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RI Only State Losing Population Two Years in a Row

December 21, 2012/in Blog, Migration, Recent Posts, Taxes/by Justin Katz

Quick Links: see larger out-migration report here

Since the U.S. Census department released its latest state-by-state population estimates, it has been widely reported that Rhode Island was one of only two states to lose population from 2011 to 2012. The other was Vermont.

However, as with the RI Center for Freedom & Prosperity’s findings in September, looking more deeply reveals that the headlines actually understate Rhode Island’s poor position.

In total, Rhode Island lost 354 people, or 0.03% of the 1,050,646 estimated to have lived here in 2011. As bad as that is, it looks preferable to the 581 whom Vermont lost, which was 0.09% of that state’s population. Two considerations smudge that silver lining.

As a percentage of population, most of the difference was in the higher number of births in Rhode Island: 1.02% of population versus 0.92% in Vermont. To some extent, that’s a positive finding, but it’s only significant because Rhode Island offset more of the residents who moved to other states (0.51% of population, to VT’s 0.28%) with higher immigration from other countries (0.34%, to VT’s 0.10%).

The second smudge is that this year is Rhode Island’s second on the population-loss list. Last year, its company wasn’t Vermont, but Michigan. Over the two-year span, from 2010 to 2012, Vermont’s population has grown; over the last year, Michigan made up most of its loss from the year before.

Uniquely, Rhode Island is still slipping, with a two-year net loss of 2,275 people. Of course, international immigration and a natural increase (with births outnumbering deaths) soften the blow. Since 2010, 1.26% of Rhode Island’s population — 13,259 people — have left for other states. As with the other numbers presented, here, that’s a net number, meaning it’s the number of Rhode Islanders who left above and beyond the number of people who moved here.

It’s true that Rhode Island is the second most densely populated state in the nation, after New Jersey, so a rapidly growing population might be problematic in the long term. Be that as it may, multi-year trends of losing population — especially losing established Rhode Islanders to other states — is a symptom of a state in need of dramatic turnaround.

Projo Omits the Real Story of Health Benefit Exchanges

December 18, 2012/in Blog, Health Care, Recent Posts/by Justin Katz

The Providence Journal’s article checking in on the progress of Rhode Island’s ObamaCare health benefits exchange ignores the major policy questions and potential objections that have made the exchanges a subject of controversy across the country. With the exchange’s executive director, Christine Ferguson, as its only source, the article is little more than a preview press release for an expensive government service that is of dubious origin, questionable promise, and dangerous potential.

Here is a mere sampling of the conspicuous omissions:

The article ignores the controversy of more states’ refusing to set up exchanges than agreeing to do so. Oklahoma is leading the way in a lawsuit challenging the authority of the Internal Revenue Service (IRS) to impose a fee on medium-sized and large employers that do not offer healthcare benefits in states that will have federally run exchanges.
The article glosses over the distortion of the employment market caused by the employer mandate. With the threshold of 50 full-time employees before businesses are required by the law to offer healthcare benefits or pay the IRS penalty, the law is creating perverse incentives that are leading employers nationwide to limit workers to part-time status and potentially not to hire them at all.
The costs of the exchange and the Medicaid expansion to the state are not mentioned. The initiation of ObamaCare in Rhode Island looks like a windfall of federal dollars for the state, but within a few years, the additional local costs will add strain to the state’s annual struggle to balance its budget. With data from the Kaiser Family Foundation, the RI Center for Freedom & Prospeity estimates that the cost of the Medicaid expansion to Rhode Island taxpayers will be approximately $50 million per year. When it comes to paying for the exchange itself, Rhode Island may follow Massachusetts’ strategy of charging a 3% fee on top of premiums.
The planned expansion of the exchange as a “unified infrastructure” is nowhere to be found. The officials behind Rhode Island’s health benefits exchange are also planning to integrate it with other state subsidies and services, such as welfare and food stamps. The Center has dubbed this strategy a “dependency portal,” because it would potentially create an automatic “on ramp” to dependence on government handouts.
The article also ignores the interests on the exchange’s board. In populating the governing board of the exchange, Governor Lincoln Chafee paved the way for expansion of services supplied through the exchange, without appointing any board members who might act as a counterweight to the special interests around the table.

