RI Senate President Is Not Satisfied with Seventh Place
While Rhode Island has been distracted by gridlock snow storms, triple dipping public employees and Presidential primaries, Senate President Joseph Montalbano has been sneaking around giving an interview to the Editorial Boards of the Pawtucket Times and the Woonsocket Call.
As reported by the Pawtucket Times’ estimable Jim Baron on Tuesday, the state budget was the dominant subject of the sit-down. And though Rhode Islanders are already the seventh highest taxed in the country, it appears that the only tax off the table for the Senate President is the state income tax.
Whether it is the Historic Structures Tax Credit, the Film and Television Tax Credit, the flat tax option for the state’s highest earners, or the capital gains tax which was being phased out but was frozen in the current year when it was scheduled for oblivion, “the revenue side has to be examined,” Montalbano told editors of the Pawtucket Times and Woonsocket Call on Monday. Montalbano recognizes that cities such as Pawtucket, Woonsocket, Central Falls and Providence have benefited from the historic tax credits by getting some of their previously vacant buildings back on the tax rolls and that it is “good for business and good for the construction industry. ”But every time a developer takes advantage of the tax credits “it is a direct hit on the state budget.” So while Montalbano admits he is an original sponsor of the historic tax credit program – as he was with the film and television tax credit — and has supported it over the years, he says the time may have come to “freeze it or in some way modify it.”
* * * *
The sales tax, too, could be up for some tinkering, the Senate President said, not a hike in the 7 percent rate, but perhaps broadening in the types of economic activity covered by the tax. “You are going to see proposals to expand the sales tax,” he said, “perhaps adding luxury items such as clothing that costs over a certain amount of money, or professional services such as legal services or accounting, things like that.“That in effect is raising taxes, I’m not denying that is a raising of taxes,” Montalbano conceded.
It is a little disturbing that the Senate President placed so much emphasis on the revenue side of the budget throughout the interview, though he did indicate expenditure categories that would be looked at.
It is not all going to be solvable on the backs of the state workers but there are definitely going to have to be cuts made and union contract concessions made and any time that is the case you have to have the unions there. You can’t just dictate contract changes, they are certainly not going to be legislated.
And when cities and towns begin their budget planning, the Senate President’s advises them not expect an increase in state funding this year.
”That same dynamic will also extend down to cities and towns, which will almost surely see a second straight year of frozen school aid and other funds from the state, Montalbano said
In fact, the Senate President was downright critical of the budgeting practices of cities and towns.
It’s going to be tough medicine for everybody,” he said. “The days of four-year contract extensions with 3 percent raises and no co-pay in insurance and not comparison between Blue Cross and United are over. The locals are negotiation contracts they can’t afford.
Interestingly, the Senate President did not mention social programs, though Rhode Island is one of the most generous states in that spending category.
Rhode Island is facing an annual operating deficit north of $450,000,000. Closing any portion of that deficit by advancing Rhode Island’s position as seventh highest taxed instead of enacting difficult but necessary spending cuts will only accelerate the flight of real revenue producers from the state and thereby boomerang to the state budget.
FYI….
Here is the link to the actual story:
http://www.pawtuckettimes.com/index.php?option=com_content&task=view&id=5939&Itemid=27
One wonders why the Projo didn’t make note of his remarks?
This will havea MAJOR impact on local property taxes next year….
My wife and I and our combined income in excess of $100,000 is already leaving. It’s just a matter of when. Raise my taxes again and you only kick me out faster.
I am sick and tired of Rhode Island being a utopia for the lazy, whether they be welfare recipients or no-show public employees (Mr. Pelosi?) while those of us that work hard and play by the rules routinely get raped by the general assembly. What is my incentive to stay?
What is my incentive to stay?
Posted by Greg at December 22, 2007 2:38 PM
XXX
None. If you can, get out before the maggots pick you clean. You can be replaced by some illegal with 5 kids on “child only” FIP, Rite Care, Section 8, food stamps, paid babysitters, free utilities, etc.
