When the Good Times Aren’t So Good, What Will the Bad Times Be Like?

Elizabeth Gudrais has an article in today’s Projo on the National Conference of State Legislaturesannual state budget survey ($$ required to view the original). This year’s study ranks Rhode Island #1 in the country in terms of tax increases between this year and last. The Projo article contains none-too-surprising reactions from the usual suspects; House Finance Chariman Steven Costantino says the NCSL methodology is flawed, Gary Sasse of the Rhode Island Public Expenditures Council says that Rhode Island’s poor fiscal condition is because other areas of the budget are being starved to pay for entitlement spending, and Ellen Frank of the Rhode Island Poverty institute says the message from these kinds of reports is that Rhode Island needs to find new ways to raise taxes.
However, in terms of planning for the future, the most important feature of the NCSL study may be its warning that we’ve been living through good times that are about to come to an end…

Of the 45 states that have already reported, 23 ended fiscal 2007 with surpluses equaling 10 percent or more of state general-revenue spending, due in many cases to higher-than-expected revenue receipts. Many states were able to increase their reserve funds — Tennessee, for example, by more than $200 million…[but] for other states, the boom times appear to be coming to an end. The NCSL report fingers fiscal 2006 as “the peak for state fiscal health this decade.” On average, the report says, the growth in state surpluses and higher-than-budgeted tax collections are slowing down.
If the forecast is accurate, fixing the structural problems in Rhode Island budget is not something that can put off for much longer.

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Greg
Greg
13 years ago

I’m curious if there has ever been a study that painted the state in a poor light that wasn’t panned as ‘flawed’?
I swear, Jesus Christ himself could come down and proclaim at 200 decibels that “YOU ARE ALL SCREWED UP!” and Bob Walsh would come out and state that God wasn’t an authority and couldn’t properly gauge and Jesus was an undead, mediocre carpenter with a homosexual bent and we shouldn’t listen to him.

Sarah
13 years ago

Maybe if we spent a little more on education and less on entitlements we’d have an educated workforce to bring higher paying jobs and will generate higher revenue for the state all without raising taxes….just a thought.

SusanD
SusanD
13 years ago

We’re Number One!
We’re Number One!
We’re Number One!

Thomas
Thomas
13 years ago

Greg,
You say, “I’m curious if there has ever been a study that painted the state in a poor light that wasn’t panned as ‘flawed’?”
In this particular case, however, the methods they used do seem to have a very peculiar effect. From the ProJo story:
“Because NCSL specifically asks each year whether states reinstated any taxes that were set to be phased out — and because Rhode Island considers the hospital licensing fee anew each year, rather than extending it indefinitely — it counts against Rhode Island each and every year…”
So, if one state has a permanent tax on X, and a second state has a tax on X of exactly the same amount, but has to reauthorize it each year, the second state has “increased taxes” and the first has not. That doesn’t make sense, does it?
Note I’m not saying that we aren’t taxed too much, we don’t have foolish fiscal policies, or that a properly-done report wouldn’t show about the same result. I’m only saying that the claim that the NCSL method is problematic actually makes some sense.

Greg
Greg
13 years ago

If liberals can make the argument that level-funding something that was slated to get an increase is a ‘cut’, then I think we can reasonably argue that any tax that is slated to be ZERO next year that gets extended to be anything greater than zero WOULD, in fact, be a tax hike.

Thomas
Thomas
13 years ago

Greg,
In a word, “no”. The NCSL says it is measuring tax increases from last year to this year. If a tax is the same this year as it was last year, it’s not an increase. Their way of measuring “increase” is faulty.
Flat education funding was a “cut” in these two senses: 1) the General Assembly did in fact cut 3% increase from the Governor’s budget. 2) given inflation, flat funding will result in a cut in purchasing power.
However, if anybody says that the General Assembly cut the amount of education funding from last year, they are just plain wrong That’s not what “flat funding” means.
I don’t see what “liberals” has to do with it. Bsad arguments are bad arguments. Saying “if liberals can make bad arguments, so can “we””, just means more trash cluttering the policy space.

Greg
Greg
13 years ago

It’s that very inability to muddy the argument, change the subject, and downright lie about realities that keeps the Republicans in this state from being able to make inroads with the populace.
It’s not about whether a cut is a cut or level funding. It’s about what you can convince the PUBLIC.

