Speaker Mattiello Taking Time to Look at the Law.
Kudos to Speaker Mattiello! While very few people have been talking about the issue, some have proffered that a settlement in the pension reform case and subsequent passage by the General Assembly could have future legal ramifications as to whether or not the state pension settlement arrangement will fall under the auspices of a contract. This is a very important issue and we applaud Speaker Matteillo for considering requesting a legal opinion from the Supreme Court regarding the implications of the General Assembly acting upon the pension settlement.
Pensions currently exist as a matter of statute, not a binding contract. That is an important distinction which allows future General Assembly's to alter pension benefits. We have always said that the General Assembly can legislate out what it has legislated in. The question is, will that still be the case if the settlement becomes law? The Speaker said that he is concerned that the settlement may create contract rights that, in his opinion, do not exist now. As we are all painfully aware, the state cannot afford a misstep with this issue. Unfunded pensions at both the state and the municipal level have created a crisis for RI. Even after the 2011 state pension reform, Mike Reilly notes that changes in the accounting requirements for pension may put us back to the same place we started before the reform, nearly wiping out the 2011 reform savings. Setting precedent with the pension settlement is not something that will "move the state forward" as Governor Raimondo likes to say.
Should It Stay or Should It Go?
What is quickly becoming another one of RI's albatrosses, the Health Insurance Exchange, aka HealthSource RI, and how to fund it is up for debate. A hearing was held last week and supporters of the plan espoused all the reasons why the General Assembly should keep the state-run Exchange.
In the past, Speaker Mattiello had voiced his opposition to paying for a state-run Exchange if it were more expensive than handing it back to the federal government. As Ted Nesi writes, it is a very complicated issue to compare what it will cost RI taxpayers under a state-run plan versus a federally-run plan.
However, contained in Nesi's article is a Senate Fiscal analysis that indicates that moving to the feds may actually cost less over the long-run than funding the state exchange with an "additional" premium tax.
Did you know that:
We already pay a premium tax on our insurance plans that net the state's general fund approximately $30 million a year?
Did you know that the governor's proposal would allow the Secretary of Health and Human Services to decide how much the state exchange will need, each year, and then set that additional premium tax accordingly?
There is only one word for this: outrageous.
But all of this highlights former Governor Chafee's absolute disregard of the future cost of the exchange and the impact on RI taxpayers at the time his decision was made. As you may recall, he created the exchange by an Executive Order and the General Assembly never codified its existence in law. The chickens have come home to roost and Governor Raimondo is now looking to put taxpayers on the hook for its operational costs. The bottom line is, RI government has grown by creating the Exchange and politically, it is difficult to stop programs once they have begun. It means losing jobs locally. It is the hope of OSTPA that the Speaker makes the right economic choice, not the expedient political choice.
The Medicaid Issue.
Governor Raimondo's Medicaid taskforce has released its findings on ways to save money in the Medicaid program. They sound wonderful and innovative and cutting edge, but will they produce the results that are needed to close the budget gap, will this fee for service concept actually work? Or will it simply reduce payments to hospitals and nursing homes with no accompanying changes in the delivery of healthcare? Of course, the task force did not include the result of Ken Block's report on Welfare fraud and abuse (including Medicaid) or any of its conclusions or the problems that Justin Katz highlighted in the salary level of Eleanor Slater employees. These are concrete instances of fraud and abuse that can easily be remedied, but for the political implications.
Block's report, dated Jan, 2013, made specific recommendations regarding Medicaid. Representative Morgan has introduced legislation for years now to address Medicaid fraud and abuse and Justin Katz, from the RI Center for Freedom and Prosperity, wrote specifically about the waste and probable fraud at the Eleanor Slater facility back in early 2013 (which is also highlighted in the Block report). There is no reason the state should allow these abuses to continue unabated. Write to Speaker Mattiello and Governor Raimondo and urge them to pass legislation that addresses all of the fraud and abuse noted by Block and Katz and that addresses Representative Morgan's concerns. If these issues had been addressed back then, we would have saved 2 full years under our budget belt.
And Those Red Sox.
Governor Raimondo has finally stood up and said that the Red Sox deal, in its current form, is unfair to taxpayers. It didn't take much analysis to make that statement - $120 million in debt payments (which they term lease payments in order to avoid the public vote on the deal) and city tax breaks. We all know that proposing to actually buy the I 195 land is simply not going to work. RI cannot afford the "nice-to-haves" anymore. A broad coalition of the public is against this - everyone from the Green Party to the Tea Party. This broad coalition is clearly a formidable opposition and our elected leaders are smart to take notice. The next step is to be very weary of future proposals from the Red Sox owners. Unless their deal includes nothing from taxpayers, it should be a complete non-starter. Ask your senator and representative what level of government participation they would support. Let them know that it should be zero point zero.
If the Taxpayers Give 'Til It Hurts, They Will Come.
