Center Criticizes State Labor Relations Board Decision to Dismiss Request

Providence, RI — In a brief and vague letter, the State Labor Relations Board (SLRB) dismissed a request by the Rhode Island Center for Freedom & Prosperity to await the landmark precedent that the U.S. Supreme Court will likely set in early 2014 about whether or not independent home care providers can be classified as a kind of public employee solely for the purpose of unionization. Submitting its request in the interests of the Rhode Island taxpayer, the Center had suggested that no election should be held for the certification of the Service Employees International Union (SEIU) to represent the providers until the Constitutionality of doing so is clarified.

“It is the epitome of irresponsibility to rush into this election without any public debate and legal analysis of how the Supreme Court’s planned hearings, or the recent federal appeals court ruling, might affect plans here in our state. The highest court in the land has clearly signaled that there may be a constitutional issue with forced unionization”, commented Mike Stenhouse, CEO for the Center. “It would be totally unfair to child care providers to conduct an election under this cloud, only to find out in a few months that the entire process may soon be ruled as unconstitutional.”The letter of dismissal, SLRB Administrator Robyn Golden states that SLRB “policy” leaves the Center with no standing to make requests of the government board. She goes on to assert that “it is also not within the Board’s statutory autority to act on your request or any requests of this nature.”

Neither state law nor policy places restrictions upon the parties permitted to petition the board with information relevant to its decisions. Moreover, regulations place no restrictions upon the board in the course of scheduling elections for union representation. According to regulation 8.02.5, “it shall provide that such election be conducted by an Agent of the Board at such time and place, and upon terms or conditions, as the Board may specify.”

“The Rhode Island taxpayer has every right to ask the SLRB to avoid lawsuits associated with potentially unconstitutional laws,” said Stenhouse, “and the board has the authority to take that precaution.”
In authorizing and scheduling an election about whether or not upwards of 680 home child care providers should accept the SEIU as their exclusive union representative, the SLRB would fail to seriously consider the Court’s announcement last week that it will hear a case that will determine whether Illinois home-care providers can be forced into union ranks against their will. Previously, the Eighth U.S. Circuit Court of Appeals granted an injunction to stop a planned election of home child care providers in Minnesota, pending action from the U.S. Supreme Court.

Earlier this month, 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 .
The Rhode Island Center for Freedom and Prosperity, a nonpartisan public policy think tank, is the state’s leading free-enterprise advocacy organization. The Center works to make a profound, positive impact on the lives of every family and business in the state through the exchange of market-based ideas and reform solutions aimed at restoring economic competitiveness, educational opportunities and – ultimately – hope for a brighter future.
OCTOBER 8, 2013

Political Class in Rhode Island: Living in a Land of Make Believe

Commentary (amended 7/15) 

See TV discussion on WJAR-10

What are we to make of recent legislative sessions and of our state’s political leadership? After all the talk from the Executive and Legislative about economic development, and comparing that with the virtual inaction we all witnessed, I have reached my own fanciful conclusion:

the Political Class in Rhode Island is living in a “land of make believe”

landofmakebelieveThe rest of us, taxpayers and business owners, are left to deal with real life.

Where are the jobs and the plan for economic growth we were promised? Consider …

In the land of make believe, the fact that over 50,000 of us are out of work does not inspire a need for bold public policy reform. In reality, Rhode Island is in the midst a severe Death Spiral, as fewer and fewer people are calling our state home, and those that remain and forced to support an ever-increasing budget burden … only perpetuating the downward spiral.

In the land of make believe, simply talking about economic development suffices as progress, while in the real world, we saw no major policy changes that gets onerous tax and regulatory burdens off our backs.

In the land of make believe, preservation of the status-quo budget is the top priority. In the real world, it is indeed this failed budget that has caused the Ocean State to be ranked so poorly in so many categories.

In the land of make believe, the myriad window-dressing bills and re-shuffling of the deck gives cover for legislators to hail that they helped our state. In reality, the 2013 legislative session further weakened the competitiveness of our already last-place state.

