Moore: Three Reasons For Optimism in the New Year

Monday, January 02, 2017

 

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On the whole, 2016 turned out to be a blunder-filled year.

Who amongst us will ever forget “cooler and warmer”? Or who didn’t cringe when Raimondo’s Chief of Staff Brett Smiley went on a profanity-laced tirade against the man who would go on to win the Presidential election?

And did anyone not shake their head when Jorge Elorza decided to proliferate parking meters throughout the city across parts that didn’t have them previously (and didn’t have parking woes to begin with).

Yet despite those mistakes, there are a few reasons for optimism in the new year and beyond in good ole Little Rhody.

Raimondo’s Gets

Firstly, Governor Raimondo is starting to lure some big companies to come here and convince them to hire significant numbers of employees.

In the last few months, the Governor announced that Virgin Pulse, General Electric, and Johnson and Johnson have all pledged to locate offices here in Rhode Island and to hire scores of workers. Yes, all of the gets have been the result of the promises of significant subsidies, absent such promises, the state wouldn’t have gotten the jobs in the first place.

Rhode Island is still a state with high taxes and cost structures (such as energy costs). If the state doesn’t offer incentive packages, the state simply isn’t going to lure the big companies in the short term.

And of course, the state should be taking steps to lower its tax burden. The state should be more aggressive about reducing its taxes--perhaps eliminating, or at least cutting in half the sales tax. Make no mistake about it: that means the state would have to cut spending to do it.

Yet the reality is that until that happens, the state will continue to play “let’s make a deal” in order to score job gain. It’s a necessary evil. In the end, we’re better off with the new jobs than without them.

Car Tax Days Are Numbered

Perhaps the biggest winner in the race for House Speaker Nicholas Mattiello’s political life, which he won by roughly 80 votes (thanks to mail ballots), wasn’t really Mattiello. Instead, the real winner in the race was the state’s car owners--many of which who pay onerous excise taxes on them.

In the thick of the race, Mattiello boldly pronounced that he would lead the charge to eliminate the car tax. After the race, the Speaker unveiled general plans to gradually eliminate the tax over a 5-year period.

There’s been some pushback from Senate President Teresa Paiva Weed, who points out that eliminating the car tax and having the state take on the additional tax burden in place of the local communities will unfairly burden the state government.

She makes a good point.  After all, the state government has, in large part, made more difficult decisions to reduce spending than the municipalities have.

Yet that dispute will, in all likelihood, get resolved--and the state will move to eliminate the car tax, beginning this year. That’s a welcome move for everyone, as the tax is regressive.

Magaziner Finally Dumps Hedge Funds (sort of)

The state pension fund has been under assault by exorbitantly high priced money managers who run large, complex investment vehicles called hedge funds. These funds have cost the state millions of dollars in investment fees.

The hedge fund managers are great salesman and excellent at raising campaign cash for politicians. But they’re usually not very good at investing money. In the vast majority of cases, they cannot beat the S&P 500 index.

Fortunately, state treasurer Seth Magaziner has finally awakened to this fact, and has pledged to drop the worst performing hedge funds. That’s a good sign, despite the fact that it took him way too long to come to this realization. The fact remains, our retirees and current employees will have more retirement security as a result of the move away from hedge funds.

So while there’s always reasons for negativity in Rhode Island, the aforementioned factors should give us some sense of optimism as we move forward into 2017.

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Russell Moore has worked on both sides of the desk in Rhode Island media, both for newspapers and on political campaigns. Send him email at [email protected] Follow him on twitter @russmoore713.

 

Related Slideshow: Out-of-State Vendors Receiving the Most RI Payments - 2016

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#25

JP Morgan Chase

Payments: $3,146,422.54

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#24

Revenue Solutions, Inc.

Payments: $3,654,233.63

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#23

PFIZER INC

Payments: $3,676,250.00

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#22

ROADSAFE TRAFFIC SYSTEMS INC

Payments: $3,686,165.67

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#21

PRIME HEALTHCARE SERVICES LANDMARK LLC

Payments: $3,804,256.42

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#20

ACHIEVEMENT FIRST

Payments: $3,890,503.84

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#19

ADIL BUSINESS SYSTEMS INC

Payments: $4,149,853.97

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#18

SANOFI PASTEUR INC

Payments: $4,198,078.83

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#17

U S BANK NATIONAL ASSOCIATION

Payments: $4,338,063.80

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#16

GLAXOSMITHKLINE LLC

Payments: $4,386,954.00

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#15

XEROX STATE HEALTHCARE LLC​

Payments: $4,402,280.60

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#14

UNITED HEALTHCARE INSURANCE CO

Payments: $5,034,687.75

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#13

SANTA BUCKLEY ENERGY INC

Payments: $5,058,162.23

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#12

NORTHROP GRUMMAN SYSTEMS CORP

Payments: $5,089,906.24

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#11

MORTON SALT INC

Payments: $5,104,136.27

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#10

NATIONAL RAILROAD PASSENGER CORP

Payments: $5,254,314.90

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#9

WELLS FARGO BANK NA

Payments: $10,026,906.84

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#8

CONNEXTIONS INC

Payments: $10,180,782.79

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#7

MULTI STATE LOTTERY ASSOCIATION

Payments: $11,678,432.46

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#6

HP ENTERPRISE SERVICES LLC

Payments: $18,698,256.18

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#5

C/O NATIONAL GRID (UK)

Payments: $19,457,417.26

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#4

BANK OF NEW YORK TRUST COMPANY N A, 

Payments: $39,800,264.25

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#3

DELOITTE CONSULTING LLP

Payments: $57,599,902.86

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#2

XEROX/HEALTH CARE FINANCE ADMINISTRATION

Payments: $75,364,099.11

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UNITED HEALTHCARE SERV INC

Payments: $134,424,977.66

 
 

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