It’s only going to get worse unti 26 reps. stand up, say ENOUGH, and sustain a veto. We may be getting there but we ain’t there yet.
Certainly level funding for the next 3 years is going to drive most municipalities into Chapter 9-starting with the “Capital City” whose house of cards is already tetering.
Here is what I posted on this blog on December 13 as a prediction, based on a source close to a well known (and despised) Pawtucket rep.
Sadly, it is ALL coming true:
Look for the sales tax to be “broadened” but kept at 7%. Capital gains
back up to 7%. Marginal rates back to 9.9%. Historic and Film credits
cut. $30 million left in tobacco money sucked up. Token cuts in non-
Executive agencies like Judiciary and JCLS. $50 million in welfare
cuts.
Token 1% hike in extortion payments to teacher’s unions (“State Aid To
Education” in progressive-speak) for each of the next 3 years, with
towns invited to apply for “emergency” waivers of Paiva-Weed
restrictions.
This is what I am hearing from a close associate of a well-known
Pawtucket rep. The “game plan” is then to raise the broadened sales
tax to 9% in 2009, which they think will keep the SS. Welfare/Union
from sinking for a few more years.
Also under consideration: A penny hike in gasoline tax, a 1% income
tax surcharge for “the rich” (somewhere undefined but north of
$100,000) and a .4% increase in all brackets.
Please note these hikes would bring us the “gold medal” in both the
sales tax and the income tax (10.9% compared to California’s 10.3%).
Progressives be proud!
Happy Kwanza
Free Mumia
Many of us are stuck here – but anyone who works in the private sector who has a possibility of leaving RI should be ramping up the search. Sad, but true.
Rhode Island has great potential, but will probably never realize it. In any case, the short and intermediate term outlook indicates continued economic decline … which will result in the General Assembly further “enhancing revenue” … which will result in further economic decline … which will result …
So the downward spiral will continue and accelerate.
We’re screwed.
Sorry Greg, Tom and Mike,
After living in RI for over 60 years I can no longer afford to live in RI anymore. Greg instead of talking about it I made my move out of state to save my fixed retirement income which has caused me to realize the following:
1.New State has a Republican Governor; a Democratic General Assembly and they work together.
2.New State ended fiscal year with budget surplus last two years and is projected to end next two years with surplus.
3.RI state property tax of $2,600.00 vs. $325.42 property tax per year assessed property same as in RI at $270K in new state.
4.New state does not collect state income tax on my retirement income.
5.New State sales tax of 4%.
6.There is no property tax on private cars or boats in new state.
7.All state beaches and parks in my new state are free with free parking, with restrooms, bathhouses, lifeguards; picnic grounds some with tennis, basketball, baseball, courts and swimming pools.
8.The new state and city are contemplating eliminating all rider charges for one of the best public bus system in the US to offset and help decrease increased commuter traffic.
9.The average temperature is 75°F – 85°F year round.
10.National Weather Service issued blizzard warnings for our mountain tops two weeks ago which received 8 inches of snow.
11.NEA statewide public schools are all in session and students have passed all No Child Left Behind tests. The state, cities, towns, union, teachers, parents and business all work closely together to ensure the children receive excellent education and after school services.
Happy Holidays!
Mele Kalikimaka
New state = Hawaii?
Best wishes for your future in paradise!
My wife and I are closing on a house in Florida next month. My services business sounds like its in the Senator’s sights. All I need is a good internet connection and an airport or interstate to occasionally visit my customers. I derive almost no income in state. I’m in the import/export business – I export services, import money and pay taxes to RI. While I can continue to work here, unless there is an exclusion for out of state customers, this will put me at a significant disadvantage compared to my competitors. As a subchapter S business owner, my income flows directly from the business. At the very least, without the exclusion, this will increase my effective state tax by at 140 PERCENT! Thats just comparing the 5% I pay in income tax with the 7% that will be skimmed off the top in sales tax. In actuality, because I do have some deductions and because I have overhead, the real hit looks more like a 400 PERCENT! increase. Sorry to shout here, but this will certainly affect where I live and where I declare my state of residence. We’ve been vacationing in Fla for 12 years and had planned on ramping up to a few months a year, but this could easily tip it to six plus months. My customers mostly deal with me by internet, e-mail and phone. Do I need this? Do those morons think my situation is unique? Hey, stupids, this is a COUNTY masquerading as a state! All I have to do is move my business office across state lines, MA or CT, your choice, if I don’t want to take the bigger step of living 6+ months a year in Fla. Its probable that at least one of these states will not tax… Read more »
Yes Aldo
I moved to Hawaii and I’m loving it!
