State Leaders, Experts Call Chafee Budget ‘A Good First Step’
Thursday, January 17, 2013
They responded with a standing ovation.
It was brief moment of levity but a good microcosm of the night overall as General Assembly members, local and state leaders and political officials across Rhode Island had high praise for the governor and his proposed 2014 fiscal year budget.
Chafee’s $8.2 billion plan would cut the corporate tax rate in the state from nine percent to seven percent over the course of three years, would increase aid to local school districts by $30 million and would come without a tax or fee increase.
It does, however, come with a cost as some cuts are expected in social services.
GoLocalProv asked state lawmakers, local officials and economics and political leaders to weigh in on Chafee’s performance last night. And while most admitted they needed to study the proposed budget more thoroughly before being completely signing off on it, saying the oft-repeated line that ‘the devil is in the details’, by and large the reaction was positive for the governor, his State of the State address and his initial budget proposal.
Fox: Focus On Education Key
Fox noted that he was pleased to see the Governor call for an additional $30.3 million to fully fund the state’s school aid formula, was glad to see Chafee tackle the problem of rising tuition costs at the state’s three higher education institutions and hopes to see more work done to lessen the “debt burden” that students face by attending colleges in the state.
Fox was also pleased with the governor’s announcement of an additional $600,000 in tourism marketing efforts and his lowering of the corporate tax rate.
“I think the governor hit on a lot of points,” Fox said. “I think it’s a good budget. We’ll start our hearings on the House side with [Finance] Chairman [Helio] Melo’s committee. The devil’s always in the details in terms of lowering the corporate tax and adding all these investments, so until we get into the details and we can see how it all balances and whatnot, we’ll withhold further comment but I think it’s a great starting point.”
Fox was also pleased to see that the Governor was able to get the budget submitted much earlier than usual.
“I think we are on a very, very good start, probably the best start that we’ve had in terms of budget proposals due to the very fact that it’s on time,” he said. “It lets our committees get to work very quickly.”
Paiva Weed: Budget Has A Balance
Senate President Teresa Paiva Weed said she believes Chafee’s budget, at least on the surface, reflects many of the priorities of the legislature.
“The budget proposal was extremely well-done,” she said. “I applaud that there are no new taxes or fees, applaud the proposed repeal of the corporate tax, the institution of the historic tax credit as well as additional aid to cities and towns.”
Paiva Weed does have some worries, however.
“This budget reflects a number of hard decisions that the governor indicated,” she said. “Some decisions which I know many of us will look to closely examine as we move forward [include] not providing cost of living increases in some of the areas of human services, such as the area of nursing homes, so there are still some concerns. Any budget requires a balance, we want to move everybody forward, not just a few.”
Paiva Weed applauded Chafee for his focus on infrastructure, his investments in education, his investments in workforce development and job training and called his decision to lower the corporate tax and his instituting a historic tax credit “bold steps.”
“There is a balance here,” she said. “[There’s] a combination of bold steps with a steady pace that the governor has hoped to maintain. I think that it may just be enough to move the needle.
Melo: Rhode Island Is On The Right Course
House Finance Committee Chairman Helio Melo said he believes that Chafee’s address last night shows Rhode Island is on the right path.
“It’s a slow-moving ship but we’re on the right course,” he said. “It was great to hear that the Governor’s proposed budget does not have any new taxes, no new increases and so that is great for the state of Rhode Island and all Rhode Islanders.”
Melo said he believes the proposed corporate tax reduction is something the House will have to look into.
“That’s something that we need to focus on,” he said. “How we get there, we might have different ways but at the end of the day I feel that the results will still be the same and I think the governor’s numbers are very realistic and they can be attained.”
DaPonte: Time To ‘Undo’ Some Tough Choices?
Senate Finance Committee Chairman Dan DaPonte called Chafee’s efforts a good start in the budget process.
“I certainly think there was some energy in the room,” he said of the State of the State address. “I think the budget appears to be a good one with some significant investments and attempts to continue to move the state in the right direction. Obviously the devil is in the details and we’re going to go through the budget process and let the process work itself out.”
DaPonte felt the fiscal year 2014 budget might be a chance for the state to “undo” some of the tough choices it’s had to make over the past couple of years but he was pleased that Chafee’s proposal also included a balance of items that he felt were “investments for the future.”
Mattiello: This Budget Is Different
House Majority Leader Nicholas A. Mattiello said he liked the governor’s priorities this budget season.
“My overall reaction is very positive,” he said. “I like the investments in education in our cities and towns and our infrastructure. Those are priorities that are very important to our community, they are what make us a community, they help support and build our foundation for our future so I thought his speech was good. But, as in all State of the State addresses, we’ll take a look at the budget when presented and look at the details.”
