Rhode Island Politics & Taxation, Part V

This posting continues a periodic series on Rhode Island politics and taxation, building on four previous postings (I, II, III, IV).

Governor Carcieri issued his State of the State Address on January 18. The following excerpts from that speech highlight the structural problems we face in this state:

A good government lives within its means and does not overly burden its taxpayers...by any measure Rhode Island's taxes are among the highest...in the country...Taxes in Massachusetts - once known as Taxachusetts - are now among the lowest, 40th.

To keep this economy growing, we must lower taxes so Rhode Islanders keep more of what they earn. To do that, I am developing a five-year tax reduction plan. This plan will be broad-based, benefiting as many Rhode Islanders as possible. I will also propose that new lottery revenues be dedicated to direct property relief. We must work together to make tax relief a priority.

But tax relief is impossible unless we get serious about controlling spending. Two of the spending issues we must address this year are: state employee health care and pensions.

We are currently negotiating with all the major state employee unions for co-sharing of their health care premiums. Rhode Island is one of only five states in the country where employees do not co-share. 45 states do. Massachusetts employees pay 20% of their premiums. Since the vast majority of taxpayers co-share their premiums, it is only fair that those of us who work for them do as well...

Without any reforms, the taxpayer bill for pensions will rise from $188 million in the current year, to $283 million next year, a $95 million increase in one year! This is an urgent problem and we must work together on a reform plan...

We now have eleven public charter schools serving 2,200 students, 90% of them from urban districts. These schools are thriving. They thrive because they are innovative, challenging, and family-friendly. Every one of them met its performance targets this year. But we don't have enough of them, particularly in urban communities. Over 500 students are currently on the waiting list to enroll in a charter school. I will submit legislation removing the moratorium on charter schools passed last year. This moratorium is not fair to our children and we need to end it now.

Getting better education results means implementing these reforms, not spending a lot of money. Our spending per pupil is already seventh highest in the nation. The increase in state support for education over the last five years has averaged 6% a year, over twice the rate of inflation. And, by the way, the level of state support for urban schools is one of the highest in the nation. The 5 urban core cities got almost $80 million, 63% of the increase in those 5 years. So, let's find new ways to be more effective.

Reforming the state pension system will save school districts nearly $18.5 million next year. Providence alone will save over $3.0 million. My new state health care contract will allow school districts to piggy-back on the state's low cost. Combining such purchasing will save municipalities additional millions.

In summary, among the 50 states, Rhode Island (i) has the 5th highest overall state and local tax burden, per the Tax Foundation; (ii) is one of only 5 states where state employees have a zero co-pay on their health insurance premiums; (iii) has one of the richest state pension programs; (iv) spending per pupil is the 7th highest; and (v) limits educational choice. This is not a formula for success.

Take a minute and ask yourself the following questions:

Who opposes health insurance premium co-payments for state employees?

Who opposes changes to a grossly underfunded state pension program?

Who demands school contract terms that result in overpaying for underperformance?

Who blocks educational choice for those who need it most?

In other words, who is not a friend of Rhode Island working families, retirees and children?