TivertonFactCheck

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 .

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2014 Campaign: Six BIG Issues No One is Talking About

6 Big Questions Not Being Asked of the Gubernatorial Candidates

With the 2014 Rhode Island gubernatorial campaign now shifting into high gear, the Rhode Island Center for Freedom and Prosperity encourages the media, advocacy groups, and citizens to ensure that certain major policy issues are publicly addressed by the full slate of gubernatorial and other statewide and General Assembly candidates.

big-questionsEach of the issues below has the potential to significantly alter the future of our state, and to date, little, if any debate has taken place, with most candidates talking vaguely about their own plans for broadly related issues. The specific positions of each candidate on these issues and questions would provide clearer insight into each of their individual governing philosophies.

The Center believes that candidates should be forced out of their comfort zones and inform voters of their specific positions on each of these important statewide issues:

1. Constitutional Convention: on the ballot this year will be a referendum for voters to decide if the State should convene a constitutional convention. Advocates believe that a convention is necessary due to the lack of action by the General Assembly in addressing Rhode Island’s most pressing issues and its continued favoritism to special-interest groups.

  • Are you in support of a Constitutional Convention for Rhode Island?
  • What specific issues would you like to see addressed if a convention were to be approved by voters?
  • As governor, if the convention is approved, how would you help ensure that the Convention is conducted a non “politics as usual” manner?
    • Would you encourage the election of delegates in a nonpartisan manner?
    • How do you feel about sitting lawmakers’ being eligible to run as delegates?

2. HealthSource RI: once federal funding runs out in FY2016, what position will the candidates take regarding use of state funds or assessments to Ocean State taxpayers or policyholders?

  • Do you support paying $23 million per year for ongoing operations? Or should we transfer the exchange to the federal government?
  • Major insurance premium increases were again approved for 2015, despite HealthSourceRI claims that it would decrease costs. Is this a concern to you?
  • Do you support consolidating all public and private healthcare in the state under HealthSource RI? (Per H7819, which was heard in House Finance in June 2014)
  • Are you aware of and do you support paying $10-15 million per year for the related Unified Health Infrastructure Project (UHIP)?
    • Do you support using financial information collected from individuals applying for health insurance via HealthSource RI to automatically enroll them in other statewide public assistance programs?
      • Given the projected $50 million per year increase in the state share of Medicaid costs, can the state afford similar additional increases in other public assistance programs?

3. Educational Choice: While each candidate has put forth some general thoughts on education, no significant reforms have been suggested. A movement is underway in Rhode Island to empower parents with expanded choices for their children’s education, choices that may include some form of scholarship voucher so that no child is condemned to remain in a failed government school.

  • Do you support providing expanded educational choice for families? Why or why not?
  • Do you specifically support some form of educational voucher?
  • Do you support expansion of charter schools? Or expansion of the state’s existing Corporate Tax Credit Scholarship program?

4. Sales Tax Reform: Speaker Mattiello has publicly stated that he will take a look at sales tax reform in 2015. The RI Center for Freedom & Prosperity claims that major reforms in this area would produce a game-changing, massive jobs boost for the state’s economy, much more than any other tax reform idea. Given the chronic unemployment problems we face in Rhode Island …

  • As Governor, will you support significant sales tax reform?
  • Do you believe any major jobs creation policy idea would be worth pursuing if it was not revenue-neutral?

5. RhodeMapRI: is a major economic development plan for the state, quietly advanced by the Chafee administration and signed-on to by multiple municipalities and other organizations, that has largely flown under public and media scrutiny. This self-described “sustainable living” plan is funded by the federal department of Housing and Urban Development (HUD) and is largely based on an environmentalist and economic justice agenda, that may even include future racial quotas for communities.

  • Are you aware of and do you generally support the RhodeMapRI plan?
  • Do you believe that unelected federal bureaucrats should be dictating the future economic development of our state?
  • Or should any plan for Rhode Island be developed by our own elected officials?

In other cities and counties across the nation where similar plans have been implemented, such as Westchester County, NY, residents have complained about a loss of individual property rights, loss of sovereignty of locally elected government, and unequal property taxes levies.

  • Do you share these concerns or do you believe they justify the larger goals of the plan?