Rhode Islanders deserve a government that treads cautiously when dabbling in such costly and radical changes to the critical services of the health care marketplace. And they definitely deserve a state-level press corps that exposes government inadequacies and the risks and costs that it incurs.

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

December 6, 2012/in Blog, Citizen Vigilance, Commentary, Recent Posts, Taxes/by Mike Stenhouse

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.

RI Public and Private Sector Compensation Comparison

November 28, 2012/in Featured, Labor, Pension Reform, Policy, Recent Posts/by Justin Katz

Download: Executive summary; full report with methodology (PDF)

Executive Summary

State and local government workers enjoy significantly higher compensation levels than their private sector counterparts, according to data compiled for Rhode Island as part of a national study conducted by economists William Even, of Miami University, and David Macpherson, of Trinity University.

Even and Macpherson apply the most complete controls for such variables as education, experience, and broad job category and the most accurate accounting of benefits to date. They find that state and local government workers across the country receive a “premium” above their private-sector neighbors, but Rhode Island amplifies the difference:

Rhode Island: 26.5% higher total compensation
New England: 18.8% higher total compensation
United States: 14.9% higher total compensation

Furthermore, a preliminary review of the effects of Rhode Island’s pension reform suggests that the changes to their retirement benefits did not appreciably reduce government workers’ advantage, only reducing the premium for government work to 26.24%.

Looking at base pay alone shows that job security and better benefits in government do not correspond with lower salaries, at least in Rhode Island and New England, where state and local workers receive:

Rhode Island: 10.4% higher base pay
New England: 2.8% higher base pay
United States: 1.5% lower base pay

Averaging all jobs at every level, total public-sector pay and benefits in Rhode Island are competitive with Massachusetts and Connecticut, but private-sector workers earn nearly 25% less than their peers across state borders. Consequently, comparing averages within Rhode Island yields the following results:

Total compensation: 20% higher for government workers
Pay (base salary): 4% higher for government workers
Benefits: 58% higher for government workers
Hours worked: 5% less for government workers
Value of paid time off: 5% higher for government workers

Compared with the New England region, Rhode Island’s government employees are unique in having a higher average base salary than the private sector as well as a higher value for paid time off. They also enjoy a total compensation premium well above the regional average, even as they work the fewest total hours.

If there is to be any hope of keeping current compensation levels and benefit promises to government workers, the state must experience an immediate boom in the private-sector economy. Without rapid economic growth and a boost to their prosperity, taxpayers’ tolerance and capacity to pay for government beyond their means will continue to wane.

Data Analysis

Overall Averages

Rhode Island’s state and local government employees receive higher compensation than their private-sector neighbors by every measure, according a study comparing public-sector and private-sector compensation that the RI Center for Freedom & Prosperity requested from economists William Even, of Miami University, and David Macpherson, of Trinity University.

Chart 1 shows the average real earnings and benefits (in 2010 dollars) for state and local workers versus private-sector Rhode Islanders. Benefits take into account pensions, health insurance (including post-employment/retiree), other insurance, legally required benefits, like Social Security payments, and paid time off. The total compensation for the average public-sector employee in Rhode Island was $100,217, which was more than 20% higher than the private-sector average of $83,419.

Rhode Island is inarguably in a high-cost, public-labor-friendly region, but even so, it is unique within New England. Chart 2 shows that Rhode Island is the only New England state in which the average wage earnings (base salary) of all state and local workers, on its own, was greater than that for all private-sector workers.

The most conspicuous reason for Rhode Island’s poor showing, here, is the huge gap between its economy and that of the two states that envelop it. While the Ocean State’s public sector is competitive with Connecticut and Massachusetts (with earnings only $4,294, or 6.6%, below the region-leading Bay State), its private sector has a $15,398 (23.3%) deficit.

