The Budget, Repackaged
If you want handouts, whether you are a business or a student, Governor Raimondo has a handout waiting for you in RI. The state cannot provide an economy where either businesses want to locate or graduates are able to find a job, so the state is groveling to keep you here or to draw you here, by offering everything from tax credits to forgiveness of debt.
It is clear that our elected officials cannot come to grips with the fact that reducing the cost of doing business in this state is the only way to create jobs. And the only way to keep our graduates is to create policy that encourages that job growth.
Medicaid, HealthSource RI and More
While this budget does take a look at one system - Medicaid - and calls for reducing waste and fraud, it also relies on capping reimbursements to providers, a sure way to destroy a good healthcare system.This budget also belies the problem with the Health Insurance Exchange - the fact that it is too expensive to maintain here at the state level. The Governor stated that there were no broad based tax increases, but she failed to mention that the budget includes a new tax on every individual and small business health insurance premium in order to fund the Exchange. And, that tax is assessed whether you use the exchange or not. One might think that would be a broad based tax
Take a look at the legislation introduced to support taxing health insurance premiums. Secretary of HHS, Liz Roberts, would be empowered to determine the tax levy. And, to make matters worse, there is no upper limit on how high those taxes could go. OSTPA wonders where the "affordable" part of the Affordable Care Act went.
And if that is not considered broad based, there are numerous other tax increases, including on cigarettes, on certain real estate transactions, on B & B's and other rentals, and on "the rich". Presumably everyone will be hit with an increased tax.
RI taxpayers had big hopes for this budget, a budget that would represent a vision and a new direction for the state's economy, something bold. But instead what we received was more of the same. You might not be able to tell the difference between this budget and a Chafee budget, we couldn't. More debt, more taxes, little spending reduction and no attention to the major structural problems the state faces.
There was no mention of the financial impact of illegal immigration - likely because it is a third rail of politics. The issue continues to adversely impact our economy and stress our education system. There is a simple fix, it's called E Verify (and there is a hearing this week for legislation, see below).
This budget pays very little attention to the size and cost of our government.
In her address the Governor mentioned $22 million in savings from "efficiency gains" in state government. Even if she is able to come up with that, it is a drop in the bucket comparatively. It represents only 1.3% of the state's total salaries and benefits which are projected to be $1.6 billion. It also happens to be about the same cost as the recently negotiated contract by former Governor Chafee. His administration agreed to increases but failed to provide a means to pay for those increases. Raimondo noted that if the revenue estimating conference sees improvement in the forecasts, she may not need to find the "efficiency gains" after all. Translation: the governor will be able to avoid concessionary negotiations with the unions.
Our government spending is out of control and more is needed than a mere shaving of $22 million. Governor Raimondo claims that you can't cut your way to prosperity. She was once in private industry. We can't imagine that she came across too many successful companies that had that as their motto. Successful companies are consistently looking for better, more efficient ways to provide a service to the customer. That is how they survive. RI state government will have none of it.
Government Spends Where It Shouldn't and Doesn't Spend Where It Should
RI state government is bloated, there is no doubt. The total budget is $8.6 billion. That is outrageous for a state this size. In 8 years, since the 2008 projection, the state's total budget has grown nearly $2 billion, yet our population has remained stagnant.
Health and Human Services (HHS) ate up 38% of the 2008 budget.Today HHS devours more than 43% of the budget. Transportation costs eek out only a little over 5% of the current budget. That is a high opportunity cost. Money the government spends on support services cannot be spent on basic government services like roads and bridges.
Looking at the Health Insurance Exchange as an example, it is expected to cost $30 million to operate this year. Remember, this is a system that basically provides government funded Medicaid.The Governor claimed early on that she was going to take another look at the annual costs because she did not believe it could possibly cost the projected $20 million a year to run this system. Now her budget includes $30 million and she defends it.
Highest Cost of Education Becomes Even Higher
The Governor wants to provide more money for education yet there is no reason to believe that more money will fix RI's education system. Education needs the reforms that Commissioner Gist worked years to draft and for which she gathered support, but in the end, were gutted by the General Assembly. Both annual teacher evaluations and standardized testing as a graduation requirement would improve the education system more than throwing money at it.
