Pam Gencarella: Context Is What’s Needed - Part I

Thursday, October 16, 2014

Pam Gencarella, GoLocalProv MINDSETTER™

This is the first in a two-part series OSTPA will present to provide context for two types of state-wide referenda that you will be voting on this November.  Referendum questions are usually an after thought for many voters.  It is our contention that the decision to further indebt our state or the decision to hold a Constitutional Convention should not be a vacuous check mark on the ballot, there must be a frame of reference when making these decisions. Make no mistake about it, they will affect your every day financial lives.  Part I provides context for the bond referenda (questions #4 - #7).  Part II will provide context for the Constitutional Convention referendum (question #3).  

The Credit Card.

Have you received your Voter Information Handbook yet?  It purports to be “a guide to state referenda”.  The problem is, when it provides you with information regarding bond issues, there is no context.  Virtually everyone knows that RI’s economy is one of, if not, the worst in the country.  But one might think that after reading the voter handbook, it’s okay because the government will issue more debt to make it better.  

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Did you realize that this will be the third election cycle where the state has asked you to approve over $300 million in additional debt (principal and interest)?  In 2010, voters approved $309 million, in 2012 we approved another $308 million and this year, we are asked to approve another $370 million.  That would be a total of $1 billion approved in just 5 short years!  If you are game for more taxes or if you have no children or grandchildren living in the state, then you probably won’t twitch at that number.  But if you expect to be able to afford to live in this state or you want your children or grandchildren to have the opportunity to live here, you must recognize that, given the state of our economy, this additional debt would only ensure that our kids would either be saddled with significantly higher taxes or they will be forced to move out of this state.

So when you are standing there, all alone in your voting booth, trying to make a decision about whether you should approve the more than one-third of a billion dollars in debt that the state is asking from you this year, consider the following:  

Our own government projects that RI does not have enough money to pay for things they have already approved.  It’s right there in black and white in our 5 year “plan”.  Your elected officials have actually budgeted to be $1 billion in the red by the end of the next 5 years.  Is that an indication that we should add more debt?  

RIPEC (RI Public Expenditure Council) reports that as of 2014, RI ranked 10th highest in the country in per capita debt.  But more telling is that, as a percent of personal income, RI’s debt is nearly 70% higher than the US median. 

You should also know that, according to RIPEC, RI ranks as the 3rd highest in spending on general debt interest (per $1,000 of income). No surprise there.

So What is the Government Asking of You?

Question #4 will ask you to approve $183 million more in debt to build an engineering school for URI.  Now, who isn’t proud of the wonderful flagship university in our state?  But we need to decide if this debt issue is a ‘nice to have’ or a ‘necessity’. You and I do that every day when we make our personal budgeting decisions. The Providence Business News talks about the inconvenience of students having to traipse across the campus to get from one building to another. Or that URI lost 2 faculty members to other universities because of better facilities.  Sorry, but RI is kind of in a financial crisis right now and the cure to the inconvenience appears to be less important than our state remaining afloat.  

To put this bond issue in context, is it right that there is no money to maintain our primary and secondary public schools where 142,000 children attend?  Many schools are so dilapidated as to pose a health risk to the students and teachers.  Yet, the state would pay a total of $183 million for improvements in efficiency for a handful of students, where potentially half of whom are from out of state and some number of those in-state students will leave to find jobs outside the state.  A ‘nice to have’ or a ‘necessity’?

Question #5 will ask you to approve $52 million for creative and cultural spending.  Against a backdrop of $1 billion in deficits, a ‘nice to have’ or a ‘necessity’?

Question # 6 will ask you to approve $52 million for mass transit hub infrastructure.  Which would be great, if there were an economy to speak of and the demand to move people around in order to get back and forth to work were high.  How about we consider that once unemployment reaches the middle of the pack in the country?

Question # 7 will ask you to approve clean water, open spaces and healthy community spending to the tune of $78 million.  Juxtapose that against crumbling RI highways and bridges, unfunded expenses to maintain the new Sakonnet Bridge, and the debt the state has already racked up in past years to fund current expenses.  Yet our elected officials are asking for local recreation grants and renovations at Roger Williams Zoo.  Again, ‘nice to have’ or ‘necessity’?  

As RIPEC stated in its review of the state’s Budget Outlook, Debt Position, and 2014 Ballot Initiatives , “unless the state’s structural deficit is resolved, the state will continue to have to choose between making investments in its future and relying on short-term financial fixes and one-time solutions”.  Nothing has changed.  It is still the case today.  The General Assembly continues to spend with impunity and burden its taxpayers with more debt.

What’s a Voter to do?

A Narragansett resident recently wrote an editorial in The Providence Journal on the issue of adding more debt. She summed it up perfectly. ‘Every year they spend more than they can collect in taxes requiring a continuous increase in taxes and fees.  We have become accustomed to hearing that they need more money every year - something reminiscent of my kids in their teenage years. No one is even talking about stopping the financial madness.  A no vote on the bonds is the only way we can show our displeasure at their financial mess; conversely, a yes vote condones their misbehavior.” 

Perhaps a 30,000 foot view would be that the money would be better spent investing in an economic plan, one that restructures our tax system to incentivize the creation of new businesses and the expansion of existing businesses.  Consider whether generating new, permanent, good-paying jobs is a better approach to investing in RI’s future over creating more debt for what might very well be considered luxuries in the current economic climate. 

Pam Gencarella is a member of OSTPA, a taxpayer advocacy organization in Rhode Island.

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