6. Unionization of Independent Business Owners: in June of this year, the U.S. Supreme Court’s ruling on the Harris v Quinn case led most legal experts to believe that the ruling has a direct impact on last year’s successful effort to unionize home childcare workers in Rhode Island. The 2013 law and subsequent election that would force the payment of union dues or fair-share fees is now likely unconstitutional for such non full-time state employees.

  • As governor, what will you do regarding ongoing negotiations with the SEIU?
  • What will you do to return workplace freedom to this group of childcare workers?
  • What is your position on the unions’ stated intention to unionize other private workers — as quasi public employees — in other industries?

List of Lasts RI

LastPlace

July 22, 2014

Providence, RI – Calling it “a shameful failure of public policy and political leadership”, the RI Center for Freedom & Prosperity today published a List of Lasts RI, based on its revealing 2014 Report Card on RI Competitiveness, which was released last week. The List of Lasts documents (19) distinct categories where the Ocean State ranks last, either nationally or regionally, in various national performance indices, as of the spring of 2014.

“Our elected officials keep telling us how they’re moving our state forward, yet we’ve fallen to the bottom of the class in an shockingly high number of subjects,” commented CEO Mike Stenhouse. “Rhode Island has all the characteristics to be an A+ state, yet our political class keeps failing us.”

Rhode Island’s Lists of Lasts (19)

National Lasts:

  • CNBC saddles the Ocean State with the WORST CLIMATE FOR BUSINESS
  • The Federal Government ranks RI as suffering from the HIGHEST UNEMPLOYMENT RATE
  • 247 Wall Street ranks our state as having the HIGHEST LEVEL OF SPREADING THE WEALTH; or taxpayer funded income redistribution.
  • A Reason Foundation report rates RI as being hampered with the MOST DEFICIENT BRIDGE SYSTEM
  • CNBC also handicaps RI as enduring the WORST TRANSPORTATION INFRASTRUCTURE state in the nation
  • RI is burdened with the HIGHEST NUMBER OF HEALTH INSURANCE MANDATES, per the Council for Affordable Health Insurance

New England Lasts: In addition to the above (6) categories, Rhode Island also ranks last in New England in (13) more categories:

  • Business Tax Climate
  • Sales Tax Rate
  • Estate Tax Exemption
  • Economic Freedom Index
  • State Lawsuit Climate
  • Unemployment Tax Rate
  • High School Graduation Rate
  • 4th Grade Reading Scores (NAEP)
  • 4th Grade Math Scores (NAEP)
  • Municipal Worker Compensation (vs private sector)
  • State & Local Pension Liabilities
  • Medicaid Payments (per enrollee)
  • Overall Freedom

NOTE: All citations and sourcing can be found on the 2014 Report Card on RI Competitiveness.

Stenhouse continued, “This November, voters should hold accountable those legislators they feel contributed to these dismal rankings. Hopefully, in 2015, we will see a new public policy culture on Smith Hill.”

Center Signs Letter Urging Executive Office Restraint

Following the President’s 2014 State Of The Union Address, the Rhode Island Center for Freedom and Prosperity, announced that it has signed a national letter urging President Obama to respect the separation of powers, a cornerstone of America’s system of government, and forgo his stated plans to implement new laws via Presidential Executive Order. The letter also demands that Congress aggressively fight every encroachment of its constitutionally defined powers.

A copy of the letter, originated by The Liberty Foundation of America, and signed by CEO Mike Stenhouse, behalf of the Center, along with about 20 other state based think tanks, can be viewed here.

kryptonite

38 Questions on the Superman Building

Would Saving Superman be Kryptonite to RI’s Economy?

Opinion

Local developer Arnold “Buff” Chace of Cornish Associates and a Massachusetts real estate investment fund, High Rock Development, recently released a “redevelopment plan” for the property at 111 Westminster Street in Providence’s Financial District popularly referred to as “The Superman Building.”  As the Providence Journal reports, the plan requires state-taxpayer-funded public subsidies of $39 million, $21 million in federal-taxpayer-supported tax credits, and up to $15 million in city-taxpayer-supplanted tax forgiveness in order convert a 441,000 square foot building from office use to primarily residential use.

