Post-Fox Shakeup: Where Does RI’s FY15 Budget Stand?
Wednesday, April 02, 2014
What will Rhode Island's Fiscal Year 2015 budget look like under new leadership?
Just over a week after former Representative Nicholas Mattiello was voted in as Speaker of the House following former Speaker Gordon Fox's stepping down -- after a raid on Fox's State House office and home -- GoLocal reached out to the new Speaker, as well as other elected officials, leaders, and interest groups across the state, as to what the budget outlook looks like now, as well as their top priorities.
Speaker Mattiello, who in his first address to the House chamber last Tuesday said he would be focusing on "jobs and the economy," said what tops his budget agenda are "taxes, regulatory reform, and education and infrastructure."
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST"It is imperative that we become more competitive with our neighboring states when it comes to taxes. We will be looking closely at the estate tax, the corporate tax, and the minimum corporate tax as just some examples," said Mattiello.
What pieces of Governor Lincoln Chafee's $8.5 billion FY15 budget proposal -- which outlines $275 million in new borrowing -- the General Assembly will keep is yet to be seen.
"We must implement regulatory reform as part of our overall budget and economic development strategy. We must offer relief from the regulatory burdens that discourage companies from doing business in Rhode Island," Mattiello said Tuesday. "The budget must include a continued investment in our public schools and we need to develop a formula or strategy to properly fund our infrastructure needs."
GOP in Mix; Cuts on the Table?
As part of Mattiello's ascension to the top post in the House included support from the Republican caucus. House Minority Leader Brian Newberry addressed his party's priorities -- and how the dynamic has shifted with Mattiello at the helm.
"What I'd like to see is no tax increases, I'd like to see some cuts, I'd like to see significant cutbacks in bloated social welfare spending," said Newberry. "That would be my three priorities.
Newberrry continued, "I think it's too soon to tell what type of impact it will have for the GOP, but I hope to have a better working relationship with the leadership. Going back to 2005, when Governor Carcieri tried to get [then Speaker Bill] Murphy ousted, there was a fractured relationship, and it was the same leadership after that with Fox. There was nothing personal, it's just what it was. I'm hoping that will change. Mattiello wasn't in there back then, he doesn't have that back history."
At the forefront of proposing cuts to the budget is the Rhode Island Center for Freedom and Prosperity, who on Wednesday will be unveiling their "$potlight on $pending" Report at the State House, which was done in conjunction with the national Taxpayers Protection Alliance, and promises to save RI "over $225 million in wasteful spending."
"If we implement them all, we can reduce the sales tax to 3%, repeal the estate tax, and eliminate talk of tolls on the Sakonnet Bridge. now or in the future, and still have $100 million to work with," said Mike Stenhouse, CEO of the Center. "With the Reps and Senators over 100, you're not going to get consensus on all of the items presented. Our challenge -- and some of these items will have their defenders, and that benefit only a small number of people -- is to get people to say which of these is worth not saving the economy."
Fiscal Conservatives, Progressives Square Off
Financial analyst and GoLocal MINDSETTER Michael Riley supported the Center's report -- and questioned the political implications of the Fox shakeup.
"I would implement spending cuts using the Center's suggestions, as well as the report Governor Chafee received from Ken Block well over a year ago," said Riley. "I would eliminate both sales taxes and the estate tax and lower the corporate tax rate."
Riley added, "I think there will continue to be a big cloud however over the State House, waiting for the other shoes to drop from the Fox scandal."
Larry Girouard with RI Taxpayers similarly addressed tax structure as the group's top priority. "In my mind, government must create the environment in RI for business to flourish...beeing last in business friendliness in the country is not the brand that we want to have.
The legislature must consider tax reform at some level large enough to send a message to the northeast that, under a new speaker, things are going to change. The three tax issues in our platform are the sales tax, the corporate tax, and the estate tax," said Girouard, noting the group's "action agenda" could be found on their website HERE.
However, progressive policy analyst Tom Sgouros questioned the call for cuts in the coming year's budget.
"The progressive agenda, such as it is, was in terrible shape before the change of leadership, and I expect that to continue. Which is bad for our state since the policy changes most likely to be ignored as "progressive" are the most likely to have a positive impact on jobs and the economy," said Sgouros. "You want a better economy? Invest in the things that will improve it: roads, schools, communications infrastructure, the environment."
"This idea that the only reasonable way to improve the economy is to cut taxes exactly how the Chamber of Commerce wants is just silly and not supported by, you know, actual data," continued Sgouros. "Sadly, that kind of empty posturing is all I expect to see this year, probably with dire effect as our school budgets get tightened even further and property taxes ratchet up.
