The recent front-page Providence Journal story about our Center did not tell the whole story. You deserve to know. Click on …
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“Is it so unimaginable to our critics that there are indeed many people who volunteer their support to our Center, and who also believe that a limited, transparent government is the best interests of the average Rhode Islander?” … Mike Stenhouse, CEO.
In recent months, a national smear campaign was launched by left-leaning groups such as Progress Now and the Center for Media and Democracy to attempt to call into question the increasingly effective work of state-based think tanks like our RI Center for Freedom & Prosperity.
There have been dozens of unfounded allegations from the left, including our own U.S. Senator Sheldon Whitehouse, falsely claiming that the groups like ours are “phony” and engaged in “dirty business” and “dirty tricks” in advancing the agenda of out-of-state rich people who supposedly fund our operations and determine the issues we promote. Since then our Center has occasionally been asked about these baseless accusations.
Providence Journal article confirms that Center operates in a nonpartisan manner, and in full-compliance with federal law.
The Providence Journal published a related front-page story this week, after recently requesting that our Center to respond to a number of questions regarding the funding sources of our Center, and whether or not our agenda is influenced by out of state interests. As a Cranston native, and founder and CEO for the Center, I welcome this opportunity to discuss the mission and operation of our organization, and to set the record straight.
As the ProJo article confirms, our Center works in a nonpartisan manner and maintains the privacy of our donors as provided by the IRS and federal law, and as affirmed by the U.S. Supreme Court. Other clarification points from the article:
While our work is often viewed as disruptive to the ‘establishment’, it is an unfounded accusation and a typical ploy of those we challenge to aver that the work of our Center is influenced by any out-of-state interest. Our Center’s staff and Board are comprised of Rhode Island residents, who all believe in the power of free markets and the capacity of free people to create a healthy, prosperous Ocean State.
As supporters and friends of our Center, you deserve to know the full story, not just a portion of it. The ProJo article does not tell the whole story. All of the questions submitted to us by the Journal and all of the responses our Center provided to them are shown below. You can decide for yourself if they purposely omitted certain information.
We are not surprised that just as our Center is establishing itself as an alternative strong and consistent voice in the Ocean State, that our opponents predictably trot out such intellectually dishonest questions, in an attempt to discredit our work, and that certain members of the media oblige them.
Even a recent New York Times article confirms that such smear attacks stem from a national, partisan effort. In fact, in parroting the same false talking points across the nation, the left is once again creating myths: http://m.washingtonexaminer.com/it-turns-out-the-evil-koch-bros-are-only-the-59th-biggest-donors-in-american-politics.-can-you-guess-who-is-number-one/article/2544025?
Also note that our Center operates in stark contrast to groups like Progress Now and the Center for Media and Democracy who receive hefty gifts from unions, who in turn use coercive tactics to force their members to donate to political causes with which they may not agree.
Below are the questions submitted to us by the Providence Journal, along with our complete replies. As you will see, the published story in the Providence Journal omitted most of our comments.
* (ProJo) Can you say how much the center received during 2013 in contributions and grants?
(Center) In accordance with IRS rules, our Center will make this information available when we file our annual 990 report in the coming months. Now in our third year of operation, our 2011 and 2012 reports are also publicly available.
* With regard to your donors, your stance is that you cannot reveal them?
The Center – like almost all IRS designated 501-C-3 nonprofit organizations, including the Red Cross, the liberal Tides Foundation, and Rhode Island’s Economic Progress Institute, and as affirmed by the U.S. Supreme Court – respects the privacy wishes of its donors, who give freely and voluntarily to support our mission to enhance the lives of all Rhode Islanders. Should individuals choose to make known their gifts to our Center, our Center also respects their right to do so.
* What do you say about the center being an affiliate of the Franklin Center for Government and Public Integrity, which according to the Center for Public Integrity gets most of its money from Donors Trust. The Center for Public Integrity calls Donors Trust “a vehicle for tax-exempt giving from wealthy conservatives such as billionaire industrialist Charles Koch.” In light of this, is the center largely funded by the Koch brothers and other very wealthy individuals?
The Center worked with the Franklin Center in identifying and securing a journalist for our online blog and journalism website, The Ocean State Current, in 2012. That employee relationship lasted for six months, ending in December of 2012. Our Center is not aware of the funding sources of the Franklin Center. The Ocean State Current remains in operation because of the voluntary work of a team of in-state bloggers.