In the land of make believe, our generous social services spending provides critical support to the needy. In reality, ranking number one in terms of redistribution of wealth policies, Rhode Island is the most anti-family, anti-jobs state in the entire nation, depriving the needy of the opportunity for upward mobility and the financial self-security that they really desire.

In the land of make believe, providing a municipality with a statutory hammer to bully its local University into making payments in lieu of taxes is simply helping each side get together to work things out. In the real world, the state has stuck its nose into a place that it doesn’t belong and has created an non-level playing field that will make Rhode Island even a less attractive place for other non-profits.

In the land of make believe, raising the minimum wages helps low-income workers earn a few more dollars. In real life, this deprives jobs to others, particularly youth and families in need of additional income.

In the land of make believe, levying tolls and raising fees are just harmless means of finding revenues to pay for pet spending programs. In the real world, each of these money grabs results in yet another disincentive to some kind of productive economic activity.

In the land of make believe, a little bloodletting here and there in the form of new taxes and fees is healthy because it pays for some perceived good. In the real world, Rhode Island is suffering death by a thousand cuts.

In the land of make believe, it is considered a win-win to pay people NOT to work, via an expanded TDI family leave program. In the real world, actual businesses, workers and families know that this is a lose-lose scenario, forcing even further costs and loss of productivity onto an already strained private sector.

In the land of make believe, unionizing daycare workers will improve the quality of care. In real Rhode Island, unions will siphon off more dues from more workers and will increase their political power in the state.

In the land of make believe, state and local government officials hide behind assumed rates of returns for defined benefit public employee pension funds that are significantly higher than those assumed in the real, private sector world.

In the land of make believe, Obamacare and state exchanges were to lower the cost of health insurance. In the real Rhode Island, rates will rise by 12%.

In the land of make believe, a special session of the General Assembly is warranted to address a critical pension issue with a politically sensitive class of workers. Conversely, the fact that real world, average, everyday would-be workers face one of worst employment outlooks in the nation is not a cause for action, or even apparent concern … should be of concern to all of us.

In the land of make believe, passing National Popular Vote now makes ‘every vote count’ for Rhode Islanders in presidential elections. In the real world, our esteemed Political Class has voted to reduce our state’s collective clout in electing our nation’s leader by over 57%!

In the land of make believe, tolerance is a catalyst for economic growth. In the real world of economics, tolerance is not a variable in any economic formula that I have ever studied.

In the land of make believe, the political class believes that it is their responsibility to right every perceived wrong. In the real world, the unintended consequences of their policies are strangling us: We are more than capable of fending for ourselves if government would just get out of the way!

In the land of make believe, big government, with all its insider deals, special interest favoritism, and cronyism provides valuable services to certain citizens and businesses. In reality, we simply want a government that works for all of us, including the average little guy, not just for the special few.

There is one area, however, where the make believe land of the political class overlaps with the real world.

In the land of make believe, public officials are fearless that they will ever be held accountable for their actions or, this year, for their inactions. And, sadly, it is also true that in the real world Ocean State voters are not likely to ever hold their elected officials accountable.

On second thought, maybe it is we, ourselves, who are living in a land of make believe; by daring to hope that our elected representatives will someday have the vision and courage to make our dream of an economic recovery a reality; or alternatively, that if legislators continue to fail in this regard, that we will apply some measure of chronic political unemployment to them.

Every Rhode Island vote should count

By Mike Stenhouse – as appeared in Providence Journal June 28th, 2013

‘Every vote should count.”

That was the mantra that echoed through the chambers of the Rhode Island General Assembly this month as our legislators debated, then passed, the National Popular Vote bill, which would change the way states elect the president of the United States.

The legislators were referring to votes by citizens in national elections. What about votes by legislators on local bills? Shouldn’t every legislator be held accountable for each vote they take? Shouldn’t those votes count too?

Would you be surprised to know that, in passing the NPV bill, our General Assembly just voted to diminish our voice in national elections, as Rhode Islanders, by over 50 percent?

And why should we be surprised? After all, over the past few years, even with the Ocean State floundering near last place in an alarmingly high number of categories, our elected officials continue to pursue policies that further diminish our state’s competitiveness, that encroach more severely upon our individual freedoms, that reduce our opportunities for increased prosperity, and now that would take away over half of what voice we have when it comes to electing our president.