Mele Kalikimaka & Hau`oli Makahiki Hou.
General Assembly Wish List for 2008:
1. A professional services tax on legal, accounting, consulting and real estate type of services.
Of course, most of these services can be provided from anywhere as Ken points out and will only result in a temporary increase in state tax revenue until the professional services industry has time to relocate out-of-state.
2. Historic Structure Credit: It affects so few Rhode Islanders, it will be easy to pass.
3. Film & TV Credit: Most people don’t think about it, so it will probably hit the dust bin.
4. Hospital Bed Tax: Of course, the tax will be passed along by insurers to the Rhode Island tax payer, but it not as direct as raising the sales or income taxes.
5. Tobacco Tax: It’s the easiest type of tax to increase.
6. Luxury Sales Tax: It will be interesting to see what gets defined as “luxury”.
And with all of this, RI will still not have attacked the looming unfunded pension liablility.
As today’s Projo points out, RI just can’t afford the healthcare and pension costs associated with its state workers.
The people who currently complain about “balancing the budget on the backs of state workers” haven’t seen a thing yet and it won’t matter whether there is a Republican or Democrat as Governor in 2010. The state can’t afford the pension and health benefits it has already agreed to pay out.
It is going to take nothing less than a harsh dose of tough medicine to turn it around. More taxes is not medicine, it’s poison.
The delightful paradox is that the only person in the likely field of candidates for Governor with the guts to administer the “medicine”, is also the only one with the know-how to save those pensions.
The unionistas have backed themselves into a corner where only Laffey can save them! I love it!
Think it is vitaly important for the governor to set forth concrete proposals on pension reform/government reform in the next budget address. Needs to offer up a concrete blueprint on these issues. The Assembly needs something tangible thrown in their laps. Even if it’s not approved there needs to be a definitive proposal on the table so it can be publicly aired debated and pressure applied to the legislature to address it. Biggest complaint I have with Gov Carcieri is while he’s on the right track with many issues he doesn’t force the hand of the legislature by putting out concrete nuts and bolts proposals and having his Reps introduce legislation on his behalf. Given the gravity of the problem with our looming deficits hopefully this will change. Also remember it’s projected that House and Senate leadership will change in 2010. Speaker Murphy wants a legacy to leave behind. Look for Murphy to become a bit more ‘visionary’ in the coming years.
George,
Frank Caprio is Steve Laffey’s worst nightmare. Laffey can talk economic and budgetary rings around Cicilline Lynch Roberts. Can’t do that against a likeable Caprio who has very good knowledge of economics and a resume to back it up.
Caprio may be a nice guy, but he’s also a thin-skinned wimp with little to no personality … not what most people look for in a governor. That being said, for a Democrat in RI, we could do far worst.
PS From what I’ve been hearing through the grapevine, a $450M deficit would be a blessing compared to what the real number will likely end up being. Just wait until the next budget forecast. All hands, prepare to abandon ship!
Tim,
I’d bet alot of legislators leave the General Assembly. It’s one thing to be a legislator in gravy train times, but how many legislators will want to go back to their districts explaining why they had to cut social services, education, health and pension benefits, raise taxes, etc.?
As for Caprio, the Dems first need to be smart enough to nominate him. There will be plenty of special interest groups fighting to preserve their own slice of the pie and they may want a more liberal candidate. Right now it looks like it will be a Caprio-cicilline race.