Even when benefits are factored in, the private sectors in Massachusetts and Connecticut outstrip government employees. In contrast, Table 1 shows that Rhode Island adds a relatively large amount of compensation via benefits in its public sector and a relatively low amount in its private sector.

Another significant perk to working in Rhode Island’s public sector is time off. According to the data collected by Even and Macpherson, Rhode Island is the only New England state in which the value of the public sector’s paid time off ($7,208) is greater than the private sector’s ($6,857). (These numbers are included in the total for benefits.)

And while government workers in all New England states put in fewer hours than their private-sector neighbors, Rhode Island’s public employees put in the fewest. Moreover, only in Vermont is the gap between the sectors larger. (Note: Annual hours are calculated from weekly-hour responses on employee surveys.

Variable-Controlled Premiums

A common objection to such comparisons of average pay is that the types of jobs available within the public sector lend themselves to more-highly educated employees. Therefore, the argument goes, it is entirely appropriate for them to make more than the average of all private-sector jobs, because they skew toward the higher end of the workforce.

To investigate this explanation, Even and Macpherson performed a regression analysis for Rhode Island, the New England Census division, and the United States in order to compare similarly situated employees. Chart 3 shows a summary of the results.

The percentage shown is the premium for working in the public sector — that is, the percentage advantage in compensation from working in the public sector, taking into account employee characteristics (such as education and experience) as well as broad job category (such as management versus office and administrative support). (See Table 2.)

On salary alone, state and local employees enjoy a 10.4% premium in Rhode Island, even when controlling for other variables like education, experience, and broad job category. For New England overall, the premium is 2.8%. Nationwide, the public-sector actually has a salary penalty of 1.5% below the private sector.

Adding in the total value of benefits (before pension reform), Rhode Island’s state and local workers receive a premium of 26.5% over their similarly situated private-sector counterparts. That compares with 18.8% for New England as a whole and 14.9% nationwide.

A significant consideration that Even and Macpherson were unable to quantify due to a lack of data is job security. Given higher rates of unionization and the ability to affect their employers through political activities, government workers are generally understood to face less volatility than do private-sector employees. In theory, economists could apply a monetary value to that intangible benefit, but such an investigation would be beyond the scope of this study.

Pensions & Pension Reform

One important adjustment that Even and Macpherson have made to the raw compensation data is to determine the current value of pension benefits using a 4% discount rate. In a defined-benefit system, actuaries value the guaranteed level of income that employees will receive during retirement by assuming that investments will produce a certain return.

Rhode Island currently assumes a 7.5% return. Prior to the adjustment that spurred the 2011 pension reform at the state level, the assumption was 8.25%. Because this study uses data from 2010, that is the starting point for this data. By comparison, the average private-sector assumption is 6%.

In all cases, therefore, Even and Macpherson had to mark up benefit values to account for the likelihood that investment profits will fall short of predictions. It may seem counterintuitive that a benefit is worth more when invested money receives less profit. However, in the case of guaranteed pensions, the benefit is defined in the future, not the present.

Therefore, lower profits from investments would require greater payments by the employer, making the benefit of greater value to the employee now. In effect, the employer is promising a greater return to the worker than he or she would be able to achieve by investing on his or her own.

Because pensions make up 10-20% of the typical government employee’s total compensation, compared with 4-6% in the private sector, large reforms can greatly affect the premium that public-sector workers receive over the private market-place. For this study to be complete, therefore, some accounting of the effect of the Ocean State’s pension reform on the value of state employees’ benefit packages had to be included.

However, the imposing complexity of pension calculations is such that an accurate estimate of the reform’s effects would be well beyond Even and Macpherson’s scope. In particular, during the transition from the defined benefits pension to the newly developed hybrid plan, each individual employee’s benefit will be different, and results vary from job to job and across state and local governments. It will be a matter of years before accurate data is available.

Consequently, the public-sector premium given above can be considered the outcome if the lawsuit currently pending on behalf of the relevant labor unions succeeds in overturning the reform. For some sense of the result if the state prevails in its defense of the reform, the Center for Freedom & Prosperity asked Even and Macpherson to provide a rough calculation.