Mattiello also felt that this budget was unlike Chafee’s other two as governor.
“I’m very pleased that we don’t have any tax increases in this budget,” he said. “In the past, there have been fee increases which I generally am opposed to. I like the fact that he took a look at ways of improving our economy long-term and reducing the corporate income tax.
I believe that’s a move in the right direction so this budget is very different from previous budgets in that I think it makes good investments in things that are very important to our community, to our students and all aspects of the community as well as taking some actions that will actually help our economy long-term.”
Newberry: ‘I Was Pleasantly Surprised’
House Minority Leader Brian Newberry said the highlights of the governor’s proposal for him were the lack of a tax increase and the cut of the corporate tax rate.
“I think those are important,” he said. “I think the best thing we can do to help Rhode Island is we have do something to increase our private sector job space. That’s critical because when you employ people, a lot of the other social work, social studies, tend to take care of themselves so if you can do something to increase private sector employment, such as cutting the corporate tax or restore tax credits that will help the construction industry, I think those are important steps.”
Newberry also felt that there was something different last night than at previous State of the State addresses.
“This budget is a night and day difference from the last two,” he said. “I can tell you having sat through this same address for the last two years, in my own mind, I rejected his prior budgets out of hand as did most the Assembly members, whatever their political leanings. This one here, and again the devil is in the details, and so I will have to look at it, there are probably a lot of things I’d like to see in the budget that aren’t there and I’m sure there’s going to be things in there that I don’t care for but this is something we can at least work with.”
Algiere: We Need To Put People To Work
Senate Minority Leader Dennis L. Algiere said he wants a little more time to understand “where the money is coming from” but felt last night was a good start for the budget season.
“There are a number of things that I heard today in the budget address that I do like,” he said. “First of all, no tax increases or fee increases and we’re beginning the process of reducing corporate tax burdens. What we need to do is we need to put people to work and get a decrease of unemployment in the state. Those are things I like to hear.”
Algiere also credited the governor with addressing the corporate tax reduction, investing in the state’s education system and “beginning the process/continuing the process to reduce the property tax burden which is tremendous in our state.”
Raimondo: Rhode Island Needs A Vision
“I think Rhode Island needs a vision and a leader who can act,” she said. “And the reason we did pension reform is so we can invest in the future and I think what you heard tonight is a message of investing in the future.”
Costa: The Trouble Lies With The General Assembly
Representative Doreen Costa, one of Chafee’s most vocal critics on matters of policy, felt that the governor displayed a number of “really great ideas” at the State of the State address but worried how much different the budget that ultimately gets approved will be to the one submitted last night.
“The first impression of the budget is always a good impression because that’s what they do,” she said. “They want to make it great so the people in the state think that you’re doing something good and they want it to excel. The issue that I have is that once the General Assembly gets its hands on the budget and starts amending the budget .. I mean, you’ve got to realize, this General Assembly has a ‘tax-and-spend mentality.’ ”
Costs said that because there are a noticeable lack of Republicans in office, she believes there is a good chance the budget will be amended to feature a lot of items she objects to.
And although the Governor touted the fact that he submitted the budget early, Costa doesn’t think that will matter much.
“We have a little more time but things here move at a snail’s pace,” she said. “I’m just happy that the governor has the budget here early. Unfortunately, I don’t think it’s going to make too much of a difference. We’re still going to be in session until three o’clock in the morning crunching numbers which I don’t think is fair to the people that we represent.”
Avedesian: ‘Good News For Warwick’
Warwick Mayor Scott Avedisian had a brief statement in reaction to Governor Chafee’s speech last night.
“The Governor's speech was good news for the City of Warwick,” he said. “We are slated to get more state aid, more school aid, and our Warwick Station Development District efforts were highlighted by the Governor.”
Langevin: Social Cuts A Concern
Rhode Island Congressman Jim Langevin, who attended last night’s address, said he had a positive reaction to the governor’s speech overall but had some concerns related to potential cuts to social services in the state.
“I believe that he’s focusing on the fundamentals that keeping the state strong and investing in and supporting education, workforce development and infrastructure,” he said. “Those are all key elements of keeping Rhode Island moving in the right direction.
We all know that if we want to grow the economy, we have to have an educated workforce. If we want businesses to expand here and relocate to Rhode Island, we have to show that we have a workforce with the right skills for the jobs that are available and obviously we’re challenged with a crumbling infrastructure to do more to support our roads and bridges and so the governor’s emphasis on these things are very important”
Langevin hopes the General Assembly and the budget process as a whole don’t impact “the most vulnerable populations in our state.”