Under the current Electoral College system, thanks to the wisdom of the Founding Fathers to protect small states like ours, Rhode Island enjoys a greater proportion of electors than our population level would otherwise dictate. However, under the NPV compact, Rhode Island’s popular vote impact would be lessened to be directly proportional to its national share of the population.

Here’s the math: The Ocean State’s population of 1 million represents just 0.316 percent of the nation’s 316 million people. Our state’s electoral weight of 4 electors represents 0.743 percent of the 538 national electors.

So, our General Assembly just voted to reduce our state’s collective clout from one-in-134 to one-in-316 — a loss of over 57 percent of our voice!

This same sort of illogic is how our state government has continually voted to keep Rhode Islanders from realizing their fullest potential. Recently, the Rhode Island Center for Freedom and Prosperity released snapshots of our General Assembly Freedom Index that scores both bills and legislator votes in terms of how they preserve or infringe upon our freedoms, which we believe have a direct effect on our chances of achieving prosperity.

To date, we are tracking 551 bills in the 2013 session. Over two-thirds of those bills we marked as “red,” in that they diminish our liberties; with a total negative score of minus 285. Clearly, the wrong direction.

As for individual legislators, not a single state representative or senator scored in the “green,” or with an overall positive score, on our Legislator Scorecard as of the posting of the snapshot.

Think about that. Not one elected official so far in 2013 has an overall voting record that works to your advantage. Your legislature as a whole has put forth a collection of 551 bills that will further diminish your chance to succeed — death by 551 cuts, if you will.

And now, to top it all off, they have just voted to diminish our state’s political standing when it comes to electing the leader of our nation.

Indeed, it appears that the more government tries to do, the more it harms our freedom and prosperity, as well as our ability to determine our own futures and to pursue our own paths to happiness — whether we are individuals, businesses, municipalities or, now, as a state. Once upon a time we called this tyranny. What do we call it today?

When will we learn that as citizens it is our civic responsibility to ensure that every legislator’s vote counts, too, and hold them accountable for their actions?

Mike Stenhouse is a lifelong Rhode Island resident and chief executive officer of the Rhode Island Center for Freedom and Prosperity, a non-partisan public policy think-tank.

38 Questions on the Superman Building

Would Saving Superman be Kryptonite to RI’s Economy?


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.


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.

Online Merger of The Ocean State Current and Anchor Rising

Providence, RI — The Rhode Island Center for Freedom and Prosperity announced today that its online journalism and commentary wing, The Ocean State Current, will be merging the content of Anchor Rising into a single location on The Current’s existing website and URL.
The co-branded joint venture, launched today at, will now also feature content from an experienced team of Anchor Rising contributors who set the standard for conservative blogging in Rhode Island, including Andrew Morse, Marc Comtois, Monique Chartier, and Patrick Laverty.

Founded in 2004, Anchor Rising is Rhode Island’s most prominent blog for conservative news and commentary about politics and public policy. Justin Katz, one of Anchor Rising’s founding members, and editor of The Ocean State Current, also serves as the Center’s research director. “Moving the state forward toward less-waning waters’ is arguably no longer sufficient at a time when the keel appears to be scraping the bottom of the bay. We’ve reached the point of dredging, and that requires greater focus and greater unity of purpose”, said Katz.
RI Center for Freedom & Prosperity CEO Mike Stenhouse says, “With this new quality content, we feel the Current-Anchor website is now the premiere online opinion area for advancing free-market, small government views in the entire state.We also intend to continue producing hard-hitting investigative journalism pieces as with the recent stories about excessive overtime payments to government workers.”

Anchor Rising’s deep archives will remain in their original locations on the Internet, and readers can access the original archive site through the arvhive link on the new, combined page.

Commentary: Sakonnet Bridge Toll – We All Sleep in the Beds we Make

December 6, 2012

We all sleep in the beds we make. Legislators and citizens alike.

