The House-approved fiscal year 2016 Rhode Island state budget contains a new 8% tax on vacation rentals, which the Rhode Island Association of Realtors (RIAR) say will "create burdens for Rhode Island's residential property owners and barriers for tourists."
The move comes after Chris Wall, President of the Board of Directors of the Greater Providence Board of Realtors, ran against incumbent Gayle Goldin, a non-profit consultant, in the Democratic primary for District 3 in Providence. Wall was aided by the National Association of Realtor Fund's $75,000 spend in support of his campaign, but ultimately came up short to Golden -- who in the waning days of the primary season pulled in several thousands of her own in PAC money which included State Senate Democrat and Leadership PACs.
Wall referred questions about the vacation tax to RIAR lobbyist Monica Staaf.
"They're killing the Golden Goose," said Staaf of the House-approved vacation rental tax. "If I were a legislator, I'd be wary of walking in 4th of July parades in some communities this year."
Impact on Realtors, Renters
Staaf said it wasn't just the vacation rental tax - but the timing -- that was particularly problematic.
"The Senate is voting [on the budget] next Wednesday. That will give rental agents a week to learn how to transmit reports, collect taxes, a whole host of issues that are being rushed through," said Staaf. "Our members who are rental agents are reaching out folks who are renting this summer to let them know they should pay in full by July 1st. No one has a lease that covers the tax. People booked these rentals as far back as last summer, and are being told they have to pay in full now, or get hit with an 8% tax."
The Rhode Island Association of Realtors is urging people on its website to call members of the Senate to postpone implementation.
"I think it's overwhelming that it wasn't postponed. We'd asked for a January 2016 implementation just to get through the rental season. It's right before the 4th of July. These renters didn't budget for an 8% increase," said Staaf. "How does this make our state look to out-of-staters, when they find this out? Other states have this tax up north, but Massachusetts -- and the Cape -- don't have this tax."
Efforts were made during the floor proceedings to push off the implementation date, but confusion over the impact of the July 1 start date played a factor.
Representative Karen MacBeth said she was going to introduce an amendment for a January 2016 effective date and look to offset the revenue this year, but didn’t when she thought the impact would be minimal based on erroneous information.
“All I know is I did have an amendment that would have tried to postpone it to January [2016], but when [Chairman Gallison] said people who had contracts signed before July 1 wouldn’t be impacted, I didn’t,” said MacBeth. “I didn’t realize if they haven’t paid in full that they would be hit.”
Representative Blake Filippi, who along with Representative Anthony Giarrusso offered an unsuccessful amendment to push off the implementation date, said he was most concerned about the position it was putting renters -- and property owners - in this summer.
“We want to be business friendly. It’s not just about taxes, it's how government operates and treats people who have invested in the state,” said Filippi. "It’s about fair treatment.”
Realtors Win on Taylor Swift Tax
The tax comes at a time when the state found itself in an improved financial standing - the state revenue estimating conference in May showed $173 million in surplus funds not taken into account in Governor Raimondo's initial budget proposal.
One win for the realtors was seeing Raimondo’s statewide property tax proposal — dubbed the “Taylor Swift tax” — fail to gain traction.
“I think in the long run, the statewide property tax would have been more devastating,” said Staaf. “But in the short term, this is worse.”
The big outside spending bet -- and loss -- landed the Wall-Goldin race on GoLocal's list of "most bizarre moments" in the 2014 primary election races:
It's hard to think that a candidate for a state senate race -- one of 38 Rhode Island state senators -- just got a windfall of $75,000, but that's just what Chris Wall got from the National Association of Realtors PAC on August 13.
Wall's largesse comes in a race that pits him against incumbent State Senator Gayle Golden, who 28 days before primary reported $13,814.96 cash on hand. Meanwhile, Wall reported having nearly $20,000 cash on hand for the period ending August 11, prior to the big get. If you see more of Wall in your Facebook ads, you know why! Big money from out of state for a General Assembly race?
Related Slideshow: Most Bizarre Moments to Date in RI 2014 Primary Season
The primary season has been long and unpredictable - here are some of the most strange events so far.
One of the most bizarre moments of the campaign primaries came early on when Democratic gubernatorial candidate Clay Pell was found to have lost his car not once, but twice, back in the spring, prompting both media attention and satire -- and the twitter handle @PellKwanPrius is still chirping oftentimes snide and/or humorous remarks as if it were the beleagured car itself, which was eventually found.
The Pell campaign took a hunker-down-in-the-bunker approach, kept relatively quiet, and let the incident(s) die down. With a recent surge in the polls, Pell might have proved that the best medicine might just be a positive message, deep pockets and lots of money to spend, when you have it.
With a little more than two weeks until the primary, a surprise joint announcement was made on August 22 by Providence Democratic Mayoral candidate Brett Smiley that he was bowing out to support Jorge Elorza in an effort to defeat Michael Solomon.
Hardly a week prior, Smiley was boasting that he had bested his opponents in fundraising for the previous reporting period, announcing he had raised $55,042 from July 1 to August 11, more than double the amount raised by both of his opponents combined. In comparison, Jorge Elorza raised $23,819 and Michael Solomon raised $2,710.
While Smiley and Elorza attested that no "deal" had been cut, the 11th hour bow out by Smiley was a nearly unprecedented move in recent Rhode Island political history. And while Elorza's first hurdle is Solomon, watch to see how the pieces fall in City Hall should Elorza prevail in the general.
How much does it take to win a Rhode Island State Senate seat?
It's hard to think that a candidate for a state senate race -- one of 38 Rhode Island state senators -- just got a windfall of $75,000, but that's just what Chris Wall got from the National Association of Realtors PAC on August 13.