SusanD
SusanD
13 years ago

“So, if one state has a permanent tax on X, and a second state has a tax on X of exactly the same amount, but has to reauthorize it each year, the second state has “increased taxes” and the first has not. That doesn’t make sense, does it?”
Nowhere does the article indicate whether this $72m “fee” pushed Rhode Island to the top of the list. This strikes me as a non-issue; it would be little comfort to learn that, minus this “fee”, RI was – whew! – only the second highest tax raiser last year.
Further, as long as the General Assembly lacks the stones to either make the “fee” permanent or abolish it and walk away from the revenue, it is perfectly correct that they get nailed with this rap.
Finally, I would note this interesting observation by Gary Sasse of RIPEC:
“The reason other states have been flush with cash, but Rhode Island hasn’t, has to do with how Rhode Island handled the lean times earlier this decade, says Gary S. Sasse, executive director of the business-backed Rhode Island Public Expenditure Council.
“When other states experienced fiscal downturns, they made the hard choices. They cut back on programs. They did things to keep their budgets structurally in balance,” says Sasse. “We did not make those tough choices here. We cut taxes, but we didn’t reduce spending.”

johnpaycheck
johnpaycheck
13 years ago

folks,,,,it doesnt take a study to see the tax increases….

Thomas
Thomas
13 years ago

SusanD,
When a report is used to drive policy discussion, as this one has been and will be, its methodology- and therefore its reliability- are never “non-issues” except among those who put have already reached their conclusions and don’t really care about evidence one way or another.
You say, in response to a quote from me, that “Nowhere does the article indicate whether this $72m “fee” pushed Rhode Island to the top of the list.” Fine. I didn’t say it did. But I don’t know how much this odd way of counting “increases” added to the RI score across the whole budget, and I’m going to guess you don’t either.
It’s completely fine with me if you criticize the GA for annually renewing the hospital fee/tax; just please don’t call it an “increase” (except for the $6M it actually increased from last year).
I fully agree with Mr. Sasse that cutting taxes, such as the capital gains tax, without reducing spending, is irresponsible.

SusanD
SusanD
13 years ago

“its methodology- and therefore its reliability- are never “non-issues” except among those who put have already reached their conclusions and don’t really care about evidence one way or another.”
In my attempt to be succinct, possibly I was not clear.
Reference is made to the $72m hospital fee that the Gen Assembly implements anew each year. It has been suggested that this should not count as a tax increase as it was in the budget in the prior year.
My point was that even if this fee/tax is subtracted and Rhode Island is no longer Number One, Rhode Island is still near the top of the list of states which increased taxes last year. Second place? Third? Whatever it is, we are not in an enviable position. Rest assured though, Thomas, when that point is clarified, I will readily stipulate to Rhode Island’s standing in this extremely unfortunate competition. In the interim, you cannot credibly accuse me of not caring about evidence on a point which was never made; i.e., Rhode Island’s placement on this list upon exclusion of the hospital tax/fee.
I would also contend your questioning of the methodology and reliability of this report if your sole reservation is that one item. The General Assembly, presumably out of a lack of courage and decisiveness, has chosen to handle this tax/fee, year to year, in a manner that leaves them open to this calculation. It is, therefore, not this report’s “odd way of counting increases” but the actions of the RI General Assembly which confers upon them and upon our state this dubious distinction.
As to the more general comment of leaping to conclusions, having never been accused of such a thing – rather the contrary – I’ll just let it stand with some be- and a-musement.

Thomas
Thomas
13 years ago

SusanD, No, the hospital tax is not my “sole reservation”. This way of putting it makes me think you believe I have a goal of denying that RI is #1 in tax growth. I do not, because I don’t know. My only reservation is to the way NCSL counted “increases”. The hospital tax is just an example. Not only should that tax not count as an increase, NO tax that was the same amount last year as this year should count as an increase. That’s not what an “increase” is. Problem is, we don’t know how many other items in the RI budget were counted this way. Also (and you should like this) we don’t know how many items in OTHER state budgets were counted this way. It might in fact be that NCSL’s way of measuring “increase” artifically inflated other states’ increases more than RI’s , and we are actually not only in first place, but in first place by a bigger margin! The point is, we don’t know. That doesn’t change the fact that the way NCSL counts increases (according to the ProJo) is absurd. If you are really going to claim that it’s reasonable to say, as NCSL appears to have done, that a tax that was $72M in 2006 and $78M in 2007 increased $78M from 2006 to 2007, I doubt there’s anything more I could say on the matter that would be useful. Perhaps I was wrong to suggest you were leaping to conclusions. My view may have been colored by my experience in another thread, in which you referred to a comment of mine as “baseless and a reflexive defender of Democrat politicians”. How did I earn this scathing rebuke? I suggested that, before concluding how dependent Providence is on the rest of the… Read more »