“Hopefully revenue will improve and that will lessen the impact of any proposed cuts,” he said.
Pacheco: No Bold Idea For Quick Jolt
Rhode Island Democratic Party Chairman Ed Pacheco issued a statement praising the Governor’s budget proposal overall but wondering what impact some of his ideas will ultimately have.
“In his State of the State budget address, Governor Chafee touched upon the key points crucial to strengthening Rhode Island’s economy: education, infrastructure and workforce development. Investing in education is, of course, critical and I applaud the governor for again fully funding the school aid formula and for his innovative approach to providing savings to our higher education institutions. I also respect his continued pledge to assist cities and towns with high property taxes that overwhelm home and business owners.
The governor was right to discount the ‘get rich quick approach.’ However, there was no bold, innovative idea presented that reflects our state’s immediate need for an economic jolt. He made apologies for cuts to social services, the impact of which is uncertain as we have yet to see the complete details of his budget.
In all, he is asking Rhode Islanders to trust the course we are on and cautioning the General Assembly to be skeptical of anything other than that. Now it’s in the hands of the legislature and I credit Governor Chafee for his willingness to work with the Assembly on common sense solutions. How the Assembly embraces these initiatives, along with developing effective initiatives of their own, will determine the substantive policies that are needed to move this economy forward.”
Zaccaria: 'Here We Go Again.'
Not everyone was convinced Chafee’s proposal would work.
Rhode Island's GOP Chairman Mark Zaccaria felt the budget didn’t go far enough to get to the matters really affecting the state.
“The Governor is exactly right in his assessment that the Corporate Tax Rate must be lowered to promote Corporate Activity. In fact, doing so will increase overall state revenues. So why wait three years? And why only go down two points? Does he not really mean it?
It was the best, most substantive and specific thing he said. I was encouraged that he correctly identified this easy target but I was also concerned that he seemed only to be paying lip-service to it by suggesting only a faint attempt to implement it. I say 'Faint Attempt' because we all know that the Legislature will dial back whatever he offers, so why start with a low bar?
As for the rest of the speech I found it a laundry list of heroic focus issues, all of which were predicated on spending money we don't have. Six million for tuition support in post-secondary education? OK, but from where? Three Million in workforce development? OK, but what's that? CEETA? And where are we going to get the cash? He loves the fact that the voters passed every Bond Measure in 2012 but offers nothing about how we'll repay the $200+ Million all that good stuff will cost. Five hundred thousand for the 195 Development Council? Six hundred thousand for Tourism Advertising? Show me the Money!
What we saw in the bulk of the Governor's speech was a listing of noble concepts with no sense of priority or of how we would fund them! There was nothing in his speech about compensating cuts. There was nothing in his speech about reducing the high incentives we now have for increased Entitlements Spending. There was no estimate of the projected revenue increase that will surely result if we lower corporate tax rates so there could be no policy statement about where that new money might go to further promote Rhode Island.
The Governor began his speech by referencing the State House, itself, as a symbol of our Proud and Prosperous Past. Sadly he did not end it with a clearly articulated roadmap for returning Rhode Island to that preeminent position. The speech was eyewash. Its lack of priorities and outlined next steps indicated to me that he has no plan that he's willing to fight for in hand-to-hand combat with the far more powerful legislature.
Block: It Was Chafee’s Best Speech
Ken Block, Chairman of the Moderate Party of Rhode Island felt last night was the best speech he has seen the governor give and said that, in terms of specific content, there wasn’t much that he could take issue with.
“Fully funding the educational funding formula, not raising taxes or fees, lowering the corporate tax rate and spending money to maintain infrastructure are all, in my opinion, solid, common sense governance issues,” he said. “I would personally like to see more aggressive steps to resurrect our economy—especially when you compare Rhode Island's performance relative to our neighboring states. There is still a LOT of work to do to make RI a more desirable place for businesses to want to come to do business - and we must do that work to fully fix our high unemployment relative to our neighboring states.”
Wynne: Questions remain
Rhode Island Tea Party President Susan Wynne said that, after she listened to Chafee’s budget proposal, she had a number of questions that were left unanswered or whose answers were “troubling”.
“Where are the major spending cuts?,” she asked. “Will taxpayers be keeping more of their hard-earned money? Will business regulations be significantly reduced? Will there be voluntary union membership? Will we return to a free market in healthcare? Will he respect our 2nd Amendment rights or amass more power for an ever growing government?”
Perry: Where Are The Bold Initiatives?
