Center Calls on State to Suspend Childcare Unionization Law

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UPDATE – June 30, 2014: Based on today’s U.S. Supreme Court ruling, the Center, as it warned last fall, calls on State and SLRB to undo unconstitutional law and resulting SEIU elections. (see media release below)

UPDATE – August 6, 2014: SEIU in Massachusetts and other states abandon forced fee scheme for home childcare providers – see media release here! Our Center challenges the SEIU in Rhode Island to follow suit.

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FOR IMMEDIATE RELEASE                    June 30, 2014

Providence, RI — Based on today’s U.S. Supreme Court decision in the Harris v Quinn case, which legal experts believe invalidates the 2013 Rhode Island law that allowed for the forced payment of fees to unions by home childcare providers, the Rhode Island Center for Freedom & Prosperity is calling on the State, the State Labor Relations Board (SLRB), and all statewide candidates in 2014 to act decisively and swiftly to ensure that taxpayer dollars intended for the care of children, which are unconstitutionally slated to be diverted into union coffers, remain with the providers.
In order to avoid a legal morass and the costs of a potential lawsuit, as projected by the Center last year, and with area unions publicly stating that it is their plan to force unionization upon even more independent business owners and contractors in the Ocean State, the Center recommends that clear, decisive administrative and legislative action be taken as soon as possible. Touting it as a major victory for small business, the Center believes today’s decision will “stop cold” any further attempt by organized labor to compel other independent contractors and small business owners to pay union fees.
“For these very reasons, last fall our Center petitioned the SLRB and the SEIU to hold off on this unionization process until the Harris case was decided. But they forged ahead without concern for anybody’s interest but their own,” said Mike Stenhouse, CEO for the Center. “As our Center also warned, this entire process has been an unconstitutional waste of time and money that violates these providers’ first amendment rights.”
The Center is calling on 2014 gubernatorial and General Assembly candidates to weigh in on how they will approach potential legislation in 2015 that would permanently undo the now unconstitutional law (H5946) that passed the Rhode Island’s General Assembly in 2013.
In the meantime, the Center is calling on Rhode Island’s SLRB to invalidate the results of the October 2013 SEIU election that was based on the now unconstitutional law; and upon the state to suspend all ongoing contract negotiations with the SEIU for these independent contractors, to ensure that no professional is forced to pay union dues or fair-share fees, to prohibit any possibility of state involvement in the collection of related dues, and to ensure that no taxpayer dollars will be used in defense of any subsequent lawsuit.
Further, the Center calls upon Attorney General Kilmartin to issue an opinion as to whether or not the administration as the legal authority to temporarily suspend the 2013 state law that today’s U.S. Supreme Court indirectly ruled is not constitutional.
The Center may also seek to initiate injunctive relief against the state and the SEIU labor union, on behalf of home childcare providers, because the existing law illegally treats such business owners as public employees.
In 2013, the Center published a report highlighting concerns that unionization may cause for taxpayers, service providers, and other independent business owners. All related information can be viewed on the Center’s website at www.RIFreedom.org .

State of the State

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Center’s CEO discusses the recently passed FY-2015 budget, BIG QUESTIONS for gubernatorial candidates, and the state of the state on “State of the State” cable TV.

[button url=”http://vimeo.com/channels/365354/99366876″ target=”_blank” size=”medium” style=”royalblue” ] Cable TV Interview [/button]

Rhode Island Employment Snapshot, May 2014: The Silent Boom

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Rhode Island’s unemployment rate moved down by a notch, rather than a leap, in May, to 8.2%.  However, the 2,659 newly employed Rhode Islanders, according to official Bureau of Labor Statistics (BLS) figures, lead the nation in terms of growth. The downsides of these numbers are that they’re simply difficult to believe and that, even if they’re accurate, the state’s employment situation is still abysmal.

The first chart below illustrates the first downside. If we believe the lines that the government is drawing for us, over 13,000 Rhode Islanders have found employment since December, and we’re back to the employment level of January 2009, after more than five years of wallowing.  Are there any non-statistical signs of this recovery?

The second chart provides a longer-term sense of the results. Rhode Island is still below its employment level just before the jobs-crash of the recession and still lags both of its neighbors dramatically when it comes to reclaiming jobs.  Indeed, Massachusetts has now surpassed its pre-recession peak.

The third chart compares Rhode Island’s unemployment rate with what it would have been if the state’s labor force had held steady. It shows that unemployment never got as low as Rhode Island officials had claimed, and the growth in the gap between the two lines is steadier and more dramatic, with the exception of the peculiar results these past three months.  Even if the results since December reflect real growth, Rhode Island’s unemployment rate would still be over 11% if people had not stopped looking for work.