$75 million … sound familiar? Given the disastrous track record of Rhode Island’s “public-private partnerships” of late, the Rhode Island Center for Freedom & Prosperity thought it might be appropriate to pose certain questions relating to the request.  38 questions, in fact.

38 Questions

1.    Did we learn nothing from 38 Studios?  With many multi-million-dollar years ahead of us to cover a failed gamble on subsidized video games, one would think that the state’s ability to adequately analyze this sort of massive investment and its risks would be a matter of suspicion.

2.    Is this a priority for the state?  Have we solved enough of our education, social services, and infrastructure problems to justify applying our treasure and attention to a massive, risky, and speculative real estate investment?

3.    If we do have budget dollars to spare, why wouldn’t we invest them in infrastructure improvements that benefit all economic drivers?  We can think of at least one bridge that could lose its looming tolls faster than a speeding bullet.

4.    Do the voters responsible for this big check get a say as to whether they want to be in the apartment building investment business?  Does their Constitution require their approval of such expenditures, or at least a legislative supermajority? (Should it?)

5.    If you call it a tax credit, but you then let the developer sell it to other taxpayers, isn’t it just a really inefficient way of handing out a multi-million-dollar corporate welfare check?

6.    Why do we need to involve tax credit brokers, anyway?  It would be a lot easier to keep track of all the people who stand to profit if the money flowed out of the state check book? Or would transparency be like Kryptonite to the superpowers of the deal makers?

7.    How about a tax-credit lottery? Tens of thousands of small businesses would love not to pay their full tax liabilities for a year or two.

8.    According to the developer, 775 office buildings are in the City of Providence, representing over 15 million square feet of space.  Do subsidies to one disadvantage the other 774?

9.    For that matter, why not redirect the $75 million in subsidies to pay most of the first-year cost of the proposed elimination of the state sales tax?  The Center’s Zero.Zero plan, currently before the General Assembly, would put that money in the pockets of every individual Rhode Islander and every business.  That would spark new economic activity, not just moving dollars from one neighborhood or town to another.

10.    Why can’t the developer phase in the conversion over time, using profits for additional remodeling?  They project that “stabilization” of the downtown Providence office market will take 12 to 15 years, saying it would take 24 to 30 years if we don’t give them piles of taxpayer money (Advisors Inc. Economic and Fiscal Impact Study dated April 25, 2013 [HR&A], page 26).  Cautious, phased-in funding over 5 to 10 years would achieve the same goal without the up-front risk.

11.    For that matter, its own market study says that the Class A office market in Providence is seeing its lowest vacancy rate in 10 years and that midsize office suites could generate $25 per square foot in rent.  Is that really not viable, or is it just harder to hide previous losses in smaller projects?

12.    And while we’re at it, how can the HR&A report (page 30) claim that the “magnitude” of the project implies that the spending is “net new”?  They seem to be arguing that 95% of the spending is “new to the region” because a project of this size “would not have otherwise taken place” without the taxpayer subsides.  If Rhode Islanders have that much money lying around doing nothing, perhaps the developers should just take up a collection.  Or maybe there’s a reason the project can’t gather funding without involving politics and taxes.

13.    Why does the developer get to retain $15 million in declared value while arguing functional obsolescence at the same time?  If you need this bailout to keep the lights on (literally), isn’t the building really worth nothing?

14.    Is it somehow our problem that the owners paid too much for the building in the first place?  In the nation’s 46th worst (of 51) real estate market, there are probably a lot of bad bets still shaking out around the state. Should other property owners start putting the word “iconic” in all of their materials?

15.    The various “public-private” redevelopment successes touted by the developers in other states don’t seem to have required quite the same sort of taxpayer-funded cash in hand.  Can they cite a successful effort that invested a similar amount of taxpayer money on a per-square-foot basis that wasn’t an investment in public infrastructure or funding traded for equity?

16.    Did the building owners have an appraisal done when purchasing the building in 2008?  They say they’ve spent $39,200,000 to date on the property.  Since we’re being asked to make the same investment, shouldn’t we know their upfront purchase price, how much they’ve spent since then, what they were paid in rent over the years, and what they have taken out in management fees and profits?

