Newport’s Blue Wave Has Become an Economic Tsunami

Saturday, April 20, 2019

Michael Smith, Guest MINDSETTER™

 

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Michael Smith, GOP activist

Last fall I wrote an article laying out the economic and social malaise that Newport faces. I warned that electing more tax, spend, and waste politicians could worsen the already ominous future the city faces.

Unfortunately, last week, the residents of Newport experienced what electing progressive politicians would cost them. A surprise, last minute docket item was placed for a vote, with less than a week for voters to react to it. The proposal was for a new 2 percent “conveyance tax “on home sales.

The city manager and mayor hoped to sneak the vote through with little fanfare. However, the city hall meeting that night was packed with home and business owners objecting to the senseless and regressive tax.

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In her campaign, Mayor Jamie Bova promised ‘more government transparency.” This sleight of hand indicates that was just an empty campaign slogan, quickly discarded when she sets her sights on more tax revenue.

Our progressive officials worked diligently to confuse the public. They used a fancy and ambiguous term for what is, in reality, just another damaging real estate tax. These disingenuous officials tried to sneak it through with little time for those affected to analyze its impact.  Because the bottom line is, they want more money. And this is the target they are plundering this time. They are running out of easier options.  In truth, they simply don’t care about its impact on working class folks.

This new real estate ‘conveyance’ tax will extract roughly $11,260 from the average single-family homeowner.  That’s a daunting sum for middle-class families already struggling to secure their future in the hostile Newport economic climate. 

So what’s going on here?

The real elephant in the room is that despite our grand mansions and strong seasonal tourist trade, Newport is broke.

Where did the money go?

Middle-Class Exodus

The lifeblood for any community is year-round middle-class families. That dynamic is all but gone in Newport. 98% of all current home sales are to part-time, out of state residents. With wealth made in our nations’ biggest cities, they pay exorbitant amounts to have second, and/or retirement homes in our city by the ocean. Homes in once working-class family neighborhoods, such as the Point and The Fifth Ward, that sold for $200,000 or less a short 20 years ago, are selling for close to a million now.

However, the wages of full-time residents have not kept up with real estate costs. Newport’s average income is under$ 60,000 and dropping each year.  The high cost of homes and soaring rents have been forcing the middle class and elderly out by record numbers in the last five years. Working class Newporters are an endangered species.  With them has gone the thriving tax base necessary to make the city work well for all.

Instead, Newport is becoming a city built on two opposite population dynamics: the part-time wealthy residents and the full-time poor.  Poor political leadership has watched this two-headed monster grow with no plan to address its pitfalls. The result is a city scrambling for revenue that is no longer there; a city where middle-class workers can no longer afford to buy a home, work locally and enjoy a thriving year-round community.

One side of the population are wealthy part-time residents. It might seem a blessing that real estate values are climbing and that the summer months bring bustling tourist activity.  However, the reality of a city with a growing part-time population and seasonal employment is the disappearance of year-round revenue for the city.  In the winter those part-timers are elsewhere, and Newport resembles a ghost town.  Not only the tax collectors, but also workers searching for the wages to care for themselves and their families feel winter’s economic vacuum. This cycle hurts small businesses and working families who are leaving because there is no consistency in income.

A Public Housing Boom

The other side of the population dynamic are our poor residents. Newport aggressively pursued an effort to be a leader in public housing. Unfortunately, it outstrips our ability to pay for the associated costs. Because subsidized housing pays a much-reduced property tax and the residents pay fewer taxes, the situation now resembles a small tug boat trying to pull a large ship through stormy waters. With 19% public housing, the city is experiencing demands from infrastructure, public safety, education without the resources to pay for them. That sends them scrambling to squeeze extra money out of the shrinking middle class through ever more inventive and damaging tax schemes.

Swamped by Schools

The costs of the daily operation of our public schools is by far the biggest money issue the city is facing.  90 percent of Newport’s students are from low-income housing. Not only are buildings dilapidated and overcrowded, but these students bring more educational challenges with them. Compared to other communities our schools require more teachers, must provide for additional language and health needs, and supply full breakfast and lunch programs.

The costs are staggering, and the disappearance of a year-round economy through a strong middle class is the reason the city does not have it.

Unfortunately, elections matter. Last November the city saw a Progressive Trifecta occur, where far left candidates, took all aspects of city government: from city hall, to our state delegation, to the school board. They won on narrow social issue platforms, not economic solutions.  As a result, they are ill-equipped to understand and solve the problems facing our beautiful city. Instead of making a course correction, that will bring the ship to calmer waters and accommodate middle-class residents, it appears they have decided to plow ahead with their tax and spend agenda, squeeze working class residents for more of their hard-earned money and ignore the storms on the horizon.

The cure is not more new taxes and costs. That tactic drives out the glue that keeps a community together, the middle-class families and small businesses.

The 2% conveyance tax has been opposed by city and business leaders on all sides of the political spectrum. It will have continued devastating effects. Unfortunately, our elected officials are all progressives and they prefer to ignore economic reality.

Instead of seeking more taxes and fees that without thoughtful solutions will only lead to more taxes and fees, let’s work to elect political leaders who will bring plans for a new way forward. Our city desperately needs new, innovative thinking from our city leaders.  We can no longer suffer with liberal politicians with no experience or understanding of home or small business ownership. Politicians who ignore the economic reality of middle-class life, as they pander to the left-wing allies.  We need political leaders who understand what it takes to build a city with an economy where everyone can live and thrive year-round.

The commonality that Newport shares with other near bankrupt cities is unchecked -wasteful spending partied with unending requests for more taxes and fees. Hopefully, other communities can learn from this.

Mike Smith, a Republican, is a former candidate for both the Rhode Island House and Senate in Newport

 

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