Mike
Mike
13 years ago

The state is screwed with a capital “S”. The unfunded pension liabilities are in an uncontrollable death spiral. Look for a 9% sales tax and continued double inflation property tax increaes for the next 5-10 years until so many people leave the state that the tax revenues fall. Then the contraction of government will set in, as surely as it has done in all Soviet-style “progressive” economies.
If they couldn’t make it work in vicious police states they sure as hell aren’t going to make it work in a postage sized stamp state with no guards on the borders!

johnpaycheck
johnpaycheck
13 years ago

i live in ri and am resigned to a tax increase every year.
it is a death spiral. i figure there will be more band aids next june and the next eyar and then there will a collapse.

SusanD
SusanD
13 years ago

“It might in fact be that NCSL’s way of measuring “increase” artifically inflated other states’ increases more than RI’s , and we are actually not only in first place, but in first place by a bigger margin! The point is, we don’t know.”
But by saying that, you are deflecting and casting doubt on the study and thereby its conclusion and thereby the reality of the extreme dubiousness of the fiscal management exercised by the controlling party in this state and the serious consequences of that management.
This is the frustration some of us have been experiencing on some of these conversation threads. Instead of discussing the issue, we seem to get distracted by an either non-existent or miniscule problem with the latest study which precipitated the discussion. In short, Greg’s first question on this thread is a very good one.

Thomas
Thomas
13 years ago

SusanD says, “But by saying that, you are deflecting and casting doubt on the study…” I don’t know about “deflecting” but, yes, I am casting doubt on its methods. SusanD: “..and thereby its conclusion.” Possibly, but I’m not in a position to know that. I don’t have any idea whether the errors caused by the NCSL method are “miniscule”, as you assume, or large. SusanD: “and thereby the reality of the extreme dubiousness of the fiscal management exercised by the controlling party in this state and the serious consequences of that management.” Whoa, wait a second. Because I think one study is flawed I’m expressing doubt that the state’s fiscal management has been bad? That’s quite a leap. I’m starting to see a pattern, though, between this thread and the one on Providence’s fiscal dependence on the state. If I question any fact that supports what you know to be the truth, I’m on the other side. Sorry, I’m not buying. First, your assumption is wrong. I’m perfectly happy to say the state’s finances are in crisis. I’m also happy to lay most of the blame for that at the door of the dominant political party. That, however, is entirely beside the point. More importantly, getting the facts right is not a “distraction”. It’s essential. If we’re just going to accept at fact value those reports and studies that support what we already “know”, and reject those that contradict it, and not worry about how they are done, there’s no point in doing the studies. If we’re not going to make an attempt to be rigorously honest about methods and measurement, we’ve got no right to complain if thoughtful people reject our opinions and demands. I am also interested in the way both sides of political debates tend to ignore… Read more »

John
John
13 years ago

Thomas,
Unfortunately, the past few years have shown that facts — indeed, a growing avalanche of evidence — have not convinced Bob Walsh, Marcia Reback, Kate Brewster, Frank Montanaro, and the many true believers in advocacy organizations and the General Assembly that (a) anything is wrong with the current state of affairs in RI, or (b) that anything that is wrong can’t easily be fixed by either building a new casino or raising taxes on the evil rich and businesses.
“Knowing a guy” is far more important to too many people in RI with power and influence (and that includes too many members of the business community) than “knowing the facts.” You might want to call Gary Sasse at RIPEC, and ask him for his views about how much influence accurate facts have had on policymaking in RI over the last decade plus. Or Kip Bergstrom at the Economic Policy Council. Both very smart guys and both, I’m sure, equally frustrated that their fact-based analyses have been ignored over the years, leading to the fast building fiscal train wreck we now face.
The sad fact is, while growing clarity about the facts and their implications has caused a lot of smart people to leave RI (and businesses to avoid it), its impact on the RI political system has been close to zilch.

Tom W
Tom W
13 years ago

Instead of obsessing about the minutiae of study protocols, how about a little “common sense” benchmarking.
New Hampshire is in New England, and so also is subject to our high energy costs etc., and yet does just fine without a sales or income tax. Indeed its roads and public schools are superior to Rhode Island’s, and its economy has outperformed ours for decades.