The lifting of the moratorium on building schools was sorely needed. RI is sending its children to buildings that are run down and poorly maintained. But did you see the bureaucracy it will take to do this? "The school building authority advisory board shall advise the school building authority regarding the best uses of the school building authority capital fund". Sounds like a lot of layers to get a school built and that is on top of the municipalities' councils, school committee and boards.
Will the Governor Play Ball?
Given the major news about the Pawtucket Red Sox and their interest in moving to Providence with help from the government, one might think the Governor would have addressed that big elephant, but nary a word about any current conversations or future deals. She did, however, include a whopping $25 million for the I 195 commission to play with even as there are virtually no interested parties.
What Kind of Hope Do You Hold?
And then there is her request that, like the state, the municipalities look for ways to provide government services more efficiently. Did you hear or see any response to Ken Block's WatchdogRI report about the outrageous municipal cost of fire service in this state? While Speaker Mattiello unfortunately did say he thought there may be an agenda behind this data, he admitted that the study probably has some merit. So, the best way to find out is for the Speaker to legislatively create a commission to study the data and draw their own conclusions. On the face, it would seem that Metro RI's total cost of $313 million compared to Prince George's County, MD's (the area outside of DC, with comparable population and land mass) cost of $149 million is worthy of further study, as the General Assembly likes to do. Or the fact that the per capita cost of fire in Dallas is half the per capita cost of RI! Or even the fact that RI has more fire engines, more ladder trucks, more rescues, and more fire stations than each of the cities of Dallas and Phoenix, and a number of counties with similar demographics. We need bold action to be taken to reduce the cost of our bloated government.
And, after all is said and done in this budget, the Governor will still need to contend with the result of the pension suit, the impact of Massachusetts gambling and the hundreds of millions of dollars needed to repair our roads and bridges. What, in this budget, helps prepare the state for those eventualities?
Providing loan forgiveness for 100 students will not address the "relatively weak human capital assets that will continue to be a drag on RI's economy" that she notes in her five year projections. And this budget certainly does not address the projected $1 billion in deficits over the next 5 years. We had hoped for more, much more.
This Week in the General Assembly
As usual, there are more bills introduced this year to increase child care subsidies. Apparently $50 million is not enough in this state to provide help with day care. Even before these new pieces of legislation, the Governor's 5 year projection recognizes that costs for subsidies will continue to increase and that the "federal block and matching grants are assumed to be insufficient to finance these incremental costs". In other words your state tax dollars will be needed more and more to provide for these increased subsidies. Do you think we should be legislating additional new subsidies? And where does the General Assembly stand regarding the legislation to allow daycare unions when the Supreme Court has basically ruled that unconstitutional? We have not seen any legislation addressing that important issue.
As part of Ken Block's review of the cost of fire service, he has looked at the pensions. He noted that Pawtucket had very few disability pensions and found the reason was a limiting contractual definition of total and permanent disability. This week Senator Archambault introduced bill S 643, a bill to significantly expand the definition of total and permanent disability for policemen when it comes to providing tuition to children of police officers. Just a few word changes can add significant costs to any system. Rather than an injury that prohibits an officer from any gainful occupation, it would mandate benefits if the officer could no longer perform as an officer, even though he could be fully employed in any other occupation. A bad precedent.
Hearings This Week Provide Hope For Positive Change
Representative Shekarchi's bill (H 5341) to opt out of the state's TDI system is scheduled for a hearing. A great bill to address an old systemic problem. Then there is Rep. Giarrusso's bipartisan bill (H 5589) to implement E Verify (just like the federal government does) and address the unfettered immigration of illegal aliens into RI. Rep. Phillips (H 5813) is requesting that the DLT look at the seasonal unemployment issue in the state's unemployment system.
