendation to hold the minimum wage steady and, instead, increase the Earned-Income-Tax-Credit (EITC), which rewards work without risking job losses.

STATEMENT: P3 Legislation Applauded as More Efficient Delivery Model for Infrastructure Upgrades

NEW: Failing RI Report Card Grades Not Advancing Social Justice

FOR IMMEDIATE RELEASE
November 17, 2015

Non-Competitive Grades Harming Work, Mobility, and Opportunity for Rhode Islanders
Preponderance of Fs and Ds Should Signal Need for Change in Policy Culture

Providence, RI — The opportunity for upward mobility for many Ocean Staters continues to be hampered by a non-competitive business climate and onerous family tax burdens, as evidenced by the poor grades the State of Rhode Island received on the 2015 Report Card on Rhode Island Competitiveness, the fourth annual such report, released today by the Rhode Island Center for Freedom & Prosperity.

Burdened with public policies that discourage work and a productive lifestyle, the state’s poor grades in 10 major categories (two F’s, seven D’s, and one C) reflect a government culture geared to benefit special interest insiders, while at the same time promoting job-crushing and soul-crushing dependency among the general populace.

Raising even further alarm, Rhode Island ranked dead-last, overall, when compared with report cards from other New England states.

“This report card clearly demonstrates the wreckage that decades of liberal policies have wrought upon our state. These unacceptable grades should be a wake-up call to lawmakers that a government-centric approach is not producing the social justice and self-sufficiency that Rhode Islanders crave,” suggested Mike Stenhouse, CEO for the Center. “If we want to provide more mobility and opportunity for our neighbors and entrepreneurs, we must completely reform our public policy approach. We must learn to trust in our people and remove the tax and regulatory boot of government off of their backs by advancing policies that empower the average family with choices, that reward work, and that grow the economy.”

The two categories with F grades are Infrastructure and Health Care; the seven D’s are Business Climate, Tax Burden, Spending & Debt, Employment & Income, Energy, Public Sector labor, and Living & Retirement in Rhode Island; while Education received a C-. Among the 52 sub-categories evaluated, Rhode Island received 19 F’s, 24 D’s, 5 Cs, 3 Bs, and just one lone A.

In a related 1-page brief, the Center also analyzes report card trends over recent years as well as comparisons to grades for other New England states.

The RI Report Card, originally developed for the Center by a national economist, compiles into a single document the state rankings among key economic and social indexes, as published by dozens of credible 3rd party national organizations.

The 2015 report card, with citations, as well as reports from prior years can be downloaded at RIFreedom.org/RIReportCard.

Media Contact:
Mike Stenhouse, CEO
401.429.6115 | info@rifreedom.org

About the Center
The nonpartisan RI Center for Freedom & Prosperity is Rhode Island’s premiere free-enterprise research and advocacy organization. The mission of the 501-C-3 nonprofit organization is to return government to the people by opposing special-interest politics and advancing proven free-market solutions that can transform lives by restoring economic competitiveness, increasing educational opportunities, and protecting individual freedoms.

2015 Report Card FAILS to Provide Equal Opportunity for Rhode Islanders

The Center’s 4th annual REPORT CARD demonstrates how RI’s political class continues to cater to special insiders, while depriving other Rhode Islanders of the opportunity for upward mobility, educational opportunity, and personal prosperity.

[button url=”http://rifreedom.org/RIReportCard/” target=”_self” size=”medium” style=”royalblue” ] 2015 Report Card [/button]

P3 PayGo Model for RhodeWorks

[button url=”http://rifreedom.org/wp-content/uploads/RICFP-P3-PayGo-101515.pdf” target=”http://rifreedom.org/wp-content/uploads/RICFP-P3-PayGo-101515.pdf” size=”medium” style=”royalblue” ]Click for full “P3 PayGo Model” report[/button]

Beginning this spring, Rhode Island Governor Gina Raimondo proposed a controversial RhodeWorks program to implement a toll system for commercial trucks as the foundation for a massive revenue bond that would not require voter approval. RhodeWorks is the governor’s strategy for repairing and maintaining a statewide road and bridge system that is undeniably in poor condition.

