Talking Budget: Is Compromise in the Air? (Or is it just talk?)

{N.B. Here at Anchor Rising, we watch (or TiVo) the local Sunday morning shows so you don't have to. Here is a transcript of this morning's Channel 12 Newsmakers, hosted by Steve Aveson and also features Ian Donnis of the Providence Phoenix (who has a little more, here). I've offered a few (very few) comments of my own in italics}.

Guests:
Rep. Steve Costantino - Chair, House Finance Committee
Rep. Paul Crowley, Newport - Deputy Chair, House Finance Committee

Steve Aveson (SA) - [As far as the budget], we're in a tough spot...we've hit the wall.

Steve Costantino (SC) - We have hit the wall. And if we were to pass this budget as is, putting aside whether there are some valid issues in the budget or not, the first day of July, 2009, we will have a $379 million deficit. So, although this budget is balanced, it really does very little in terms of looking at the structural problems we have with the budget. You can't grow budgets at a certain level when your revenue is growing at a different level. And that's pretty much where we are right now. Our revenue numbers are not sustaining the expenditures. So there has to be complete analysis of this budget. There are too many one time fixes in the budge, and when you have a one time fix, remember, you've lost the ability to use it in the out-years. So, if you have a $50 million, one time revenue item, you don't have that in the next year. So now you have to find it and if you don't have it terms of revenue growth, you have to go deeper in the expenditure side.

SA - In some degree, the Governor and you are kind of speaking the same tone. We've got problems, we've gotta solve the problems and we've got some specific ideas in mind. Paul, just give us the long view, after almost 27 years in the General Assembly, how is it that you think we get to this point today...

Paul Crowley (PC) - I think it's basically that...We have a very hard time, when the revenues are coming in, to get people to accept the fact that there is a limit to what government can do. And when there's money to be spent and programs can be expanded, like in good programs like RIte Care for young children, it's hard to say, well, someday there's going to be a limit as to what we as a state with a population of only a million people, how much revenue we can produce and how much government we can support. That's an argument that people don't want to hear. So it keeps kinda growing each year, each year and then finally, we hit the wall. Now, I think, what my great concern is that, not only are we facing this revenue issue--we're facing the issue of government growing--but we're also facing a significant change in our state's population. We're going to become an older state, so that all those people that have worked in this economy are going to become retirees of this economy. So it's going to become a different kind of state and we better deal with that and question from the local level--not just the state level, from the local level--how much government can we afford, what can we ask them to do and how can we make it more efficient.

SA - Steven...what do you like...about the Governor's tone...

SC - I think there is a seriousness and a commitment to get the budget to where it has to be so in the out years we've made some movement in terms of fixing this. Ultimately, for the quality of life to improve in Rhode Island you have to have a health state government. We can put all the P.R. on certain ideas and certain programs but ultimately people have to feel that living in this state is worth living in this state. We have a beautiful state. There's no doubt about it. But you can't have a situation where too much of someone's disposable income is going to government that cannot be supported. Ultimately, that affects the quality of life. So I think in terms of the tone, I think there's a willingness to work on these long term issues....what the specifics are...there may be some differences...

Ian Donnis (ID) - Steven, you say there's a willingness to work on these long term issues, but these budget problems haven't come out of the sky. State spending has grown at twice the rate of inflation for more than ten years. Why has it taken the state so long to come to terms with this?

SC - Well, I think Paul hit on it very well. There are some programs that are growing disproportionally to the revenue [stream], but these are programs that are near and dear to Rhode Island citizens. RIte Care, Education, in education in the last few years is growing even higher than some of the human services programs. So it gets difficult to make some of these choices because you are affecting--on the short term--some of the services. But ultimately, I think what I said before--and I'm not to say that the General Assembly hasn't participated in this--but it's been for well-intended reasons. We now have to look at what's the long-term effect of some of these programs. What's the long term effect of some of our tax policies. Because this isn't just an expenditure side issue, it's a revenue side issue.