Rep. Morgan has been trying to address this broken and costly system for years. It's time to get the DLT involved and to get recommendations for improvements to alleviate abuses. There are also bills to create a fraud, waste and abuse agency, known as the Office of Inspector General and good government transparency bills. Senate President Paiva Weed and Senate Finance Chair DaPonte sponsored a bill (S 606) to be heard this week that provides for a more lean and efficient government with the help of the private sector. Hopefully, the Senate President will contact Ken Block since part of his platform was to update and streamline the antiquated payroll systems in state government that result in an enormous waste of a significant number of hours and pieces of paper.
We urge you to email Rep. Shekarchi and let him know you support the TDI bill, email Rep. Giarrusso and let him know you support E Verify, email Rep. Phillips and let him know you support looking at abuses in the unemployment system and email Senate President Paiva Weed and Chairman DaPonte and let them know you would like them to allow Ken Block to fix their antiquated systems.
Legislative Hearings 3/17/15 - 3/19/15
TUE, MAR 17
House Finance Chairman Gallison
Room 35, Rise (4:30 pm)
H 5164 Establishes the office of Inspector General as an independent agency charged with preventing and detecting fraud, waste, and abuse.
Sponsors: Blazejewski, Ajello, O'Grandy, Ackerman, Fogarty
H 5326 Establishes the office of Inspector General as an independent agency charged with preventing and detecting fraud, waste, and abuse.
Sponosrs: Reilly, Marshall, Newberry, Filippi, Giarrusso
H 5517 Requires real time access to General Assembly votes.
Sponsors: Nunes, Marcello
House Corporations Chairman Kennedy
Room 203, Rise (4:30 pm)
H 5292 Grants sole authority to the state for regulating drones (unmanned aerial vehicles).
Sponsors: Ucci, Corvese, Reilly, Melo, Winfield
H 5293 Creates a commission to study the regulation of drones (unmanned aerial vehicles).
Sponsors: Ucci, Corvese, Azzinaro, Hull, Bennett
House Judiciary Chairman Keable
Room 101, Rise (4:30 pm)
H 5156 Requires public entity budgets available in digital form though the SOS.
Sponsors: Solomon, Shekarchi, Melo, Nardolillo, Roberts
H 5307 Exempts fire districts with no tax and/or policy making authority from certain posting requirements of the open meetings act.
Sponsors: Gallison, Malik, Marshall, Winfield, Keable
H 5308 Legislative oversight commission allowed to issue subpoenas upon a majority vote.
Sponsors: Morgan, Reilly, Price, Filippi, Lancia
WED, MAR 18
House Finance Chairman Gallison
Room 35, 5:30 pm
H 5341 Permits employees who are covered by an employer sponsored disability insurance program to opt out of state TDI program.
Sponsors: Shekarchi, Corvese, Kennedy, Diaz, Serpa
House Health, Education and Welfare Chairman McNamara
Room 101, 5:30 pm
H 5503 Requires public assistance recipients to perform community service.
Sponsors: Roberts, Giarrusso, Lancia, Nardolillo, Newberry
THU, MAR 19
Senate Commerce Chairman Picard
Room 212, Rise (4:30 pm)
S 606 Creates a volunteer private sector enterprise group to help state government become more responsive and efficient.
Sponsors: Picard, Paiva Weed, Sheehan, Pearson, DaPonte
House Labor Chairman Shekarchi
Room 101, 3:30 pm, continue after Rise
H 5813 Mandates the Dept. of Labor develop a report specifically looking at the seasonal unemployment issue and produce by Dec. 1, 2015.
Sponsors: Phillips, Casey, Morin, Amore, Messier
H 5589 Mandates E Verify use for government and private employers with 3 or more employees to ensure US citizen or appropriate documentation.
Sponsors: BIPARTISAN Giarrusso, Lancia, Roberts, Carnevale, Nunes
House Environment and Natural Resources Chairman Handy
Room 205, Rise (4:30 pm)
H 5591 Establishes a commission to study the use of state owned land to assist in the incubation of private businesses involved in the development of new technology supporting the generation of "green energy".
Sponsors: McKiernan, Shekarchi, Handy, O'Brien, Marshall