Bishop: Tax [Breaks] and Spending

Thursday, June 23, 2016

Brian Bishop, GoLocalProv Guest MINDSETTER™

You may not think that “Tax and Spend” is wise policy, but at least its honest. If you spend a lot, you have to tax a lot. If all went as the Keynesians forecast, RI would have a great economy because of all this government spending -- the burden would be well dispersed and hardly noticeable. How’s that workin’ for ya?

But in Rhode Island we have a new version: Tax [Breaks] and Spend. Tax burdens are high and discourage economic growth. So the government has taken to purchasing growth with borrowed money, i.e. selling the future of our state for the future of our state.

A History Of Not Paying For Tax Breaks

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.Historic tax breaks are a great . . . eer sad, example. These are nothing but inefficient corporatist giveaways disguised as concern for historic architecture. While some historic structures can be lost to decay, Boston in the mid 20th century is the perfect example of how they are more likely to be lost: to the penchant for government planning. The Boston Redevelopment Authority leveled historic buildings to make way for its brutalist Government Center and the Prudential Center.

In Providence, we were fortunate enough not to have been redeveloped to that extent. And yet we are constantly pestered to support redevelopment. Many historic buildings found interim uses, but downtown developers don’t want to be bothered with that. They would like you to write them a check and forget about waiting for the economy to catch up.

Even if you think historic tax breaks are a necessary evil, we didn’t budget for the cost of these breaks, we used moral obligation bonds through the Commerce Corporation to pay for them, a harbinger of the tax [breaks] and spend ‘fireworks’ economy.

Fireworks Economy Fizzles

The flash and bang from each growth purchase fades quickly, requiring us to head back to the fireworks factory and buy more and more, when we haven’t even paid for the fireworks that have already gone off and faded.

Like the folks bringing the big fireworks from South of the Border, these corporatist purchases need to be hidden lest the authorities, that’s us, should figure this out. And historic tax credits are but the tip of the iceberg in what is given away in directed tax breaks -- not tax relief, where everyone’s taxes are lower, but tax breaks for the select few.

Spending Not Neglected Either

Spend side stimulus is justified by allowing infrastructure to atrophy and paying no attention, not only to maintenance, but to what would be a reasonable scale of investment in specific projects. So we get a billion dollar giveaway to construction contractors and the laborers unions in the form of the rebuilding the 6/10 connector.

While the aging portion of the highway that cut Olneyville from Silver Lake was built in the 1950s, the last mile north to 95 -- that DOT insists is the important purpose of the connector -- wasn’t even opened until the mid 1990s, 40 years later. We did just fine without it. In fact 95 was far less congested when we had a larger population and more downtown business before that interchange opened. Yes the old bridges are shored up, but the answer may well be to tear them down, not to rebuild them.

Inside Baseball Dominated By Special Interests

No more stark contrast could be seen than how the Transportation Advisory Committee (TAC) of the State Planning Council last month didn’t raise a peep of protest to authorizing DOT to borrow $195 million dollars now for the 6/10 project that has no agreed plan and is still years away. At the same time, this same committee saw pitched battle over a $3 million cost share for an exit ramp from 295 serving the new Citizens Bank campus in Johnston.

You would think that the Statewide Planning agency that has taken so much interest in pawing through municipal plans lately, might be interested in seeing the actual plan for a major state project like the 6/10 connector before approving hundreds of millions in borrowing. But you would be wrong. It isn’t necessarily wrong to plan for some expense in the future, whether for tearing down the 6/10 or rebuilding it. But there is a distinct effort to push DOTs massively expensive stalking horse out of the barn before the review, a review which might close the stall door.

Biblically, then, the committee turned to the mote of the Citizen’s exit ramp while ignoring the beam of the 6/10 connector. A well organized TAC faction attacked a $3 million dollar investment splitting the cost of this exit with Citizens but ultimately failed, as they should have. But there was a debate. In this Alice in Wonderland world of planning, a small investment, reciprocated by private industry, is attacked while a slothful hundreds of millions feeding frenzy for consultants, contractors and unions is ignored.

Of course corporatism American style, with its handouts of public money to private projects, ought to be opposed even in small amounts. But highways are not private projects. One of the few real jobs that government has is the build out of our road system. Locational decisions by major private employers are appropriate drivers, not to mention that Citizens actually offered to pay for half the costs of the public infrastructure that was particularly suited to its own needs.

The organized effort against the plan was no taxpayers movement, it was a green coup by those who think it’s government’s job to tell business where to locate. Ironically they were undone in some measure by the fact that the location was actually within the commercial development corridor along Route 295 contemplated by the very government planning upon which they regularly hang their hat.

The Citizens Tax Break That Deserves Scrutiny

If $3 million to split the cost of an exit ramp were a no brainer, there is something else to be said about the new Citizens Bank campus that deserves scrutiny. It received a 20 year subsidy from Johnston officials who are elected for only 2 or 4 years. This might or might not look stupid for Johnston based on an alternative universe without the project. Collecting a third or half of the taxes they ought to might be better than collecting nothing.

Bishop: Tax [Breaks] and Spending

Related Slideshow: The Highest Taxed Communities for 2016

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