ID - Paul, one of the areas targeted by the Governor is state subsidized child care. Proponents would say that this childcare is crucial for helping people to get out and work if they're on the economic margins. Does it make sense to target this program for cuts right now?

PC - I think you have to look at it. You have to look at every, single program. [If you] take any program off the table, we're not going to be able to resolve this issue. But that's not a bad place to start and let me give you [an] example. When we started to build the child day care system to put people back to work, well, we didn't just build the simplest--you known, a couple of people watching a couple of kids at home--we built a system that guaranteed that the kids would be in safe environments, protected then people came in and we had benefits and decent pay for the people doing the work. So our system...grew horizontally and vertically. It encompassed a lot of children and became very expensive. It's a very good program, but the question is sustainability. Can this tax base sustain that program. So that's the very difficult question that we're going to have to be facing.

SA - Paul, your words earlier that there sounds to me like an invitation to the taxpayers to recognize that their going to have to change their way of relating to the government. The governor suggest that, Steve seems to be saying that as well. What about the message that the governor suggests, that for the next four months there be an unpaid work day. That's saying to union workers or state workers "you're going to have to shoulder part of this burden." Is that going to resonate? Is that a good idea? Is that the right way to send a message to all the taxpayers of Rhode Island?

PC - I think one of the union leaders came out just recently and said, "No, not us." But I think everybody has to be at the table. Our public sector employees at the state and local level are well compensated, they've got excellent health care packages and they have terrific retirement programs. To say that we're going to get into this situation and that we can't be touched is not realistic. I think we also need to look at an issue like aid to education. You know, we just can't simply say that the key is to give more money. We have to look at the educational structure and if the Governor talks about the idea of consolidation of school districts, he's got to roll up his sleeves and come to the table and say I want to work in it. I happen believe on that. He finally said, "Let's talk about a state teacher's contract." Well, let's not just talk about it Governor, let's assign the Board of Regents to come up with a model for a contract, let's make it a date certain to get this thing off the ground. The savings we would make in those areas today are probably not going to accrue for another two or three years. But if we don't start today, then the problem just keeps getting bigger, and bigger and bigger. So there's gotta be the committment governor, we'll work with you but we've gotta see you at the table with your sleeves rolled up saying, "I'm gonna do the work."

SA - $46 million added to the budget for education is an investment in the future. The governor says that that's going to bring a great return. Moving 500 prisoners...is another issue...

[END OF SEGMENT ONE]

I must say that I'm encouraged by the "tone" of the discussion. If Constantino and Crowley are any indication, it seems like the Legislature may have finally gotten the message that the RI Government can't keep spending like drunken sailors. Now for two quick observations: 1) Rep. Constantino made a point of mentioning that the GA also needs to look at the revenue side (not just the expenditure). Be on the lookout for tax increases. 2) OK, what's up with Crowley's throwing-down-the-gauntlet attitude towards the Governor? As if the Governor hasn't tried to propose education--and other cost-saving--reforms before? It sounds like Crowley is trying to shift the perception away from who really has shown initiative (the governor) on this issue by saying that something along the lines of "talk isn't enough." Well, that's true, but until now the Governors been talking but it's been the folks in the General Assembly who haven't been listening. Crowley makes the same challenge to the Governor in the next segment, too.

[SEGMENT TWO]

SA - Whoever the leader is, it's their job to throw up big ideas, to challenge...and then the worker bees have to make it come true. What do you say to the governor? Rally back to what we were talking about the state workers. I mean, during the break you were saying Steve that the Governor's kind of got to be engaged with that...

SC - In terms of the whole state worker issue. Ultimately, how I would deal with this is, you bring the unions in, you say you're going to have to share some of this pain. And in fact, if we've hit the wall, we've gone to the extent that we can go to in trying to resolve this budget problem. We need to go deeper. We need you to come to the table to participate in this. Some of these ideas we're talking about, whether they're the furlough days, and some of these issues. We need you to be involved in this and start that give and take. Now, ultimately, maybe you don't get there and maybe there isn't agreement. But at least there's a process by which they've been engaged and at least you can say you've brought them to the table and either they bought in or they didn't buy in. I'm not sure that give and take has happened previously to this budget.

