Imagine an organization coming to the taxpayers with their hat in hand asking for $20 million dollars when they cannot even explain why and what they spent over $11 million on over the last three years?
Once again, I find myself shaking my head and mumbling “only in Rhode Island”.
A GoLocal investigation, reported last Thursday, showed that ProvPort (the Allens Avenue area property that serves as a working waterfront) paid management fees of $3.731 million in 2012, $3.631 million in 2013, and $3.655 million in 2014 — totaling $11,017 million in total management fees to the for-profit company over the last three years, according to the most recent IRS data available.
The Port’s spokesman was unable to explain who receives the fees and the payment schedule! Further, ProvPort only has one employee, Bill Brody, the organization’s legal counsel, who earned $225,00010.
Provport’s terminal operator, Waterson Terminal Services, covers all of the port’s expenses. Waterson Terminal is run by two men, Bruce Waterson and Ray Meador. Waterson is a long-time port operator and Meador is a California based businessman.
Transparency Needed
For all intents and purposes, it appears that ProvPort is a non-profit front organization for Waterson Terminal Services, a for-profit company. There’s nothing wrong with for-profit companies. They make the economy work. But when they’re grabbing taxpayer dollars and unable to explain (specifically) how the money is spent, that’s a problematic issue for taxpayers.
State representative Patricia Morgan got to the essence of issue on last Thursday.
"Something is not right. Who's it going to benefit? The landowners. Last night when they explained it in less than ten minutes, they didn't have the explanation done well. They haven't worked out the details, but they know that they want it. It should have have been properly vetted and it wasn't -- that's the problem," said Morgan.
"It doesn't make any sense. The financing seems strange. So you're having taxpayers buy the land? It should come under intense scrutiny -- if this was a profitable venture, they wouldn't come to taxpayers. Whenever they can't get money anywhere else, they make the taxpayers the loaners of last resort."
Morgan is spot on. The state legislature should have provided much more transparency to the citizens of Rhode Island and the rank-and-file legislators before asking them to vote on the issue. Naturally, the rank-and-file state legislators should have voted down the measure, but apparently they thought it was a good idea to ask voters to make this decision.
Accountability Before Spending
State voters must be far more judicious. Before anyone votes to approve this plan, voters must demand to see a valid business plan that shows how this will pay off in the long run, including how many jobs the additional acquisition of additional parcels of land will create.
What investor in his or her right mind would blindly invest their hard earned money into a scheme that lacked a rational, well thought out, and transparent plan beforehand?
In other words, everything that wasn’t presented before the 38 studios deal became a reality is what needs to be procured before voters allocate even one dollar to purchase additional land at ProvPort. Fortunately for taxpayers, they’ll get the final say on the ProvPort question, unlike the shady 38 Studios deal.
Just Say "No"
In the end, the ProvPort bond issue may very well be a good deal for the state’s taxpayers. Because we haven’t had an explanation of their current spending and what the money will be used for, it’s impossible to be certain.
But up to, and until we see the detailed information that proves the point, the answer to the question of whether taxpayers should spend $20 million so that ProvPort can acquire additional land should be a firm “no”.
Russell J. 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: FY17 House Budget—Winners and Losers
The House Budget is passed and there were some last minute and controversial surprises.
When controversial Article 18 got pulled from the budget on Tuesday, critics had lauded the removal of the provision, which appeared to benefit a single wind farm - and the substantial political donor who owned it. But the real winner here is National Grid, the company owned by the British Energy Conglomerate, who would have had to force electric rate payers to pay millions more to connect renewable energy projects to the power grid and pay a greater share.
The battle is not over, however; Speaker Mattiello said that after having received feedback on Article18 and that he "reached the conclusion there are pieces of the article that do not need to be in the budget." Given the level of scrutiny is it highly unlikely the measure will see light of day as a stand-alone measure before the session adjourns, but it can't be ruled out.
Mattiello said that the House finance budget is taking $1 to $2 million from the $5 million for next year from the statewide tourism office and giving it back to the regional tourism bureaus. “We had a snafu in the effort. We’ll rely on the locals for the year, and then it will transfer back to state initiative,” said Mattiello.
One of the biggest battles of the 2016 General Assembly session started when Governor Raimondo proposed a tagging fee on medical marijuana plants -- to major pushback.
The tax as proposed in the Governor's 2017 budget would have imposed a $150 per plant charge on patients lawfully growing marijuana for medical purposes, and a $350 per plant charge for caregivers, for a projected total of $8.5 million in new revenue.