It’s important to note, here, that the pension data throughout this study assumes that all municipal employees are receiving the same weighted average contribution as those in the state’s two largest plans — state workers and teachers — with and without 2011’s reform.

Be that as it may, the effect of the reform on this study was relatively minor. The guaranteed payments provided through the defined-benefit portion of the state’s new hybrid pension system have gone down. But the state has increased the percentage of payroll that it must contribute each year, to make up for the 5% of their pay that employees are putting toward their defined-contribution plans. The state has added a 1%-of-payroll contribution to those plans, as well.

Consequently, the annual value of government employees’ pension benefit has only decreased from $10,692 to an estimated $10,476. In terms of the “premium” that state and local workers receive over similarly situated private-sector Rhode Islanders, the percentage advantage has decreased from 26.49% to 26.24%.

Policy Analysis

Living Beyond Our Means

When a family comes to a decision about purchasing any product or service, it doesn’t merely accept the seller’s sense of what’s reasonable. In addition to the market rate, consumers must take into account the quality of the thing they’re buying as well as their own ability to afford it.

With deteriorating infrastructure, doubts about the quality of government services, and the high-profile specter of unfunded municipal and state retirement liabilities looming over the state during this current period of economic stagnation, the compensation of public-sector employees has become a subject of heated debate about fairness and affordability.

Rhode Island is the only state in New England in which public employees have higher base salaries than the private sector. At the same time, state and local workers in the Ocean State work the fewest hours in the region. When benefits are factored in, Rhode Island has the highest premium for public-sector workers over private-sector workers, even if pension reform survives the lawsuit that unions have filed to overthrow it.

Meanwhile, the state’s economy is reeling, with arguably the worst employment picture in the United States, certainly the region. With dwindling taxable incomes and general economic activity, the state and its cities and towns will not long be able to continue to squeeze more revenue from a population that is losing ground economically and seeing many of its productive residents and college graduates flee to states with healthier economies.

Adjustments around the edges that do not take on the significant public policy issues we face will not be sufficient to turn the state around. Without rapid economic growth and a boost to their prosperity, taxpayers’ tolerance and capacity to pay for government beyond their means will continue to wane. Painful struggles between powerful insiders and the average citizen will worsen. Even more taxpayers may decide that the battle is not worth the benefits of living within the Ocean State’s borders.

Economic Growth Benefits Public and Private Sectors

With all of the emphasis on improving economic development in Rhode Island, there have been two conspicuous omissions.

The first is the need for a complete change in the way that state and local governments treat taxpayers and businesses — as a matter of regulation, as a matter of spending, and as a matter of taxation.

The second, as emphasized in the data revealed in this study, is the fact that government workers should be out in front of the crowd advocating for change — not for tax-the-rich schemes that will never produce sufficient revenue, but for precisely the policies founded in economic liberty that will close the gap between private-sector Rhode Island’s earnings and those of its nearest neighbors.

If there is to be any hope of keeping current compensation levels and benefit promises to government workers, the state must experience an immediate boom in the private-sector economy.

Even the dramatic pension reform that sent unions to their lawyers and made state Treasurer Gina Raimondo a national policy star barely nudged Rhode Island’s public sector toward the national ratio of public-to-private workers. It hardly even brought the tiny Ocean State nearer to the average for the union-stronghold region of New England.

While additional compensation cuts and even deeper benefit reforms will be necessary in the public sector, the more significant factor in the public-private imbalance, locally, comes from the substandard economic conditions in which the Rhode Island taxpayer in the private sector is forced to survive. That is where dramatic improvement is most necessary, and most attainable, if public policy can be properly aligned.

Central Falls retirees discovered all too painfully that unsustainable compensation arrangements, whether salaries or benefits, are by no means guaranteed if obvious warning signs are not acted upon responsibly. The comparison of the public sector and the private sector in Rhode Island is one such sign of unsustainable compensation levels.

The people of Rhode Island depend upon government workers for the appropriate and necessary functions of government, but those workers depend upon the private sector to maintain a healthy economy and, in turn, sufficient government revenue. The top priority for employees on both sides of Rhode Island’s taxing and spending, therefore, should be reasonable reform that makes public-employee compensation sustain-able combined with the elimination of policies that restrain economic growth in the Ocean State.

