April 29, 2009
Taxes Plus Fees In Rhode Island
This past Monday, the Projo's Neil Downing concluded his story on the Rhode Island Public Expenditure Council's analysis of the state budget with this note…
RIPEC also urged that the state review the range of fees it charges. The group said that, when compared with other states, Rhode Island ranks near the bottom regarding income from charges and miscellaneous revenues.Here's the opening step of the suggested review: using 2005-2006 state and local revenue data from the Census bureau (the latest year for which data available is online) and 2006 income data from the Bureau of Economic Analysis, Rhode Island's ranking per $1,000 of income in the fee and miscellaneous charge categories tracked by the Federal Government can be determined…The state should review fees and other such charges “to [ensure] the adequacy of charges for services, the need for the charges and whether the state can seek additional non-tax income,” the RIPEC report said.
| Fee/Charge | RI Rank |
| Housing and community development | 4 |
| Other general revenue | 13 |
| Air transportation (airports) | 17 |
| Highways | 28 |
| Sea and inland port facilities | 29 |
| Other charges | 29 |
| Institutions of higher education | 32 |
| School lunch sales (gross) | 34 |
| Natural resources | 34 |
| Parks and recreation | 41 |
| Parking facilities | 42 |
| Sewerage | 42 |
| Solid waste management | 44 |
| Hospitals | 49 |
However, ranking alone doesn't tell the entire story. For example, for a category like "Natural Resources, RI's lower-half ranking doesn't impact total revenue collected very much because no state collects very much in that category relative to its total budget. One way to evaluate the revenue impact from a state's policy in a particular fee area is add fees to the the total taxes collected, for each fee category in each state, then re-rank the totals and see how the results shift.
When only state and local taxes are considered, Rhode Island begins in the 2005-2006 Federal data from a rank of 8th from the top per $1,000 of income. The table below lists how inclusion of each individual fee category would change that rank...
| Fee/Charge | Rank Chg. |
| Hospitals | -16 |
| Institutions of higher education | -5 |
| Other charges | -4 |
| Highways | -3 |
| Sewerage | -2 |
| Other general revenue | -2 |
| Sea and inland port facilities | -1 |
| Parks and recreation | -1 |
| Solid waste management | -1 |
| School lunch sales (gross) | 0 |
| Air transportation (airports) | 0 |
| Parking facilities | 0 |
| Natural resources | 0 |
| Housing and community development | 0 |
In other words, Rhode Island's 8th place ranking in taxes drops to 24th when the sum of taxes plus hospital fees are considered, to 13th when the sum of taxes plus higher ed fees are considered, etc.
Obviously, whatever it is that makes hospitals in Rhode Island different from hospitals in most of the rest of the country (except maybe Vermont, who holds down the number 50 spot on the "hospitals" list) has to be determined, before anyone can advance a serious claim that our state's fees are too low.
I believe the fees data the Census uses for hospitals reflects publicly run hospitals.
On the other side of the question, in the past RI has ranked very high in the support it provides to for profit and not-for-profit hospitals -- e.g., our large budget allocations for uncompensated care.
So this is really an apples to oranges type comparison problem.
Posted by: John at April 29, 2009 4:20 PMI'm not advocating anything here, but "hospital" fees and charges collected in RI are about 15 times less per $1,000 of income than those collected in Massachusetts and Maine, and about 20 times less than those collected in Connecticut -- and Connecticut only places 39th on the hospital fees list!
Is there something radically different about our hospital system here, compared to the hospitals in other states?
"The group said that, when compared with other states, Rhode Island ranks near the bottom regarding income from charges and miscellaneous revenues."
Even if Andrew is wrong and there is a legitimate basis to raise fees, why can't we leave the status quo in place? By not raising fees, it balances (if only slightly) our taxes, which are on the other end of the scale.
"The state should review fees and other such charges “to [ensure] the adequacy of charges for services, the need for the charges and whether the state can seek additional non-tax income,” the RIPEC report said.
Dear RIPEC:
Please look over your prior analyses. State budget problems cannot be attributed to a lack of revenue.
Sincerely,
Monique
Posted by: Monique at April 29, 2009 10:42 PM