Chafee’s Budget: A Taxing Attack on the Middle Class
Thursday, March 10, 2011
Governor Chafee billed it as a shared sacrifice budget, but the proposed plan unveiled Tuesday has emerged as more of a wholesale sacrifice of the Rhode Island middle class on the altar of the pension preservation church, of which Chafee is a very faithful member.
The proposal, which is far from any clear path to actually getting passed, was positioned as taking an across the board “share the pain” approach to tackling the state’s roughly $300 million dollar deficit in the midst of shrinking sources of revenue.
Chafee backed away from his highly criticized one-percent tax idea on staples like groceries and prescriptions, but now proposes a far longer list of taxable items and transactions. Chafee’s token gesture of “lowering” the sales tax by a point from 7 to 6 percent, is of muted value now that he has taken a broadened tax targets approach that will make the lives of middle class Rhode Islanders, struggling on ever tighter family budgets, more expensive day in and day out.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTFrom the minute you turn up the heat in the house in the morning until late in the day when you pick up your malfunctioning car that just got repaired at the garage –it will cost you more. As you squeeze in a quick haircut, grab some cold medicine at the pharmacy for one of the kids, and pick up your dry cleaning on the way to the repair garage, it will cost you more at each and every transaction. Oh and when you grab your spouse or the kids and head to the movie theater Friday night, because these days that’s about the extent of the family outings you can afford– it will cost you a new tax to buy the movie tickets with the popcorn. Welcome to the deteriorating Rhode Island middle class life.
But how exactly will this jumpstart the anemic local economy? How does the Chafee approach help the bulk of our small business owners, who operate the shops, salons, repair garage etc. attract urgently needed new business when customers will be turned off by paying a higher costs for their services?
In fairness, there are some modest attempts in the budget plan to offer some tax relief to the business sector, including a proposal to further reduce the corporate income tax rate from 9% to 7.5%. But that will be countered in the form of new employee taxes to businesses to shore up the steep loan repayments coming due for the state’s hefty borrowing for the unemployment benefits fund.
Perhaps most alarming about Chafee’s proposal, is its approach to the state’s dominant debt dilemma: the pensions. Despite the talk in recent weeks coming from other elected leaders or fiscal advisers about the need to rein in the pension costs, most notably in the city of Providence, Chafee’s blueprint is centered on the principle of pay up—with little mention of scaling down.
While he is proposing to require statewide public employees and teachers to increase their own contributions to 11.75%, he has also unveiled a new gift to the unions in the formation of a new forced pension contribution fund aimed at the cities and towns. He’s calling it the Municipal Accountability, Stability and Transparency (MAST) program. But as Cranston Mayor Alan Fung is bravely and correctly pointing out, the program is unfairly designed to force communities to make pension contributions they cannot afford, without any attempt to enable cash strapped towns and cities like Cranston to reduce the size and scope of the benefits. It’s a MAST that seems destined to sink several communities in the state that are already taking on water.
This budget proposal makes one wonder maybe Chafee just can’t intuitively understand that doling out extra pennies, dimes and dollars for everyday transactions is a large burden on the state’s middle class. Maybe someone whose family’s education options have never had to be dependent on a Rhode Island public school cannot viscerally feel the middle class rage of seeing school budgets be more than 80% dedicated to the personnel contract with the scraps left over for the curriculum, music, arts and sports.
One final note: the budget proposal authorizes that a study, originally begun in 2008, be resumed about the possibility of putting tolls on the state’s highways to create a fund for our deteriorating roads and bridges. Instead of the path to prosperity, maybe this budget plan needs a new name: “The Toll Road to Oblivion” seems to fit.
Donna Perry is a Communications Consultant to RISC, Rhode Island Statewide Coalition
Related Articles
- Providence: The Capital of Insecurity
- The Rallying Cry of the New Rich
- Why Watson Is Not Wrong
- The Coming Collapse