Methodology

Download the PDF version of this report for Even and Macpherson’s full methodology.

Rhode Island Labor Force and Employment, January 2007 to October 2012

Rhode Island Employment Snapshot, October 2012

November 20, 2012/in Blog, Jobs, Recent Posts/by Justin Katz

Rhode Island’s unemployment rate fell one tenth of a point in October, to 10.4%, still second worst in the nation, after Nevada. However, for the second month in a row, the Ocean State led the nation in actual employment increase. While the data offers an encouraging picture, the boom in jobs over the past two months has been so historically large that it ought to be treated with caution until other economic indicators begin to substantiate the results.

The first chart below shows Rhode Island’s trends in labor force (employed and looking for work) and employment since the beginning of the recession in January 2007. The second chart shows the labor force and employment pictures for Rhode Island, Massachusetts, and Connecticut as each state’s current percentage of January 2007.

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

November 20, 2012/in Blog, Commentary, Policy, Recent Posts/by Mike Stenhouse

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.

RI’s State and Local Tax Burden Still an F

October 26, 2012/in Blog, Recent Posts, Taxes/by Justin Katz

Rhode Island’s state and local tax burden is still the sixth worst in the nation, according to the Tax Foundation’s updated ranking. In fiscal year 2010, the latest year for available data, residents of the Ocean State once again paid 10.9% of their income to state and local governments.

As was true last year, using 2009 data, only Connecticut performed worse in New England, by the Tax Foundation’s measure. Rhode Island’s state and local tax burden will therefore receive another F grade when the RI Center for Freedom & Prosperity updates its Report Card on Rhode Island Competitiveness early in 2013.

In 2010, Rhode Islanders paid $29 less per capita in state and local taxes to other states ($1,309), but $19 more to their own ($3,318). The Tax Foundation added those sums together and calculated the result as a percentage of the average per capita income of $42,628, which represented an increase of only $155 from the prior year, still well below the 2008 average of $44,345. More telling, perhaps, is that this increase was much smaller than the norm of the last three decades.

Member of Center’s Task Force to be Panelist at Brown Univ “Pensions in Peril” Forum

October 25, 2012/in Blog, Events, News, Pension Reform, Recent Posts/by Mike Stenhouse

Providence — A member of the RI Center for Freedom & Prosperity’s special pension task force will serve as a panelist at the “Pensions in Peril” forum today, October 25 (Thursday afternoon), sponsored by the Taubman Center for Public Policy at Brown University. The forum will feature national and local experts about how municipalities are dealing with the fiscal time bomb of unfunded pension liabilities.

Eileen Norcross, a senior research fellow with the Mercatus Center at George Mason University and lead researcher on the State and Local Policy Project, was the first national expert to raise alarms about public pension accounting in RI localities in 2011, arguing that municipalities are vastly under-estimating the true scope of their unfunded pension liabilities. Norcross co-authored a report that calculated municipal pension liabilities under various discount rate assumptions.

The Mercatus Center report, which received significant local and national attention, indirectly challenges the more rosy pension assumptions put forth by some local officials in RI, including co-panelist, Mayor Scott Avedisian of Warwick.

The forum, which will take place from 4:00 pm to 6:00 pm at the Salomon Center for Teaching 001 off the main green at Brown University, is free and open to the public and media.

For more information about the Center’s pension task force and Eileen Norcross, click here.

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

Media Contact:

Taubman Center: 401.863.2201

Rhode Island Employment Snapshot, September 2012

October 22, 2012/in Blog, Recent Posts/by Justin Katz

Rhode Island’s unemployment rate fell another two tenths of a point in September, to 10.5%, still second only to Nevada. More notable, though, is that the Ocean State led the nation in actual employment increase, and that the results for the country as a whole have rightly raised eye-brows. Not seasonally adjusted, September typically sees a decrease in employment, so this months results were not only historic, but unusual.