17.    Would a private investor get in league with someone whose own numbers indicate a loss of almost $25 million in five years on this project?

18.    Who’s on the hook for the bad investment?  Who invested the equity to allow the company to purchase the property, and who loaned them the money?  Who are we really bailing out here?

19.    More bluntly, does our proposed multi-million-dollar subsidy go to the new development, or does the plan include paying off old debt or old investors?

20.    What is the tax value of the write-down to the developer and/or its investors or lenders?  Will the state see the claimed $120,000 in corporate income taxes (HR&A, page 33)?  Will the EDC exempt the sales tax on construction materials?  Will the millions in federal payroll tax dollars that leave Rhode Island during construction be counted as an offset and a negative economic impact?

21.    The report calls the proposed rate of return for investors “below market,” at 2–6%. So what exactly is motivating an investor to invest?  Love of DC Comics–style architecture? Will there actually be other new investors, or will RI taxpayers be left holding Superman’s cape?

22.    If we later find out that the money players who are already over their skis on the project are taking the reduced return instead of losing everything, would that be called “fraud”?

23.    What kind of development fees, management fees, or other payouts to the developer, its investors, or its lenders are going to be made during the life of the project?

24.    Specifically, what do we get for $3,105,678 in “legal & professional” fees and $3,342,050 in “administration & development” fees?  (Would it be too bold to ask who exactly gets that $6,447,728?)

25.    If it’s an investment, do we get equity?  If the developer puts in $10,000,000 and we put in $40,000,000, do we get 80% ownership?

26.    How can the developers claim that the $75 million will drive economic activity without subtracting the $75 million that taxpayers will no longer have? Simply taking it from us and spending it yourself does not yield new economic activity.  A better term than the repeatedly used “generate” (HR&A, page 2, for example) would be “relocate” (or perhaps “redistribute”).

27.    Who thinks it is a compelling argument that the project will save $740,000 in lost property tax revenue over the long term?  The subsidies amount to roughly 100 times that amount. If we took those tens of millions and simply lowered the commercial tax rate in the City of Providence and across Rhode Island by eliminating the two-tiered tax system that today punishes and drives out businesses, it might lead to new tenants downtown and push up property values and assessments.

28.    In the absence of such market forces, where will the anticipated tenants come from?  Won’t they just leave the suburbs or the neighborhoods and move to the subsidized building?  Which cities and towns will lose the professional residents the project intends to attract?

29.    Who’s going to get those Burnside Park views?  The developers’ “tenant profile” talks about “young professionals, older professionals, Boston commuters, empty nesters, and students.”  Not exactly those most in need.  This table of expected annual incomes for each unit type assumes that housing costs represent about one-third of take-home income. In that case, our average beneficiary is making around $75,000 per year.

38questions-table1

30.    Is welfarequeenus hipsterus a rare breed of urban parasite noted for its aversion to suits and Windows-based products and its keen sense that everybody else can afford to pay a bit more for their greater good?

31.    Man of Steel aside, if we’re subsidizing “stainless steel appliances” and “granite kitchen and bathroom counters,” can we leave our doggie bags there when we go out for a night on the town after dinner? How about using the “24 hour fitness center” and “24 hour concierge/security”?

32.    Given the roughly $75 million in total proposed handouts, the proposal amounts to a subsidy of about $200 per square foot for 265 new households (HR&A, page 34.)  That kind of money builds a nice house; how about we just build a bunch of those and give them away?  That certainly seems more equitable than subsidizing one tall building in a single bound.

33.    How can they characterize a projected 104 jobs as economic growth?  Aren’t the people who will live there economically active today?  Same goes for resident spending estimates (HR&A, page 36.)  Even if every resident moved here from out of state, the HR&A study (page 38) only projects $697,000 in annual revenue to the State of Rhode Island, for which it calculates a net present value of $8,600,000.  So we invest $39 million in cash, and another $36 million in incentives, and we know on day one that over $60 million of that subsidy is a write off? Wouldn’t it be a better investment to spend $105 million to eliminate the sales tax and clear a path for 25,000 jobs?