The concept of donor directed granting organizations such as Donors Trust are not endemic to conservatives or liberals, or billionaires or millionaires. They are numerous and diverse in nature, throughout the country, accepting charitable donations from individuals at virtually all income levels to support thousands of charitable causes and nonprofit groups. Organizations such as the United Way and the Rhode Island Foundation serve the same function for a diverse array of donors who wish to maintain their anonymity for any number of reasons.
I can categorically answer “no” to the question about whether or not our Center is largely funded by Charles Koch, or any out-of-state wealthy individuals. Depending on how you define wealthy individuals, I can confirm that our Center does solicit and accept funding from individuals in Rhode Island who agree with our free-market principles and who have the means to support our mission to enhance the well-being and prosperity of the average Rhode Islander through responsible public policy reform.
* Some people and groups say organizations such as the RI Center for Freedom and Prosperity are simply fronts for the very wealthy who want to avoid paying their share of taxes. What is your response to this?
I can also categorically state that 100% of the policy decisions our Center makes are determined by our own Board and staff, based on Rhode Island’s unique circumstances, without any influence from any outside group or individual.
Regarding our policy advocacy, consider the top three issues in which our Center is engaged:
Our Sales Tax Repeal idea would eliminate a highly regressive tax that will most benefit low-income families, by keeping more of their hard-earned money in their own pockets and providing new job opportunities to enhance chances for upward mobility.
Similarly, our School Choice campaign will benefit inner-city families most, especially those who have children who are condemned to attend failed schools simply because of their zip code
Finally, the ideas in our Healthcare Freedom Act provide solutions to many Rhode Islanders who are concerned about access to affordable, quality care. As it is now obvious that tens of thousands of Rhode Islanders will remain uninsured, even after full implementation of the President’s healthcare law and our state’s exchange, our Center recommended multiple solutions that will make access to healthcare a more viable option for the average Rhode Islander.
Clearly, this is not a tax-break-for-the-rich agenda, but rather, an agenda that will provide renewed opportunities for most Rhode Island families and also provide a boost to our state’s broken economy.
* Is it appropriate for an advocacy group that won’t disclose its donors to be preparing testimony and research reports to a legislative commission that is considering major changes in state tax policy?
It is entirely appropriate for our Center, and all similar state-based organizations, to advocate for policies that will help our state, as we best determine ourselves. Virtually all IRS approved C3 and C4 groups also choose to respect the privacy of their donors; there is nothing new or suspicious about this.
Like virtually all nonprofits, our Center conducts multiple fundraising activities to support our activities, including direct mail solicitations, personal networking with citizens in our state, and competitive grant applications to national and local foundations. Our Center employs a full-time Development Director to manage these efforts. Currently, the Center has almost 300 distinct donors, almost all of whom are Rhode Island citizens who share our belief in economic and educational freedom.
Is it so unimaginable to our critics that there are indeed many people who volunteer their support to our Center, and who also believe in a limited, transparent government?
* Any other comments welcome.
It is obvious that those who defend the status quo are not at ease with the work of our Center, which challenges the policy culture that has created the unacceptable economic and educational conditions from which far too many Rhode Islanders are currently suffering. It is important for Rhode Islanders to know that any implication that our Center’s work is influenced by outside sources is completely unfounded.
Has the Providence Journal asked the same questions of those groups who have raised questions about our Center?
* Is it fair/accurate to say that the center wanted to provide a different voice/perspective than people might have been hearing state policy debates? If yes, can you elaborate?
Yes. In fact, it is the primary mission of our Center is to attempt to balance and stimulate public policy debates. Through research, analysis, and advocacy our Center provides new and alternative views on important issues for our state. In some cases our views challenge the entrenched status quo mindset, while at other times our ideas are in direct opposition to the highly restrictive progressive/union agenda, which has dominated our state – virtually unopposed – for recent decades.
It is our opinion that “free market” policies are indeed in the best interest of all Rhode Islanders. Clearly, the big government, special interest approach has failed this state. Our recommended policies offer a fresh, new path forward, based on principles that have a proven record of prosperity and that served as the basis for the founding of our nation.
* Did the center contact Rep. Malik about sponsoring the no sales tax bill last year, or did he contact the center?
Representative Malik first approached the Center following testimony we provided at a 2012 House Finance Committee hearing: Around that time we had published our first sales tax report, and he expressed general interest in the issue to me. In November 2012, House Minority Leader Newberry publicly stated that sales tax reform would be one of his caucus’ platforms for 2013. I approached the Leader to offer access to our research, and he suggested that I contact Representative Malik who, as a retailer himself, had been interested in sales tax issues for years. It was following the Massachusetts’ State of the State address in January of 2013, when Governor Patrick proposed to lower his state’s sales tax, that I re-established contact with Representative Malik. He indicated that he was interested in submitting a bill to repeal the Rhode Island sales tax and inquired if our Center would further educate him on the issue, based on our prior reports, and if there was additional research that could be conducted to advance the public debate.