"The General Assembly Is Confident That Its Proposed Economic Stimulus Program Will Enable RI To Take The Necessary Steps to Restore Its Economic Health", so says the opening of House bill 6136, entitled the "I - 195 Tax Stabilization Incentive Act". This Act was introduced last week by Representatives Ajello, Hull, Diaz and Palangio to provide 100% subsidies to the City of Providence when offering tax stabilization agreements to qualifying projects. Is this going to be part of the Governor's $25 million budget item for I-195 development or is this in addition to that? How much money can the state afford to spend on developing the I-195 land? Where are the analyses and the projections for the expected return? The one mystifying piece of this is that it allows the city to offer these "incentive" agreements to projects that were begun up to 24 months ago. Aren't they already incentivized if they began work?
What's Up at the State House Next Week?
On Wednesday, the Senate Education committee will hear numerous pieces of legislation that attack the popular charter public school system. Let Senate Education Chairwoman Gallo that you do not want the charter school system undermined and that you believe the best interests of the students should be the driving focus of all education policy.
Of course there is the usual onslaught of legislation to increase electricity costs in a state where business has cried foul at the already high cost of electricity.
Did you know that:
National Grid does not care if alternative energy actually makes a dent in RI? That is because they receive a "bump-up" that results in rate increases to make up their "losses."
Your General Assembly made that a law. How do you like that?
This week, the House Finance Committee will continue to hear the various parts of the budget. They are holding hearings twice a day. A schedule is provided in the Legislative Hearings section below. Since our roads and bridges are as bad as they have ever been, you might want to stop by Room 35, on Thursday, at the rise (4:30) and see what the Dept. of Transportation and RIPTA have to say. Perhaps they will address the estimated $3 billion gap
that is needed to fund repairs to our roads and bridges over the next 10 years, or not.
Legislative Hearings May 5 – May 7
TUE, MAY 5
Senate Commerce Chairman Picard
Room 212, rise (4:30)
S 733 Another increase to the cost of electricity, this one for demand side management programs and special rates for low income, subsidized by the rest of the RI taxpayers.
Sponsors: Miller, Sosnowski, Walaska, Conley and DiPalma
Senate Finance Chairman DaPonte
Room 211, rise (4:30)
S 163 Increases the earned income credit from 10% to 20% allowing for refunds in excess of what has been paid in for RI income tax. (see Justin Katz' analysis on what this is already costing you, the taxpayer whose income is being redistributed)
Sponsors: Goldin, Pichardo, Crowley, Miller and Metts
S 376 Provides for more tax credits on residential renewable energy systems, subsidized by the RI taxpayer.
Sponsors: Fogarty, Satchell, DiPalma, Goldin and Coyne
S 210 Provides for certain retirement benefits to be deducted from taxable income, including social security benefits, but also includes public and private pensions, interest income, 401K and IRAs, in an effort to retain our older citizens.
Sponsors: Fogarty, Pearson, Felag, McCaffrey and Lombardi
WED, MAY 6
Senate Education Chairwoman Gallo
Room 313, rise (4:30)
S 87 Mandates that a mayoral academy must be approved by the local city or town council via a resolution or ordinance, after at least one public hearing, making it more difficult to establish a mayoral academy, circumventing the public's proven interest in this alternative form of education choice.
Sponsors: Satchell, Lombardi, Gallo, Miller and Pearson
S 700 Mandates that mayoral academies participate in the state's retirement system along with its incumbent financial burdens, from which they are currently free.
Sponsors: Jabour, Lombardi, Goldin, Ciccone and McCaffrey
S 739 Among other things, mandates that new charter public schools or increased enrollment in any charter, beyond the 2015 levels, must be approved by the school committee and the city or town council (by ordinance or resolution) in each of the sending districts, inhibiting the ability of the charter public school system to grow and benefit our children.
Sponsors: Pearson, Picard and Satchell
Senate Special Legislation Chairman Felag
Room 301, rise (4:30)
S 447 Provides a constitutional amendment be on the ballot for voters to decide if members of the General Assembly as well as general office holders should contribute 20% toward their healthcare premiums, much like all of the taxpayers currently do.
Sponsors: BIPARTISAN Fogarty, Lynch and Ottiano
THU, MAY 7
House Municipal Government Chairman Craven
Room 203, rise (4:30)
H 6145 Allows redevelopment agencies to engage in economic development as defined in the permissible uses of Eminent Domain section of RI General Laws, provided it is Providence (defined as a city/town with more than 100,000 residents, of which Providence is the only one).
Sponsors: Almeida, Diaz, Carnevale and Slater
HOUSE FINANCE TO REVIEW BUDGET Chairman Gallison
TUE, MAY 5
- Commission on Deaf and Hard of Hearing
- Governor's Commission on Disabilities
- Department of Health
- Public Safety
WED, MAY 6
- Office of the Child Advocate
- Dept. of Human Services
THU, MAY 7
- Office of the Mental Health Advocate
- Dept. of Behavioral Healthcare, Development Disabilities and Hospitals
Rise (4:30 PM)
- Dept. Transportation