34.    How can they claim a “multiplier effect” from jobs that are presumably mostly here already?  The “IMPLAN” model (HR&A, pages 41–43) for estimating economic impacts and multiple effects is certainly respected and credible for its purposes, but the HR&A study utterly misuses it.  The IMPLAN model assumes new economic activity, not simply the shifting of resources within the state; that’s more like a TRANSPLAN.

35.    Are we crazy to think that myopic economic analyses, absurd corporate welfare handouts, and inept economic meddling contributed to the fact that “Rhode Island’s economy suffered more from 2008 to 2012 than the neighboring New England states,” as the developer’s market study puts it?

36.    Mightn’t a broad-based reform help replace the roughly 1.5% population loss the study anticipates for the state with population and economic growth?  As the developers’ own analysis notes, we have 35,900 fewer jobs in Rhode Island today than we had at the peak of 2006.  Take out the 112,000 largely government funded healthcare and education sector jobs, and the 49,700 or so public sector jobs (U.S. Census Bureau 2011 Data for Full Time Equivalent Employment, state and local), and our current private employment of 388,000 is around 10% below the peak.

37.    If this deal ends in disaster, and taxpayers lose again, do we at least get the consolation prize of watching some political player get banished to Krypton?

38.    In the spirit of Rhode Island’s economic development habit of ending up where it began, we’ll close with: Did we learn nothing from 38 Studios?

On a Serious Note

Many years ago, the EDC liked to talk about “traded services” as the types of activities that represent economic growth for a state.  They are not activities that occur simply because of their proximity to the local market.  For example, a restaurant is not a traded service, because people will not travel to South Carolina for dinner.  On the other hand, jewelry manufacturing is a traded service, because another state can provide incentives or an economic environment that would draw that business away.

It follows that economic development policy should be focused on activities that are portable, or traded.  To subsidize non-traded services is simply to shift resources from one pocket to the other, while dropping a few dollars on the ground in costs and expenses.

Moving a Rhode Islander from Pawtucket to Providence is economic activity, but it is not economic growth.  The same can be said for the new dry cleaner or coffee shop that the resident will now frequent.  The construction activity for a new Providence apartment may be simply offsetting the same type of construction activity back in Central Falls.

Except that Pawtucket, Central Falls, and the other cities and towns in the state will never know what might have been.

dollars_clothespin_436x270

RI Medicaid Abuse Puts New Spin on “Laundering” Taxpayer Dollars

MEDIA: NBC- Channel 10, ABC Channel 6

The State of Rhode Island has developed a new spin on the idea of “laundering” money, as part of the cycle of taxpayer dollars that end up in the pockets of the special few, according to a follow-up post today on The Ocean State Current, the journalism wing of the RI Center for Freedom & Prosperity.

According to the post by Justin Katz, some unionized laundry workers at the Eleanor Slater Hospital, and throughout the Department of Behavioral Healthcare, Developmental Disabilities and Hospitals (BHDDH), routinely double or even triple their salaries to take home over $123,000 per year, due to suspiciously high overtime payments.

The post follows an investigative article published yesterday in The Ocean State Current about six-figure overtime payments to government employed nurses and psychiatrists.

These new laundry worker revelations depict the waste and abuse in the laundering scheme where local and national taxpayer dollars are recycled first through the government via collection of taxes, then, in the Eleanor Slater case, sent to state-run facilities in the form of excessive Medicaid payments, with the money then further cycled directly into the pockets of privileged union employees – in this case, to laundry workers via exorbitant overtime payments.

Result: our hard-earned taxpayer dollars legally recycled to lavishly benefit government workers.

The data for The Current’s article and post was collected by the Center, as part of its transparency effort.For more information about salary and overtime payments made to other state employees, please visit our popular transparency website, www.RIOpenGov.org.

High Overtime, Evasion Raise New Questions About Medicaid Fraud and Waste

Related Links: GoLocalProv, New Allegations Surface in RI Medicaid Fraud

In the wake of an investigative article published this morning in The Ocean State Current about suspiciously high overtime payments to government employed nurses and psychiatrists, the Rhode Island Center for Freedom and Prosperity plans to publish additional related information in the coming week.