Laffey’s problem is that his first exposure to the state was not very positive. He could have run for Lt. Governor or General Treasurer and walked into the Governor’s office in 2010. It will be more difficult for him to do it now.
Rhode Island is on the precipice of economic catastrophe of Great Depression proportions. This is not inevitable-but it is a real possibility. This state is already ranked in the very low 40s for economic climate, and businesses continue to move out, which is the economically rational thing for them to do. There is no way that a state that is already hemorrhaging businesses and taxpayers can absorb the multibillion dollar unfunded public sector pensions and continue its status as a welfare magnet of national and international proportions. To endure mere pain, rather than catastrophe, the Democrat General Assembly would have to do the following: Repudiate its subservience to the unions and begin acting for the greater good of Rhode Island, freezing the pensions and other benefits, reducing our welfare benefits down to federal minimums, and use the savings to reduce our tax structure to not only be no worse than regional averages, but competitive nationally. We would also have to make our work force competitive by eliminating the teachers unions so that we can clear the path to attaining world-class public education in the state. Lastly, the Democrat Party would finally have to purge itself of the corruption that has been part of its essence for decades. Rhode Island’s well-deserved reputation as “the Louisiana the North” only hurts us economically, and “Operation Dollar Bill” is far from over. There is no visible reform movement within the Democrat Party – even as “progressive” wing has shown a remarkable propensity to “go along to get along” – so there’s no reason for optimism that Rhode Island’s endemic political corruption is going to get better anytime soon, much less our national reputation for corruption. In fact there is zero reason to believe that Rhode Island’s Democrats will do ANY of the above; for… Read more »
Anthony,
“2. Historic Structure Credit: It affects so few Rhode Islanders, it will be easy to pass.”
What most people don’t understand is the Historic Structure Credit affects everyone in Rhode Island.
The state would be in worst financial state if it were not for the Historic Structure Credit which has received national recognition.
According to published reports the Historic Structure Credit is directly responsible for over $2 billion dollars in economic activity in Rhode Island.
Governor Carcieri indicates the Historic Structure Credit is responsible for closer to $5 billion dollars in over all economic activity in Rhode Island.
If the GA changes or kills the Historic Structure Credit a lot of projects in the state will stop and a lot of people will be out of jobs.
Ken,
I don’t think that Anthony was advocating for the elimination of the credit, merely positing what is likely to happen.
>>If the GA changes or kills the Historic Structure Credit a lot of projects in the state will stop and a lot of people will be out of jobs.
Look at its track record. They work on “this years budget” in isolation, and then through the prism of doing the bidding of the public sector unions and welfare industry.
If they cared about people and jobs – other than state jobs for themselves and their relatives, that is – they wouldn’t have continued making RI one of the worst states for employers, year after year, decade after decade.
They operate for their own self-aggrandizement and that of the special interests that keep them in power. When you view them in that light, the logic underlying their actions over the years becomes clear – and it becomes equally clear that they don’t give a da** about the average Rhode Islander or the well-being of this state.
Consider the last session: they level-funded local education aid while handing Frank Williams a $70 edifice to his ego; peed away the last of the tobacco money (instead of, say, using it to help plug the $5 billion and climbing unfunded pension liability) … and at midnight made it impossible for the Governor to try to save money by making it impossible to privatize any state services.
Does this sound like the actions of a group of people that gives a sh** about the well-being of Rhode Island????
With a group like this in charge, can you blame businesses / employers for concluding that there’s no hope and leaving the state????
>>handing Frank Williams a $70 edifice to his ego;
Should have said “$70 million” – sorry.
Ken,
I apolgize for the confusion–Tom W. is correct, I was making some predictions as to what will happen, not what should happen.
I have no question that thousands of Rhode Islanders have unknowingly benefited from the Historic Tax Credit. It has helped revitalize several neighborhoods and led to the renovation of mill buildings that would otherwise drag down property values and remain eyesores.
But you can bet that the General Assembly will focus on ways to generate additional short-term revenue without upsetting voters. That means the legislature will terminate many good programs, to include those that generate long term tax revenue and more than pay for themselves.
