Tom Sgouros: Pay Attention to the Numbers, Stupid

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Saturday, January 28, 2012

Tom Sgouros, GoLocalProv MINDSETTER™

I see from reports out of yesterday's "e-town hall" or whatever we're calling this new mass conference call technology, that Governor Chafee is going to introduce a bill to the Assembly that would allow cities and towns to suspend cost of living adjustments (COLA) to retirees. As much as I hate to say it, this is likely the right call.

The problem is that the Assembly has virtually declared war on the finances of our cities and towns. They keep cutting state aid to the municipalities, and refusing to cut program requirements. Between 2007 and 2011, the state cut $65 million in revenue shared with municipal governments, plus another $125 million that used to be spent to pay your car taxes.

The kinds of education aid that actually go to a local school budget went down from $690 million to $632 million, another $58 million loss. In other words, counting the car tax loss, cities and towns saw a net loss of $248 million over four years, most of which came in 2010.

On the other side of the ledger, can you think of a state mandate that was lifted during that time?

The abuse of the municipalities is appalling, and it should shock no one that East Providence has fallen. Informed betting has it that there will be more cities entering either receivership or state control before too long. The only uncertainty is where.

With the Assembly refusing to cut requirements on the cities and towns, and the Assembly refusing to restore the cut funding, the Governor has decided to put Assembly members on the spot with a bill that will infuriate union members. The truth is that you can't get something for nothing, but I'm not talking here about the union members; I'm talking about the Assembly leadership.

Having it both ways

For many years, the Assembly leadership have demanded to have it both ways. That is, they've spent state dollars to get the approval of the rich people whose taxes they've cut and cut and cut, but have repeatedly skated away from the "tough choices" they are always talking about. Those choices are typically hidden within the budget, a big and complicated piece of legislation where you can always point to some extenuating cut to justify your vote, so the tough choices are never really out there, with the occasional exception like last fall's pension vote.

Arithmetic will win out, though, and you simply can't get away with this kind of thing year after year. Coddling rich people has cost our state a tremendous amount of money over the past decade and what have we got to show for it? A municipal fiscal crisis and a state whose finances aren't so hot, either. A perpetually broke Department of Transportation has bridges rotting all over, and schools all over the state cutting art and music classes even while more charter schools are founded to suck away yet more funding. We have libraries foregoing book purchases, and a colossal backlog at the state health labs. And all this is just a sampling of the decay produced by the mania that says you can "do more with less" year after year after year. This is a crazy way to run the state, but the people who run it can continue this way because they're never actually forced to make choices that are tough.

COLAs are a good thing

On the merits, retirees deserve COLAs. It simply isn't fair to offer someone a pension whose value will decay year after year. Elderly people can seldom do much to offset the loss of income this means. One of the major achievements of 20th century US social policy was to redefine old age from a time of penury to a time of pleasure. Social Security and the widespread adoption of pension plans by employers across the country made that happen. I don't want to go back, and you shouldn't either -- if you hope to be old someday.

On the flip side, though, a COLA is meant to preserve the value of a pension, not to increase it. Contracts that provide COLAs far above the actual rate of inflation were a mistake to begin with, and the retirees who have profited this way have contributed to the public sentiment against public employees, to their shame, and the shame of the people who agreed to those contracts.

So I say again, hooray for Governor Chafee. I hope he not only introduces this bill, but he finds a way to get it to a vote on its own and not get packaged up in the budget bill. I am tired of hearing about "tough choices" from people who never have to suffer the consequences of the choices they've made. To the members of the General Assembly: If you believe COLAs are a waste of money, vote for this bill and suffer the consequences. If that means you lose your seat, we can all hope you will be replaced by someone who understands that arithmetic matters.

Tom Sgouros is the editor of the Rhode Island Policy Reporter, at whatcheer.net and the author of "Ten Things You Don't Know About Rhode Island." Contact him at ripr@whatcheer.net.
 

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