This is precisely the role our Center is designed play: Injecting new ideas and research into the market and then aggressively supporting debate when related legislative or other advocacy efforts are initiated. We are happy to work with any interested lawmaker from any party.
Our Center is not a lobbying entity, and had no part in securing any sponsors for the bill. I’m sure that Representative Malik would confirm these details, if you choose to contact him.
* You mentioned that school choice will be the center’s next big issue. Can you say why the center chose that one?
Economic and educational reforms are the two issues our board determined should be our Center’s top priorities. Without economic growth that brings new job and career opportunities, and without a properly educated citizenry to fill those positions, Rhode Island will not be able to break out of its stagnancy.
In selecting major issues to advance, we look beyond policies that nibble around the edges of the massive problems facing our state, and seek to inject well-researched, game-changing ideas into the public policy debate; ideas that can provide immediate and broad benefits to Rhode Islanders. Also, we seek policy ideas that are not only needed, but which have a legitimate chance to advance, given our state’s unique and current political orientation.
School choice reforms, whether through expanded charter school or tax credit programs, or through a voucher system, would provide immediate relief for families with children condemned to attend a failed school simply because of their zip code. Further, the competition created between public and private schools will likely lead to a higher educational achievement across our entire state. We are working in cooperation with Speaker Pro Tem Elaine Coderre and her son’s new organization, RI Families for School Choice. This organization approached our Center in late 2012 to ask if our Center was interested in helping to raise awareness on school choice. As this issue fit our mission, we have not only engaged, but have since decided to make it a priority for this year.
Similarly, significant sales tax reform would immediately put money back in the pocket of every family and business in the state, create economic growth, and provide new job opportunities for tens of thousands of Rhode Islanders.
There are dozens of additional reforms that our state must consider in the years ahead, many of which our Center will also attempt to advance. However, we believe that sales tax and school choice reforms are an important first step in putting our state on a new policy path.
HOW CAN TAX CUTS BE PAID FOR? Read about non-essential spending that can be trimmed in our report preview. It is simply a matter of setting spending priorities so that crushing tax burdens can be lessened for all Rhode Island families and businesses.
[button url=”http://www.rifreedom.org/?p=10237″ target=”_self” size=”medium” style=”royalblue” ] Report Preview: Pork Spending[/button]With the state of Rhode Island in economic crisis, and with massive structural budget deficits projected for years to come, Ocean State lawmakers have the opportunity to both grow the economy and reduce deficits by trimming non-essential spending and cutting taxes in the FY2015 state budget.
Good government is about setting spending priorities, so that opportunities exist for those who wish to succeed. Creating jobs and savings for Rhode Island families while reducing the crushing tax burden on the state’s business sector must be weighed against the excessive and often wasteful spending for projects that produce little or no benefit to the average resident.
Developed in cooperation with the national Taxpayers Protection Alliance, the full Spotlight on Wasteful Spending report, which will be released in March by our Center, will outline over two-hundred million dollars in opportunities for savings without cutting budgets for essential services such as education, public assistance programs, aid to cities and towns, or infrastructure. Examples of pork spending projects that can be repealed or rolled-back in order to effect tax reform, include:
With the Ocean State’s economy burning all around us, politicians just keep fiddling the same old spend-and-tax tune
These items, plus an additional $100 million or so in dubious spending and other savings opportunities will be discussed in the upcoming March report. Other areas where non-essential budget savings can be realized include: state government operations and excessive overtime compensation; occupational licensing management costs; non-vital commissions and other bureaucratic entities; historical preservation projects; arts & culture subsidies and film incentives; and more.
It is a myth, often perpetuated by those who defend the status quo spending levels, that tax reform ideas that are non revenue-neutral would result in cuts to critical state services. This report clearly shows otherwise – that frivolous spending is rampant. In reality, tax and budget reforms can happen if proper spending priorities are considered.
To help ensure that unnecessary spending practices will not re-emerge, the Center’s full report will also recommend creation of a fully-empowered Office of the Inspector General. The Center also supports the concept of an “Office of the Repealer”, which would have the sole responsibility of making recommendations to the legislature in areas of government waste, duplication and out-of-date regulations that should be removed from the state law. Related ‘repealer’ legislation is before the RI General Assembly in 2014.