Despite a report from an insider government vendor, many are concerned that the governor’s plan would place yet another tax on Rhode Islanders — in the guise of highway tolls — putting unnecessary downward pressure on an already depressed state economy and placing taxpayers and drivers at further risk for inevitable cost overruns.

More recently, to address this concern, a Republican Policy Group (RPG) of state lawmakers has proposed a pay-as-you-go (PayGo) alternative that would find an annual sum of money derived from cuts and reform to existing state expenditures in order to fund the annual cost.

The mission of the Rhode Island Center for Freedom and Prosperity is to advance market-based solutions for the Ocean State through a rigorous exchange of ideas, as well as to provide alternative perspectives in the debate about important public policy issues. We agree with the priority on infrastructure established by the governor and the RPG’s directive to fund and build a sustainable repair and maintenance program within the state’s already high tax and fee regime. However, with Rhode Island’s infrastructure in such bad condition, a large up-front investment of money may be unavoidable.

The Center proposes an out-of-the-box concept for “delivery” of this massive public works project utilizing a proven model utilized in many other states for similar projects.  Lawmakers should conduct the detailed due diligence necessary to properly consider a public-private-partnership (P3) delivery model, with a pay-as-you-go (PayGo) funding foundation.

All combined this approach would fund much needed infrastructure upgrades largely from existing general revenue, yet would offload the debt, risk, and delivery of the project to a private sector partner.

The P3 PayGo model would preclude the need for tolling and would  provide substantial benefits for Rhode Island taxpayers and drivers by:

  • Removing the risk of taxpayers’ or ratepayers’ bearing the burden of likely cost overruns
  • Requiring no major new revenue streams, such as tolls, taxes, or fees
  • Removing project management from the RI Department of Transportation (RIDOT), which has recently come under intense public criticism for ongoing internal inefficiencies
  • Delivering bridge and road repairs in a more timely manner
  • Potentially saving hundreds of millions of dollars in overall project costs

Compiling this paper, the Center found the potential cost savings of a P3 PayGo project to be massive, reducing project costs by nearly half and potentially reducing annual costs to nearly one-third of the proposed spending. However, the primary goals of this proposal are to allow an upfront infusion of money without the need for tolls or other new revenue or long-term general obligation debt and to mitigate the risk associated with a project of this size. We therefore consider cost savings to be a secondary benefit, with the expectation that the numbers will become clearer as the public debate proceeds. At the very least, it is clear that, like the state’s bloated budget, P3 PayGo has plenty of slack to make the proposal feasible.

Important note: The term “public private partnership” is often used to describe government subsidies arbitrarily handed out to private ventures, such as 38 Studios. The P3 described in this paper is very different, with delivery of a vital public works project farmed out to a private sector partner in order to achieve market-based efficiencies and risk management not usually available to the government.

[button url=”http://rifreedom.org/wp-content/uploads/RICFP-P3-PayGo-101515.pdf” target=”http://rifreedom.org/wp-content/uploads/RICFP-P3-PayGo-101515.pdf” size=”medium” style=”royalblue” ]Click for full “P3 PayGo Model” report[/button]

P3: a Compelling Delivery Model for Governor’s Proposed Infrastructure Upgrades

A P3 Model would bypass the troubled RI DOT and enable a private sector partner to deliver vital bridge and road repairs in a timelier, safer, and less costly manner. WOULD REMOVE ALL RISK OF COST OVER-RUNS FROM RHODE ISLANDERS!

[button url=”http://www.rifreedom.org/p3/” target=”_self” size=”small” style=”royalblue” ] Read the Policy Report [/button]

Gary Sasse on RhodeWorks: Leaving No Stone Left Unturned

State Leaders Should Remember that Rhode Island’s Transportation Funding Crisis Evolved Primarily From Debt- Driven Financing Practices

Statement from Gary Sasse:

A recent Hassenfeld Institute public opinion survey found that 76% of Rhode Islanders felt the State was  spending too little on road and bridge maintenance. This finding is consistent with the bipartisan agreement that Rhode Island’s bridges urgently need to be improved.