RI-laborforceandemp-0107-0514RIMACT-laborforceandemp-0514perc0107RI-unemploymentrate-steadyLF-0107-0514

House Budget Adopts 25% of Spotlight on $pending Recommendations

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But Leaves $168 Million of RI Taxpayer Dollars on the Table

 

The budget unveiled in the Rhode Island House Finance Committee, last week, showed a $13.3 million decrease in state spending, compared with the governor’s proposed budget.  Approximately $3.1 million of the reductions overlap with the Spotlight on $pending report that the RI Center for Freedom & Prosperity released in March, after a review of the governor’s proposal.

Another $52.9 million in Spotlight on $pending suggestions were in the budget, but were either not counted as a line item or amounted to transfers to federal funds.

“The legislature clearly has different priorities than the Center, but the fact that some of our suggestions found their way into the budget shows how important it is to have alternative voices,” says Justin Katz, who is the research director for the free-market think tank and a coauthor of the Spotlight on $pending report.  At a State House press conference promoting Spotlight on $pending on April 2, Katz had told reporters that the Center hoped legislators would look to their analysis for ideas no matter what fiscal goals they were trying to reach.

Specific areas of agreement between the Center and the House were as follows (note that reductions are from the governor’s proposal, not from current spending):

  • A $1 million reduction in local funding for the State Council on the Arts.
  • Savings of $834,512 in “inmate population-related operating expenditures.”
  • Eliminating a $500,000 increase in workforce training programs.
  • Over $323,973 in savings by not adding new employees to a consolidated Diversity, Equity and Opportunity office.
  • Ending $159,585 in Public Utilities Commission personnel previously funded by the federal American Recovery and Reinvestment Act (ARRA), rather than absorbing them into state spending.
  • Saving $145,303 by running a new certificate of good conduct program for parolees with existing personnel.
  • A $100,000 reduction in payroll within the governor’s office.
  • Not adding a $75,000 per year Creative and Cultural Economy Coordinator to the state’s payroll.

The House also agreed with the $50 million in savings the Center recommended by not expanding the historic tax credit program as the governor wanted.  However, neither the governor nor the House included those costs or savings anywhere in the budget.

Another area of partial overlap came with the Unified Health Infrastructure Program (UHIP), which will make it easier to enroll people in multiple government programs when they apply for any one of them.  The Center expects this program, operated using the state’s health benefits exchange (HealthSource RI), to amplify the cost of social service programs and called for it to be ended.  Instead, the House budget managed to transfer $2.9 million in near-term spending on the project from general revenue to federal sources.

“It’s going to take more feedback from Rhode Islanders to change way the state government operates,” says Katz, who would prefer the savings to be used to reduce the state sales tax rate to 3%, creating over 13,000 private-sector jobs.  “Still, counting the tax credits and UHIP, the House budget includes 25% of the savings that we identified in Spotlight on $pending.”

The Spotlight on $pending report was produced in cooperation with the Taxpayers Protection Alliance and coauthored by Drew Johnson and Justin Katz.

Commentary: 2-out-of-3 Ain’t Good Enough

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By Mike Stenhouse, CEO

The 2015 state budget is now public. Corporate tax and estate tax cuts are in. Help for the middle class is out. In fact, the average worker is being asked to pay for reforms that benefit more well-off constituencies.  Why? It’s not just a matter of fairness; it’s a question of economic stability.

Rhode Island’s poor economic performance and dismal jobs outlook can largely be attributed to high levels of taxation and regulation across all points of Rhode Island’s economic lifestyle.

TaxEconomicCycle

An analogy can be made between a prosperous state economy and a three-legged stool, where each leg plays an equally important role in keeping balance and maintaining strength, as part of the normal economic cycle through which most individuals progress:

  • First leg – workers – where individuals produce the products and services essential for a growth economy; where valuable professional experience can gained; and where individual wealth can accumulated and spent in the local economy;
  • Second leg – business sector – corporations and entrepreneurs  who, as managers or small business owners, guide the free-market to generate profits that further fuel the overall economy; and where, simultaneously, further personal wealth and experience can be accrued and spent;
  • Third leg – investors – where wealth is put at risk via equity investment back into the business sector, further boosting the economy and creating jobs, and which provides additional opportunity to grow individual wealth; where philanthropy funds local charities; where wealth is spent on a large scale, often in retirement, and, finally; where wealth is passed down to family heirs in the hope of maintaining ongoing investment and philanthropy in the state.