Wall's largesse comes in a race that pits him against incumbent State Senator Gayle Golden, who 28 days before primary reported $13,814.96 cash on hand. Meanwhile, Wall reported having nearly $20,000 cash on hand for the period ending August 11, prior to the big get. If you see more of Wall in your Facebook ads, you know why! Big money from out of state for a General Assembly race?
When Providence City Council President and Mayoral candidate Michael Solomon said that he would be amending years of Rhode Island Ethics Commission filings to reflect a city PEDP loan dating back to 1988, little did anyone know that there would be dozens -- at least 50 -- individual line item amendments to over ten years of reports.
Moreover, despite the amended filings, the Ethics Commission voted to move forth with an investigation into Solomon's disclosures -- and after the initial proverbial dust settled, City Council candidate Michael Long said that despite the multiple amendments made, there was missing information -- still.
Solomon offered a public apology for what he called a “clerical error” made in his ethics disclosure filings, and asked that they be put in the context of his record. The voters of Providence will decide on Tuesday.
The Rhode Island Republican gubernatorial primary took an interesting turn this summer...towards middle America, when GoLocal broke that Cranston Mayor Allan Fung shot his "Open for Business" ad...at a diner in Columbus, Ohio.
Taking a tip perhaps from the Pell camp's "how to respond to a missing car" playbook, the Fung team refused to address the situation at all, opting instead to remain tight lipped while opponent Ken Block held a press conference at a diner in Cranston -- which the owner said Fung had yet to set foot in, despite being a block away from Cranston City Hall.
In perhaps one of the more bizarre moments in a primary season already chock-full of them, GoLocal's Stephen Beale uncovered that Providence Mayoral candidate and former Housing Court judge Jorge Elorza lifted language that Central Falls Mayor James Diossa once used...to apologize for being caught stealing as a young man.
The Elorza camp decried the move as a staffer's error in judgment, as they said the same communications consultant had penned both letters, but opponent Michael Solomon jumped immediately on the issue, with his camp saying, "For weeks, Mr. Elorza has attacked Michael Solomon’s character over a clerical error on a financial filing, a paperwork issue. Plagiarism is a character issue and if Mr. Elorza was honest here, he would say anyone who had done this isn’t fit to be Mayor."
Will it matter, or will not? The voters will decide on September 9.
Despite repeated scrutiny from his Republican gubernatorial opponent Allan Fung, Ken Block steadfastly refuses to release his tax returns. Granted, Senator Claiborne Pell and Representative Patrick Kennedy never did themselves, but that hasn't stopped Fung from hammering Block on the point at every turn.
Block spokesperson Jeff Britt said in April, "Ken Block, unlike all the other candidates, actually runs a company and has a S-Corp -- the way it works, all the company's income is charged to you personally. So his competitor could go in and look at contracts, bidding strategies, it's not something Ken's going to do."
"Ken absolutely agrees that when Governor, he'll release his tax returns, because he won't be running the company, and subsequently filing for the S-Corp. Ken believes elected officials should release income tax return information so that people know our politicians don't have conflicts."
Will tax returns -- and their release, or not -- continue to be a campaign issue down the road? Only time (and the Rhode Island electorate) can tell.
You can't fault General Treasurer and Democratic gubernatorial candidate from claiming credit for "bringing" Narragansett Beer back to Rhode Island (front office operations, mind you brewing takes place in upstate New York) -- it's nostalgia, it's feel good, and the folksy commercial harkens back to a day when the Rhode Island economy was humming along.
However, when she touted creating over 1,000 jobs in the state while a venture capitalist, one would think you might not point to the one that created...12, which is the approximate number of full time staff at the Ship Street headquarters. Granted, that's 12 more employed people in the constant bottom-dweller in unemployment that is Rhode Island, but even the usually even-keeled Clay Pell, who prides himself on not going negative, came precariously close.
"The often awkward Clay Pell got off the best zinger of the campaign to date with his "My campaign's created more jobs in RI than Narragansett Beer" response to Gina Raimondo's ad," quipped Ron St. Pierre.
In an election year, you would think that a Mayor -- and municipal manager -- would dot their "i"s and cross their "t"s -- but only after recent municipal bond refinancing offering in June by the city drew attention for all the wrong reasons.
The $17,465,000 Series 2014A tax exempt and $6,285,000 Series 2014B federally taxable general obligation refunding bonds had a preliminary financial statement posted on June 19, with a Moody's rating of Baa1 and a S&P rating of BBB -- but GoLocal Mindsetter Michael Riley forced Mayor Taveras' hand.
"This bond offering overstates pension assets by $57 million and understates the ARC," said Riley at the time. "Is the true nature of the pension obligation disclosed? What will the UAAL be under GASB 68? What will the ARC be?"
After GoLocal's article -- and Riley's fingerpointing -- an addendum was filed to the initial bond offering in the days following to rectify the asset overstatement.
"This is absolutely due to the fear that they are being misleading and that we pointed it out," said Riley. "Very odd that they made the addendum when they did."
As GoLocal's Arielle Confino pointed out, "While each candidate for Governor talks about creating jobs in Rhode Island, campaign spending reports show that they are actually great at investing their donors' millions in businesses in the District of Columbia, California and Virginia -- nearly three-quarters of the $8.9 million spent by the five gubernatorial campaigns over the course of the 2014 election cycle has gone to out of state political consultants, media buyers, and direct mail vendors.
“When you start talking about growing jobs and businesses and supporting the local economy, you need to look first to having your needs supplied by the people in the state that you are looking to take office in. Going elsewhere is contradictory and hypocritical,” said Richard Lallo from Colonial Printing, a family owned and operated business located in Warwick.
