2014 Legislative Alert
Wishing everyone a Happy, Healthy & Prosperous New Year!
The RI General Assembly is back in session.
Will 2013 be a harbinger of the 2014 session?
4.9% ! That was RI’s unemployment rate just 7 years ago, at the end of 2006.
If you don’t believe it, you’re not alone. When OSTPA reported that number while testifying in a Labor Committee hearing last year, one of the representatives questioned the accuracy of that number and wanted to know our source.
Here’s the BIG question for 2014 - if, as a state representative, you were unaware that RI had actually experienced that level of unemployment, then what is your vision for the future? What are you aiming for?
If it’s an unemployment rate of 9%, tied for last place with one other state, then RI is there. If the vision is to be middle of the pack at around 6.4%, then RI’s leaders have a lot to do and we know that the answer is not “staying the course”. If our vision is to be back where we were just 7 years ago, then we need leaders who are willing to blow up the current economic paradigm. Even at that, it wouldn’t place RI in the top 10 states for unemployment rates.
Have our leaders done anything to improve RI’s economy in the last two years?
Two years ago at this time, Speaker Fox told Newsmakers that reforming pension, creating the I-195 commission, changing the education funding formula and investing in job skills training were the keys to addressing long term economic growth. The Speaker said it was the government’s role to create the conditions that would allow businesses to thrive.Ted Nesi commented back then that there was a “lack of imagination at the State House” and that government officials were “still just talking about it”. Two years later, Ted Nesi’s statements stand.
Looking at the 2011 pension reform, dark clouds have since gathered over it with Judge Sarah Taft-Carter mandating that mediated settlement talks take place between parties who don’t have the authority to negotiate, her attempts to usurp the power of the legislature. The problem is that the decision makers are not at that table. The legislature can ignore any mediated settlement that may present itself any time now. They should do so.
As for the I-195 redevelopment saving the RI economy, has anyone even shown interest in the 20 (buildable) acre parcel? Colin Kane, Chairman of the I-195 Redevelopment Commission claims there has been “driveby” interest, but 2 years later, have there been any corporate commitments? The project is expected to be completed by the end of 2016. Will it be like the Inter Link and the North Kingstown train station - “We built it, but they didn’t come”?
While the education funding formula has been implemented, the cost of the education system continues to increase, requiring that more and more school programs be cut and at the same time, property taxes (the bulk of which pay for school departments) continue to rise.
Job skills training is wonderful, except that there are no jobs for which to train. The Dec. 4, 2013 House Finance Committee’s recent budget presentation reported that the “high wage tier jobs” in the Providence Metro area recovered at less than half the rate of the US overall and that the “mid wage tier jobs” have continued to decline in the Providence Metro area while the US has increased slightly. That leaves only the “low wage tier jobs”, which still fall short of the US average growth, but for which the need for job skills training is much less of an issue.
So where does this leave us as we face another year of legislative wrangling?
The Speaker’s recipe for economic success appears to be missing some ingredients. While the Speaker did not address infrastructure in the Newsmakers segment, it is critical to the long term economic growth for RI. On the one hand, last year the General Assembly moved more revenues that were originally tagged for transportation, back to transportation, but on the other hand, because it wasn’t enough, the Sakonnet Bridge was tolled to help pay for the entire state’s infrastructure maintenance. A death knell for those local businesses. The battle against this injustice will continue in 2014, but with deficits in the budget, the chances of this going away seem slim.
The insiders are not optimistic about RI’s fiscal position. According to the Budget Status presentation noted above, the “RI economy underperforms compared to the US as a whole”. The RI “recovery [is] much slower than prior projections” and as one would expect given the lack of economic leadership “the good news keeps getting pushed to later years”.
Remember, the 5 year budget plan included one billion dollars in deficits.
OSTPA cannot see where the ‘good news’ ever appears on RI’s fiscal horizon. The presentation asks the question that OSTPA has been asking since the Executive Order was issued to create the Health Insurance Exchange, “How will the Exchange be funded after January 2, 2015?” No answers from the lawmakers or from the branch that ordered the creation of the Exchange.
Additionally, the presentation reports that the Budget Office estimates a higher gap than the original projection of $140 million for the 2014/2015 year with estimates of up to $400 million in deficits five years out. OUCH! The presentation goes on to list the issues for the budget - the “RI infrastructure funding gap”, the lack of “funding for the state health benefits exchange”, the lack of “control of current year spending to mitigate budget year deficit”, a “slow growing economy”, and “structural tax and spending issues”. The same old song.
So what did our fearless leaders do in 2013?
With 9% unemployment, they increased the minimum wage from $7.75 to $8.00, they allowed private, independent day care providers to be represented for the purpose of negotiating a public sector contract, adding more demands and people to the public union strong hold, they renamed and reorganized the Economic Development Corp. hoping people would think the General Assembly was actually doing something to improve economic development in RI. They temporarily placated the East Bay population with an insulting 10 cent toll on the Sakonnet Bridge while establishing a “study commission” to develop a plan to close the gap on the fiscal needs for the entire state’s infrastructure maintenance budget. By the way, that study commission has failed to offer any recommendations. And lastly, they proceeded to pay the 38 Studios debt.
What can we expect in 2014?
On the upside,Speaker Fox was asked if tax increases would be on the table and he said no. Additionally, he recently wrote an editorial addressing the naysayers of pension reform (hopefully to include Judge Sarah Taft-Carter) to once again explain that RI’s public pensioners could have been the Central Falls pensioners or the Detroit pensioners if this reform had not been enacted. He resolutely stands by the actions of the General Assembly. However, Rhode Islanders must remember that he resolutely stood by the actions of the General Assembly when they passed Voter ID, but recently, RIfuture.org claimed a “HUGE WIN” when they reported that the Speaker had reversed his position on Voter ID. His legs are apparently a bit wobbly now and he is not standing so resolutely by Voter ID in 2014. Beware the backtracking Speaker Fox. Will he back track on pension reform, just two years after touting it as the primary long-term effort of turning RI’s business climate around? Will he stand resolutely about no increase in taxes?
Stay tuned for the Governor’s Budget presentation for the 2014/2015 year along with the 5 year projections. Perhaps now that he is not running for governor, he will do the right thing by the RI taxpayer and provide a courageous plan that eliminates the projected 5 year deficits.