All three economic roles, or legs of the stool, are equally important and are inter-dependent on each other. The free-enterprise system allows individuals move from role one to another as they choose, as they acquire capacity, or as other circumstances dictate.

A balanced, growth economy must have strength in each of its three legs: a partnership of sorts. If any one leg is out of balance or weak, likewise, the other legs – and the overall economy – will also suffer. It is this tri-lateral partnership that creates a vibrant free-market economy and a stable tax “base”, strong enough to support public assistance programs and foundational services such as education and infrastructure.

However, in recent decades in Rhode Island, excessive government interference has systematically weakened all three legs of our economic stool, limiting  the capacity of individuals to move from one role to another; and at all three roles, driving many out of our state.

With high sales and property taxes in a high cost of living state, and with limited opportunity for upward mobility because of a weak jobs market, Rhode Island is a barely affordable home for many workers in low and middle income families, who have little chance of saving money and accumulating initial wealth. Yet no relief is planned in 2015 for the average worker.

With the highest corporate tax in New England and one of the worst business environments among all states, along with a dwindling consumer base, it has become very difficult for businesses and entrepreneurs to prosper in the Ocean state. Limited corporate tax relief is designated in the 2015 budget for the business sector.

For wealth that is accumulated despite these roadblocks, our state has further imposed a dis-incentive for many families to keep that wealth in Rhode Island, by charging one of the nation’s most punitive estate, or death, taxes …  tending to drive high-income individuals out of our state. Some relief is also planned for wealthy investors  in 2015.

Yet, while it is a positive sign that some reform is planned to fortify the two roles that generally involve higher income individuals, why are we ignoring relief for the middle class? To make matters even worse, the new gas taxes and fees on real estate transactions, vehicle inspections, and traffic court appearances, along with the new the ‘use tax’ on income, will be a direct hit on middle and low income families.

This puts the proposed 2015 budget completely out of balance.

There is, however, a policy idea on the table that would restore that balance by aiding those with lower incomes. Our Center’s sales tax reform idea, that cuts the rate to 3%, can also fortify the worker leg, leading to more family savings and creating thousands of vital, new job opportunities. If we also implement a major sales tax cut, strengthening this leg as well, this would spur consumer demand, increasing corporate profits and wealth creation in the other two legs. This is a balanced, win-win solution.  Instead, Rhode Islanders are yet again looking at an unbalanced, win-lose approach.

Rhode Islanders want a government that works for everyone, not just for the well-off. We can do this by cutting corporate, estate, AND sales taxes.

The former rock star, Meatloaf, may have crooned that “two-out-of-three ain’t bad”. But when it comes to fortifying all three economic roles that are equally essential in turning around a struggling state like Rhode Island … two-out-of-three ain’t good enough!

Mike Stenhouse holds an economics degree from Harvard University. 

Without Sales Tax Reform, 2-out-of-3 Ain’t Good Enough

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RI’s 2015 includes corporate and estate tax reforms for big biz and the wealthy, but provides no relief for average family or worker. Read this unique commentary that takes a holistic look at the 3 phases of the economic cycle.

[button url=”http://www.rifreedom.org/?p=11208″ target=”_self” size=”medium” style=”royalblue” ] Commentary: 3 Legs of a Stool[/button]

STATEMENT on FY15 BUDGET: Middle Class to Pay for Corporate & Estate Tax Reforms

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June 6, 2013
Sales Tax Cut Would Have Larger & More Immediate Impact
Pointing to new broad-based taxes and fees that will especially harm the middle-class, that will also help pay for planned cuts for corporations and high-income individuals, the RI Center for Freedom and Prosperity sees little in the budget that cleared the House Finance Committee yesterday that will aid struggling families and small businesses, in a statement released today.
The Center further urges lawmakers to modify the budget so as to make a more immediate and larger impact on job creation. While noting a that a few items in the proposed budget are a small step in the right direction, the Center notes that the budget also takes backwards steps, and argues that much more needs to be done to boost the state’s struggling economy.

“While the modest corporate and estate tax reforms will be helpful over the long term for those constituencies, we then simultaneously turn-around and add to the plight of the average guy, asking them to pay for those reforms by imposing new vehicle fees and gas and use taxes,” said Mike Stenhouse, CEO for the Center. “Nor does this budget have any bold jobs creation plan. If we also cut the sales tax, we can put money back in the pocket of every Rhode Island family and business, and create thousands of new jobs right away.”

