The Governor's budget for FY2019 stands in stark contrast to the successful path to prosperity blazed by the federal government via tax and regulatory reductions in the past year.

Center Critical of Governor’s “Wrong Direction” Budget

FOR IMMEDIATE RELEASE:

January 18, 2018

“Keep Going” Strategy Headed in Wrong Direction

Recent Federal Reforms Demonstrate the Path to Prosperity

Providence, RI – The Governor’s proposed “Keep Going” FY2019 budget stands in stark contrast to the successful path to prosperity blazed by the federal government via tax and regulatory reductions in the past year.

“In perpetuating a stagnant economic status quo for Rhode Island, this budget includes a number of new revenue schemes, even while the Administration claims there are no broad based tax hikes,” said Mike Stenhouse, CEO for the Rhode Island Center for Freedom & Prosperity.”Treading water simply is not good enough for a state that ranks in the bottom-10 in multiple broad, national indexes: business climate, Family Prosperity Index, Jobs & Opportunity Index, and in regulatory burdens.”

Already spending significantly more per capita than its more prosperous neighboring states, the proposed budget irresponsibly proposes $135 million in new spending, including the planned hiring of hundreds of new government workers. The budget also seeks to extract significant new revenues from the public via a bevy of narrow tax and fee increases, such state sponsored sports gambling and increased marijuana usage, and “scoops” from other agencies. Additionally, the projected $41 million in new trucker toll receipts will inevitably lead to higher prices for grocery and other consumer products.

With a highly successful 180 degree opposite approach, and less than one month after becoming law, the recently enacted federal tax reforms prove that bold reductions in personal and corporate tax burdens, when combined with meaningful regulatory reforms, will lead to real and immediate economic growth. Further, as the nation has witnessed by the hundreds of companies that have recently announced employee bonuses and pay increases, such growth directly benefits workers at all levels.

The $350 BILLION investment plan announced by Apple this month, and the expected $38 BILLION in new federal taxes it will pay, clearly demonstrates – as the Center has consistently advocated, and as America also saw during with Reagan era tax cuts – that lower tax rates that spur economic growth can actually lead to increased revenue flows to the government.

“Sadly, per Amazon’s announcement this, we find again that Rhode Island’s political class was fooling itself into believing that our Ocean State was in the running for a new Amazon corporate campus,” continued Stenhouse. “As we have maintained for years, until RI takes serious steps to improve our dismal business & educational climate, we will continue NOT to make Top-20 lists, and we will continue to hemorrhage from small business shutdowns and transplants to other states.”

Instead of even more taxpayer money dedicated to fund crony corporate welfare handouts, this money could be used to fund broad-based tax cuts that can spur economic growth. If Rhode Island were to work towards a pro-growth, lower tax and regulatory business climate, there is no reason to believe our state could not share in the same dynamic economic growth that we are now seeing across America. With national jobless claims at 40 year lows, with record low African American unemployment, and with Hispanic unemployment also approaching historic lows, it is a win-win situation for Rhode Island to consider meaningful tax cuts and regulatory reforms.

As with last year’s budget, the Center criticizes the ledgerdemain in the budget regarding the deceptive process referred to as “scooping.” Scooping creates the appearance of more general state revenue receipts, by moving off-budget funding from specific state agencies or quasi-publics (e.g., $5 million from the Student Loan Authority) into the general fund. Over time, these agencies may seek to recoup lost funds by shifting the burden to municipal taxpayers or by other increased fees.

The Raimondo administration is heaping additional burdens on employers by doling out tens of millions of their hard-earned tax dollars to Infosys.

Statement on Infosys Announcement: Small Businesses Should Be the Focus

Pro Small Business Measures Would Benefit Ocean State More than Infosys-Type Corporate Welfare

Federal Tax Reforms Could Open Door for Real Economic Growth

Providence, RI – Just days after touting “Small Business Saturday” the Raimondo administration has heaped additional tax burdens on employers and taxpayers in the Ocean State by doling out tens of millions of their hard-earned dollars to Infosys. Today’s announcement of yet another astro-turf corporate welfare scheme underscores how little is being done to nurture small business employers, who account for well over 90% of all jobs in the state.

Ironically, the RI Center for Freedom & Prosperity points out that it may be reforms in Washington, DC … often the target of scorn by the Governor … that could be the main reason behind the Infosys announcement, and that may spur real, grass-rootseconomic growth.

“There is little doubt in my mind that the primary reason why Infosys is now locating more jobs in America is because of the easing of federal regulations that we have seen this year,” commented Mike Stenhouse, CEO for the Center. “If Congress next passes its Tax Cuts & Jobs Act, companies won’t need taxpayer-funded hand-outs to decide to become established and to flourish in our state.”

The Center has long-maintained that Rhode Island’s corporate welfare based economic development strategy, like the Infosys deal, is not sufficient to spur robust economic growth and jobs creation. Instead, the Center has advocated that broad-based tax and regulator reforms – that will lessen burdens every business in our state – are the only means by which more and better companies will produce more and better-paying jobs.