“It’s good the Governor now recognizes any new taxes would be a disaster for Rhode Island and the state will benefit from the changed corporate tax rate proposal, no question,” she said. “But overall he failed to articulate a coherent galvanizing vision for how Rhode Island is going to reverse course out of a depressed economy, dead last rankings, and a widening inability to match its workforce with jobs. Where are the bold initiatives? They are just not there and it’s disappointing.”
RISC says the address reflected a “mixed commitment to help local communities.”
“His plan to send $20 million in state aid to local cities and towns, especially distressed communities, is an important step toward holding down the need for local tax hikes,” the release said. “However, RISC notes there was no mention of a planned effort to bring back last year’s municipal relief package aimed at municipal pension reform and cutting excessive personnel costs that weigh down city and town budgets.”
“It’s a step forward by Chafee to provide aid to communities and keep property taxes from any new hikes,” Perry said. “However it’s concerning to see no mention of a renewed attempt at municipal relief and municipal pension reform.”
Perry says the Governor’s “proposed budget commitments to public education and infrastructure are solid pieces of his overall plan.”
“The state needs to continue the strides it’s making to improve the performance of its public schools, as well as reverse poor rankings for the condition of our roads and overall infrastructure and so the Governor is right to make those investments,” she said.
Mazze: Real Question Is What Will Legislature Do?
Edward M. Mazze, a professor of Business Administration at the University of Rhode Island said the governor’s speech was “upbeat about the state's economic future” but still concerning.
“Unfortunately, there was no vision or plan presented about how the state is going create jobs for today and for the future,” he said. “A new remedy was recommended - lowering the corporate income tax rate over the next three years from nine percent to seven percent. This rate has very little effect on small businesses and sole proprietors which make up over 90 percent of the businesses in Rhode Island. Yet, it is still a good idea since it tells the world Rhode Island is open for business.
“Legislators were also delighted because the Governor used the right words - no increases in taxes or fees, investments in infrastructure and education, more support for cities and towns, getting people back to work through workforce development programs and more revenue to support human service programs. These items are mentioned every year and get lost by the time the budget is approved. The real question is what will the legislature do after they review the budget? The answer is whatever they like.
After a budget is approved, will the state be more business friendly? How many new laws will be passed to stop businesses from growing? Will government programs be cut to reduce government expenditures? Since the last State of the State speech, there have been few accomplishments that have created any new jobs. How will the state budget deal with the $75 million fiasco in video games? What happens if the unfunded public pension and health benefits liabilities law is over-turned in the court? What about the unfunded local and town pension and health benefit programs? What about the cities and towns currently in financial trouble? All topics avoided in the speech but could cause Rhode Island to return to a recession.
The state needs leadership beyond the governor when it comes to economic development. And, Rhode Islanders need accountability from elected officials at all levels.”
Lardaro: Chafee Was At His Best
University of Rhode Island economist Dr. Leonard Lardaro said last night was the “most animated” he’s seen Governor Chafee in a while.
“As I watched the address, it was apparent that this budget correctly attempts to add substantial funding for investment-oriented purposes such as education and infrastructure which generates both future economic growth and added tax revenue,” he said. “I also liked the proposed change to the corporate tax rate, even though this is not necessarily the best way incentivize business expansion because it focuses only on the rate and not on deductions. It should, nonetheless, improve our national rankings.
Lardaro did have concerns, however.
“As the address progressed, though, I couldn't help but wonder how we are supposed to pay for all the added funding the governor's budget calls for,” he said. “Is there the presupposition of large revenue increases due to the expansion of gambling? Is substantial growth assumed? The address only dealt with the "goodies" while excluding any discussion of proposed cuts and the ultimate financing of what was proposed.”
Schiller: Chafee Needs A Victory Early This Year
Wendy Schiller, an Associate Professor in the Department of Political Science at Brown University, felt the governor gave a “strong speech” outlining “his fiscal priorities for the state with the appropriate emphasis on the economy and its components parts including corporate tax rates, education, and infrastructure.”
“I also think he was right to hone in on property taxes and municipal finances which can be important in attracting new business to the state,” she said.
A big concern for Schiller, though, is how Chafee works with the General Assembly in crafting the actual budget that will be adopted.
“The question now is how Governor Chafee will show the necessary leadership and cooperation with state legislative leaders to get some of these key proposals enacted into law,” she said. “He needs to achieve a legislative victory early in this new year to establish momentum and show he can be an effective leader as governor. A victory on enacting same sex marriage in Rhode Island would be one type of early accomplishment that he needs.
Schiller wraps up her thoughts with an opinion expressed by many on Capitol Hill last night.
“From this speech, it seems to me that Governor Chafee intends to run for reelection in 2014,” she said.
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