Tom Sgouros: Tom’s Tidbits
Saturday, July 16, 2011
Providence City Budget
The Providence City Council approved an annual budget. They lowered the Mayor's request for a 13.5% hike on property taxes by hiking the property tax people pay on their cars by a lot. Now only the first $1000 of a car's value will be exempt, instead of $6000. Until last year, the state paid the tab for the exempted value, but ending that program was one of the state's ways to pass its fiscal crisis down to the cities and towns.
The decisions made by the City Council weren't awful, but that's only because all the options were pretty bad. One thing worth remembering, though, is that the state yanked around $60 million in state aid from the non-schools part of the Providence budget over the last three years along with comparable amounts from all the other cities and towns. This current year's state budget restored a paltry $3.9 million.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTWhat's astonishing to me is that this kind of fiscal abuse can go without comment while bushels of blame are heaped on the former Mayor. (Watch the comments below this and previous columns of mine to see examples.) The stark truth is that the refusal of state policy makers even to attempt to understand the plight of our cities and towns has led to a long series of misbegotten policy "solutions" that have only made things worse. These problems stem from an over-reliance on local tax revenue and the way those collections ebb and flow with the movements of people. Until there is an honest accounting of these problems -- and a forthright attempt to address them -- we will continue to lurch from one municipal crisis to another. Good morning, Central Falls! See you soon, Pawtucket!
Car tax exemption gone
The end of the car tax exemption in Providence will, I hope, mark the end of a sad chapter in public policy. The car tax exemption, established in 1997, was a perfect example of a terrible solution to a bad problem. The problem was rising pressure on property taxes, due to the many pressures on municipal budgets. The legislature chose to do precisely nothing about any of the pressures. Though state aid to the municipal part of town budgets did climb during the Almond years, it wasn't commensurate with all the new requirements, and almost all of that aid disappeared during the Carcieri years.
But the car tax exemption put the state in the position of paying some of the taxes. This had the sound of a good idea, without actually being a good idea. It simply put the state in the same position as residents who complained about rising property taxes. What's more, because this money was essentially used to pay citizens' tax bills, it didn't help the cities and towns balance their budgets.
Worst of all, this very expensive program allowed legislators to count as state aid money that cities and towns never saw. In a 2009 interview I witnessed, Senator Dan Daponte, the chair of Senate Finance, talked at length about how much state aid had gone up over the previous few years, and yet towns were still crying poverty. But the numbers he used to make his point relied on counting car tax exemption increases as increases in aid. But when the exemption increased from $5000 to $6000, the state paid the difference in tax bills, and taxpayers were happy, but no town saw a single dime more revenue.
On the flip side, because the cities used this state money to reimburse towns for bills they did not issue, when the state abruptly decided to end the program in the middle of a fiscal year, it sent all the municipal budgets into disarray. In other words, it was a terrible idea from the start, and put the state and the cities and towns into untenable positions that only made the underlying problems worse. I'm doubtful that anyone will even attempt a solution to the problems of municipal finance any time soon, but I don't mourn the passing of "solutions" like this one.
Can't find a solution? Make it illegal
The Assembly passed, and the Governor signed, a bill to make dropping out of high school illegal before you're 18. Now it's illegal to drop out at 16. The high dropout rates in all our schools are a serious cause for concern, but it's hard to see how simply making it illegal is going to change much. I don't think this law will do much harm, but I doubt it will do much good, either. After all, is the point simply to keep kids in school who don't want to be there, or find ways to make them want to be there?
One effect you will see from this law is in test scores. Over the past 20 years, test scores for minority fourth and eighth graders in America have improved fairly substantially. (This is according to the NAEP tests.) But the effect is not seen in the 11th grade results, and one reason might be that attempts to improve dropout rates keep more kids in school who used to drop out. Presumably lots of those kids score poorly on standardized tests, and increasing numbers of them will pull down the score averages, even while the achievement level overall is going up. Any research having to do with dropout rates is plagued with poor data quality, so this is only speculation, but if this new law has any significant effect on retention of students, it will have a significant downward effect on NECAP results. No doubt the lower scores will inspire yet another round of teacher-bashing, even though it will be a reflection of what is more or less good news.
RIPTA Hearings Set
Not to harp on RIPTA, but it pains me to see such a valuable service headed down the drain. Because neither the Governor nor any of the legislature saw fit to address its well-known funding issues this year, bus riders are looking at brutal service cuts this fall. Late buses -- the kind that carry people home who work late -- will be a thing of the past, as will weekend service on most lines, a number of lines will be eliminated completely and every person who rides the bus will have to adjust. Just in case you were wondering, studies from 2008 showed that RIPTA was a very good bargain for the state -- they give a lot for the money, compared with other bus systems. The new director says he can get more efficiency, and I don't doubt he can find some, but I question how much can be squeezed out of a stone that's already seen quite a lot of squeezing.
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 [email protected].