SA - Paul, have past governors done a better job of that?

PC - Yes, I've served with quite a few of them and the one that probably did the best job--and not on just these kinds of issues but in terms of being engaged in government--was Bruce Sundlun. He said--we had a plan to renovate the airport--he said the renovation's no good, we're going to build a new one. He would pull legislators off the floor, and even though he had a Democratic leadership and sometimes the Speaker might complain (he'd say, "Governor, I'll talk to my people, not you.") He'd say, "No, I'm the governor, I talk to whoever I want." He would roll up his sleeves and be completely engaged. That's what I want to see from this governor. When he talks about being the education governor, say, "Fine Governor, you control the Board of Regents now. A lot of the reforms you want to do, you can do through the Board of Regents. Call a meeting, talk to your Chair, and say I want to get these things done." But I want to see that from the Governor. I want to know that every week when we're up there--the Finance Committee, working on this stuff--that he has people at those meetings, at those hearings and he's coming up and he's talking to us after the meeting and saying, "OK, here's what we heard, what do you think? What can we do together?" He's gotta be completely engaged or we're not gonna make a dent in this thing that we have today. {Sorry, I've got to interject...First point: would they really listen to what the Governor has to say? Second, missing in Crowley's Sundlun example is the fact that the Governor is of a different party than the majority of the Legislature. In fact, he's basically the only Republican up there. Can you imagine what the Dems in the Legislature would do if the Governor acted like Sundlun and pulled them off the floor? Again, Rep. Crowley is challenging the Governor, as if the Governor hasn't tried to work with them before. Seems like a lot of his bluster should be turned towards those who haven't been willing to listen to anything the Governor has proposed in the past. Now that he has been shown to have been correct in his predictions, they are trying to imply that he just wouldn't work with them, that's why we're in the current budget crisis. Please. Regardless, I hope the Governor calls his bluff and makes sure that the public is informed on the tone and direction that any budget "dialogue" takes.}

SA -Steven, tobacco futures, dipping into the rainy day fund, insurance reserves, selling property...those are a lot of big ideas. Tackle one of them?

SC - Well, the commonality of all of those ideas--and I would say this, there may be some of those we'll have to concur with because we don't have any choice--but the commonality is they're one time fixes. And tobacco securitization, in this proposal, isn't as bad because it's talking about going to capital and the infrastructure for the state...bridges, state roads, hospitals...Some of these other one time fixes basically just make the problem worse. Whatever you use once, you don't have in future years. So you have to find it in future years and if you can't find it in future years then you have to dip even deeper into government services and what we're paying for.

ID - ...Celona...7 other elected officials and companies, your thoughts...?

(No earth shattering revelation other than, gee, "it's sad" and Rep. Crowley stressing that, just because they are all legislators, they don't necessarily know each other or what others are doing.)

SA - Final statement...this is tough times. What do you think is going to happen, how do you think we'll prevail ultimately? What's the biggest compromise?

SC - I believe probably the biggest compromise will probably be in the education arena and probably some of the human services programs. I think ultimately there probably aren't going to be many compromises this year. I think it's going to be a situation where we finally have to put a budget together that deals with the out years. So I don't see many, many compromises this year. There may be some in education, some in human services--maybe to not go deep into child care--but if I don't do that, I have to find the money somewhere else so we might have to share some of that burden over some other human services programs. But ultimately, we need to pretty much get a budget that is healthy for the citizens of Rhode Island in the future.

Despite my annoyance with the attempt by Rep. Crowley to try to shape this as the fault of the Governor because he wouldn't play nice-nice with the GA, I've at least taken away from this that both he and Rep. Costantino recognize that the state of the state is dire indeed. Let's see if their actions end up lining up with their rhetoric. I sure hope so.