A few weeks back, Justin observed that the single biggest factor retarding fiscal and economic reform in Rhode Island may be the “but what can we do?” attitude of learned helplessness prevalent in Rhode Island’s legislature and municipal councils. Members of the But-What-Can-We-Do Caucus profess that they are powerless to do anything but raise taxes to maintain the state’s current (and mediocre) level of services, because impersonal macroeconomic forces beyond anyone’s control dictate that paying more to receive less is the inevitable reality of modern life.
Today, Steve Peoples of the Projo opened up the mainstream media chapter of the But-What-Can-We-Do club…

The state’s largest revenue streams — income tax and sales tax — are not keeping pace with projected expenditures, in part because of a weak national economy that may be headed toward a recession.

I see. The state’s structural deficits are the result of a sluggish national economy, not poor choices made at the various levels of Rhode Island government.
Except, as URI Economics Professor Professor Leonard Lardaro just noted, while Rhode Island’s economy has been contracting, the national gross domestic product has been growing by 4%.
Except, as the National Governors’ Association noted in June, Rhode Island was one of only three states that couldn’t cover its beginning-of-the-year projected spending for fiscal year 2007 — if Rhode Island’s fiscal problems are rooted primarily in a national slowdown, then why are 47 other states able to stay within their projected budgets when Rhode Island can’t?
Except, as the Rhode Island Public Expenditures Council noted in their analysis of Rhode Island’s current operating budget, spending from general revenues in fiscal year 2008 increased by 5.7% over the previous year. How exactly is it reasonable to assume that it will take something as dramatic as a recession to prevent revenues from automatically “keeping pace” (Peoples’ phrase) with 5.7% expenditure growth?
Despite the desire of many of Rhode Island’s leaders and activists to shift blame to some other place, Rhode Island’s perennial fiscal crisis is occurring in spite of, not because of, the national economic situation. And in the event of a national slowdown, there will be new fiscal and governance problems piled on in addition to the set of existing problems the state has already created for itself.