The Key is to Pass Them!
There are a handful of bills in the House that would help improve RI’s economy by restructuring the tax system. Bills that increase the estate tax (otherwise known as the death tax) exemption in an effort to keep some of our seniors with wealth right here in Little Rhody and upper middle class folks from leaving in their effort to preserve what they may have for their children. Visit RIEstatetax to learn why we must make changes this session! There are bills that reduce the corporate tax
rate in an effort to woo companies to our state and bills that look to change our unemployment insurance system meant to reduce the cost burden on businesses.
Please let Chairman Gallison know you support the effort to keep wealth in our state and therefore, support changes in the estate tax exemption.
Last week’s good government bill was the Ethics reform bill. This week’s good government bill is repeal of the master lever. Both of these bills have been introduced year after year with seemingly majority support, yet no movement is ever seen. Perhaps Speaker Mattiello will allow these bills to come to a floor vote this year. Under new leadership, anything is possible.
But the Bad Bills Keep Coming.
Unfortunately bad bills continue to rear its collective ugly heads aimed to increase the personal income tax rate on top earners.The mindsets behind those bills are that as long as there are higher wage earners in RI then they should be taxed to the max, so to speak. Of course that “max” will likely never be enough for legislators who do not look first to potential cuts in existing spending. The RI Center for Freedom and Prosperity held a press conference last week to point out $225 million worth of spending worthy of review within RI’s $8.5 billion budget. There are also the usual bills to dismantle RIDE’s education reform, bills that would eliminate the bare minimum standard of requiring a graduating student be partially proficient in certain subjects and bills that leave the teacher evaluations in the hands of the public unions through their collective bargaining agreements. Education reform is critical to turning RI’s economy around. Remember, RIMA (the RI Manufacturers Association) stated that many of RI’s graduating youth are ‘unemployable’.
Last week, the House Finance Committee heard Representative Cimini’s bill to increase the personal income tax in the top bracket 2% and Representative Valencia’s bill to increase the top bracket 4%. Imagine thinking that in a state the size of RI, with an $8.5 billion budget, here is no room for cutting, only more room for taxing. Asking just a little bit more from higher income earners in spite of the fact that RI has reported an increase in the effective rate of tax for the past 2 years. Additionally, the top 3% of earners (over $200,000) already pay 40% of the total personal income tax. How much more should RI require of those top earners? At what level do people take their ball and go out of state?
Let’s paint a picture.
As a flurry of activity takes place in the State House this week, we would ask members to consider that RI does not exist in a vacuum and therefore, legislation should not be crafted as if RI exists in a vacuum. Below is a table that provides the Tax Foundation’s rankings for RI compared with the other 49 states. When looking at the reasons RI ranks near the bottom in every survey, much of it has to do with our non-recovery from the recession due to the lack of jobs. The lack of jobs, in turn, has to do with the ‘totality of the tax burden’ as explained by CVS’s Senior Vice President John Kennedy at a recent House economic workshop. As you can see below, RI ranks in the lowest quartile in 4 out of 5 tax rankings. Additionally, 3 out of 5 of these rankings have deteriorated year to year.
Corporate Tax 42 40
Individual Tax 37 36
Sales Tax 25 24
Unemployment Insurance Tax 50 50
Property Tax 46 46
Overall State Tax Rank 46 46
Will words ring true in the 2014 session or will they ring hollow like so many before?
Upon receiving the votes needed to become Speaker of the House, Representative Mattiello told reporters that the economy and jobs are his top priority. OSTPA applauds his priority and hopes that his actions are aligned with his promise.
A Bill Diametrically Opposed to Jobs and the Economy.
Representative Handy’s “Climate Change Adaptation and Mitigation - Resilient RI Act of 2014” H 7904 was heard last week. Who could argue that when rebuilding roads or structures, one shouldn’t consider the effect of future weather conditions. But this bill goes much further than that. It provides for a target of 25% of renewables in our energy distribution by 2025 and targets a reduction of 85% in CO2 by 2050, all without any analysis on the impact this would have on RI’s extremely fragile economy. Representative Handy even testified that it would add more bureaucracy so he plans on submitting a fiscal note with amendments. Suffice it to say that the 27 page document gives authority to 36 departments, commissions, councils, etc to “construe liberally in aid” of the legislation’s purpose of mitigating global climate change. Sort of like suntan lotion, ‘apply liberally’.
The sponsors and supporters have tabled this as a “job creator”. Jobs are created when mandates are made for mitigation and adaptation, that’s true. The only problem is the other half of that equation is a tax or rate hike to or a direct out-of-pocket cost to pay for these new mitigating and adaptation jobs. Even if RI reduced its emissions to 0 and targeted 100% renewables, we would face all of the same climate issues. RI is but a speck in the global issue of CO2 emissions. With countries like China and India that have virtually no controls over emissions, what possible impact could RI have? At the hearing, people were talking as if once RI made these changes, the storms would stop coming and the tides would stop rising. Will this legislation allow these departments to determine that thermostats should be set no higher than a targeted degree? Or that air conditioning units can not be run for more than a targeted number of days? Is that what the legislation to install smart meters was all about? If this bill passes, RI’s residents would have to contend with both future weather damage and a dismal economy. Let Representative Handy know that this bill is over the top and does not serve the RI citizen well.
