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Dissecting the state budget: Winners, losers, and continued mediocrity

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The Rhode Island state budget for the fiscal year that commences July 1 has emerged from the House Finance Committee. By the time of the publication of this editorial, the voluminous document will have withstood a House vote, sped through the Senate Finance Committee, been voted on affirmatively in the full Senate, and arrived on Gina Raimondo’s desk.

As per usual, most House members will not have read it. And in the immortal words of former U.S. House Speaker Nancy Pelosi, when pressed about the Obamacare bill: “But we have to pass the bill so you can find out what is in it.” That statement, which will live atop the catalog opera of ludicrous public official utterances, is appropriate to the Rhode Island budget process as well.

Although many of the governor’s wishes will be realized, many too will remain unrequited. The numbers in this daunting equation are similar between the administration proposal and the House result. However, the House Finance Committee version spends $25 million less than the administration. The grand astronomical state budget amount will be $8.939 billion for the next fiscal year. This skyrocketing sum has doubled in the last two decades. The year-to-year increase in this year’s budget is $276 million, thus inviting the question, has the quality and availability of goods and services improved so greatly to justify such an increase in costs when the intrinsic value of a dollar is only 54 percent different from 1996?

As with any annual budget, some citizens benefit from what those rascals on Smith Hill conjure up in their economic cauldrons, while others do not. Retirees will realize a state tax cut, however minimum wage earners will have their salaries stay status quo. But lower echelon earners will realize greater access to the Earned Income Tax Credit. Medical marijuana users will suffer a $25 per plant tagging fee, but they will not endure a higher rate desired by the governor, nor will they be restricted to in-state recommendations by doctors.

Charters schools will take a hit, while unionized teachers in general public schools will benefit. Further, schools in need of renovation funding will have to wait a little longer. Parking at the beach will costs less and catching a smoke will not cost any more this upcoming year. I-195 land development money, yet unused, will be moved along. Fortunately, it will not be appropriated to try to renovate that albatross of a building that the superhero in the cape supposedly used to fly next to. Also, in a token public relations move, the minimum corporate tax was lowered a wee bit. And in response to the ongoing statewide tourist campaign debacle, funding to local tourism districts was restored for at least a year.

In regard to the budget process itself, Raimondo stated in an unguarded moment of utter honesty, at a Washington, D.C., forum in February of 2015: “For too long, what’s happened in Rhode Island – and it may happen in other statehouses – is the governor proposes a budget and often in the dark of the night, in a quiet room, the lobbyists and the General Assembly get together and they hack it up every which way and out pops a budget … And that’s bad for everybody as far as I can tell.”

Although the governor seems to have been describing a clandestine and ominous Star Chamber or the gestation of Rosemary’s Baby, the actual process is perhaps not that devilish. The process is blindly expedient with members not having sufficient time to review the intricacies of the budget. Why not pass a requirement that the finished budget must be reviewed by the legislators for a minimum of 30 days before the final vote? Members could break into study groups, just like in graduate school, and therefore extensively discuss all aspects of the budget.

Liberal advocates like our Gina wanted another increase in the minimum wage, which is currently at a rate of $9.60 per hour. She did not get it this year. Since the mandatory rate has already jumped from $7.40 per hour in 2012 to its current rate, standing fast on the rate was a prudent move by the General Assembly.

Many businesses are labor intensive and have short profit margin sales that depend on high volume and reasonable rates of employee pay. Low wage earners, such as fast food workers, are first-time, part-time employees. These jobs were not intended to carry a family. So mandatory minimum wage increases can destroy a business owner’s ability to survive.

On the bright side for the working class, both the governor and the speaker can claim a win on the expansion of availability and qualification for the Earned Income Tax Credit which correlatively stimulates lower echelon spending that invigorates the economy.

On the contrary, a battle lost for the governor centered on medical marijuana in the state. The governor wanted a higher per-plant tagging fee, but it will be limited to $25. Additionally, she wanted to restrict users from only receiving enabling recommendations from in-state doctors. Speaker Mattiello perceived the program differently: “It’s a prescription. I looked at it from the point of view if you get a prescription for some other medicine, an out-of-state prescription is good in Rhode Island, so why would you treat that differently.” Agreed, but the General Assembly should have gone a step further. Instead of tabling it for further study, we should legalize marijuana and tax the heck out of it. We need the revenue desperately and we already have the highest per-capita pot usage rates in the nation. So why wait? It is not a moral or safety issue if the market already exists.

If you want to surf with “Moondoggie,” “Frankie,” and “Annette,” you will be pleased that beach fees have been returned to pre-“Metric Man” (former governor Chafee) levels. This is a small win for us and for tourism.

Speaking of tourism, the speaker is “cooler” about the administration handling the matter, so he has returned a great deal of the allotted funding to local control. The governor was “warmer” about leaving the money in administration hands. Gina gets left out in the cold on this one.

Educationally, the public sector educators who despise charter schools had a big win. The governor proposed a flat $355 per student cut in funding which would be returned to the general public schools in the districts.

Oppositely, the General Assembly indulged the whims and wants of teachers’ union lobbyists and came up with a convoluted formula. Districts will have two restraining choices. One, they can reduce charter school payments by 7 percent. Or two, they can deduct all the expenses from specific costs of books, special education, technical education, and busing from what the pay out to charter schools. This thinly veiled attempt to destroy charter schools is another indulgence of teacher unions.

According to Mayoral Academy spokesman William Fischer,

“This will devastate us … It easily doubles the haircut we were facing in the governor’s budget.” And: “This is a chaotic mess, not for just for the charters but for the districts.” Score one for the Smith Hill elite and record a loss for the governor and every disadvantaged student who is elevated by these needed schools.

Fortunately, the yet unused I-195 development money will not be wasted on the eyesore Superman building. The $25 million for associated projects will be held in check. When pressed by reporters about the possible steering of that fund for renovation of the archaic structure, Commerce Secretary Stefan Pryor said: “No, that is not what the funds will be used for, unequivocally no.” Score one for every taxpayer on that issue.

Businesspeople will receive a meager break in our minimum corporate tax of $50. A public relations ploy, this action does little to address the real business problems of gross over regulation and taxation. However, it is something for Gina to talk about when trying to impress the Washington, D.C., party powerful and for Mattiello to crow about how he is the “Pro-Business Speaker.”

So, another year’s budget comes to pass. It is not particularly good, it is not particularly bad, it is not particularly innovative, nor does it reign in spending in any dramatic manner. It is just another annual budget from our lackluster government folks!

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