“The Infosys deal does nothing to improve our state’s dismal business climate and will help very few Rhode Islanders,” continued Stenhouse. “Interestingly, while statewide legislative leaders continue to hamper small business growth, it may be the federal government that will take concrete steps to actually improve the climate for all small and large businesses.

“According to the Center, corporate welfare schemes will do little to alleviate the problems suffered by Rhode Island employers and families … as exemplified by bottom-10 national rankings in such broad-based indexes as: overall state business climate, Family Prosperity Index, Jobs & Opportunity Index, occupational licensing burdens, and the recently released poverty report.

Rhode Islanders would be hit with a tidal wave of new costs to fund the most destructive progressive bills.

15 Progressive Bills would Cost Rhode Islanders over Six BILLION Dollars

PROGRESSIVE TIDAL WAVE of New Costs ?

Opportunities for Rhode Island families to move up the income ladder and achieve a better quality of life would be threatened if the progressive-left’s agenda were to be fully implemented. Already drowning from a 45th rank in business climate and overall family prosperity, Ocean Staters would be asked to bear a tidal wave of new costs totaling multiple billions annually in order to fund the legislative vision of the state’s progressive-Democrat wing.

According to research released today by the RI Center for Freedom and Prosperity, potential increased costs of $6 BILLION per year would be heaped upon our state’s families and businesses via tax hikes, higher ratepayer fees, and new employer mandates if just 15 bills that are now on a path in the General Assembly were taken up again in future years and became law. Such added government-imposed burdens would run counter to productive reforms in other states … and would create new barriers to job creation, while reducing disposable income for virtually every Rhode Islander.

Already suffering from a serious out-migration problem in our state, taxpayers, residents, and business owners should be alarmed that the wave of intrusive bills introduced in 2017 … in the areas of healthcare, business regulation, energy, and education … would likely sweep away even more Rhode Islanders into other states.

The most onerous piece of legislation is a proposed single-payer healthcare system, sponsored by progressive-Democrat activist Representative Aaron Regunberg. In ceding management of the state’s entire healthcare insurance to an overly politicized and incompetent government bureaucracy, this one piece of legislation alone would heap about $5,403,000,000 per year in new costs on taxpayers.


Rhode Islanders need a credible alternative to the status quo and its destructive progressive ideas. You can help.

Click here to find out more >>>

The RI Center for Freedom & Prosperity is the Ocean State’s leading voice against the wreckage caused by our state’s progressive agenda.

As the state’s leading research organization, advancing family and business friendly values… the mission of our Center is to make Rhode Island a better place to call home – to raise a family and to build a career.

While progressives value government-centric, taxpayer-funded dependency… our Center believes in the value of hard work and the free-enterprise system.

We understand that in order for more Rhode Island families to have a better quality of life, that more and better businesses are needed to create more and better jobs.

Your donation will help us fight the union-progressive movement and, instead, advocate for pro-family, pro-business policies and values.

Please make a generous, tax-deductible gift to support our Center today!

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The second biggest burden of the progressive bills, would be a $391,200,000 annual burden on employers under a $15.00 minimum wage mandate, as proposed by Representative Marcia Ranglin-Vessel, also a member of the progressive-Democrat caucus.

The third most costly bill, which will be considered next month when the General Convenes in a rare September session, is the controversial and high-profile paid-time-off mandate, also sponsored by Regunberg, which would add a $48,713,985 burden on employers.

Consistent with past trends, bills often take years to work their way through the internal politics of the General Assembly. Carbon tax and other energy-related legislation that would raise energy rates on everyone, “fairness” taxes on investment managers, affordable housing incentives, and a statewide charter-school tax … make up some of the other most costly and misguided bills.

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.


Rhode Islanders need a credible alternative to the status quo and its destructive progressive ideas. You can help.

Click here to find out more >>>

The RI Center for Freedom & Prosperity is the Ocean State’s leading voice against the wreckage caused by our state’s progressive agenda.

As the state’s leading research organization, advancing family and business friendly values… the mission of our Center is to make Rhode Island a better place to call home – to raise a family and to build a career.

While progressives value government-centric, taxpayer-funded dependency… our Center believes in the value of hard work and the free-enterprise system.

We understand that in order for more Rhode Island families to have a better quality of life, that more and better businesses are needed to create more and better jobs.

Your donation will help us fight the union-progressive movement and, instead, advocate for pro-family, pro-business policies and values.

Please make a generous, tax-deductible gift to support our Center today!

show less


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.

The RI Center for Freedom & Prosperity is the Ocean State’s leading voice against the wreckage caused by our state’s progressive agenda.

As the state’s leading research organization, advancing family and business friendly values… the mission of our Center is to make Rhode Island a better place to call home – to raise a family and to build a career.

While progressives value government-centric, taxpayer-funded dependency… our Center believes in the value of hard work and the free-enterprise system.

We understand that in order for more Rhode Island families to have a better quality of life, that more and better businesses are needed to create more and better jobs.

Your donation will help us fight the union-progressive movement and, instead, advocate for pro-family, pro-business policies and values.

Please make a generous, tax-deductible gift to support our Center today!