Excellent analysis from Tom W.-as well as some others on this thread.
The drastic cuts we all want will happen-“sooner or later”.
Given the moral midgets on Smith Hill we can all be sure it will be “later” rather than sooner. The idea of proactive measures is alien to these creatures.
Regardless, for the first time in my 40 years I am giddily looking forward to a GA session. Either they make cuts that are going to make their supporters squeal (who wants a pool on the first brown baby held aloft in the State House with the placard “GOVERNOR DON’T STARVE ME!”-I have January 28-LOL) or they raise taxes to even more confiscatory levels. Which will cause more capital to flee, revenues to fall and result in even MORE cuts in coming years.
So get your popcorn ready. I’m tempted to rent a Chicken Little outfit and head down there with an “IT FELL” placard.
8 days and counting. I can’t wait.
PS-
Here’s a real LOL-What’s the chances of the progressives getting their “fair and equitable alternate funding stream for education”?
TomW & Anthony,
Sorry for delay in answering; had tickets to the Sheraton Hawaii Bowl; good game but Boise State loss to East Carolina by a field goal (41-38) and we all go to the beach to watch sunset over pupus and a cool drink.
I didn’t interpret Anthony advocating altering or killing the Historic Structure tax credit.
I was providing my information as reasons why it should not be tampered with by the GA.
My understanding is the 30% tax credit is a rebate of monies the investor pays up front to the state at the end of the project so it’s not like RI is giving away taxpayer dollars.
I agree that the GA will hack at everything they think will raise resources and they will only make matters worse because their actions are kneejerk with no long term forethought.
I have a gut feeling that the budget deficit is larger than $450 million because of the subprime loan mess and high foreclosure rate in RI. Take all of those houses off the tax rolls and/or put them back on the tax rolls at reduced prices you start creating a short fall in property tax. Likewise with foreclosures come bankruptcy and income tax shortfall problems.
RI has started having layoffs both state and private business which drains the unemployment services, 2008 through 2010 does not look very pretty for RI.
I have one more task and that is to move my father out of RI to Hawaii with me.
Mele Kalikimaka (Merry Christmas) & Hau`oli Makahiki Hou (Happy New Year)
>>I have a gut feeling that the budget deficit is larger than $450 million because of the subprime loan mess and high foreclosure rate in RI. Take all of those houses off the tax rolls and/or put them back on the tax rolls at reduced prices you start creating a short fall in property tax. Likewise with foreclosures come bankruptcy and income tax shortfall problems. RI has started having layoffs both state and private business which drains the unemployment servic Hence my earlier post re: potential economic catastrophe of Great Depression proportions. Years ago there used to be a saying in these parts that when the national economy sneezes, RI catches cold. Well, the national economy is slowing a lot more dramatically than the media is letting on. Add in a cadre of baby boomer state employees and teachers who, thanks to their bought and paid for minions at the General Assembly have no minimum retirement age, are on the cusp of retiring and collecting taxpayer financed pensions, retiree health care, etc. That $5 billion and climbing unfunded liability won’t be able to be ignored. And the unfunded liabilities of Providence might as well be added in as a state unfunded liability. Then there’s the unfunded liabilities of Cranston, Woonsocket, Newport, etc. etc. etc. Then there’s the welfare queens continuing to produce thousands of ESL / “special needs” students each and every year. Add into the mix a possible Democrat administration, that will be inclined to enact major cuts in the defense budget in favor or social programs – like the early 1990’s, there goes Raytheon and the defense contractors from Aquidneck Island – Rhode Island’s only “tech industry” presence. Add into the mix a national slowdown affecting tourism and hospitality – particularly since Newport is more a domestic tourist… Read more »
If we can clean that double-dipping chiseler Montalbano (and his power base like Alves, etc.) out of the Assembly, that would be a pretty good start. Unfortunately, few people who complain about how Democrats are ruuning R.I. want to take precisely those Democrats who are most responsible for the problems.
Montalbano is a cancer on our state from both the union and corporate perspectives.