Greg
Greg
13 years ago

Ultimately, one truth shines through regardless of your political bent, your motives or your union affiliation. The wild spending party is just about over. We’re only a couple of years from Thelma and Louise-ing right off the cliff. This year’s inaction by the GA was pretty much the final nail in the coffin.
And there’s no reason to believe that things will be better next year. All we can really hope for is that all of the schools in the state, after being screwed by the GA so Williams can get his courthouse, cut programs back so far that every parent is outraged and actually begins to pay attention and DEMAND some accountability from the yahoos at the statehouse.
The other thing we, as a state, need is a serious opposition party. And Gio’s functionally retarded Republican Party might as well be the Cool Moose Party for all the effectiveness they have.

Bobby Oliveira
13 years ago

Dear Tom W,
For the 18000th time, New Hampshire is nothing like us.
I don’t want government New Hampshire style and neither does anybody else. If we did, we’d elect people who want to run Rhode Island, what a joke, in a New Hampshire way.
Comparing us to them also shows that you are either intellectually dishonest or clueless about how government works. In your case, I think it’s both. God, are you going to hate the 2008 results.
Susan,
If you quote garbage from garbage surveys, expect us to mention it. If the folks putting together the stats have an agenda or have shown that they will skew results based on other influences, see US Chamber, we will mention that too. We are not mindless sheep for whom who you have to do is draw some lines on a chart so we will go “baaaaaaaaaaaaaaaaah” in agreement.
The surveys, numbers and rankings also must mean something. They must have context and perspective. Otherwise, they are useless.
Greg,
If I were you and believed what you believed, there were dead bodies found after every Republican meeting. I don’t know how you deal with it.

Tom W
Tom W
13 years ago

>>For the 18000th time, New Hampshire is nothing like us.
AMEN!
>>I don’t want government New Hampshire style and neither does anybody else. If we did, we’d elect people who want to run Rhode Island, what a joke, in a New Hampshire way.
Yeah, they don’t need the U.S. Attorney investigative staff there on a full-time basis.
Funny, people who aren’t illegal immigrants / welfare leeches are moving there … whereas the illegals / welfare leeches are moving here.
And we know who THEY want to elect – corrupt Democrats (I know, I’m being redundant) who’ll hand out welfare – either in the form of patronage jobs or checks.
>>Comparing us to them also shows that you are either intellectually dishonest or clueless about how government works. In your case, I think it’s both.
RISDIC. Plunder Dome. Magistrate Harwood. Celona / Irons / Operation Dollar Bill. Yeah, I’m clueless to how government works in RI.
>>God, are you going to hate the 2008 results.
Perhaps. I hated the 1976 results, and it does look like we could well end up with another Democrat of similar ilk.

SusanD
SusanD
13 years ago

Exactly, John, thank you for channeling my inarticulable thoughts.
That’s fine, Bobby, it’s garbage. Hopefully, that will be of some comfort to you and your public union cronies when their pension checks start bouncing.

Thomas
Thomas
13 years ago

John- What you say may well be true, but are you suggesting that it means we should stop caring whether studies are well-designed and findings are honestly presented? I don’t think Gary Sasse would agree, and I certainly won’t.
Tom W- What you dismiss as the “minutiae of study protocols”, I call good research design and careful presentation of evidence. You wouldn’t tolerate careless design in medical research, would you? I see no reason to tolerate it here.
As for “obsessing”, I encourage you to reread the history of this discusson. Greg mocked Costantino’s statement that the study was flawed, and I pointed out that Costantino actually had a point. In order to head off unreasonable objections, I was very careful to not take issue with the general proposition that our taxes are too high or growing too fast, or even with the ultimate result of the study or that RI is #1 in tax growth. Apparently, though, it didn’t sit too well with some. Greg went on to insist that a tax that doesn’t grow from year-to-year does actually increase, and SusanD then attributed to me some of the very positions that I explictly disclaimed. I’m pretty sure I’m not the one obsessing here.

Frank
Frank
13 years ago

Bobby O,
What exactly is government ‘New Hampshire style” and how do YOU know that I, or anyone else, wouldn’t like it?