The key question that the General Assembly will need to address is what would represent the most efficient, economically neutral and fairest way to finance and deliver a bridge safety and improvement initiative. To answer this question the General Assembly has four optional approaches it may choose to consider.

The first is the Governor’s plan that is financed by borrowing backed by truck toll revenues. The second is a PAYGO plan that has been recommended by House Republicans. This plan would be financed by reallocating existing resources, and would not contain new tolls, fees or taxes. The third option, put forward by the Rhode Island Center for Freedom and Prosperity, constitutes a P3 public-private partnership between the State and private partner. The private partner, in exchange for pre-determined revenue guarantees, would finance, repair and maintain bridges for an agreed upon time. The final option is a hybrid PAYGO- debt plan would be based on some additional public debt, but also the use of current general revenues.

In studying these options state leaders should remember that Rhode Island’s transportation funding crisis evolved primarily from debt -driven financing practices. These practices have served to inhibit the state’s ability to properly maintain its roads and bridges. Therefore, in considering the best way to finance and deliver a bridge improvement program, the General Assembly should remember that borrowing is expensive. The most costly public debt may occur when there is a limited history with a new revenue source and any debt financing should be designed to avoid the carrying charges of issuing a large bond upfront.

While the REMI study provided additional information about the economics of the Governor’s truck toll proposal, questions remain regarding the impact of this proposal on sectors of the Rhode Island economy and operationalizing the tolling system.

In order to serve the best interests of the Rhode Island taxpayer, the General Assembly should take the time to fully evaluate all four options, leaving no stone left unturned.

About the Author:

Gary Sasse is the director of Bryant University’s Institute for Public Leadership. He is a former executive director of the Rhode Island Public Expenditure Council, and for several years directed the state’s Department of Revenue and Department of Administration during the Carcieri administration.

 

STATEMENT: REMI Toll & Bond Report Overstates Benefits; New Model Next Week

FOR IMMEDIATE RELEASE
September 3, 2015

Economic Drawbacks Under-Stated, Benefits Overstated
Pro Government Spending Analysis is Not Balanced with Free Market Analysis

Providence, RI – As projected months ago, the economic development analysis released yesterday by the Raimondo administration, conducted by Regional Economic Models, Inc. (REMI), is based on pro government spending theory that under-states the negative impact of extracting new funds out of the private sector economy, and does not take into account the more traditional free market economic theory, according to the RI Center for Freedom & Prosperity.

“On the one hand, and obviously, when hundreds of millions of dollars are spent on a project like this there will be a near-term boost in jobs and economic activity, as the REMI report suggests,” commented Mike Stenhouse, CEO for the Center. “However, on the other hand, there is also a negative ongoing impact on the economy through the imposition of new tolls, taxes, or fees. The REMI model minimizes this effect, while free market models normally project a greater long-term negative impact to economic growth.”

The Center plans to release a policy concept paper next week that will put forth an alternative funding and delivery model, that would complete the vital bridge and road repair project at a lower cost and in a more timely manner, while also removing risk of likely cost overruns from taxpayers or ratepayers.
Media Contact:
Mike Stenhouse, CEO
401.429.6115 | info@rifreedom.org

About the Center
The nonpartisan RI Center for Freedom & Prosperity is Rhode Island’s premiere free-enterprise research and advocacy organization. The mission of the 501-C-3 nonprofit organization is to return government to the people by opposing special-interest politics and advancing proven free-market solutions that can transform lives by restoring economic competitiveness, increasing educational opportunities, and protecting individual freedoms.

Governor’s BOND & TOLL plan will waste over $650 million

PAY-AS-YOU-GO a Superior Approach.

The plan under consideration would more than double the cost of the project and would enrich special-interests without any added benefit for Rhode Islanders. The Center’s new report shows how to make RhodeWorks “work” for Rhode Island.

[button url=”http://rifreedom.org/2015/07/making-rhodeworks-work-for-rhode-islanders/” target=”_self” size=”medium” style=”royalblue” ] Read the PayGo Report here [/button]