House finance scaled back the fee-per-plant to $25, to cover the costs of regulating the marketplace.
“Advocacy works. We listened to folks, no one really liked the proposal we received,” said Mattiello. “[As far as] the need of regulations, we’re probably on the low end of that. But we didn’t want to enhance revenues on prescription medications.”
A surprise amendment that resussciated a dead proposal.
A late session effort by the City of Providence to get a $20 million bond question on the ballot for ProvPort in November initiatially hadfallen flat as a line item in the budget.
Legislation introduced by Senate Majority Leader Dominick Ruggerio in late May and now a budget article add-on for a bond referendum of $20,000,000 to fund the acquisition, expansion and infrastructure improvement of up to approximately 25 acres of land and facilities located between Allens Avenue in Providence and the Providence River by ProvPort, Inc.
While it appears to be a House Finance budget “loser” the battle is not over yet for the year, as Mattiello said there is still ongoing discussions.
Mattiello touted in his “pro-business, pro-economy” budget lowering the minimum corporate tax from $450 to $400. This comes a year after the General Assembly lowered it from $500 to $450 last year, taking away at that time the dubious distinction for Rhode Island being the state with the highest corporate minimum tax.
“There are no new taxes or fees,” said Mattiello of the House Finance FY17 budget (apart from the $25 medical marijuana tax).
Raimondo had called for a $40 million school construction and renovation bond to be put on the November ballot, but Mattiello said during a media briefing that the state should wait for the completion of a study expected to show what exactly the construction needs are for the state’s schools.
Mattiello said that there is still funding in the budget for school construction needs, as Raimondo had also proposed an $80 million appropriation for construction and renovation, including of $9.1 million for the school building authority -- but the dedicated bond question that would have increased resources by 50% -- was off the table in the House Finance budget.
After years of steady increases in the state’s cigarette tax, smokers got a reprieve in House Budget when the committee rejected Raimondo’s proposal to raise the cigarette tax twenty-five cents from $3.75 to $4 a pack.
Make no mistake about it, this is just as much about the convenience stores not wanting the additional tax on their golden goose - and New England Convenience Store Association lobbyist Brian Goldman just got vetted by Senate Judiciary for his nomination from Raimondo to replace Associate Judge Frank Cenerini, who retired in October 2014.
Governor Raimondo once again pushed for an increase in the state’s minimum wage, and it appears she will be once again denied by the legislature.
Speaker Mattiello said that Raimondo’s effort to boost the minimum wage from $9.60 to $10.10 an hour would be a no-go. So while it falls in the loss category for those who were pushing for it, it could have been labeled as a win for business owners who have said they couldn’t incur such a mandatory increase.
“We are giving pension relief to everyone who receives some type of pension income, whether it’s public employees, private, or veterans,” said Mattiello.
Mattiello noted that the tax deduction “will be income tested, [and] you have to be Social Security age to qualify.” The tax exemption is slated to apply to the first $15,000 in retirement income, for those qualifying individuals with incomes of $80,000 or less, and couples up to $100,000.
While the removal of Article 18 was championed as a win against crony capitalism, there was more at stake than just one developer with strong political ties. While the article appeared as of Tuesday looked to be gone from the budget, that did not mean the legislative proposal could not stand alone. EcoRI was quick to point out however all that the article did for provide for a number alternative energy incentives including:
Article 18...would allow loans for projects using net metering and virtual net metering, as well as those priced through the Renewable Energy Growth Program.
Article 18 also includes a five-year extension of the state Renewable Energy Fund, which provides grants for small- and medium-sized solar projects. The funds are collected through a monthly surcharge on electric bills and the pool of funds, currently about $6 million, is distributed to solar developers and installers through the Rhode Island Commerce Corporation.
Article 18 also exempts residential and commercial manufacturers from paying local property taxes. It also establishes a statewide property tax rate for commercial renewable-energy systems. The new tax rate will be determined by the Office of Energy Resources.
Everyone who loves the beach gets a win with the the House budget. Speaker Mattiello touting that “beach fees are reduced to the 2011 level” for the coming year.
A season pass for residents would be slashed from $60 to $30, non-residents from $120 to $60, and Rhode Island senior citizens from $30 to $15. Plus, one-time entrance fees would be lowered for residents from $10 to $6 (and senior citizens, down to $3).