Considering that public dollars are being paid to government workers who, for years, have collected six-figures in overtime from a facility that was cited in a recent Medicaid fraud and waste report, “one really has to wonder if the State of Rhode Island is defrauding itself: at taxpayer expense”, commented Mike Stenhouse, CEO for the Center.

The recent Block Report cited the Eleanor Slater Hospital in Cranston, a state-run facility that charges abnormally high fees, as a potential source for abusive Medicaid spending. In her article, Suzanne Bates, a freelance journalist, details how nine employees at that same facility received over $100,000 in overtime compensation alone, pushing gross annual pay for some to over a quarter-of-a-million dollars.

The article also describes the difficulties Bates and the Center faced in getting an explanation and in obtaining the data. The investigative article raises questions that go to the heart of our state government’s inability to manage its budgets in a way that serves all Rhode Islanders:

  • Why would the state-run Eleanor Slater Hospital, in Cranston, be so short-staffed that it must pay over one million dollars in overtime to just 9 employees year after year?
  • Is our state truly being served well if union contracts make it more cost-effective for the Dept. of Behavioral Healthcare, Developmental Disabilities and Hospitals (BHDDH) to pay exorbitant overtime to some, rather than to hire more people during these hard economic times?
  • If taxpayers are ultimately paying almost the entire bill for this expensive workforce through both state and federal Medicaid dollars, where is the oversight to keep these costs under control?

Later this week, the Center plans to publish a broader list of overtime payments made to other state employees. Next week, the Center plans to launch a new module – that lists regular and overtime compensation for all state employees – to its popular transparency website, www.RIOpenGov.org .

The Ocean State Current is the journalism wing of the RI Center for Freedom & Prosperity. The data for The Current’s article was collected by the Center.

RIVotes.org

RIVotes.com now live! Transparency to hold your Legislator Accountable

Go to RIVotes.com

October 2, 2012: The non-partisan Rhode Island Center for Freedom and Prosperity announced today the launch of RIVotes.com, an online transparency tool that allows the public easy access to the voting records of state legislators as well as the capacity to search for and track pieces of legislation in the most comprehensive manner available during the legislative session.

RIVotes.com is designed to help community leaders, businesspersons, newspersons, public officials, and members of the general public understand how their legislators voted on bills that affect their communities, businesses, schools, or families. This transparency and accountability website allows citizens take a more active part in the democratic process.

The Center recently added 2012 bills into RIVotes.com, which also includes legislation as far back as 2009. RIVotes.com features a host of user-friendly functions, including:

  • View the voting record of any legislator by all bills, by category, or by date range.
  • Easily create a “Missed Votes” or a “Voted Against Majority of own Party” report.
  • Find bills of specific interested, with searches by topic, keyword, date range, or bill number.
  • Build your own custom “scorecard”: choose the bills to include and the “correct” vote; RIVotes.com automatically creates a legislator-by-legislator scorecard.
  • Interactive discussion forums and social media integration to allow you to join with other citizens in posting comments and initiating viral distribution.
  • Sign up for automatic email notification when action is taken on bills that interest you.

“Combined with our recently released General Assembly Freedom Index, our Center is providing unprecedented transparency to citizens about the voting histories of their state Senators and Representatives,” said Mike Stenhouse, CEO for the Center. “In order to protect our free and democratic society, citizens must remain well informed about what their government is doing and must hold their legislators accountable for how they vote,” added Stenhouse.

The RI Center for Freedom & Prosperity also plans to utilize a new feature of RIVotes.com to automatically send out regular voting summaries to local media entities and to interested taxpayer groups during the 2013 legislative session.

RIVotes.com is the second transparency website launched by the Center: RIOpenGov.org was launched in 2011 to provide detailed pension payment data for state and municipal employees. RIVotes.com is a copyrighted product of the Mackinac Center for Public Policy.

The Rhode Island Center for Freedom and Prosperity, a non-partisan public policy think tank, is the state’s leading free-enterprise advocacy organization. With a credo that freedom is indispensable to citizens’ well-being and prosperity, the Center’s mission is to stimulate a rigorous exchange of ideas with the goal of restoring competitiveness to Rhode Island through the advancement of market-based reform solutions.

WATCH: Mike Stenhouse discusses “What’s a Citizen to Do?” on State of the State TV