Tom W
Tom W
13 years ago

>>Tom W- What you dismiss as the “minutiae of study protocols”, I call good research design and careful presentation of evidence. You wouldn’t tolerate careless design in medical research, would you? I see no reason to tolerate it here. Thomas, it’s a fair point. The point I was trying to make (perhaps unsuccessfully) is that we’re engaging the in the proverbial “missing the forest for the trees” discussion. Over recent years (if not decades) study after study consistently conclude that RI is a high tax state with a poor business climate, laggard public school systems and sluggish (if not declining in real terms) economic base. In response, year after year, the rent-seeker defenders of the status quo – Democrat elected officials, “educrats” and public sector union officials – reflexively criticize the flaws or invalidity of the stud(ies) methodology. Well, are they ALL wrong and do the ALL use fatally flawed methodology? And where are the studies that show that RI is a low (or at least competitively) taxed state and/or with a good (or at least competitive) public education system and/or with vibrant (or at least competitive) economic growth? Some things over the years become the “conventional wisdom” without necessarily being accurate … but other things become generally accepted because they are accurate. Once you get past the apologists and excuse-makers on Smith Hill and the union halls, it seems pretty incontrovertible that: 1) Rhode Island is a very high tax state; yet despite that … 2) Our infrastructure has not been properly maintained, and is in terrible shape; 3) Our public schools under-perform (to put it mildly), even in comparison to mediocre U.S. public education generally; 4) Were it not for an influx of Central Americans, legal and illegal – presumably drawn here thanks to our above-average welfare benefits… Read more »

Greg
Greg
13 years ago

“Greg went on to insist that a tax that doesn’t grow from year-to-year does actually increase”
What a stunning mis-read of what I said.

Thomas
Thomas
13 years ago

Tom W.,
I understand what you say about the forest and the trees, but I hope that if you pause to reflect on my first comment and the fact that I explicitly did not question the conclusion of the report, you will see that I can not be fairly charged with denying the existence of the forest.
All (I repeat, ALL) I said was that NCSL was wrong to count as an increase a tax that remained the same from year to year. I believe that’s still correct.
I would not have said a word if Greg had not made fun of Constantino for saying it was a flaw. Constantino, like it or not, was right. (in case you are wondering, I am not a fan of Mr. Costantino’s leadership of the Finance Committee).
Reflexive dismissal of substantive conclusions because of minor flaws is wrong. Note, again, that I did not do this. Relflexive dismissals of methodological errors as unimportant is just as wrong.

Thomas
Thomas
13 years ago

Greg,
Here is what you said, “..I think we can reasonably argue that any tax that is slated to be ZERO next year that gets extended to be anything greater than zero WOULD, in fact, be a tax hike.” That does seem to be the NCSL way of thinking.
To simplify, let’s say the total tax for 2006 is $100M. $25M of this is slated to expire at the end of each year, but each year it is always renewed for the following year. (which is what happens with the hospital tax). So in 2007, the tax is again $100M.
According to the ProJo, NCSL counts the $25M as part of the increase from 2006 to 2007, even though the total level of taxation remains the same.
Are you saying you agree or disagree with the conclusion that there has been a $25M increase in taxes from 2006-2007 in the above hypothetical?

Greg
Greg
13 years ago

If this year the total tax is $100 million, and next year it is slated to decrease by $25 million but at the end of the year they extend the tax so that next year the total tax is $100 million, that is a $25 million increase from what was previously projected.
The flip-side is this.
If “X Department” gets $25 million for their operations this year and are slated to get $28 million next year, but at the end of the year you decide that they will only get $25 million, they will argue (quite successfully if you review the media in the ’80s) that that is a $3 CUT in their budget. But it’s not. In reality, it’s level funded.
Until you learn how to spin things your party is going to continue to flounder against the party that knows how to spin.

Thomas
Thomas
13 years ago

Greg says: “Until you learn how to spin things your party is going to continue to flounder against the party that knows how to spin.”
Oh I dunno, Greg. Given that you just managed to completely evade the direct question and changed the subject to an irrelevant issue, I’d say you’ve made a pretty good start on spin.
On the other hand, I think the advantage goes the party that can see through and deconstruct the spin, and tells people the truth. I’m old-fashioned that way.

Greg
Greg
13 years ago

Yeah, Thomas. That’s been working great for your party so far. Why change now? Whattya got? Seven Republicans in the whole General Assembly? Yeah, that’s a victory. You sure are getting elected by deconstructing the spin and telling the truth, now aren’t ya?

Tom W
Tom W
13 years ago

>>I understand what you say about the forest and the trees, but I hope that if you pause to reflect on my first comment and the fact that I explicitly did not question the conclusion of the report, you will see that I can not be fairly charged with denying the existence of the forest.
Thomas,
FWIW, I said “we’re” intending to indicate that this whole thread was focusing on trees, not you alone.

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