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.”
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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.