After decades of negligence by the Political Class in mismanaging one of the appropriate roles of government – infrastructure development – Rhode Island ranks last or next to last in multiple major national highway, bridge and general infrastructure indexes.

And now, with tolls planned for the Sakonnet River Bride, the state faces a lose-lose situation; where local residents will face a punishing new ‘tax’ and where the local and state economy will continue to be harmed as a result. Are tolls the only course we should have considered? Will anyone even end up being held accountable for this debacle?

Our elected officials, including those few who are now speaking out against the toll, have systematically ignored our state’s bridges and highways and have continually prioritized spending in other areas where a more tangible political quid-pro-quo can be realized. This total failure of government has brought us to the point where the knee-jerk reaction to impose new taxes and fees on our people was sadly predictable.

But the blame does not reside solely on Smith Hill. Where were those people last spring when the budget and this toll were being contemplated? Where was the East Bay citizenry then that should have been pressuring their own locally elected officials to run around the state capitol to try to kill this toll? It may be too little, too late now.

These citizenship and legislative failures are yet more examples of what can happen when the great responsibility our Constitution places on citizens to remain vigilant and to control the workings of our government is abandoned, leaving a void for special interest groups to eagerly slop up any taxpayer dollars left in the trough.

When will we ever learn?

Back to the matter at hand, according to the Federal Highway Administration, more state and local governments are relying on tolls to build and repair roads, bridges and tunnels as traditional local revenue sources and one-time stimulus funds dry up. But is this the only practical approach? No.

There are alternative solutions we might have considered to fund these much needed upgrades. In order of preference, they are (were):

A) Re-allocation of existing funds: without raising taxes, fees, or tolls – this approach would force officials to make difficult funding priority decisions, and decrease tax and fee burdens on the Rhode Island economy. But who in the Political Class is brave enough to do this?

B) Cut taxes elsewhere, even as we implement the new tolls: this would lessen the negative economic impact on Rhode Island drivers who are tolled as well as on our overall economy. This we can still do.

C) Privatize the upgrades and maintenance: many states are contracting with private entities to maintain infrastructure, collect the tolls, and take the financial and legal risk. The private sector can manage projects such as these at a lower cost and can also provide maintenance and toll-collection services more efficiently. Privatization would also ensure that the tolls are never mingled with the state’s General Funds and re-allocated for whatever new emergency may arise. Further, a private entity can be sued if they fail to meet the terms of their contract in maintaining a bridge or highway. Under a government run system, who can be or will be held accountable? This is where we could have been.

D) Government-run upgrades and maintenance funded by tolls: the big government default mode, which would likely result in higher tolls than the privatization route. This is where we are.

E) Raise general taxes: this approach would affect a broader range of Rhode Island residents, and would have the largest impact on the state’s already fragile economy. Only the most radical socialists would think that this is feasible in Rhode Island at this time.

For failing in their duty to the people by not considering some of these other options, some legislators should lose their jobs.

For failing to remain vigilant in exercising their right of citizenship, it looks like many Rhode Islanders will now pay a dear price.

Mike Stenhouse is CEO for the Rhode Island Center for Freedom and Prosperity, a non-partisan public policy think tank and 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.

Opinion by CEO Stenhouse: The old approach won’t restart R.I.

As printed in the Providence Journal Op Ed section, 11/15/2012

On Nov. 10, a single page of The Journal featured two articles that tell us all we need to know about Rhode Island’s misguided approach to economic development and our dismal economy. While Rhode Islanders struggle to control their families’ financial security, our state looks to seize control, period.

The first article (“State seeks growth ideas, data analysis”) reports that Governor Chafee will use tax dollars to pay private firms for ideas, due in about 90 days, on how to focus resources in specific areas that can be coordinated across multiple state agencies.

Every part of this approach is precisely opposite of what we should be doing.

Rhode Island has a bad economy because we have one of America’s worst climates for business; and we have a poor business climate because we have too many punishing taxes and regulations enacted by our own government.

As the governor sees it, the same government that created this bad business environment now wants to be entrusted to come up with a plan to fix it — coordinated across multiple agencies.