The proposed new gas taxes and fees on vehicle inspections and on good-drivers seeking to clear their traffic records, along with the $2+ million in new sales taxes, will be a direct hit on middle and low income families. The deceptively named “Safe Harbor” for the use tax would impose a new default of 0.08% of adjusted gross income tax on residents’ assumed purchases outside of the state.

The Center does note it as a positive step that the proposed budget did make some cuts that were recommended in its April Spotlight on $pending report, namely: suspension of the historic tax credit program and holding the line on state personnel costs.

The $48 million to pay for a reduction in the sales tax to 3%, that would produce about 13,000 jobs, can be made by eliminating the $12 million payment of the 38 Studio bond, by eliminating the $15 million to the HealthSourceRI UHIP project, by eliminating $11 million in General Assembly legislative and community service grants, and by cutting $19 million in excessive overtime payments, all were recommended cuts in the Center’s spending report.

OTHER NEW TAXES & FEES:

* Article 12 of the budget increases the real estate conveyance tax that a seller of a home or other real estate must pay at the time of transfer.    The current tax is $4.00 per $1000 of the sale price;  the FY2015 budget would increase this tax by 15% and would become $4.60 per $1000 in Rhode Island, higher than Massachusetts tax of $4.56 per $1,000.

THEY KNEW! 2009 Brief Advised Against Healthcare Exchange for RI

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They Knew!

Ignoring the advice of her own specially convened study process, Lt. Gov. Elizabeth Roberts became one of the leading figures in promoting a complex, costly health insurance exchange for Rhode Island. Further,

HealthSourceRI officials and supporters continue to tout a cost containment goal that the process advised is not achievable according to a little known 2009 Issue Brief provide to Ms. Roberts and other state officials! Our Center’s analysis of this Brief can be downloaded by clicking the button below:

Analysis: They Knew in 2009!

TheyKnew

MEDIA RELEASE, June 3, 2014: Specifically advised “Do not pursue” in 2009 by her own specially convened study group, regarding formation of a state-based health insurance exchange, as it would not be fiscally viable and would not meet its primary objective of cost containment, Lieutenant Governor Elizabeth Roberts of Rhode Island nevertheless pressed for the formation of a state-run ACA exchange and has remained one of its most outspoken advocates. This according to the Rhode Island Center for Freedom and Prosperity, a nonpartisan think tank, which today published an analysis of a little known Issues Brief funded by the Robert Wood Johnson Foundation and presented to state officials years ago. 
 
“There has never been a rigorous public debate about the pros and cons of a state-funded exchange for the Ocean State. With tens of millions of dollars now at stake, we need a renewed discussion today,” commented Mike Stenhouse, CEO for the Center, referring to the abbreviated process that saw related legislation fail in the General Assembly in the spring of 2011, only to have the exchange authorized without advance public scrutiny later that fall by Executive Order of the Governor. “Revelation of this Brief raises many questions. Why was this information not brought to light in 2011? Why do State and HealthSourceRI officials continue to tout claims that their own study advised are not feasible? We must have answers to these questions before we spend $15 million in next year’s budget.” 
 
The findings in the Brief validate many of the specific concerns raised by the Center in recent reports. In additional to clearly indicating that the study group’s number one preferred objective – to drive down healthcare costs – was not achievable via a state exchange, the 2009 document also advised that Rhode Island’s economy was not strong enough, that there was not a large enough insured population, nor was their a complex enough insurance provider/product market that required coordination, to justify the “establishment of a new administrative structure” to operate an exchange. Further, the Brief advised that because of these characteristics a “health insurance exchange may not generate sufficient volume to be cost-effective.”
 
“As a state, we are now facing the precise sustainability problems that our Center projected two years ago, that this Brief advised against five years ago, and that has been empirically supported by results from Massachusetts for the past six years,” added Stenhouse. “The small business sector in our state has been deceived into supporting a massive bureaucracy that, sadly, will not reduce their health insurance costs.”
 
Links to other related information about this issue, including two reports by the Center and a Forbes.com analysis, can be found on the Center’s home page for the health exchange issue at RIFreedom.org/Exchange. 

THEY KNEW! Lt. Gov. Roberts advised in 2009 that state exchange not viable!

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Ignoring the advice of her own specially convened study group, Lt. Gov. Elizabeth Roberts and HealthSourceRI officials continue to tout a cost containment goal that the group advised is not achievable! The Center provides an analysis of this buried 2009 report.

Analysis: They Knew!