David Brussat, Dr. Downtown: Ask Dr. Downtown

Monday, February 23, 2015

David Brussat, GoLocalProv's Dr. Downtown

 

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R.I. Department of Administration building, courtesy of diversity.ri.gov:

Dear Dr. Downtown: Rhode Island is facing fiscal meltdown and you are calling for “thought experiments” about cutting entire agencies from the state budget. When are you going to get real? - Exasperated in Escoheag

A thought experiment is not real, but a serious look at excess baggage in the state budget is real, including seriously considering the possibility of cutting entire agencies. That is the definition of getting real. Governor Raimondo’s definition of taking a hard look at the budget so far strikes the doctor as more of the same old same old.

Dear Dr. Downtown: Are you serious? You yourself just used weasel words - “seriously considering the possibility of cutting”! Give us a break! - Appalled in Apponaug

The doctor apologizes. He should have said “seriously cutting entire agencies.”

Dear Dr. Downtown: I cannot remember a time when the state was not worried about “structural deficits.” But the state has continued to operate in spite of them. I am sure we will muddle through without having to cut entire agencies. - Optimistic in Olneyville

Maybe so. The governor laid out a startling set of figures for how Rhode Island compares to other New England states in a range of categories, basically detailing how we spend more but get less in a string of spending categories - education, infrastructure, health care, fire safety, public-employee compensation, etc. And in the absence of major state spending cuts she listed projected budget deficits through 2019: $172 million in fiscal 2015; $190.4 million in 2016; $255.6 million in 2017; $382.8 million in 2018; $496.3 million in 2019. That’s $1.49 billion over five years.

Dear Dr. Downtown: Please stop trying to confuse us with numbers! - Thick in Thornton

The doctor would prefer to count snowflakes than budget shortfalls, but stay with him. Dr. Downtown may be on to something. This year’s budget is expected to top $8.5 billion. If the budget were level-funded for five years, the state would spend $42.5 billion. Over five years, the $1.49 billion deficit would be easy to swallow. So maybe Optimistic in Olneyville is right.

Nah. The doctor regrets to predict that level funding won’t happen, Furthermore, the federal dollars that make up more than 33 percent of that are likely to shrink. Lottery proceeds are expected to account for $400 million this year, or 11.4 percent of the state’s revenue. With Massachusetts gambling coming online starting this year, those numbers will fall, too.

The governor apparently did not mention the level-funding option but did mention - as a scare tactic, the doctor hopes, not seriously - raising taxes as a way to eliminate upcoming deficits. She said raising today’s 7 percent state sales tax to 8.8 percent by 2017 would do the trick. At least before figuring in the strangulating effect this would have on the state economy and revenues.

In the end, mark the doctor’s word. Rhode Island will have to cut entire agencies or go bankrupt.

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Detroit’s downtown Renaissance Center in distance, courtesy of bps.org:

Dear Dr. Downtown: Last week you quoted celebrity planner Andres Duany at length saying bankrupt Detroit has an entrepreneurial boom because it can’t afford regulators. But a Wall Street Journal story says Detroit still has regulators. What does that say about your pretty theory of cutting entire agencies? - Frankly Fraudulent in Frenchtown

The Wall Street Journal article supports both Duany’s story and Dr. Downtown’s thought experiment. Whether Detroit has no regulators or merely has no money to operate the regulatory apparatus, the result is that entrepreneurs can do a lot more if they don’t have to pay permitting fees or buy things like $70,000 kitchen fans that regulators insist that they must have. But paying Detroit’s regulators to come to work but not do their jobs is an inefficient use of the tax dollars of Detroit citizens, even if it allows entrepreneurs to create more private jobs.

Dear Dr. Downtown: So instead of sacking agencies full of state workers, how would you grow the Rhode Island economy for free? - All Ears in Exeter

The doctor will say it again: Let the governor give a speech urging economic development projects in traditional styles that strengthen Rhode Island’s brand by building up one of its top competitive advantages - its beauty. Developers’ costs in time and money would fall because they would no longer confront the confusing edicts of planning bureaucracies trying to balance the desire of professional constituencies to build modernist projects and the public’s dislike of such projects. The state’s beauty would grow and its attractiveness as a place to live, as a place to visit and as a place to create jobs would grow, too. A bigger economy at no taxpayer cost.

For example, traditional architecture works with rather than against the climate of New England. Just think of how much more sustainable houses with gables are than houses with flat roofs. Dr. Downtown’s house has gables, so he has not had to hire men to shovel snow off his roof. Keeping red ink out of his household budget is easier. That’s the doctor’s prescription.

 

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