“Get Government Out of the Way”: a free-market solution for the RI economy

October 11, 2012/in Blog, Featured, Policy, Political Philosophy, Prosperity Agenda, Recent Posts, Regulatory Environment/by RI Center for Freedom

Related Links: Oct 11 Press Conference Event & CEO Stenhouse Extended Remarks, Prosperity Agenda for RI,

Podcast: ALEC's Jonathan Williams discusses with Dan Yorke on 630WPRO

Video: Mike Stenhouse remarks at Press Conference

Adherence to Free-Enterprise Principles can Revive the Ocean State’s Economy

The state of Rhode Island requires significant public policy reform to unleash a private-sector economic engine fueled by the creativity, investment, and energy of businesses and individuals. What is not needed are more of the same subjective and politicized tactics that benefit chosen business sectors, favored political constituencies, limited geographical regions, or specific business ventures.

Rhode Island does not have to reinvent the wheel. Three proven steps are required to embark on a new path to improve Rhode Island’s economic fortunes:

1. Embrace the free-enterprise system as the means to restore prosperity

2. Follow and learn from successful economic policies implemented in other states

3. Design and implement public policy reforms reflective of the above, applied evenly and universally

In seeking to provide assistance to too many people, in caving to special-interest-group concerns, and by doling out special favors to the well connected, the state of Rhode Island has created dozens upon dozens of legislative barriers to success. These barriers have restricted economic and individual opportunities and incentives, resulting in the worst business climate in the country, loss of out-migrating taxpayers, a slew of Fs and Ds on the state’s Competitiveness Report Card, and the most dismal jobs outlook of any state in the nation. Prosperity can only be achieved if those barriers are systematically torn down and we move decisively on a new economic path.

That proven economic path is the free-enterprise system. Even President Obama calls it the ‘genius of America’, yet Rhode Island has sharply departed from its principles. Free-market concepts must be re-embraced and recognized as the economic engine that has proven to be the most effective machine ever devised to raise people out of economic misery and into a higher standard of living. This means our state must enact policies that lower taxes, reduce regulations, and cut spending. The benefit will be increased economic activity, more jobs, and positive state-to-state net migration. In contrast, government redistribution polices have failed the very citizens they intend to help.

Before we undertake the task of implementing specific policy reforms that dramatically roll back laws that hinder economic growth, a long-term commitment to economic freedom must be established. Removing certain barriers while erecting others will get us nowhere. Adherence to free-market principles is required. But, as a state, we must also be willing to work through our political and cultural differences.

Contrary to our popular notion of polarized politics, the free-enterprise system is not a political philosophy. It is a well-delineated economic philosophy predicated on a culture of success. As a people, we must overcome our disdain of the successful and resist the temptation for government to serve as referee in tilting calls to favor groups it perceives to be in need. This is not the proper role of our uniquely American form of government; it interferes with the efficient mechanics of the free-market system and it provides disincentives to achieve and prosper.

We must accept that a paycheck is better than a welfare check and recognize that a growing economy that provides job opportunities is far more desirable than a stagnant economy that breeds dependency on government services and impedes upward mobility. We cannot have it both ways. We must also understand that it is a morally preferable that free people should strive to be self-sufficient and maintain the rewards of their own hard work. Government policies should create incentives for the pursuit of individual happiness, not hinder that pursuit.

The main strategy to unleash Rhode Island’s economic revival should be to learn from and follow the successful policy reforms enacted in other states; namely, creating an attractive business climate, with free competition, so that all laborers, entrepreneurs, and businesses can have more opportunities to work, to innovate, to grow, and to prosper.

Our RI Center for Freedom & Prosperity has researched and developed an initial set of policy reforms that are consistent with these goals – our Prosperity Agenda for Rhode Island: a set of taxpayer-friendly, worker-friendly, and business-friendly reforms that reduce burdens on employers and provide more freedom of choice for individuals; proven reforms, successfully implemented in other states, that will start to move the Ocean State down a new path towards economic growth.

MEDIA

Cranston Herald: Study shows free-market enterprise is path to prosperity in RI