But a redesigned Rhode Island Economic Development Corporation would not create private-sector jobs. Government is hardly the entity those in the business community would trust.

After the 38 Studios debacle, haven’t we learned that government should not be deciding which businesses or industries should receive special treatment?

When I hear “invest in specific areas,” I can only wonder what politically connected special interests will benefit. A strong business climate, one that reduces taxes and regulations for all, would benefit the entire business sector, not just a chosen few segments.

Our state wants to use federal funds to pay for good ideas about what’s wrong with our state and what to do about it. How typical: spend more taxpayer money on more government bureaucracy to waste more time, and maybe reaching conclusions we already know.

Government begets more government, and the beat goes on.

My group, the Rhode Island Center for Freedom & Prosperity, has researched and documented the major problems in the state, and we have recommended solutions that are working successfully in other states.

And we do this for free. We never accept taxpayer money. We just ask the political class to listen!

There is no need to wait 90 days. Should people who are struggling have to wait three more months for the state to begin to get a clue?

In this same Journal article, Governor Chafee was quoted as saying that we must take steps to improve the state’s economic climate. But in the second article (“R.I. could see $50-million surplus”) about what to do with a potential budget windfall, the governor contradicted his quote from the first article.

Instead of using the $50 million surplus to improve the business climate (by reducing taxes, maybe?), the governor intends to spend forward these windfall funds on next year’s budget deficit, which does nothing to improve the state’s economic climate.

Balancing a failed budget would not help grow our economy. But this is how bureaucrats think. Economic growth should be the goal, with the budget being adjusted accordingly. Any wonder why Governor Chafee recently received a “D” for his poor fiscal policy from the Cato Institute?

What both articles clearly demonstrate is that Ocean State residents can expect a government-centric, bureaucratic, budget-oriented approach toward economic development. The government approach that got us into this mess is now being promoted by our state leaders to get us out of it. The political class just doesn’t get it.

What Rhode Island needs to do is to unleash individuals and businesses by tearing down the legislative barriers that inhibit success. Let the free-enterprise system — the same system that President Obama called the greatest engine of prosperity the world has ever known — work on its own and thrive.

Unfortunately, those who defend the status quo do not want to hear it. They do not want a less-expansive government. That might lose them votes. And they will do almost anything to avoid dealing with the real public-policy issues that are at the core of our state’s problems.

The politicians provide lip service to make it look like they’re trying to do something. And they hope that we’ll all buy it.

I don’t buy it. Do you?

Mike Stenhouse is chief executive of the Rhode Island Center for Freedom & Prosperity, a conservative think tank.

Stenhouse Remarks – Press Conference 10/11/12

October 11, 2012 Press Conference: Mike Stenhouse, Revised & Extended Remarks

“Get Government Out of the Way” Solution

Good morning. Today, the RI Center for Freedom & Prosperity recommends a free-market, get-government-out-of-the-way approach to restore Rhode Island’s struggling economy.

Rhode Islanders want to be in control of their own lives. They want to know that if they educate themselves and work hard that they can be in charge of their own futures. They don’t want someone else telling what they need to do.

The Secretary of States publishes the RI Government Owner’s Manual, under the premise that we the people “own” our government. But who’s really in charge? Many Ocean Staters feel like the government is running THEIR lives, both personally and professionally.

Rhode Island has the worst business climate in the nation because we have one of the most burdensome tax and regulatory environments, leaving families with fewer opportunities and options to pursue a productive life of their own choosing.

More and more it seems that restrictive laws and government programs are running our lives and creating obstacles to prosperity.

Bad laws created this bad environment. So … it should not be all difficult to determine what approach we should take: If we want a good economy, bad laws must be repealed.

Our Center’s Report Card on RI Competitiveness documents dozens of areas where our state receives failing or poor grades because of laws that restrict opportunity or economic activity. Each of these poor grades represents a barrier to success. If we want a more competitive economy, we must tear down those intrusive barriers.

Our Center’s General Assembly Freedom Index for 2012 demonstrates how this past legislative session – only made matters worse. If we want an improving economy, we must roll back destructive legislation.

