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  BUDGET ALERT: KNOW WHERE WE STAND BEFORE THE         FLURRY OF BILLS GO TO COMMITTEE HEARINGS
 
Governor Chafee embraced diversity with a divisive
State of the State Address. 
 
Why the Applause?
Who would discourage investing in education, infrastructure, job skills development, the arts and cultural development? Who would discourage the notion of a hub transit system? Not many people would; just like not many people would fail to support a rallying cry to “wage war on poverty”. Or, “everyone should have access to affordable health insurance”. Right?
 
So when the governor of our state or any politician for that matter throws out remarks that are guaranteed to garner support it’s a slam dunk. Unless, of course folks recognize what is missing and then it’s up for grabs.
 
Here’s the Rub. 
We witnessed a presentation that was laced with unproductive vitriolic remarks and proposals that lacked substantive steps to redeem our state. We heard no sense of urgency to turn around our spending by reforming laws that discourage businesses and oppress property taxpayers but we were told that we need to create new bureaucracies and add to existing ones. (one in the name of diversity), increase employment levels for the Division of Taxation (buried in the budget) and borrow more money.  
 
A Statesman? 
Three years at the helm disqualifies any “statesman” from taking partisan shots at prior administrations, regardless of political affiliation. Sneering at those taxpayers among us whose politics are fiscally conservative is divisive and only serves to fan the flames of incivility. This coming from the “Embracer”? All Rhode Islanders deserve more from the Governor's office and our legislature. Where was the road map to dig out of our long term structural deficit? 
 
Chafee’s Economy.  
Chafee’s budget utilized an unanticipated surplus of about $70 million to offset deficiencies in the current year budget without tending to the causes for the current year deficiency. But, more importantly, the budget projections included nearly $1.2 billion in deficits over the next 4 years. However, the governor explained that this should be tempered by the accomplishment of same gender marriage, improvements at the DMV and drop-kicking E-Verify.
 
Where’s the Money?
The governor’s proposals come with a huge price tag for taxpayers, a price tag that, including the last round of proposed bonds, increases taxpayers’ debt by nearly half a billion dollars. Much of his “vision” is dependent upon the feds passing the Marketplace Fairness Act and betting that RI voters will approve $275 million worth of debt in the form of bonds this November. Still applauding?
 
The Disconnect.
Governor Chafee failed to mention a few things.  He didn’t address how HealthSourceRI (RI’s health insurance exchange that was created as a result of the Affordable Care Act/Obamacare and Chafee’s executive order) will be paid for after the federal revenue dries up. So much for the self sustaining mechanism to reduce healthcare costs - another “sounds good” message, but translates to more giveaways and more costs. By the way, HealthSourceRI just hired 30 more people. Not only are taxpayers paying for that but we are also paying for the subsidized premiums offered to many of the thousands of people who have signed up for insurance through our new bureaucracy. That surely will translate to higher insurance premiums and taxes.
 
It’s interesting to note that a Bloomberg Businessweek article reports that Chafee assumes the state will obtain an extension of federal funding since the budget includes $23 million for HealthSourceRI, all of it federal money. In the same article, Finance Chair Helio Melo is quoted as saying “We are just trying to figure out how this is going to work. We don’t know if we’re building a colonial, a mansion, a bungalow. It always seems like we’ll continue with construction (and) we’ll worry about how much it’s going to cost us later”. And while that seems to be the attitude toward the Exchange, it seems to be pervasive throughout the entire 5 year budget.
 
And speaking of the funding for the Health Insurance Exchange, with budget deficits of $1.2 billion in future years, it would seem that there is no vision for how the state will pay its increased share of the Medicaid costs in the future.   
 
Trust Chafee? Hardly. As Felice Freyer points out, “Rhode Island enthusiastically embraced the expansion of its Medicaid program allowed by the Affordable Care Act. But at the same time, Medicaid is where Governor Chafee has turned to make the biggest cuts as he seeks to close a $150-million budget hole”. Yes, the governor has no problem forcing doctors and nursing homes to shoulder more of the costs of expanding Medicaid, but not one mention of the amount of fraud, waste and abuse reported recently, no mention of Ken Block’s findings from the report that Chafee commissioned. 
 
There’s More!
The governor had no problem including $12.5 million to pay to 38Studios bond holders – those investors who knew that they were betting on moral obligation bonds that specifically leave RI off the hook to actually make good on them. If Governor Chafee feels so strongly about the moral obligation to pay the 38 Studios debt, why doesn’t he feel a moral obligation to the taxpayers of RI?  It takes bold leadership to provide a vision that will truly encourage businesses, both established and new, to add or create new jobs.  It certainly won’t happen with more of the same and it won’t happen with the State of the State budget presentation.
 
One more tidbit of a disconnected thought processOn the one hand, the governor speaks of the phenomenal 23% increase in commercial electricity rates and on the other, includes a discussion of requiring the use of more hydropower, wind and solar power. We know that currently, the only way to make green energy work is to subsidize it and require the utilities to pay more than the current rate of coal and gas generated power.
 
We need far more from state leadership than we have seen or we are likely to see if Governor Chafee's presentation is any indication of what our legislators will accomplish in 2014. Who can conceive that in the current economic environment the state would propose borrowing money to fund $35 million for the arts and $40 million for RI’s “key locations on our mass transit hub systems”? Probably not so surprising given RI’s penchant for spending frivolously as evidenced by a $21 million bike path in the recent past and the governor’s $10 million request this year to build an event center at Fort Adams.
 
We desperately need the $80 million slated for bridge repairs, but more importantly, the state needs a source of funding for this and future maintenance other than a toll on the residents surrounding the Sakonnet Bridge area. And that does not mean new taxes. It means cutting that bloated $8.5 million budget!
 
What’s Missing from this Budget?
As we mentioned earlier, where were the savings projected from Ken Block’s fraud report?  Governor Chafee commissioned this report himself.  Who would lose from implementing systems that would identify and provide a path to eliminate fraud, waste and abuse in RI’s welfare system? Not those who truly need a safety net. And certainly not the taxpayer.
 
Conspicuously missing from the governor’s speech was the result of his September and December 2012 announcements that he would require every agency to review its regulations to evaluate any adverse impact on small businesses. What is the status of that review and what is the expected financial impact on the budget as these regulations are amended or rescinded?
 
Bottom Line.
The one thing Governor Chafee has always said holds true, RI has a lot to offer. Unfortunately, at this point in time, bold leadership is not one of them. 
 
 

 

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