When it comes to tax and budget reforms that will help Rhode Island families and businesses, public debate must ask the critical question:
Are keeping non-essential spending items worth denying renewed economic opportunities for Rhode Island families?
Based on analysis by the Rhode Island Center for Freedom & Prosperity, Governor Chafee’s proposed reduction in the corporate tax rate from 9% to 6%, if implemented as a stand-alone policy, would have a very modest positive impact on the Rhode Island economy, despite having a more notable effect on the state’s national rankings*. When this tax reform is then offset by an increase in a national internet tax, the results are likely to become negligible or even negative.
At face value, according the Center’s RI-STAMP tax modeling tool, the proposed corporate tax cut would result in a loss of $72 million in general revenues and produce only 240 private sector jobs. With the stated objective of paying for the corporate tax cut with revenues from a new internet sales tax**, which could mean up to an additional $70 million tax on Rhode Island shoppers, the combined effect means the state could actually lose jobs and still see a substantial revenue loss.
“The internet tax – a new tax on top of already burdensome tax levels in the Ocean State – is a highly regressive tax that will hit virtually all Rhode Islanders directly in their pockets, and is likely to reduce economic activity far more than a corporate tax cut might increase it. Do we want to simply improve our state ranking or do we want to provide real jobs for our residents,” questioned Mike Stenhouse, CEO for the Center. “This habit of taking a step forward only when we also take a step backward gets us nowhere. To produce game changing results for our state, revenue-neutral ideas will not get the job done; significant revenue and spending cuts must be implemented.”
The Center’s sales tax reform recommendations, conversely, could produce tens of thousands of new jobs with a lower budget impact.
** The RI-STAMP modeling tool does not directly allow for calculation of a national internet sales tax, therefor specific revenue and jobs projections were not included in this portion of the post. With the best simulation we could conduct, RI-STAMP projected a combined effect of these two tax reforms to produce a net loss of $56 million in state revenues and a loss of 879 private sector jobs. For reasons described below, our Center does not anticipate the negative effects to reach these levels, although it is highly probably that the positive effects of a reduction in the corporate tax could be more than offset by the negative effect of the new internet sales tax.
The high-end figure of $70 million in ‘new’ internet sales tax revenues for the state was used and, given that that money has to come from somewhere, that figure was “added” as an additional tax burden to the general state sales tax category in the RI-STAMP modeling tool. It was further assumed that the Internet sales taxes paid by Rhode Islanders to out-of-state retailers and those sales taxes paid by out-of-state shoppers to Rhode Island retailers would level out; meaning that the new revenues to the state would in essence be paid by Rhode Islanders. Also, given that a national internet sales tax would not provide Rhode Island with a competitive advantage or disadvantage, the negative impact on its economy would likely be less than the STAMP projection, which is designed to be comparative modeling tool.
In 2004, the State of Rhode Island enacted Renewable Energy Standards (RES) through legislation known as the Clean Energy Act. Many of the assumptions used to justify the Act turned out to be largely inaccurate, and implementation of its mandates will exact more costs to the Rhode Island economy, with only limited benefits, if any.
This study estimates the economic impact of maintaining RES mandates over the next six years in the Ocean State. Rhode Island’s energy prices are already among the highest in the nation, and the state’s poorly rated business climate hardly needs another factor to exacerbate it.[i]
The major findings of this study show:
These increased energy prices will hurt Rhode Island’s residents and businesses and, consequently, inflict harm on the state’s economy. In 2020, the RES is expected to:
Rhode Island is not alone. Nationally, government mandates that require electric utilities companies to use wind and solar power instead of more-affordable hydrocarbons have left ratepayers with sticker shock in state after state, according to a recent Centennial Institute study.[ii] Average electric rates are 21% higher in the 30 states with mandates than in the 20 states without them, according to expert Kelly Sloan.
In 2004, at the height of the manmade global warming campaign, a number of assumptions were broadly promoted as reasons for states, our nation, and other countries to enact and implement strict energy guidelines that would limit carbon dioxide emissions into the atmosphere. Nine years later, there are strong arguments to suggest that most of the assumptions that were used as a basis for the energy mandates imposed in Rhode Island were off the mark. The following are among the assumptions that are now openly in dispute:
The additional negative economic projections related to the implementation of the Deepwater Wind project are not included in these findings. The purpose of this report is to project the general adverse effects of continuing with existing RES mandates; the Deepwater project represents a specific choice to implement one or more of those mandates.
