Tom Sgouros: Tom’s Weekly Tidbits
Saturday, July 02, 2011
Favorite moments of last week's budget debate:
1. Watching Rep. Joseph Trillo (R-Warwick) give a stirring speech about the evils of overcompensated executives and the need for comprehensive health care reform. These are not, shall we say, Rep. Trillo's signature causes, or they have not been to date, anyway. Of course what he thought he was doing was speaking against the new sales tax on non-prescription drugs and recommending that the House scrap the new tax in favor of reclaiming what Lifespan hospitals pay their executives. There's no legal way to do that, but it would appear from his speech that he has no philosophical objection to several important progressive economic reforms, and I look forward to his energetic support of them in the future. In a state where the maintenance of corporate loopholes, tax cuts for the rich, anti-choice legislation and voter suppression bills all come from Democrats, who says progressive economic reforms can't come from Republicans?
2. "Combined reporting" is shorthand for an easy way to close a bunch of corporate loopholes for companies that operate in multiple states. The House leadership chose not to close these loopholes -- again. Representative Jon Brien (D-Woonsocket) rose to say that because four of the six New England states have closed these loopholes, we should not. "It's a competitive advantage," he claimed. I'm not sure if the argument was that we shouldn't close this loophole because Wal-Mart might move out of state, or if he wants us to become a haven for corporate tax cheats. Delaware, for example, has done fairly well as a haven for corporate tax cheating, robbing other states of corporate revenue, so I guess it's a strategy of sorts. But Delaware has been providing this haven for decades; it's why they have more lawyers per capita than any other state in the union except New York. The real reason this strategy works for them is that they have nearly all the tax cheats. Just getting a few will only make things worse here and more unfair for the non-cheats.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST3. The House added a sales tax on sightseeing tours conducted within Rhode Island. At one point, Rep. Karen Macbeth (D-Cumberland) rose to ask in horror whether the new sales tax would cover tickets to the "Polar Express" train run up the Blackstone Valley line in December that includes a visit to Santa. She asked, "Do we want to be the state that taxes Santa?" A fine debate ensued, with everyone seeming to mistake taxing a transaction with banning it. Here's some news: the state sales tax also applies to the sale of teddy bears and little cute puppies, too. I think it even covers bunnies.
4. RI-CAN misleads about their poll: A couple of weeks ago, RI-CAN put out a poll they did about education in Rhode Island. In the press release, they reported that "Seven in ten Rhode Island voters (69 percent)
support expanding the number of high-quality charter schools in Rhode Island." Sounds like a lot, doesn't it? But in reality, this question was the second-least popular response in one round of questions, behind questions that got 93%, 89%, 88%, 83%, and 75%. It only scored better than one other question -- about whether charters should get more money than they do now -- which got only 60%.The questions were introduced like this: "Now I am going to read you some ideas for improving Rhode Island's public schools and ensuring all students have access to a high quality education." The press release highlighted the 69% because that's what they care about. In other words, the presentation was quite misleading, but whoever wrote the press release counted on reporters being too busy to read the results. Another lesson in why it's worth reading the poll before believing the results. (Find the complete poll results by clicking here )
5. Moody's sued: A few weeks back, Moody's downgraded RI bonds over disclosure issues related to how much our management of pensions costs us. This is not good news, since it will mean paying more to borrow. It's worth remembering, though, that Moody's (and Standard & Poor's and Fitch) routinely overrate the risk of government bonds. The actual risk of default for Aa2 government bonds is much lower than the risk for Aa2 corporate bonds. This is a finding of the Connecticut Attorney General's office and they are suing all the bond rating agencies for exactly that. The complaint points out that the resulting low ratings make borrowing much more expensive. In one case, the AG's office documented a town forced to buy bond insurance from a company that was more likely to go bust than they were. Here in Rhode Island, we have probably overpaid hundreds of millions of dollars in interest over the years and yet there is no move to try to reduce our reliance on the bond market. Again, some kinds of government waste are apparently ok with the folks in charge. (You can find the complaint by clicking here)
Tom Sgouros is the editor of the Rhode Island Policy Reporter, and author of Ten Things You Don't Know About Rhode Island. Contact him at [email protected].