Ah Rhody,
You refuse to get it! If there are any “deals” to be cut it will be with the corrupt, but pragmatic and fiscally sane Dems like Murphy, Montalbano, Williamson, Fox, Caprio, Costantino, etc. and certainly not with the “true believers” of the Moscow Faction. These creatures are not even in the same stadium as the rest of us. I speak of Perry, Segal, Slater, Handy, Dennigan and their ilk.
You keep pumping this phantom Right/Left alliance. But what does the left brng to the table? Tax limitations, welfare and babysitting slashed, pay and pension cuts, ending most “mandates”, ending all benefits for illegals?
I think most of us could swallow (no pun intended) sodomy marriage and legal abortion in return, but I don’t see a single elected “progressive” who would make the trade. Until such time we can deal only with the Murphy/Williamson crowd.
>>If we can clean that double-dipping chiseler Montalbano (and his power base like Alves, etc.) out of the Assembly, that would be a pretty good start. Unfortunately, few people who complain about how Democrats are ruuning R.I. want to take precisely those Democrats who are most responsible for the problems. Montalbano is a cancer on our state from both the union and corporate perspectives. I’m not a Democrat. First, I don’t believe in that party’s national agenda (post-McGovern it’s essentially become a European Democrat Socialist party). I believe in liberty and the U.S. Constitution, both of which are anathemas to the modern Democrat Party. Second, even if I subscribed to the national party’s agenda, I wouldn’t be a Democrat in RI because I wouldn’t want my good name associated with an institution run by the likes of Harwood; Bevilaqua; Bianchini; Alvess; Irons; Martineau; Montalbano; Celona etc. etc. etc. So it’s not my responsibility to clean up the Democrat Party. Why don’t you get on the horn with the folks at RI Future and Whitehouse; de Ramel; Paiva-Weed; Perry; Diaz etc. etc. etc. and ask them why they’re not making any effort to clean up their party … and since they’re not, doesn’t that mean that the public should conclude that they approve of the corruption, or at least by their silence are enablers of it and so are complicit themselves? Aren’t they all accomplices to Democrat political corruption? And doesn’t the fact the there is no faction within the RI Democrat Party working to clean it up, aren’t we to conclude that support of public corruption IS the de facto official position of the RI Democrat Party? After all, we can be sure that Montalbano remembered to send W. Warwick a bill every month, year after year. Yet he didn’t… Read more »
Right, Tom W – the Dems cannot consider themselves reformed until they get rid of Montalbano, Murphy, Alves, Williamson, etc.
But to conservatives, they are useful, and are spared the wrath of the right. After all, kicking progressives, who have no power in the R.I. Democratic Party, requires no heavy lifting, right?
>>But to conservatives, they are useful, and are spared the wrath of the right. After all, kicking progressives, who have no power in the R.I. Democratic Party, requires no heavy lifting, right?
Rhody, last time I looked “progressive” Teresa Paiva-Weed held one of the most powerful positions in the General Assembly. Ditto Gordon Fox. Others, such as Rhoda Perry, hold great seniority. None say “boo” about the corruption going on around them.
You’ll just have to face the fact that your “progressives” are part of the corruption problem, not part of the solution.
If anyone holds no power in this state, or within their own party, it is conservatives, so please stop trying to make us responsible for fixing the Democrat Party’s corruption. It’s not our party; it’s not our fault.
Besides, with each Democrat that is indicted and/or plea bargained out of their seat, that opens one potential slot for a Republican. With the rampant corruption in the Democrat Party, the Republicans may someday gain the majority solely because of the enforcement efforts of the U.S. Attorney!
Tom, if the Republican U.S. attorney wants to go after Montalbano, Murphy, Alves, Williamson, etc., I have no problem with that!
And I’m not sure I’d call Fox a progressive – he’s part of the GTECH lobbying complex (and has had dealings with the Ethics Commission as a result). He gets lumped in with progressives ’cause he happens to be gay. Well, J. Edgar Hoover and Roy Cohn were gay, too.