The RI Center for Freedom & Prosperity plans to run the estimated $350–500 million in additional costs to ratepayers through its RI-STAMP modeling tool and release those projections in the coming weeks. It is reasonable to expect the negative effect of this single, specific project to be significantly larger than the general effect of existing RES policies.
Given the shifting landscape of the climate change debate and unchanging condition of Rhode Island’s economy, the question for Rhode Islanders is whether or not the state should loosen its energy mandate policies. This study shows that, if left unchanged, current policies will indeed cause further harm to our state’s already struggling economy.
Even if recent questions about the true global climate effect of carbon emissions prove unfounded, is it realistic to think that restrictive energy policies in the Ocean State will have any impact at all on the global climate, considering its small geographic and industrial footprint? Or should the state seek to roll back some of the burdens these mandates are projected to impose on families and businesses?
If the General Assembly is willing to consider reform of existing RES laws, our Center recommends:
Require that the state investigate and utilize methods of predicting and tracing the economic effects of renewable energy standards on Rhode Island, prior to renewed implementation.
[i] RI Center for Freedom & Prosperity, “Report Card on Rhode Island Competitiveness,” on which Rhode Island receives a D+ for energy issues overall. <www.rifreedom.org/2013/03/second-year-report-card-lack-of-bold-action-lack-of-improvement/>
[ii] Sloan, Kelly. “Bad Bargain: How Renewable Energy Mandates Pick Your Pocket.” Centennial Institute. 2013. <www.ccu.edu/uploadedFiles/Pages/Centennial_Institute/Policy%20Brief%20No.%202013-3.pdf>
[iii] “Levelized Cost of New Generation Resources in the Annual Energy Outlook 2013.” U.S. Energy Information Administration. January 2013. <www.eia.gov/forecasts/aeo/electricity_generation.cfm >
[iv] Vartabedian, Ralph. “Rise in renewable energy will require more use of fossil fuels.” Los Angeles Times. December 9, 2012. < articles.latimes.com/2012/dec/09/local/la-me-unreliable-power-20121210>
[v] Smith, Grant. “U.S. to Be Top Oil Producer by 2015 on Shale, IEA Says.” Bloomberg. November 12, 2013. http://www.bloomberg.com/news/2013-11-12/u-s-nears-energy-independence-by-2035-on-shale-boom-iea-says.html
[vi] Ibid at note 3.
[vii] Green, Kenneth P. “The Myth of Green Energy Jobs: The European Experience.” American Enterprise Institute Energy and Environment Outlook. February 2011. < www.aei.org/article/energy-and-the-environment/the-myth-of-green-energy-jobs-the-european-experience>
[viii] De Gouw, J.A., D. D. Parrish, G.J.Frost, and M. Trainer. “Reduced Emissions of CO2, NOx and SO2 from U.S. Power Plants Due to the Switch from Coal to Natural Gas with Combined Cycle Technology.” Earth’s Future. < onlinelibrary.wiley.com/doi/10.1002/2014EF000196/abstract>
[ix] Galbraith, Kate. “Study Warns of ‘Energy Sprawl’.” The New York Times. August 26, 2009. <green.blogs.nytimes.com/2009/08/26/study-warns-of-energy-sprawl/?_r=0>
[x] Wood, Daniel B. “Green power may ruin pristine land in California.” The Christian Science Monitor. April 24, 2007. <www.csmonitor.com/2007/0424/p02s01-wogi.html>
[xi] Irfan, Umair. “Bats and Birds Face Serious Threats From Growth of Wind Energy.” The New York Times. August 8, 2011. < www.nytimes.com/cwire/2011/08/08/08climatewire-bats-and-birds-face-serious-threats-from-gro-10511.html?pagewanted=all>
[xii] Hollingsworth, Barbara. “Climate Scientist: 73 UN Climate Models Wrong, No Global Warming in 17 Years.” CNS News. September 30, 2013. < www.cnsnews.com/news/article/barbara-hollingsworth/climate-scientist-73-un-climate-models-wrong-no-global-warming-17>
New report details loss of jobs and cost to economy of the Ocean State’s Renewable Energy Mandates in 2004. Is it time to ditch this policy?
[button url=”http://www.rifreedom.org/?p=10185″ target=”_self” size=”large” style=”royalblue” ] Report: The high cost of energy mandates[/button]Also see 6 Environmental Truths the Left Conveniently Ignores from the Heritage Foundation …
RI should not place new burdens, via higher energy costs, on our own state economy.