Our recent study on out-migration to bordering counties in MA and CT, are evidence that the onerous state and local tax burden in RI is driving taxpayers out of state.

Out Migration from RI

High Taxes in RI are forcing taxpayers to flee to MA and CT

The Chart above shows that Rhode Islanders who want to work and stay close to their families in Rhode Island, but who can’t afford to pay the taxes we impose on them, simply have to move a few miles over the border. And they are moving … in droves … taking their wealth and their kids with them. Taking our state’s future with them.

If we want an economy that attracts people to our state, we must stop over-taxing them.

Most Rhode Islanders want job security, more disposable income, and more quality time with their families.

I think of Marshall D’Ambrosio, owner of Legion Bowl and Billiards, our gracious host here today. Because of Rhode Island’s poor economy, and in order to survive, he has had to continually invest and risk his time and money in order re-invent his longtime family business here in Cranston.

How many ballgames and other family activities has he had to miss over the years, working into the wee hours because of the bad business climate in this state?

That bad business climate means other families and businesses have less disposable income … less income to go on a family vacation, to organize a business event, or even for a family outing at the local bowling alley.

It’s time to get real. It’s time to understand that the recent high-profile forums and reports, seeking solutions for our economy, are just window dressings that forestall action on the critical problems we must face head on as a state … that they seriously miss the mark.

The bad news is that no-one in the political class seems to want to address this problem. Think about what has transpired this year: the two most powerful officials in our state, the Governor and the Speaker of the House, have both indicated that there’s not much to do but to wait until the national economy picks up … this is not an economic strategy. And, unfortunately, they followed their own advice … they did nothing.

The General Assembly seems concerned only with balancing a budget … a budget is not economic policy.

More recently, highly publicized forums and special reports have generated much debate about how to boost the state’s failing economy: from commerce czars, to public-private partnerships, to what the private sector can do, to more creative marketing of the state, to reorganizing government departments, to grappling with questions like “who’s in charge”. Yet all of these approaches miss the critical mark. The political class does not get it.

But the good news is that citizens seem to get it … In fact, at one of those recent forums, 83% of the participants surveyed believe government to be the obstacle to economic development. Let me repeat … 83% believe government is the obstacle!

The solution must be to get government out of the way … to tear down the barriers to success … this solution is called the free-enterprise system. In the national debate last week, even President Obama call free-enterprise the ‘genius of America’; yet Rhode Island has severely departed from its principles.

Free-enterprise works, and has always worked; but Rhode Island’s economy is anything but free.

Free-markets are about individuals trying to better their own lives by working, innovating, and investing in business enterprises. Unlike the approaches currently under debate in our state, there should be no central authority dictating how or what workers and entrepreneurs need to do. There need be no over-arching strategy that restricts people’s choices. Laborers, investors, and business leaders should be largely free to work and prosper as they deem best.

This is what stimulates growth. This is what increases jobs. This is what creates wealth and grows the economic pie.

If we want a prosperous economy we must re-embrace the free-enterprise system.

Prosperity means that barriers to success must systematically be torn down.

Prosperity means that tax rates must be lowered.

Prosperity means that regulations on workers and businesses must be rolled back.

Prosperity means that we must trust more in each individual’s capacity to thrive and become self-sufficient.

Prosperity means that our state government must do less, and it must spend less.

Prosperity means that government must get out of the way. Adherence to a philosophy that seeks to subsidize politically sensitive constituencies – perceived to be in need – must be reversed.

If we want a productive economy we must build an opportunity environment that encourages people to be self-sufficient.

Similarly, revenue neutral approaches will not be enough to stimulate the rapid growth we need. Taxes and spending must be cut.

In fact, as we can see in the chart below, Rhode Island’s spending over the past 10 years has far outpaced inflation and its population growth … real spending cuts must be made, and can be made. Over this period, our state, in trying to be compassionate, has simply tried to help too many people … and it is slowly killing our economy.

RI spending has outpaced inflation and population rates

RI spending has outpaced inflation and population rates

If we want to create new wealth, we must abandon the redistribution of wealth approach.