On the upside this week.
Representative Naughton’s bill, requiring that the PUC biannually review and perform a cost benefit analysis of power purchase contracts, will be heard this week. The immediate impact of this bill would be a review of the DeepWater Wind project - a project that is estimated to cost between $350-$500 million. Of course, this cost will be paid by you, the ratepayer.Over and over again we read that RI has one of the highest energy bills, both for residents and business owners. DeepWater Wind threatens to significantly increase those energy bills. It is imperative that the project be revisited to ensure the benefit of constructing offshore wind outweighs the cost to RI’s economy. Let Representative Naughton know that you fully support this bill, especially in this economy.
The full Senate will be voting on S 2185 Sub A, a bill to begin dismantling Education Commissioner Gist’s reform. This bill would prohibit using standardized testing as a graduation requirement. If you believe that RI students, many of whom are “unemployable”, should be at least partially proficient in certain subjects, please let Senate President Paiva Weed know that this bill is ruinous for RI’s children.
Legislative Hearings 4/8/14 - 4/10/14
TUE, APR 8
Room 313, Rise (4:30)
S 2091 Repeals the Master Lever!
Sponsors: Bates, Hodgson, Algiere, Cote and Lombardo
WED, APR 9
Room 101, Rise (4:30)
H 7887 Subverts the education commissioner's reform by requiring that teacher evaluations be a subject matter of collective bargaining.
Sponsors: O’Grady, Amore, Valencia, Ferri and Messier
Room 203, Rise (4:30)
H 7791 Requires that the PUC biannually review and perform a cost benefit analysis of power purchase contracts. This would include a review of the DeepWater Wind project.
Sponsors: Naughton, Marcello, Newberry and Coderre
H 7991 Calls for more investment in green energy infrastructure including multi-state electric transmission for on-shore and off-shore wind resources and entering into more long term agreements for wind.
Sponsors: Kennedy, Serpa, Marshall, San Bento and Lally (Submitted by Governor Chafee)
Room 205, Rise (4:30)
H 7774 Addresses the unfairness of the rule of joint and several liability. Moves to equitably distribute liability amongst all defendants in the event one is unable to satisfy the judgment.
Sponsors: Morgan, Marcello, Giarrusso, Chippendale and Winfield
H 7867 Allows automated license readers throughout the state.
Sponsors: Edwards, Williams, Ajello, Cimini and Tanzi
Room 212, Rise (4:30)
S 2014 Moves the teacher notification of dismissal date from March 1 when the budget is unknown, to Jun 1, when it is much clearer what the budget will allow for.
Sponsors: DiPalma, Picard, Ottiano, Pearson and Lombardi
S 2416 Moves the teacher notification of dismissal date from March 1 to May 15, but maintains seniority in rehiring.
Sponsors: Ciccone, Lombardi
S 2757 Allows retired police and firefighters, who are no longer able to collectively bargain, a grievance procedure.
Sponsors: Ciccone and Archambault
S 2758 Requires certain employers to provide extended notice of job loss. Significant burden on business and a jobs killer.
Sponsors: Crowley, Metts, Pichardo, Goldin and Cool Rumsey
Room Senate Lounge, Rise (4:30)
S 2184 Provides for teacher evaluations to be subject to collective bargaining. A dismantling of the education reform put forth by Commissioner Gist.
Sponsors: Satchell, Lombardi, Metts, Algiere and Sheehan
S 2428 Allows students with 2 or more years of college to serve as substitute teachers
Sponsors: Pichardo, DiPalma
THU, APR 10
Room 35, Rise (4:30)
H 7034 Allows for a credit against the minimum franchise tax.
H 7064 Increases the estate tax exemption to $2 million and fixes the threshold problem which currently exists that allows estates to be fully taxed once the current threshold is met.
Sponsors: Craven, Mattiello, Costantino, Corvese and Canario
H 7140 Increases the estate tax exemption to $1.5 million and fixes the threshold problem which currently exists that allows estates to be fully taxed once the current threshold is met.
Sponsors: Ruggiero, Walsh, Giarrusso, Hull and Marcello
H 7290 Reduces corporate income tax rate from 9% to 7%.
Sponsors: Trillo, Morgan, Giarrusso, Chippendale and Costa
H 7814 Increases the estate tax exemption to $5 million for small business or farm located within RI.
Sponsors: Morgan, Giarrusso, Chippendale, Nunes and Lombardi
Room 205, 3:15 pm
H 7768 Creates a commission to study the effects and make recommendations for remedy of habitual usage of the unemployment system ie. so it is not used as a means to subsidize seasonal industry workers when the season is over.
Sponsors: Chippendale, Giarrusso and Morgan
H 7928 Requires DOL to determine options for adjusting and creates state unemployment laws regarding seasonal employment.
Sponsors: Phillips, Tomasso, Silva, Lima and Costantino
Room 211, 3:00 pm
S 2210 Increases personal income taxes by 2% on income over $250,000.
Sponsors: Metts, Pichardo and Crowley