Sgouros offered what he thought should be the GA's priorities. "I think the Assembly should work to restore the terrible cuts in local and education aid under Don Carcieri. Governor Chafee has restored some parts of them, but not nearly enough. Beyond that, real investment in faculty at the colleges would be great, and I wish someone would do something about the broken credit markets in the state beside throwing money at them via the PEDP, EDC (now Commerce) and so on. "
Looking Forward
While the shakeup in the House could potentially have implications on the budgetary process, Senate Presdident M. Teresa Paiva Weed is moving ahead with her agenda formed earlier this year.
"The Senate President has emphasized that addressing the unemployment rate and the economy are the Senate’s top priorities. The Senate has unveiled an action agenda called “Rhode to Work” to help improve the skills of today’s workforce and ensure that tomorrow’s workers are prepared for a modern economy. The Senate hosted an economic summit last month to examine the issue more closely, and a package of legislation has been introduced," said Greg Pare, Spokesperson for Paiva-Weed.
Pare continued, "Some of these initiatives have a modest potential budgetary impact, such as legislation reinventing career and technical education so that students are better prepared for job opportunities available today, reducing the waiting list for adult education courses, and increasing the number of school districts providing full day kindergarten classes. Additionally, the Senate will continue to seek ways, within the context of a responsible budget, to further improve Rhode Island’s competitiveness, particularly with regard to its business tax structure. The Senate will closely examine data regarding the combined reporting method of taxing multistate companies, as well as the expiring moratorium on state aid for school construction.
URI Distinguished Professor of Business Edward Mazze stated he believed that the state's budget should be focused on one issue -- and one issue only.
"If jobs and the economy are really important to the state, the top three budget priorities must be education, education and education. Until we prepare our workforce for jobs for the future, and public K through graduate school education is appropriately funded and recognized as important, the state's unemployment and underemployment numbers will remain among the highest in the United States," said Mazze. "In addition, attracting and retaining businesses will be "mission impossible."
Mazze continued, "The Speaker needs to deal with 38 Studios, namely, have the insurance company pay back the bond holders. This will free up millions of dollars for economic development. The General Assembly also must come up with a financing program to deal with bridges. The only way these issues can be resolved is with strong leadership. I believe the current Speaker can provide this leadership and set the economic direction of the state. Any change of leadership results in a re-ordering of priorities. Hard economic issues should take the place of soft social issues. If the mediated pension system comes back to the General Assembly, it will be a toss-up as to how much courage the Assembly has in reopening the discussions. I hope they have the strength not to do it.
Related Slideshow: RI Communities with the Highest Tax Rates #39 - #1
How do the taxes in your community compare to other cities and towns in Rhode Island?
GoLocalProv has ranked communities from the least to the highest taxed on the basis of their tax rates, using newly released data from the state Division of Municipal Finance. The below slides list the tax rate per $1,000 in value for homes, commercial property, personal property, and motor vehicles for the 2014 fiscal year, which began last July and ends next June.
Along with the rates are examples of what taxes might cost a typical resident in each city or town. For residential taxes, this calculation is based on the current statewide median price for a single family home, which is $240,000. For communities with them, homestead exemptions are factored in using the latest available figures. For motor vehicles, the example used is a 2008 Honda Accord, valued at the maximum retail price of $15,150. The total cost of home and car taxes is then represented as a percentage of the median income for that community, offering a rough measure of how affordable taxes are for those residents as compared with the taxes in another city or town.
Data sources: the Rhode Island Division of Municipal Finance, the Rhode Island Association of Realtors, the Rhode Island League of Cities and Towns, the National Automobile Dealers Association, and the U.S. Census Bureau.
#39 New Shoreham-
#38 Little Compton 
#37 Jamestown
#36 Charlestown
#35 Narragansett
#34 Bristol
#33 Portsmouth
#32 Westerly
#31 South Kingstown
#30 Newport
#29 Middletown
#28 Exeter
#27 Tiverton
#26 Richmond
#25 North Kingstown
#24 Coventry
#23 Cumberland
#22 Hopkinton
#21 Warren
#20 East Greenwich
#19 Burrillville
#18 Barrington
#17 West Greenwich
#16 Foster
#15 Scituate
#14 Glocester
#13 North Smithfield
#12 Lincoln
#11 Warwick
#10 West Warwick
#9 Cranston
#8 Smithfield
#7 East Providence
#6 Johnston
#5 Pawtucket
#4 North Providence
#3 Woonsocket
#2 Providence
#1 Central Falls
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