If we survived at the spending levels of ten years ago, we can survive on them today.

Rhode Island can learn from the experiences of other states; some states richer, some states poorer; some polices working, some policies failing. It was also part of the genius of America that states would serve as laboratories of freedom, so that policy concepts of all kinds could be tried and tested.

Regarding economic policy, many state tests have been studied. We have ample data and evidence; and it is now well-known what approaches have been successful in other states.

If we want a bigger economic pie in RI … we need a new recipe.

We don’t need hundreds of pages of reports, or days upon days of public meetings to figure out what we need to do. In fact, our Get Gov’t Out of the Way public policy approach comprises 3 basic steps, that fits on a single page (in your packets).

In this regard, last month, our Center released a Prosperity Agenda for Rhode Island, a set of initial policy recommendations that will indeed roll back bad laws; an agenda that will tear down some of the significant barriers to success in our state; a pro-worker, pro-business agenda that can begin to restore freedom and prosperity for our citizens.

An example of one of the more compelling reforms is our Zero.Zero Sales Tax recommendation. Which of these two sets of numbers is better: [75-38-400] or [68-0-5000]?

Spending on a sales tax cut is better than 39-Studios spending

Well, let’s take a closer look … for less than the 75 million dollars the state thought was a good investment in 38 Studios chasing after just 400 jobs, Rhode Island could spend 68 million dollars in the first year of a phase out the sales tax towards 0.0%, which would create 5000 jobs each year for four years!

Yet, no one in the political class wants to debate this concept. Are we not in need of a game-changing solution?

We have evidence of a prosperous 0%-sales-tax state right up the road from us in New Hampshire; further, sales taxes reform is one of the handful of proven policies that states should consider, according to our guest speaker.

In fact, a national expert on state fiscal policy is here with us today, Jonathan Williams. In his book, Rich States, Poor States, he documents which states are doing well and which are not; which approaches to prosperity are succeeding and which approaches have failed.

To add his perspective is a man who has spoken to audiences across the country and has been quoted, seen or heard on numerous national media outlets. May I introduce to you the Director of the Center for State Fiscal Reform and the Tax and Fiscal Policy Task Force at the American Legislative Exchange Council, Mr. Jonathan Williams …

Rhode Islanders must act if they want better life

Do we want to be an Entitlement State or a State of Prosperity?

OpEd by Mike Stenhouse; as published in the Providence Journal (7-29-12)

What kind of state do Rhode Islanders really want? Who will provide the vision and leadership that will lead to renewed opportunities and prosperity for our citizens?

Rhode Island has the second highest unemployment rate in the nation, yet our political leaders do nothing about it.

Ours is the worst ranked state in terms of business climate, yet our business leaders do not cry out.

We have one of the highest state and local tax burdens in the country, yet citizens remain silent.

We have dangerously high unfunded pension and benefit liabilities, yet the political class does nothing to help our municipalities.

We are losing population and wealth to neighboring states and throughout the country, yet the defenders of the status quo stick their heads in the sand and say “it isn’t so.”

We have the most burdensome level of health-insurance mandates in the nation, yet the Chafee administration is pushing us towards even more government control of our personal health-care decisions.

We have the highest sales tax in New England, yet our political class actually voted to expand the tax, even to some of the poorest among us.

Soon, research from our center will show that Rhode Island is uniquely positioned in the nation as a failing economic state, yet most members of the local media do not raise awareness or seek accountability from our public officials.

The list could go on and on, but the real question is whether Rhode Islanders really want to continue down the same path that has failed our state so miserably or if we can find the willpower to tear down the barriers that have prevented us from increasing our quality of life.

Do we as a people want to live in an entitlement state or in a state of prosperity? One could reasonably assume, based on the above pattern of apathy, that we collectively want the former. But I doubt that.

So what is a concerned citizen to do? Especially when there is no leadership coming from policy-makers?

With the 2012 election rapidly approaching full campaign mode, the choice cannot be clearer for voters. There are two starkly different visions for our state: one that defends a status quo that tries to centrally engineer our society; and one that promotes bold reforms that restore individual control of our lives and a positive sense of self-determination to our citizens.

Whether you are an average Joe (or Joe-Ann), a business owner or a student, it is important that you understand your duty as a vigilant citizen and that you are empowered to make a difference. First, you can think about and develop a core set of political principles that will guide you. Second, you can become educated about the issues and encourage discussion and debate within your various circles of friends, family and colleagues. Third, you can become actively engaged by supporting organizations, campaigns, or policy initiatives that are consistent with your core principles.

This summer and fall, you can stand up where others have fallen down. Demand of candidates who knock on your door, call your home, or conduct town-hall-type meetings to clearly tell you whether they will defend the status quo or whether they will openly support the bold reform initiatives that our state so desperately needs.

Reforms like: lowering sales, income and corporate taxes; like providing school choice for students condemned to a failing school; like implementing patient-centered health-care reforms vs. government-centered; like constructive collective bargaining reform for government workers.

As a state we can choose to perpetuate our downward spiral by allowing to stand the government regulations that infringe upon our freedoms and limit our capacity to thrive; or, we can choose to begin to rebuild our economy by unleashing the great potential within each of us. The choice is indeed yours — and ours — to make; especially when most everyone else is afraid or incapable of leading!

Mike Stenhouse is the chief executive of the Rhode Island Center for Freedom and Prosperity, a conservative think tank.

Related Commentary: 2013 Budget Fails to be Bold

Schilling’s Rookie Mistake

Oped by Mike Stenhouse published by the Providence Journal on June 3, 2012

See the ABC-6 interview on this OpEd here …

When All-Star, world champion and potential Hall Of Fame pitcher Curt Schilling stepped from the dugout into the corporate board room, and then into the public-policy arena, he did what most of us did when we first put on our uniforms: He made a rookie mistake.

With the job security of his employees and the investment value of his stakeholders in play, Schilling also took on the public trust of Rhode Islanders when he accepted a $75 million state loan guarantee for funding for his new company, 38 Studios.

While it is now good sport to openly deride Schilling as a hypocrite — or worse — I have a different take on where I think that he may stand to gain a valuable life lesson.

At many points along their athletic journey, most athletes learn the hard way that they must forgo certain activities to be successful in achieving their professional-sports ambitions. At each step along the way, more and more of our energy must be dedicated to our sport if we are to continue to achieve at a higher and higher echelon. This means that such activities as partying, skiing, off-season leisure and hobbies must be curtailed or eliminated to maintain a high level of physical conditioning and emotional focus.

As a rookie in the Major Leagues, I tried to have it all initially: the uniform, on-field success, the night life and the offseason leisure. This formula does not work for most, and it certainly didn’t work for me.

Having experience myself in professional baseball and in the dot-com world as an executive with a $50 million start-up venture, I understand what it takes to succeed. And now, with my experience in public policy, I understand the responsibilities of public officials and publicly financed organizations to taxpayers, it strikes me that Schilling may, likewise, have lost focus and spread himself too thin.

Over the past year, when I saw Schilling regularly at the ESPN studios as a baseball analyst, I kept wondering to myself how he was maintaining focus on growing his company and if he was truly committed to its success. Whether his ESPN gig had anything to do with the problems that 38 Studios now faces we’ll probably never know.

However, when Curt Schilling accepted the loan guarantee by Rhode Island’s taxpayers, he truly stepped into the big leagues. I’m not sure that he understood the commitment required to maintain the public trust. Putting everything that we have into starting a business is the type of entrepreneurship that Americans admire, even if the venture fails. But taking things for granted, especially when that includes acceptance of taxpayers’ hard-earned money, is entirely different.

I disagree with all of those who paint Curt Schilling as some kind of evil or dishonest person. I simply think that he made a rookie mistake and I don’t think he’ll make it again. In the same way that Curt Schilling worked hard to achieve success as a pitcher, I expect that he will re-dedicate himself to making 38 Studios a successful enterprise.

Mike Stenhouse is a former Major League baseball player, a former executive with and now chief executive of the Rhode Island Center for Freedom & Prosperity, a conservative think tank.

©2012, Published by The Providence Journal Co.